NEC3 ECC: Under option A, is the cost of staff (people) transport, cars, vans etc within the Working Area claimable as Equipment or is it included in the SSCC / Charges?

NEC3 and NEC4 Contracts Compensation Events
1

The Contractor is claiming Vans / Pickups within Equipment section of cost components for transporting operatives and staff from the main compound area to other Working Areas (all as detailed / identified in the Works Information).

The vehicles are driven to the works area, parked up and not used for the compensation event specifically, only to transport the staff or operatives.

Is the Contractor entitled to include these vehicles within the Equipment cost component or are they included in the People cost component or Charges?

2

Well, I can say with high confidence that they are not in Charges, so it is NOT the case the case that they are ‘should’ be paid indirectly by application of the percentage people overheads.

There is an argument for saying that they are in People if you take the statement in the Guidance Notes as a ‘persuasive’ argument, namely that “The intention is that amounts paid in the Shorter SCC” (for People) " would cover all the items listed in the full SCC." and that if you then look in the full SCC, People 13(a) might be applicable.

However, from what you say, it seems that they are almost certainly Equipment i.e. “items provided by the Contractor and used by him to Provide the Works and …” . I could quote the definition of ‘to Provide the Works’, but I will leave you to do that.

3

I can agree with Mr Broome’s answer in many respects.

The comment in the guidance notes, “The intention is that amounts paid in the Shorter SCC” (for People) “would cover all the items listed in the full SCC.” Is somewhat confusing, if the amounts paid in the SSCC are to cover all items in the FSCC, then what is the purpose of the SSCC in the first place, why not just adopt the FSCC?

As for the “travel” item SCC, People 13(a), I am not sure whether this is to include for such expenses as, train, air fares and maybe the “vehicle” item People 13(n) would be more appropriate.

Site transport is made reference to in the NEC “Managing Reality” publication, Page 126 which details examples of Agent and Engineer’s cars. Again I am not sure what the unexplained asterisk in the “. *Equipment/People item 13(n)” for the FSCC and the “*Equipment/People item 11” is meant to denote. However, a Land Rover for “general use” detailed in the same publication is an item of Equipment only.

There seems to be no doubt that cars/vans are “items provided by the Contractor and used by him to Provide the Works” whilst undertaking a compensation event, it is just where the costs are reimbursed / allocated which is in question.

Given the “Managing Reality” NEC publication, Page 126, details “*Equipment/People item13(n)” comment, I have heard two conflicting views;

One; An item can fall into only one cost component, is it reasonable to conclude a van transporting operatives falls within the “People” cost component and if this van is used for say, picking up materials, it falls within the “Equipment” cost component?

Two; The provision of vehicles for transporting people to the Works Area falls within the “People” cost component and transporting people within the working area falls within the “Equipment” cost component?

I certainly isn’t too clear.

4

I agree with the above in that it is not clear; I have a similar argument under an Option B. The Contractor is arguing that the 4x4 utility vehicle costs claimed are within the agreed equipment schedule and since the vehicle is on the working area it is claimable. However, my view is that because the vehicles primary purpose is to transport its supervisor to site, the fact it comes onto the working area (and store some tools) is irrelevant. It is difficult to know exactly where the line is drawn.