NEC ECC: Is an option E or F appropriate when the unit price of a subcontractor is fixed but not programme nor cost of the Contractor who will be managing those works

I would like to set a contract between the Employer and the Contractor where the Contractor will be paid the actual costs in relation to the management of the works and will be paid at a fixed unit rate when undertaking the physical works on site. The Contractor will not hold any risk in terms of programme nor quantities.

I understand this is not a straight forward use of the NEC Contract but it could be interesting when there is not certainty on the quantities and difficulty of the project so it is very difficult to take risk in the programme nor cost. It is not pure an option F as I do not want that the costs of the subcontractor I will used are disclosed to the Employer.

Maybe it could be an option B but heavily modified in terms of risk which is hold entirely by the Employer …

Thanks very much

Overall it seems like you want your cake and to it eat too, no risk for the Contractor but also no transparency! This isn’t possible in the ECC and as you suggest you would need to amend one of the main Options to achieve this. What you are proposing is an unusual contacting strategy like an old school schedule of rates with rate bandings for different ranges of quantities. This approach generates a huge amount of work to amend the contract, prepare, price and evaluate the schedules of rates for little benefit to the Client. I’d advise against this and go back to the drawing board to think about what you are trying to achieve from a commercial and risk point of view?

If you want the Contractor to have the least amount of risk then Option E would achieve this as the Contractor only tenders the fee percentage and certain rates for use with the Schedule of Cost Components. With Option F the Contractor is taking some pricing risk for the lump sums it tenders for work which it does itself (what you call physical works on site however it could also cover prelim items), all of the rest of the work would be subcontracted which is reimbursed in the same way as for Option E. Remember though in Option F there is no Schedule of Cost Components so you can’t pay the Contractor for people, Equipment, Plant and Materials cost etc like you can in Option E.

With both Options E and F you will need to look at subcontract terms and conditions closely and ensure you’ve seen their prices, you may even want to impose constraints over and above those at clause 26 to give the Client and PM much more input than in the standard contract.

Also, if the Contractor is to take no programme risk then a Completion Date can not be stated in the Contract Data however to do so means the Contractor only needs to complete the works in a reasonable time which may not be acceptable to the Client.