NEC Option A - Quotation cost

1

Is the contractor entitled to recover the cost of QS and programmer time used when pricings CEs

2

@EmmaQS No for NEC3, if this would fall under the “cost of preparing quotations for compensation events” - see cl. 11.2(22). This has, however, changed in the NEC4 where it is recoverable I believe (cl. 11.2(23)).

3

Sorry I’m a little confused 11.2(23) confirms Defined Cost is the cost of the components in the SSCC how does this entitle me to recover quotation preparation costs? I didn’t think it was a cost component in the SSCC

4

The QS and programmer you mentioned would fall under the category “People” of the SSCC but you would have to check which bullet point applies.

5

This is always a contentious one.

A lot of advisors will tell you that you only have to compensate the change in defined cost. Therefore if the QS and programmer are already working on the project then the defined cost won’t change as no new resource arrived and thus no increase in defined cost. As if the Client owns all the Contractors resources.

However, I am firmly of the view that the CE needs someone to price it, as much as it needs someone to do the physical work, therefore a reasonable time for compiling the CE should be paid.

6

Thanks that’s the way we’ve always viewed it and been paid but now the PQS has come back and said you’ve got a full time QS allowed for in prelims and the change control process is part of the QS role so we are already paying for that unless more resource is brought in. My argument is the prelims is based on the Scope at tender and you can’t forecast or foresee how much change there will be. Currently there is just 1 QS on the job but the workload is more intensive than it should be however I’m still struggling to justify it

7

The whole reason NEC changed the wording from NEC3 to 4 was to make it fairer and ensure the contractor gets paid for doing quotations. If you have a PM who is doing otherwise, then they are just pulling the same old tricks without any justification. I’ll bet he like to have commercial meetings (rather than risk reduction meetings) even though they aren’t a contract obligation. I’d also bet that he doesn’t issue assumptions for you to use and shorten the time you have to spend on a compensation event.

below is a free argument

In NEC (New Engineering Contract) contracts, the principle that the cost of producing a quotation should be recoverable is rooted in fairness, risk allocation, and promoting cooperation between the parties for the following reasons:

  1. Encourages Accurate and Thoughtful Quotations
  • NEC contracts often involve compensation events, where the contractor may need to submit a quotation for additional work, changes, or delays.
  • If the contractor knows that the time and resources spent preparing a quotation will be reimbursed, they are more likely to:
  • Provide accurate and comprehensive estimates
  • Avoid underpricing or overpricing changes
  • This reduces disputes and speeds up decision-making.
  1. Promotes Fairness
  • The NEC philosophy emphasizes collaboration and mutual trust.
  • The contractor should not bear the financial burden of simply preparing information to help the client make decisions.
  • Recovering the cost ensures that the risk of administrative effort is shared, not unfairly shifted to the contractor.
  1. Reflects True Cost of Change
  • When a compensation event occurs (like design change, delay, or unforeseen circumstances), the actual cost isn’t just construction—it includes time spent estimating, documenting, and submitting the quotation.
  • NEC allows these costs to be recovered to reflect the full impact of the change, keeping the contract equitable.
  1. Reduces Disputes
  • If quotation costs are recoverable, there is less incentive for the contractor to contest reimbursement.
  • It streamlines the process, aligning with the NEC aim of avoiding prolonged claims and disputes.
  1. Consistency with NEC Principles. NEC contracts are built on:
  • Flexibility
  • Transparency
  • Early warning and proactive management

Recoverable quotation costs align perfectly because they:

  • Support proactive submission of information
  • Reduce adversarial behaviors
  • Encourage collaboration

If he refuses to be reasonable. I would send him an EWN and inform him that you have to bring in a claims QS and delay analysist for quoting CE’s. Then I would add that persons cost to the cost of the quotations.

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