NEC ECC: Option A - Assessment of delay costs - People

NEC3 and NEC4 Contracts SOCC SSOCC
1

In assessing delay costs for a compensation event for the people under NEC3 ECC option A:

Relevant People employed or paid by the Contractor according to the time worked and whose normal place of work is within the Working Area or who are working in the Working Area (the Working Area being those parts of the working area necessary for Providing the Works and used only for work in the particular Contract. The working area is the area described in Part two Contract Data by the Contractor).

So if a contractors manager normally spends 10 hours a week on site working in the working area as defined in Contract Data part 2, and 20 hours a week working in the head office, if then there is a delay to the completion date, is the assessment of the cost increase based on:-

A) Contract manager 10hours per week he spends in the working area?
B) Contract manager 30 hours per week. he spends providing the works?

1 Like
2

As the delay is due to a compensation event, then you would assess the amount according to the time actually (and forecast) to be spent working in the working areas, as this is how Defined Cost is calculated for People under NEC3, irrespective of what is stated in the Contract Data.

The situation has arisen where a compensation event has caused a delay which means that there is disruption to the Contractorā€™s progress. Whether this consequently requires ā€˜more timeā€™ spent in the working areas by the Contractorā€™s manager depends upon the reasons for the delay, the complexity of the situation and what their actual involvement is with the project, which needs to be considered when making the quotation assessment.

Remember that if the Contractorā€™s corresponding quotation includes significantly increased hours without a reasonable explanation, then you may be entitled to make a PMā€™s assessment. Any such assessment, however, would need to be robust enough, in terms of calculation principles, to ā€˜demonstrateā€™ why the original assessment was not done correctly.

3

People 1 of the Shorter SCC (because it is option A) states :
"The following components of the cost of

  • ā€¦
  • people who are directly employed by the Contractor" (which the contract manager is) ā€œand whose normal place of working is NOT within the Working Areasā€ (which is the case here i.e. 10 hours within WAs, 30ā€™ish hours outside) ā€œbut who are working in the Working Areasā€ (which is the case for the 10 hours).

Therefore, the 10 hours !

4

Can I add a slightly different perspectiveā€¦

The assessment of the cost incurred as a result of the delay has little, if anything, to do with what normally happens. It can be quite dangerous to start with an assumption like this rather than saying more openly, what is now needed as a result of this delay; do we need more site supervisory time (a people cost) or more head office time (part of the fee) or in fact neither. There could be stacking of activities caused by the delay or conversely a period during which the site is effectively sterile (for environmental or statutory undertaker reasons), Was the CE from weather (in which case has the CM spent any extra time on site) or from the introduction of wholly new work (in which case an additional supervisory resource may be needed). These are just a few examples to highlight why starting with an assumption and trying to answer this sort of question at high level can be misleading and not the right approach.

The change in Defined Cost will be based on time spent in the working area (as Jon points out) but what that number should be is not so simple as just what has happened before at extend for the delay period.