I have a query regarding an Option A contract (poorly written as it has elements of Option C within it).
CD Part II states the Direct Fee, Subcontracted Fee, People Overhead % and Working Area Overhead % which have all been populated.
Normally, an Option A would use the SSCC to calculate CE’s. However, the client has used it’s own “Schedule of Cost Components” which looks in comparison like the full schedule.
The Client is now querying why i’ve used the WAO percentage as this is not used in Option A.
Does the normal rules apply or do i just say that the contract states that Fee is to be applied to the defined cost schedule provided by the Client and in the contract, based on the percentages in the Subcontract Data?
It is difficult to provide a direct answer as you say the contract has been amended although it is not clear exactly what has been amended.
The Contract Data Part 1 should state what main option is used and the definition of Defined Cost should state whether you are to use the Schedule of Cost Components (SCC) or the Shorter Schedule of Cost Components (SSCC) to assess Defined Cost.
If the SCC then you would apply the Working Areas overhead charge, if the SSCC then you would apply the percentage for people overheads.
This presumes that no changes have been made to the SCC or SSCC of course.
Thanks for the answer. I can confirm that the Defined Cost is not either SCC or SSCC; it is a bespoke list of allowables.
CD Part 2 has fee percentages against both the WAO and People so logically you apply both to account for items which are to be included in the calculation.
The point i was trying to clarify was that if the client has created and issued this contract, then it would be his risk if both the WAO and People have been populated. If it was the other way around where the contractor had “nil” or “zero” in the People or WAO then i’m sure the Client would say tough luck. Can’t have it both ways?
As contract amendments have moved the form away away from the standard NEC mechanisms, then you would need to apply the principles of contract interpretation to understand what it means. This would probably require reading the definition of Defined Cost, the ‘bespoke list of allowables’ and how the percentages have been presented in Contract Data to try and work out what the intended application was.
It may be the case that, with the amendments, BOTH percentages apply, if that seems to be how the contract intended to operate.