NEC3 ECC: Direct/Subcontractor fee percentages when using Option A

NEC3 and NEC4 Contracts Compensation Events
1

I am trying to find an answer to what I think should be a simple query when using ECC Option A.

Contract Data Part 2 asks for a Direct Fee Percentage and a Subcontracted Fee Percentage.

Cl. 11.2(8) states that the Fee is the sum of the amounts calculated by applying the subcontracted fee percentage to the Defined Cost of subcontracted work and the direct fee percentage to the Defined Cost of other work.

Cl. 11.2(22) states that Defined Cost is the cost of the components in the SSCC whether the work is subcontracted or not excluding the cost of preparing compensation events.

When assessing compensation event I usually go through the following process:

People – apply % for people overheads
Equipment – apply % adjustment for equipment
Materials – no %
Total – apply Direct Fee %

Subcontractors – apply subcontractors fee %

As I read the above clauses in conjunction with the guidance notes I am now coming round to the idea that I should be assessing compensation events in this way:

People (including Subcontractors People) – apply % for people overheads
Equipment (including Subcontractors Equipment) – apply % adjustment for equipment
Materials (including Subcontractors Materials) – no %
Total – apply Direct Fee %

If this is the case how, if at all, is the Subcontractors Fee % applied when using Option A?

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2

In main Option A the Defined Cost 11.1(22) is the cost of the components in the SSCC whether work is subcontracted or not excluding the cost of preparing quotations.

What this means is that for the direct work undertaken by the main Contractor you apply the rates and percentages stated in the main Contractors Contract Data and apply the direct fee percentage

If the quotation includes Subcontract work you include the cost component e.g. People from the Subcontractor and apply the main Contractor people percentage. You do not use any of the Subcontractors percentages for people overheads, Equipment adjustment, M&F or Design.

So with Subcontractors you are effectively using the main Contractors percentages for the subcontract works with the exception that you apply the main Contractors subcontracted fee percentage to the subcontract works.

It is best to keep the direct work of the main Contractor and Subcontractor separate