NEC3 ECS: Agreeing a Subcontractors final account?

NEC3 and NEC4 Contracts General
1

How do you agree a Subcontractors final account under NEC3 ECS Option C when the Subcontractor is not playing ball, for example:

  1. As part of the normal audit process the Subcontractor does not provide suitable information to calculate and assess the correct amount of Defined Costs. This is necessary as costs have not been captured correctly in the subcontractors project accounting system.

  2. Following a post-completion review of implemented CE’s (as requested by the subcontractor) a number of revised assessments have been made and specific additional information requested from the subcontractor, but the subcontractor does not reply. How would the assessment be enforced?

Is it down to the contractor / PM to act properly / independently and assess both the Defined Cost and the Target reasonably, if so where do you stand with a lack of response / agreement from the subcontractor especially where the contract might be in pain.

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2

The answer to your last paragraph is yes.

I have two questions to ask back at you. Why are you paying them for Defined Cost that they can not prove, as this is the very first reason to disallow a cost under the definition of disallowed costs (costs not justified by records/accounts).

Second question is why are you re-visiting implemented CE’s? Once implemented that is what the target cost is adjusted by. They then need to prove cost incurred like any other cost but will be paid what it has cost them.

Ultimately it is down to you assess the value of defined cost, and assess compensation events to ensure (revised) target cost is correct. It is in the Subcontractors interest to help with this process otherwise the Contractor may undervalue things.

3

A further point I would like to add is that as the Contractor the PM will inspect your accounts and records and in relation to Subcontractors you will need to demonstrate that you have administered the Subcontract in accordance with the Subcontract conditions. If I was a PM I would not expect to see compensation events re-opened once they have been implemented?