NEC3 ECC Option C: Does WAO apply to Agency Supplied Workers?

A Contractor has replaced several members of their Project Management Team with Agency Supplied Workers and are applying the Working Area Percentage to these costs. With the individuals not being directly employed are they not be deemed as Subcontractors and therefore not attract Working Area Overhead?

The typical roles cover the following functions:
1.) Commercial
2.) Quality
3.) Project Controls
4.) Construction Manager

Note that all of the individuals are working within the agreed Working Areas.

In the schedule of cost components there are two classifications for People. (1) Directly employed by the Contractor and (2) People who are not directly employed by the Contractor but are paid for by him according to the time they worked while they are at the Working Areas.

Accordingly, WAP shall also be applied for agency supplied staffs if they are working specifically on the project and paid for by the time they worked.

These People would most likely be treated as a People Cost under item 14 of the SCC. The exception may be where they are providing a service and therefore deemed to be a subcontractor, although this would not usually be the way in which such resources are treated, especially if engaged on a time based charge. Consequently the WAO charge would be applied to the daily or hourly rate, as appropriate.

I am assuming also that there are no issues with this arrangement, regarding ‘key people’ under clause 24 of the conditions of contract.

This is an issue which has been addressed in the 4th edition because the 3rd edition introduced some ambiguity ! The answers by Andrew and Roger are correct in that such people are covered in People 14 of the SCC and that is the ‘official’ / intended position of the publishers. However, by the logic of the contract, you first have to decide whether an organisation is a Subcontractor or not. The inclusion of the words in the definition of a Subcontractor as a person or organisation who "provides a service necessary to Provide the Works"provides a good argument that the people you mention could be deemed to be Subcontractors in which case only the subcontract fee percentage is applied to them.