NEC3: ESC Option B: Applying People % overheads to Compensation Events.
The Subcontractor has subcontracted a large section of work down to another company, for a section of road construction (The PM prior approved this and instructed it under cl.14.3). In the CE quotation the Subcontractor has applied the people % overhead to his staff time planning the works and the Sub-Subcontractors work on the road. Are they allowed to do this as the people rates used are agreed rates from a schedule of rates in the BoQ.
ie. Works total = £10,000, People % = 10%. Subcontractors staff total = £1,000, Sub-subcontractor staff total = £6,000. They applied the people % of 10% to the total (10% of £7,0000). There is not direct fee or subcontract fee in the contract. They are claiming £,7,700 in overall people costs and £3,000 in materials.