NEC3 ECC Option A - Payment of Contractor's staff working outside the Working Areas

NEC3 and NEC4 Contracts
1

While working on an NEC3 ECC Option A contract, some of the Contractor’s staff are not working within the Working Areas, in fact, some are working on the project outside the country where the contract is taking place. This is impacting performance of the Contractor. The Contractor’s Activity Schedule includes monthly activities for their staff (all staff under one activity per month). Contract Data Part 2 only included the Site as working areas and nothing else (i.e. remote working at offices in other areas outside the Site or abroad).

The Employer is unhappy and does not want to pay for Contractor’s staff outside the Working Areas. Is this possible?

The Employer believes that the Contractor must provide the works within the Working Areas, otherwise the cost of those outside will be considered under the Fee and not defined cost. They are thinking of:

  1. Send two communications in parallel:
    1. Notify that the Contractor is failing to comply with their obligations - to correct them.
    2. Notify a defect because they are not working within the Working Areas.
  2. Use clause 50.2 to deduct relevant cost from the application for payment.

Concern is that there’s no disallowed cost in Option A, that all Key People are under one activity in the Activity Schedule, that the contract doesn’t state that the Contractor must work within the Working Areas.

Thanks in advance for your support/opinions on this topic.

2

Hello Eduardo

Working Areas are not relevant to the normal application / payment process under Option A. Working outside the Working Areas is not a Defect unless there is something relevant in the Works Information - refer to the definition at 11.2(5). I’d be surprised if you have anything there.

In terms of failure to comply with obligations, the only place that language is used is in the clauses about termination, and the failure has to be ‘Substantial’. You will know the circumstances better than me, but I can’t see a failure to comply with obligations here.

As such you should pay the Contractor the amounts in the Activity Schedule.

The only time Working Areas become relevant to People in Option A is when assessing a compensation event. The Employer would be right that staff outside the Working Areas would not be included in the assessment of a CE (unless they are doing Manufacture / Fabrication or Design), and in that circumstance they would be covered by Fee, but again, that is CE-only.

This is a consequence of using Option A (or B). If this were Options C / D / E / F then the answer would be different.