NEC ECC: Take Off Risks under Option C Contracts

Under NEC Option C, can the contractor include a risk allowance for quantities even when they themselves have produced the design and drawings ? If so how can the two parties determine what is acceptable, ie 5% additional quantities ? Should each quantity risk allowance included in the Target Cost be specifically referenced in the risk register and priced ?

If this is a competitive tender then the Contractor should price risks to a level that they believe protect themselves but equally mean that they can still win the tender. Too much risk applied and they are likely to be noncompetitive.

If this target is being negotiated as a single source procurement then it is for the Contractor to allow a suitable level of risk that the Client can agree is fair/sensible, and if they can’t agree then the target will not be agreed and the Client may look to procure elsewhere. There is therefore no magic answer or formula to agree what is reasonable to allow, but it should be a level that the Client things is fair or they will not award the contract.

Also worth remembering this is a shared risk anyway being option C, so any risks they incur will still be payable, it will just eat into gainshare (or increase painshare).