NEC3 ECC: Applying of Clause 51.2

We have recently issued the required notice that will be applying for interest on late payment under Clause 51.2, as we not received payment in over the 4 weeks from the assessment date, the contract is ECC Option C.

Can you advise how this interest should be applied to the account under option C

  1. Is it an adjustment to the target through CE which effectively give us half of the interest through gain share mechanism or

  2. Add a cost to the application below the line and outside the gain share calc?

Any advise would be greatly appreciated.

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It is 2. Here’s the reasoning :

  • under clause 51.2, interest is paid on late certified payment.
  • ‘interest’ is not Defined Cost and hence not part of the Price for Work Done to Date
  • nor is late payment a compensation event, so it cannot adjust the (target) Prices.

Hence, while it is part of an assessment for the ‘amount due’, it does fall into the above categories. Once paid, you can forget about it from a contract admin point of view.