Loss and Expense

Hi, I am working on NEC3 Option C contract and I am on the PM’s side.

In our contract, PM has instructed to delete about 15% to 20% of pile (in total length). I understand the assessment shall be Defined Cost + Fee for decreasing the Prices.

Is the Contractor entitled to claim loss of profit or other amounts due to the deletion?

1 Like

I am assuming that this is not a change to the Works Information which the Contractor has proposed.

The assessment of any CE is the effect upon Defined Cost (plus Fee), noting that the Prices under a main Option C may be reduced (sub-clause 63.11).

There is no separate loss and expense or loss of profit mechanism (lost opportunity) as a ‘head of claim’ and the only right in respect of a CE is the assessment mechanisms under sub-clause 63.1 and 63.3.

Thank you for your reply

According to Clause 11.2(23), amount of payment due to the Subcontractors for work which subcontracted is a Defined Cost. As such, if the Subcontractor successfully claimed the Contractor for loss of profit under the subcontract, the Contractor is required to pay the amount for the claim. The PM has to take the amount into account for the assessment of the CE. Is it correct?


In this instance the Subcontract would not be an NEC form, in which case any associated Subcontractor costs would be assessed in accordance with the Subcontract terms, which may specifically provide for loss of profit.

The Subcontract conditions are required to be submitted to the PM (sub-clause 26.3) who also accepts them. Where this has occurred and an assessment is made in accordance with the terms of the Subcontract, then as you have stated this would include any specified loss of profit for the Subcontractor, which would be treated as Defined Cost.

thank you for your valuable and prompt reply