NEC3 ECC: Application of people overhead to sub-contract labour costs (Option B)

NEC3 and NEC4 Contracts General
1

The Contractor has assessed a compensation event based on time and materials used by various sub-contractors (eg bricklayer 10hours @ £x/hour). He has then totaled the value of the time element for all of the sub-contractors and applied his people overhead fee to this value. The direct fee has then been applied to the resulting cumulative cost.

Is this the correct application of the people overhead fee or should the assessment be based upon the sub-contractor’s time and material costs with the addition of the sub contract fee ?

2

The People cost should be assessed in accordance with item 11 of the Shorter Schedule of Cost Components.

The people overhead should then be applied to that amount.

Given that the work has been subcontracted, the subcontract fee should then be applied to the above (including any material cost)