Under an NEC3 Supply Contract, what does the percentage for overheads and profit added to the Defined Cost do and how is it applied to the price schedule in assessing the amount due?
This percentage only comes into play when there is a compensation event i.e. if there is no compensation event at all in the contract, it would never be used.
When there is a compensation event, then under the Defined Costs due to the event are built up as per clause 63.2 and the percentage is added on top to these Defined Costs. It is intended to cover indirect costs e.g. factory overheads and profit.