Disallowed cost - SoCC


Within our Schedule of Cost Components (SoCC), there is an item as follows, “Relocation charges, where agreed by the Contractor in advance of the cost being incurred.”

Unfortunately we have a few people that did come from overseas specifically for the works and there were relocation charges associated with them moving over.

The Contractor, after all the works have now completed, has stated that as no prior approval of the relocation costs were given by them, the relocation costs are disallowed.

However, when I review what constitutes a disallowed cost, there is nothing stated in there that would suggest these cost can be disallowed.

We have the usual items under ‘Disallowed Costs’ such as, costs that cannot be substantiated; are incurred due to fraud; should not have been paid to a subsubcontractor as well as cost for correcting physical defects.

There is no mention of disallowing costs if they are not in accordance with the requirements under this contract (or SoCC).

Therefore my question is, whilst I acknowledge that relocation costs were not agreed in advance, can the cost be disallowed in it’s entirety or should the Contractor be making their own assessment of the charge?


You’ll probably not going to like this, but if the cost in question does not belong to the SCC (2nd bullet point of cl. 11.2(23)), it does not form part of the Defined Cost and therefore cannot be included in the PWDD (clause 11.2(29); assuming NEC3 ECS Option C.

However, it would be a different story if the cost you’re referring to is payment to Subsubcontractors (1st bullet point of cl. 11.2(23)) and not to your staff.


Thank you Peter - you’re right, not what I was hoping to read but if this is the case then a lesson learnt for sure.


No worries, take care.