On an ECC Option A design & build contract, the Working Areas in Contract Data Part 2 are defined as:
. . . . the Site and Compound & Fabrication Yard & Design Offices.
We are currently in the design phase and a compensation event has been notified to carry out additional design work which is being undertaken by the Contractor’s design consultant in their design office.
Also included in Contract Data Part 2 are the various hourly rates for Defined Cost of design outside the Working Areas.
My interpretation of the foregoing is that the Contractor is not entitled to recover any costs for the additional design work which doesn’t seem right.
They are entitled to this claim and recover this, under Section 6: Short Schedule of Cost Components:
6 = The following components of the cost of design of the works and Equipment done outside the Working Areas:
- The total of the hours worked by employees multiplied by the hourly rates stated in the Contract Data for the categories of employees listed.
To build on @engineering the definition of Working Areas isn’t as clear as it could be however that doesn’t mean that the Contractor isn’t entitled to recover costs for additional design work as part of a CE. What it means is that it’s ambiguous which component in the Short Schedule of Cost Components the costs are recovered under - it’s either component 1: people or component 6: design outside Working Areas. If the “Design Offices” reference in the term Working Areas is taken to extend to the Contractor’s design consultant’s offices then they fall under component 1 however if they’re taken as not doing then they fall under component 6. Either way the Contractor is entitled to be paid, the argument will just be over which rates are used to assess the CE.
If the costs are recovered under component 6, the hourly rates are those stated in the Contract Data for the categories of employees listed.
What rates are used to assess the CE if the cost is recovered under component 1?
The NEC3 ECC does not use rates stated in Contract Data for the assessment of the Defined Cost of people so the cost is built up from first principles based on “amounts paid by the Contractor” i.e. wages / salary cost plus other payroll costs. You then apply the percentage for people overheads from component 4 to the Defined Cost of people and then apply the fee percentage to everything.
Does your statement still apply when using the Shorter Schedule of Cost Components because, in addition to the hourly rates for Defined Cost of design outside the Working Areas, Contract Data Part 2 includes a schedule of People rates for various categories of employees such as Site Manager, Foreman, Skilled Labour etc and the hourly rates for each was inserted by the Contractor?
These are clearly people who are directly employed by the Contractor and my interpretation is that the hourly rates inserted by the Contractor are intended to be used to assess the Defined Cost of People when they are in the Working Areas and not built up from first principles based on “amounts paid by the Contractor”. . . . . . . why else would the be there?