NEC3 ECC: Payments for People in Working Areas

For inclusion within Defined Cost with monthly interim applications , can the Project Manager only pay for people for the time that they are in the Working Areas? I.e. use an agreed hourly cost of employment only against time within the Working Areas (invariably checked by Contractor’s signing in records and the like)

It is thought that as it is “…incurred in order to Provide the Works” and

  1. “people who are directly employed by the Contractor and whose normal place of working is within the Working areas” and
    13(a) Payments made in relation to people for travel

that the Project Manager has to include in their definition of Defined Cost the time spent on the job by a directly employed person as well as their time and cost of travel to that place… Is this correct?

Before all this, surely the Project Manager would have to argue why it was Disallowed under 11.2 (25)?


Clause 11 of the Schedule of Cost Components is clear in that amounts paid by the Contractor for people are " paid according to the time worked WHILE THEY ARE IN THE WORKING AREAS". If people are not within the Working Areas their costs can’t be recovered under this clause, and therefore are deemed included in the Fee.
Regarding Schedule of Cost Components clause 13(a) - this covers the cost of travel that is paid to people e.g train fares, mileage. It doesn’t include people’s time in the same way that clause 13b doesn’t include people’s time.
Disallowed Cost doesn’t apply because the cost is not a Defined Cost in the first place. If People are not within the Working Areas then the cost of their time is not Defined Cost.

I take a slightly different line to Dave here.

The focus is the cost to the contractor. That is what is recoverable as a people cost. If that cost is incurred as an hourly rate within the working area then that is the cost that is recoverable and no other. If however, say, the cost incurred by the contractor is a day rate for a 7 hour day including at least 5 on site (but if you added up the same as an hourly rate the day rate actually include allowance for travelling) then the full day rate is still recoverable because that is the cost to the contractor of that person. The distinction in 11 is really to strip out head office people not to try and thin down how much is paid to a site person.

In relation to 13(a) this is rather ambiguous. My first reaction was exactly the same as Dave. However, it is not that clear. It is a payment in relation to people for travel. There is nothing that says this is limited to out of pocket expense type costs. I do think Dave’s point is a good one however as you go down the rest of the list. On balance I think you would have to conclude that 13 doesn’t include the time of the person the cost relates to and really is just picking up expenses.

I am not sure you ever really get to disallowance.