NEC ECC: The correct application of Direct Fee % in a Compensation Event

My Contractor has submitted a Compensation Event Quotation with proposed costs for Design, People, Equipment etc. For Design, People, Equipment he has added on the agreed % addition at the rates laid out in Contract Data Part 2. He has then applied the Direct Fee % to these already marked up cost elements. Is this layering acceptable/correct? I’ve not thought about before but now I’m questioning whether it should be applied to those cost elements where the contractor has already charged a markup. Any thoughts?


It’s hard to give an absolute answer as you do not say whether you are under NEC3 or 4 and which main option you are under and hence which Schedule of Cost Components you are using. Reading between the lines, I am making an educate guess that you are under NEC3 ECC option A or B. Is that correct ?

From what you have said, it therefore appears that the Contractor has correctly applied the percentage for design overheads, the percentage for people overheads and the percentage for adjustment for Equipment in the published list and then correctly applied his direct fee percentage (assuming he is doing the work himself).

Thanks Jon, your guess of NEC3 ECC Option A is correct. I guessed you may be right but always useful to get a second opinion.