I work as a Cost Manager for a Client and therefore administer the main contract. I am pretty sure the answer is ‘no’ but in the space of the last 12 months, to my disbelief, I have had the same argument with two different main Contractors. Is the main contractor’s margin ‘ringfenced’ (protected) under NEC 3 contracts?
To give an easy and extreme example to aid illustration; a warehouse is to be constructed for £1 million. In the £1 million is 10% fee (£100,000) for the main Contractor. The Client has a massive change of heart and decides a nice, timber shed will suffice, costing £500 + 10% direct fee = £550. Consequently the Client changes the Works Information under clause 60.1(1) as well as issuing a negative CE for £999,450. To my astonishment, if we were to apply the principles that the two different main contractors believe is the case, the revised contract value for the timber shed should be £500 + the original fee of £100,000 = £100,500. The main Contractors would not see this as an absurd figure for a timber shed as they believe they are entitled and have every right for the £100,000 that they were originally expecting from the contract. Please can you advise?