NEC ECC: Option A Covid-19 cost recovery

NEC3: The contractor has received formal instructions to both stop/restart works and has been requested to provide quotations for both events.

The contract data contains agreed rates for staff and operatives (inclusive of fees) to be used for CE’s. However, having incorporated these rates within the quotation, the PM has stated that the contractor is not entitled to recovery of any fees and are only entitled to demonstrated/substantiated cost incurred.

People cost are a mix of furloughed staff and staff continuing to work from home.

In the unamended contract, the PM is wrong: ALL compensation events include the application of the Fee: see clause 63.1.

However, you have put in brackets ‘(inclusive of fees)’ which suggest some modification somewhere. Without having sight of these modifications, I cannot say precisely.

Jon, many thanks for taking time to reply.

Perhaps, I could have been clearer in my question!

We have agreed rates includive fees. These rates have been used and accepted for previous CE’s, however, in relation to events surrounding COVID-19, the PM is now stating that these rates cannot be used and all cost must be demonstrated.

It appears that the PM is picking and choosing when the rates can/cannot be used?

Right, having cleared that up then … effectively, from what you say, it seems that the Parties have modified the contract to use these rates without the application of the fee percentage for compensation events. Given that, the PM has no right to pick and choose when to use the agreed modifications and when not to.