NEC ECC: Option C - the cost of providing a performance bond to the client

The cost of putting the PB in place has appeared in the Contractor’s Application for Payment. Should the Client be paying this cost as a Defined Cost or would it be deemed included in the Contractor’s Fee for example? The contract is option C.

The payment assessment amount is essentially based on the Price for Work Done to Date, which under main option C comprises (forecast) Defined Cost plus Fee.

Defined Cost (under NEC3) is the cost of Subcontractors plus the cost of components in the Schedule of Cost Components (SCC) less Disallowed Cost.

If a cost is not included in the Defined Cost then it is treated as included in the Fee.

A performance bond (X13) does not fall into any of the categories under the SCC, so would be treated as included in the Fee, as you suggest.