In NEC3 ECC Option A, how does the contract set out how the PM assess the value of the as tendered Fee value within interim assessments?
For the purpose of this query, lets assume that there are no CE’s.
In establishing the amount due the contract sets out in CL 50.2 that the amount due is
• the Price for Work Done to Date,
• plus other amounts to be paid to the Contractor,
• less amounts to be paid by or retained from the Contractor.
Any tax which the law requires the Employer to pay to the Contractor is included in the amount due.
11.2 (27) The Price for Work Done to Date is the total of the Prices for
• each group of completed activities and
• each completed activity which is not in a group.
The Fee is not an activity nor a group of activities (if it is an activity then this is in my experience, always expressed as a single value.
Activity is not defined in the contract. Referring to a number of well known and established English language dictionaries in the UK, it appears that an activity is a physical action or group of actions by one or many people. The Fee cannot be an activity. e.g. the Fee amongst many other things includes the cost of a Performance Bond, HO overheads etc. not activities, but costs nonetheless.
Other amounts to be paid to the Contractor, refer to the application of all other costs outside of the Defined Cost of the work being Optional X Clauses where relevant, such as Fluctuations, Changes in the Law, Multiple Currencies, Bonus for Early Completion, Advanced Payments.
less amounts to be paid by or retained from the Contractor, refer to the application all other costs outside of the Defined Cost of the work being Optional X Clauses, such as Delay Damages, Recovery of Advanced Payments, Retention, Low Performance Damages
The Fee is clearly not a tax.
The Fee (as Tendered) does not appear to be included in the methodology for establishing the value of the Works? or am I missing something?
Other Options such as Option C specifically include the reference to the Fee being applied within the calculation of the Price for Work Done to Date, yet this is missing from Option A.
The Contract defines the Fee in Cl 11.2 (8) 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.
In Option A Defined Cost is defined as CL 11.2 (22) Defined Cost is the cost of the components in the Shorter Schedule of Cost Components whether work is subcontracted or not excluding the cost of preparing quotations for compensation events.
The SOCC relates to the value of CE’s only.
How does the PM allocate the appropriate value within the PM assessment i.e. pro-rata the value of the tendered Fee against the value of completed activities? Application of the Fee %'s (as contained in CDPt 2) against the value of completed activities?
So where is the Fee (as tendered) dealt with in respect of the PM assessment of the value of the Works?