Fee on CEs where the BoQ rates are used

NEC3 and NEC4 Contracts Compensation Events
1

If both parties agreed to use BoQ rates for a CE can you still add the CE fee to them or is the fee deemed to have been included already as BoQ rates have been used?

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2

No, if you agree to use rates and/or lump sums to change the Prices (see clause 63.2) instead of Defined Cost plus the Fee, the fee percentage is not added. The costs covered by the fee percentage (see 52.1) are already included within the Prices i.e. the BOQ rates and lump sums.
The definition of the Fee at 11.2(10) is the amount calculated by applying the fee percentage to the amount of Defined Cost not rates and or lump sums.
All clauses references are to NEC4 but the same principle applies if it is NEC3.

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3

Steve - Would you agree this also applies to a contract schedule of staff rates? Staff rates are commonly included in the Contract Data, I have seen recent instances where contractors are pricing CE’s using the schedule of rates from the contract, and wrongly trying to applying the fee percentage on top. I would view the schedule of rates as being “all inclusive”.

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4

LU, the only rates included within the NEC4 are in the Contract Data part two and those are under the heading of Defined Cost so the fee percentage is added, e.g. People Rates under the Short Schedule, see clause 52.1. If the Client has introduced other schedules of rates then the Client should include a Z clause to set out how to deal with them, when they are used and for what and whether the fee percentage is added or not.

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5

Hi Steve - Thanks for the reply. I should clarify I was referring to NEC3, sorry for not making this clear. NEC3: In Contract Data Part 2 this is referring only to staff carrying out “design” work. If a rate is put in for a “PM”, or “quantity surveyor” with a day rate next to it and they are used to price a CE for works which are not design, then I assume the fee would not apply? Under NEC3 I would regard a “PM” rate in a schedule of rates as all inclusive, unless specifically working on “design”. I believe this changed in NEC4 and is clearly stated as “People Rates” in CDP2, this opens up all staff disciplines and would include the fee if used for pricing CE’s.

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