NEC3 ECC: Does Contractor retain loss of profit?

Can you claim loss of profit out over and above that included in the direct and subcontracted fee percentage under ECC option A?

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The answer is ‘No’. Here’s why :

  1. The two fee percentages are tendered as part of the Contractor’s offer - or should be - and are therefore fixed;

  2. Clause clause 52.1 opens by stating “All the Contractor’s costs which are not included in the Defined Cost are treated as included in the Fee.” So if you were to get loss of profit outside of any allowances in your fee percentages, it would have to be a Defined Cost.

  3. Option A clause 11.2 (22) defines Defined Cost as “the cost of components in the Shorter Schedule of Cost Components whether work is subcontracted or not … .” So we need to look at what the Shorter SCC says.

4a. The last sentence of the opening paragraph of the Shorter SCC states “An amount is included only in one cost component and only if it is incurred in order to Provide the Works” The first part relates to the next point, but the part after the “and” rules out costs from other contracts such as, for instance, loss of profit through devoting resources to this job which aren’t now needed, but could have been earning profit elsewhere.
4b. No where in the Shorter SCC does it list out loss of profit (on this contract) as an allowable cost.

Having said this, I have seen one lawyer, who typically represented contractors, mount an argument that contractors could claim loss of profit but I found the logic so tenuous that I have forgotten what it was ! Also, he has stopped putting it forward.