NEC ECC: Can the client limit payment to agreed target value only on option C.

NEC3 and NEC4 Contracts Payment
1

We are working on an NEC3 Option C with numerous CEQ’s submitted but most not agreed. The Client have implied that they are behind but equally, they have been advised by us that they are ‘out of time’. We have not signed the Contract as yet, due to it arriving after the works had commenced and there being many queries raised against it. They finally responded but now I have joined the company and am looking at it.

They have hinted that the contract states, they will not pay over the agreed target for defined cost plus fee but assure us that they would not do that. I am unable to find the clause in their contract but they refer to Z clauses that are nowhere to be seen. Should I assume it’s in the missing Z clauses they refer to, or is it hidden elsewhere and I just can’t see it. There are a lot of amendments to the main contract and it’s taking a lengthy amount of time to go through them. Now under pressure to get this signed and back to them.

2

The standard form operates on the basis that, in simple terms, the Contractor is paid PWDD less disallowed cost until Completion when an initial assessment of the Contractor’s share is carried out and included in the amount due (either as gain or as pain).

To move away from this principle would require a Z clause, so that is where you need to look. You obviously need to be comfortable that the contract you sign up to is in line with that you priced.

3

Have a look at the share ranges and share percentages in Contract Data Part 1.

4

These are 50% over the target and 0% if 80% or less.

5

That being the case, then what Dave has suggested (z-clause amendment) would be the most likely, if the Client is correct in what they are implying.

6

It’s in the Z clauses! Thanks.