NEC ECS: 10 % fee on dayworks labour

NEC3 and NEC4 Contracts Compensation Events
1

Data for the Shorter Schedule of Cost Components

The subcontractor have calculated their defined cost as per below

All-inclusive daywork rates plus fee of 0%
List of equipment as published by CECA plus adjustment of -25%
Sub subcontract plus fee percentage of 10%

It is to the total of these three elements that the direct fee is to be added.?

The contractor disagrees

2

I don’t quite understand what you are asking. Can you confirm that you are under an option A or B NEC3 Engineering & Construction Subcontract and what the Contractor is arguing.

3

The direct fee is not applied to any works which have been Subsubcontracted by the Subcontractor.

In the examples you listed above the Direct fee would apply to the People (Day work presumably which you have agreed as all inclusive) the equipment with the CECA adjustments but not the Subcontract works which would only attract only the 10% Subcontract

People + Equipment x Direct Fee %

Subcontract Cost x Subcontract Fee %

Add them together !

4

Couple of points here:

  • no such thing as day rates under NEC. If you have pre-agreed set rates for people cost and this is intended to replace the section 1 of the schedule of cost components than that is the rates you should use. However, it should have been made clear at tender stage what these rules are.
  • fee percentages are then applied in accordance with the rules of the contract. Sub-subcontract fee applies to any sub-subcontracted elements, and everything else would attract the direct fee percentage.