NEC ECC: Contractor's Overhead

Under option C, If the Contractor’s planner who 4 out of 5 days a week spent in head office but has been charged full time to the project.

How does the contract deal with this and what should be paid for the planner’s work?

Under NEC3 the cost of People is dependent upon the following conditions;

  • It is incurred in order to Provide the Works,
  • They are working within the Working Areas.

Where the above are not satisfied then any incurred cost is not included as Defined Cost and is treated as included in the Fee.

Under NEC4 this has been amended so that People are charged proportionate to the time they are in the Working Areas, but the charge relates to time spent working on the contract, although this is exclusively for directly employed People.

A ‘head office’ location is frequently excluded from the working areas as it is not used ‘only for work in the(this) contract’ and it is difficult for the Project Manager to monitor what work is being undertaken in this location and by whom.

If the Contractor’s head office is located some distance from the Site, it may be beneficial to set up a temporary office, local to the head office, specifically for the contract, using available technology for communication. That way the cost of specific People may be captured and charged as Defined Cost.

If the planner has incurred cost Providing the Works but has not been in the Working Areas, then under NEC3 this cost is not treated as Defined Cost.

Under NEC4 if they are actually on Site for any length of time then their cost may be captured appropriately and treated as Defined Cost.