NEC Option C - How to calculate a banded Pain/Gain calculation

NEC3 and NEC4 Contracts
1

I am working for a Contactor on an NEC Option C contract, the Pain/Gain Share calculation within the contract is banded; there has been some discussion with the client regarding how the gain share is calculated.

The Pain/Gain stated in the contract is set out below;

Band Share Range of Target Price Employer Share % Contractor’s Share %

8 Over 120% 0% 100%
7 Over 115% up to 120% 50% 50%
6 Over 105% up to 115% 70% 30%
5 Over 100% up to 105% 90% 10%
4 Over 95% up to 100% 80% 20%
3 Over 85% up to 95% 60% 40%
2 Over 80% up to 85% 90% 10%
1 Under 80% 100% 0%

The project costs are forecast to come in at 82% against the target, as the below example;

Value / Target = £100,000
Costs = £82,000

Please can you advised the correct method to calculate the Gain Share in accordance with the bands above?

3 Likes
2

Relatively straight forward - the Contractor will get 20% of the first 5% under (i.e. £1k), 40% of the next 10% (i.e. 4k) and 10% of the next 3% saving (i.e. £.3k).

So on a £100,000 project the Contractor will have been paid £82k and be entitled to an additional £4.3k for coming in 18% under the target.

3

There is also a good worked example in the guidance notes for ECC. You could also try using our free NEC share calculator which can be found here:
http://widgets.builtintelligence.com/nec3-calc/

Note: we have updated the location of our NEC3 Share Calculator