NEC3 ECC: Can prelims be priced as an item in the activity schedule under NEC3 option C?

NEC3 and NEC4 Contracts Time
2

‘Yes’, is the short answer.

And I would argue with good reason from the Employer’s point of view as you want an activity schedule where :

  • the Prices for each activity are close to the Defined Cost + Fee of doing the work
  • the activities relate to and can be shown in the programme
    so that
  • a realistic cash flow for project can be constructed for the contract (helpful for knowing when to draw down cash)
  • Earned Value can be done
  • the assessment of compensation events becomes easier as method and the cost of resources in the programme per operation plus Fee equal (near enough), the Price for each activity which means that change in Defined Cost can more easily be derived.

That’s the long answer ! Note that the benefits come from an activity schedule which reflects the DC + Fee, which includes the prelim costs and when they are incurred.
which relates to the programme and hence gives you a

3

My advice is be very careful how you do it. For example on a 12 month programme you if as Contractor you define your prelims as twelve activities called month 1, month 2 … month 12, what happens if you finish in 11 months, or what if it takes you 13 months? The answer is you get paid the same as you would if it took 12 months however I’ve come across parties disputing this which ever way works to their advantage. I’ve always thought it makes more sense to include prelims in each activity, like you would risk, overheads and profit.