NEC4 ECC: Next Payment Date option C

11.2(31) The Price for Work Done to Date is the total Defined Cost which the PM forecasts will have been paid by the Contractor before the next assessment date plus Fee.
The Contractor submits an application for payment to the Project Manager before each assessment date (in time for the next assessment date) setting out the amount the Contractor considers is due at the assessment date. The Contractor’s application for payment includes details of how the amount has been assessed and is in the form stated in the Scope.
In assessing the amount due, the Project Manager considers an application for payment submitted by the Contractor before the assessment date , in time for the next assessment date.
As some argue that the date for the ‘next’ assessment date means that this is the next assessment date plus one month of forecast costs to the Contractor, for example, salaries should the date that contractors pay salaries not be given in the Contract Data?
Some Contractors I work with have salary pay dates of the third Thursday of every month.
I myself am paid on the second last working day of every month.
Others I know are paid on the last working Friday of a month.
Is the interpretation of the ‘next’ assessment date plus one month of forecast costs to the Contractor realistic and does anyone know of any disputes that have actually made an award on this issue?

I think your question highlights the importance of having a detailed understanding of how the contract actually works in practice, from day one.

The first assessment date is decided by the Project Manager to ‘suit the procedures of the Parties’. This means that the Parties, taking account of the assessment interval, would have subsequent assessment dates which best align for the Contractor with payment dates, including, as you have highlighted, staff salary payments, and also for the Client, for example occurring at an appropriate time within their reporting cycle.

I have previously worked on an Option C contract where the Contractor set up payment dates for their Subcontractors which occurred a week after the payment assessment dates under the main contract. They requested that the main contract dates be changed, although this was not practical, so they brought all the Subcontract payment dates forward by a week.

One problem is where the assessment interval is 4 weeks instead of a month, which is often the case with certain public bodies, and the Contractor’s monthly payment cycle then gets out of sequence with the payment assessment dates.

Strictly speaking, if a payment date is one day outside of the payment assessment date then it shouldn’t be included, but I think common sense generally applies in such situations especially as you are dealing with a forecast, which becomes superseded by actual cost in the next payment assessment.