We have a NEC3 ECC Option A contract and the contractor has put a quotation in for a CE and valued as follows is this correct?
the main contractor quotation consists of :
sub sub contractor cost plus fee subcontractors cost plus fee and the then main contractors subcontractors fee is added
No that is not correct.
Under NEC3 option A, the Contractor should build up the costs from first principles in line with the shorter schedule of cost components as though they were doing the work themselves rather than use subcontractor lump sum costs (see 11.2(20) where it says it is built up from SSCC whether the work is subcontracted or not). Then a single fee - which will be the subcontract fee percentage will be applied to the total of all of the elements within the schedule of cost components that are subcontracted.
The answer would be different for NEC4 as now subcontract costs are a new element within the schedule of cost components (both full and short)
I am assuming that this is NEC3 rather than NEC4, as Subcontractor costs are treated differently under NEC4 as an cost component in their own right.
Assuming that this matter is also a CE under the corresponding Subcontract then you would take the Subcontractor’s costs and apply them to the components in the SSCC. If the Subcontract was NEC ECS Option A, the Subcontractor should have also included the subsubcontractor costs within their quotation, applied to the components in the SSCC.
You would apply the subcontracted fee percentage to the Defined Cost of subcontracted work (including subsubcontractor’s costs) and the direct fee percentage to the Defined Cost of other work.
You don’t have fee on fee under NEC3.
I would suggest an instruction to submit a revised quotation, stating the reasons why.
Hi Andrew
Agree with what you say but I think there may be a differential depending upon what publish list and % adjustments are within the various documents as well as listed Equipment, if any, that should be considered.
I always struggle if the People cost is the amount paid by the Contractor to the Subcontractor (excluding fee) or if it should be built up as what the amount would have been paid if the Contractor had employed the person. One for another day!
Dave, I agree with your comments and the subjectivity that this issue can give rise to so I think the changes under NEC4 are welcome in this regard. Maybe a question for the LinkedIn forum.