NEC3 ECC: option D - The Prices with regards to final assessment

Under 11.2 (31) of the NEC3 option D the guidance notes states the final assessment needs to take account of CE’s and re-measurement of the work done. Does that mean the BoQ is completely re-measured and a new target is set at the end the scheme?

This seems to go against target cost contract methodology where the target is fixed and then any difference between the target and Defined Cost is shared between the client and contractor under the pain/gain mechanism. It also would make the original target meaningless.

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You are largely right in that you have to measure twice :

  • firstly, to keep track of the target Prices as this is the fulcrum around which the incentive mechanism operates; and
  • secondly, to keep track of the Defined Cost plus Fee element.

Two points about the first bullet above :

  1. I suggest you measure and agree as you go along rather than at the end, both to save yourself time and hassle at the end and to keep forecasts of what the Employer will ultimately pay / Contractor receive up to date. In fact under any NEC3 contract, that is pretty much a requirement; and
  2. Oh, if it was as simple as just measuring. Unfortunately, the rules with 60.4 to 60.6 (especially 60.4) make it quite complicated to administer.

These mean that not only is the original target meaningless, but that the original rates often become meaningless as well.