Defined Cost - Option C Contract

We are working under a NEC3 Option C Contract using the “full” Schedule of Cost Components. We have been claiming recruitment agency fees on staff specifically employed for the project under SCC 4 - Charges, 43(h) Specialist Services, but these have been rejected by the Project Manager who states that these costs are deemed part of the Contractor’s Fee.

There is no definition in the NEC3 advising what “Specialist Services” covers, but is it reasonable to assume that if the personnel in question have been recruited specifically for the project then such charges are allowable under the the definition of Defined Cost.

@Leslie_Hall I see this topic has raised it’s head previously on Reachback, here’s the link to the relevant thread:

I agree with the PM’s decision for several reasons.

Firstly, agency fees are a function of employing people and as such they would be captured under component 1 and not component 4 if they could be included in Defined Cost however they are not listed and as such would be covered in the Fee.

I suspect you may question this opinion so putting it to one side that leaves us to debate if they can be included under item 43(h) as specialist services? I cannot see how recruitment can be classed as a specialist service as (1) using agencies for recruitment is routine in construction and (2) whilst a recruitment agency might argue differently, you don’t need to be highly skilled or trained to do it either!

1 Like