NEC3 Option C Disallowable Costs

We are a Main Contractor that has employed a Subcontractor under an NEC3 Engineering and Construction Subcontract Option C with the Subcontractors share percentages all at 100%, therefore, at final account the Subcontractor will be paid the Total of the Prices regardless of the Price of Work Done to Date.
Does that in turn follow that any disallowable costs within the monthly interim assessments will not be relevant at final account?
In terms of any Delay Damages is it correct these will be deducted from the Total of the Prices during the project after the current contract completion date and at final account?

Before I answer, can I just clarify…the subcontract is set up so that the Subcontractor is paid the lesser of (i) the final Price for Work Done to Date plus the Fee and (ii) the final Total of the Prices?

Good morning Steven,

I did not set the Subcontract up but it is constructed so that the Subcontractor is paid the final Total of the Prices.

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Under Option C disallowed cost is not included as Defined Cost and therefore does not form part of the Price for Work Done to Date (at any stage), see cl 11.2(23).

Delay damages under Option X7 are considered when assessing the amount due, cl 50.2, as amounts to be paid by or retained from the Subcontractor. They are deducted from the PWDD not the Prices.

Therefore, subject to any specific contract amendments, the Subcontractor will be paid PWDD less delay damages up to Completion, at Completion and after PWDD +/- share less delay damages. Given the share ranges are 100% then PWDD +/- share = the total of the Prices.

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