NEC3 ECC Option C - Is damage to crew transport a disallowable cost?

The Contractor has submitted costs for the repairs and replacement to hire vehicles following damage and theft. The vehicles were for the transport of personnel from their base location to site and not involved in carrying out the actual work.

The Contractor has advised that as the project is a target cost option C, it entitles them to reimbursement of all project costs relating to carrying out the activity on site.

No EW was given. Charges were included within the Payment application.

Are these charges Disallowed Costs?


I would phrase the initial question as “are they an allowable Defined Cost in the first place ?” and that is debatable, so I cannot give you a definitive answer.

Firstly, it is unlikely that they can be considered Equipment as according to the opening paragraph of Equipment 2, they have to be “used within the Working Areas”, which they do not seem to be.

However, they may - notice the use of the word ‘may’ - come under the rather vague description in People 13 of “Payments made in relation to people for (a) travel”.

If they are ‘Defined Cost’, then you can ask if they are disallowable i.e. Disallowed Cost.
You mention that they did not give an early warning and this potentially could result in SOME of the costs being disallowed if additional mitigation actions could have been taken to reduce cost had they given the early warning promptly. I.e. only the additional costs through not giving an early warning can be disallowed.

I think Jon has answered the question you have asked - however I smile slightly at the mention of an early warning here. I assume that you don’t know who did the theft, and if you could have raised an early warning because you knew who was planning to steal it then the police will have their man!!!