NEC ECC: Option A - Design in Compensation Events

When assessing a compensation event under the NEC3 Option A Contract how do you correctly apply the relevant fees to design costs?

The contractor directly employs a designer (off-site) and has reasonably forecast defined cost for design within their CE quotation.

Within the Contract Data Part 2 there is a prescribed design overhead percentage.

In assessing the design costs in this instance do you:

  1. Apply only the design overhead percentage.
  2. The design overhead percentage then the direct fee percentage.
  3. The design overhead percentage then the subcontract fee percentage.

In the instance of 2 and 3 is the direct/sc percentage applied to the defined cost element only to avoid fee-on-fee?

The answer would depend on whether the designer is a Subcontractor or not.

If ‘No’, then 2. above applies.

If ‘Yes’, then 3. above applies.