NEC ECC: SSOCC Option A - compensation event subsistence costs

SSOCC Relating to an Option A contract

Some of the contractor’s site based staff are working away from home and are staying in a hotel. Some of the operatives are staying in temporary mobile accommodation located in the site compound. All of these staff receive a daily subsistence payment.

In assessing compensation events, where these staff are delayed the contractor is claiming these hotel and subsistence costs as part of the on-costs related to the delay.

Should these costs be covered by the percentage for people overheads or included as an additional cost in the calculation of people costs? These staff have generally been working on the project for long periods not just doing works relating to compensation events.

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Under clause 63.1, the change to the Prices is the EFFECT of the compensation event on Defined Cost (whether forecast or not) + Fee. Cost comes from use of the resources, so the first question is something like “are these resources in the Working Areas longer as a result of the compensation event(s) ?”

If ‘Yes’, then you can proceed to see whether they satisfy the rules of the SSOCC.

Firstly, if you look at clause 41 of the SSOCC, the costs that percentage for People overheads could cover are

  • water, gas & electricity that the people who stay in the Working Areas are using;
  • buying or leasing land upon which this accommodation is sited;
  • communal catering and recreation (excluding the actual accommodation) costs.

So are the more direct ‘subsistence’ payments Defined Costs. This is where I disagree with the direction of the 3rd and 4th editions in assessing People costs, because item 11 of the SSOCC is so high level … and in the 4th edition you just have what is tendered as a People Cost with ‘equivalent rates’ if no rate exists, which is even vaguer.

Having said this, in the 3rd edition, the full SOCC can be used by agreement and it is likely, in the case of a dispute, that the full SOCC would be used as the basis to inform what “amounts paid by the Contractor” means. And the full SOCC, in bullet 13(b) has “travel and subsistence” so, in my opinion, these should be paid.

Would the amount for the accommodation be a sum ie £100 per night, or based on actual costs paid for someone to stay in a hotel?

It would be the “amounts paid by the Contractor” so if the individuals are paid £100 per night for overnight accommodation as part of their employment contract, but can do with it as they please, that is what is paid. If they have expenses reimbursed then a forecast of what is paid out on average per night is what would be paid.