I’m currently working under an NEC3 Option A Contract which is between the Subcontractor and Subsubcontractor. Within Subsubontract Data Part 1, the documents which are to be included within the Works Information are outlined.
Within the documents listed as forming the Works Information, a number of documents are specified, such as Subsubcontractor deliverables etc.
Also referenced within this section of the Subsubcontract Data P1 is ‘Hourly Rates’. The hourly rates submitted with the tender documentation are also included within the signed contract documentation.
As the Schedule of Labour rates effectively form part of the Works Information, does this constitute an agreed schedule of labour rates to be utilised in assessing the ‘People’ cost component of a Compensation Event?
Regardless as to where the rates are in the contract, clause 63.14 describes when rates and lump sums may be used for assessing a compensation event. The clause says “If the Contractor and the Subcontractor agree, rates and lump sums may be used to assess a compensation event.”
The clause doesn’t describe where the rates and lump sums are to be found, there is no link to the Activity Schedule, Shorter Schedule of Cost Components, or any other NEC or non NEC document. Therefore technically you could use any rates or lump sums that you have to hand (including the ones Subsubcontract Data Part 1) however this can only be done by agreement. So you can ask, but if the other party doesn’t agree (because maybe the it isn’t in their commercial interest to agree) then you make the assessment based based on Defined Cost plus Fee i.e. in accordance with the Shorter Schedule of Cost Components. For people, this means you include “amounts paid by the Subsubcontractor” and not the rates.
If it was intended that the “schedule of rates” be used to assess compensation events then there would need to be some amendments to the standard clauses that otherwise state a CE should be assessed using the Schedule of Cost Components. At best here you would have an ambiguity - which under 63.8 would be found in favor of whoever did not create the ambiguity, and left following Neil’s very good answer.