NEC3 Option E - Contractor use of vehicles/transportation

Good morning,

I am on the side of the Project Manager in a NEC3 ECC Option E contract. The contractor hires vans from rental companies for getting their workers to a secure site (in which parking there is very limited). In my opinion, this a huge expense and they shouldn’t be hiring the transportation but should have their own fleet, which would be significantly cheaper.

However, I cannot see anything in the the contract which says they cannot do this. It technically comes under travel under the SoCC 13. The only thing I can think of is to issue a change to the works information, which says the contractor cannot use rentals. Then the use of rental would be under the 11.2 (25) bullet for disallowed cost.

Would this be the correct approach?

There is nothing wrong with hiring vehicles and recovering the cost provided the cost is at open market rates per the Contract. It is perfectly normal, as it is for other Equipment.

I suppose you could instruct as you suggest but that would be a CE and I’d be astonished if it saved you anything. You would effectively be instructing the Contractor to open a fleet department; something they presumably don’t have if they are renting vehicles. They would need to buy vehicles and then sell them at the end of the project as an ownership model is not what they want. I’d be very surprised if that saved money. So, would this be the correct approach? You can do it, but I’m not convinced you would get the result you seek.

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Agree with “andy.thompson”. Sounds like the Contractor would not/may not follow the instruction anyway. I would not purchase vehicles if given the option, what are they meant to do with them if the job is terminated? or at the end of the project? Hire costs are a legitimate Defined Cost under the SCC (assuming they are used within the Working Area). It might be worth carrying out an open book audit (substantiation) to ensure the Contractor is passing on all discounts they are paying (Cl.52.1) and ensuring they are paying market rate for the hire. If it’s really a problem the Client/PM could look to provide the transport and instruct free issue to the Contractor.

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