NEC ECC: Contractor Share arrangement

NEC3 and NEC4 Contracts Payment
1

Clause 53 refers to the Contractors share arrangements and how these are to be assessed, with 53.3 stating the PM makes a preliminary assessment at Completion. we have a scenario currently where the Contractors application for payment PWDD exceeds the Target price prior to completion. All the CE’s have been implemented, and there will be a position where the contractor pays his share of the excess.

Reading clauses 53.3 and 53.4, the assessments are only to be undertaken at completion, which would mean that we are knowingly paying the contractor more money than they are entitled to, and seeking a credit at Completion.

Is this correct, or do we factor in the contractor share arrangements based on the value due in the period?

2

The simple answer is to ‘do what it says in the contract’ which means the PM assesses the share amount at Completion (of the whole of the works) and when the final Price for Work Done to Date and final total of the Prices is established.

This means that there is no contractual provision to make an assessment at any other time, although you would want to calculate this anyway for your own financial reporting purposes.

Because of this situation many contracts are amended to allow the PM to make an ‘interim’ assessment when the PWDD exceeds the total of the Prices, taking account of any likely adjustments to the Prices, such as CE’s accepted but not implemented…