ECC3 Option A - Defined cost CEs

ECC3 Option A - CE quotation
We have submitted a quotation for a compensation event under ECC3 Option A. We have excluded costs associated with preparing the quotations Cl 11.2(22). However, we have included allowances for the defined cost for people (PM, Planner, Admin, QA, QS - not all full time allocated) for the level of effort establishing the CE technical impact in understanding, reviewing, planning and managing the CE and ultimately dealing with the future implementation into the WI and programme, all which the contract requires.

The PM is contesting these defined costs on the grounds it is deemed they should have been included in the Tendered ToPs and we are already recovering them in any case. Our understanding is the spirit of the NEC3 CE process is to put both parties financially into a equally standing position had we not received the CE.

Is the PM correct is deeming these costs are not allowable?

Finally, am I correct in thinking NEC4 has been re-drafted to redress this situation.

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The inclusion of staff cost in quotations for compensation events that don’t affect the Completion Date can be problematic. Presumably the Project Manager’s opinion is that no additional staff (or extended staff time) are required for the additional works and therefore there is no additional staff cost ie there is no requirement to put both parties financially into an equally standing position had we not received the CE. You will need to demonstrate otherwise.

In respect of NEC4, I think you are referring to the revision is to allow for recovery of Defined Cost + Fee for preparing quotations for proposed compensation events that are not instructed. However the same criteria applies in terms of additional cost.

Thanks for your reply Dave and the first point is understood. However and following discussions with the PM, we explained the project was priced (and risk assessed) on the understanding the WI was very mature and little change was anticipated (and priced) in out tender. We acknowledge that some change will undoubtedly happen on most Contracts, but it is a matter of degrees. As a wider question (and opinion) what percentage of change do you consider is reasonable when pricing Option A projects when the WI was determined to be “mature”.