NEC3 Option C: Risk items in the Target price

NEC3 - Option C: When building up the target price the Contractor is entitled to price risk items that are not the “Employers risks” stated in Cl.80. Are they entitled to price items that are obvious CL.60 Compensation Events i.e. Can they put a risk provision in the target for “unforeseen ground conditions”? This would not seem logical as if they encounter these events they would recover the Defined Cost via a CE and lift the target. If the Contractor prices any of the defined CL.60 CE’s then the Employer ends up paying more overall as they may also cover the event in the “gain share” amount, Are they only allowed to put provisions in the target that are not “Employers risks” and “CE’s”.

I cannot see any reference in the contract in relation to building up the target, therefore there is no such restriction to including the risk sums in question. However, as you correctly note, it would not make any sense and any reasonable Employer would challenge it at tender stage.

The total of the Prices (or target) consists of the Prices as defined in clause 11.2 (30), i.e. lump sum prices for each activity in the Activity Schedule; there is no obligation to break down those sums, although I appreciate that at tender stage many contractors are required to do so as part of the evaluation process.