Assessing a CE on ECC, Option B. Should the Contractor simply take a person in the Working Area’s total annual salary package (compliant with the SSCC) and divide it by the year’s amount of official working days to derive an applicable daily rate, or are there much more to the exercise. Are there different “methods” applied in industry?
The way that the People costs are defined in the Shorter Schedule of Cost Components is so vague and contractually imprecise, in my opinion, as to be almost worthless. As a non-accountant, I might be able to come up with a reasonable way of expanding on what “amounts paid by the Contractor” to people “including those for meeting the requirements of the law and pension provision” means in practice and I am sure you could to - it would just be that yours and my way would be different !
The Guidance Notes do not offer much help at all, but do say “The intention is that amounts paid in the Shorter SCC would cover all the specific items listed in the full SCC.” In which case, the obvious response, to me, is ‘why not repeat what is in the full SCC in the Shorter SCC ?’
As a practical means of assessing people, I therefore suggest you use the the build up for People in the full SCC. The alternative is to get the Contractor to tender rates for people (which you assess / negotiate over prior to signing the contract when there is competitive tension) and these are then used instead as per clause 52.1
Thanks Jon, if I may elaborate a bit:
If the build up for an employee on site has a total annual pay package of say GBP 30000. Is this then divided (30000 / 365 days = 82.19 per calendar day) or do we only use working days per year (30000 / say 256 = 117.19) and use this rate for the quotation? I understand that this would be determined on the basis of the EOT calculation, but I’m trying to get opinions on what is most acceptable for the NEC principles
I think working days that the employer is contracted to do would be a fairer way of doing it.
As Jon states working days would be the correct way to do it - so 365 days less weekends (104 days) less bank holidays (7 days) less paid holidays (say 20 days) less sick leave (say 14 days) = 220. many companies work on the basis of 220 working days a year.