NEC3 ECC: Who carries the risk of exchange rate increase if the Contractor received the payment before the actual payment in a different currency?

NEC3 Option D: Who carries the risk of exchange rate increase if the contractor received the forecasted payment to supplier in different currency in advance?

Contractor’s monthly IPA includes other currency transaction which is forecast defined cost. Contractors IPA includes 7 weeks forecasted cash out and that includes transaction to be paid in other currency.
Meaning 7 weeks before the actual payment of all projected foreign currency transaction has been paid to the Contractor in advance.
PM opinion: The risk of exchange rate increase is now with the Contractor and should not be included in the contractor’s IPA.

1 Like

It is probably the longest period of forecasted cost to be included within a Contractor assessment. Not sure why you would ever want seven weeks forecast (I have seen regularly 1-4 weeks but not longer) within an assessment that you are going to pay out for, but if that is what you have then that is what you have. It doesn’t actually change the answer to this question. What was predicted over seven weeks ago will now be an actual cost that will be adjusted in a subsequent assessment - so any such risk remains with the “Parties” i.e. part of the pain/gain share calculation.