NEC4 - Option A - Interim Valuations

Afternoon all,

This is really important and I would appreciate some feedback on this as I feel like i am fighting a losing battle!

In the NEC4 Option A (contract not even signed yet) - We have allowances for prelims that we are trying to claim for 100% but the client is not interested as we have not completed the works. The example below should make this clearer (I hope).

Say, we have £25k in for Project manager based on a 20 week programme. We are now on week 30 due to delays (which is the fault of our own/design process being protracted). We had priced the works based on the 20 week programme which has now lapsed so we feel the £25k allowance should be claimable, we understand that no monies will be claimable from now on but that is our own problem.

Can we claim the full amount even though we are not technically finished on the premise that we have lapsed the programme which we had originally priced to or can the client withhold the monies indefinitely until we are completely finished with this stage?

I hope that makes sense and would really appreciate some feedback.

Kind regards

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Hi Dave, no, unfortunately you have not completed the activity and sounds like you priced the full prelims as one activity. It’s a bit hard to answer without seeing the activity schedule. The PM is right to refuse to pay this if the staff prelims are part on an uncompleted activity, Cl.11.2.(29) requires the activity to be complete. In reality lots of big projects tend to pay out a percentage of prelims as the project progresses, depends how reasonable the PM wants to be on this. I would send a general communication to the PM requesting the activity schedule is revised.

The correct answer would be to have priced the prelims as a weekly amount i.e £1250/per week over 20 weeks, each as a separate activity on the schedule. The delay from week 20 onwards would always be at your cost on an Option A. This is the risk v’s reward you consider when pricing works on a lump sum basis.

The real issue here is how on earth both parties are in week Week 30 without a signed contract, all parties (Contractor, PM & Client) are all very exposed at this point in time, get it signed ASAP! The PM has failed in their obligations to manage the works! Call a risk reduction meeting immediately.

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Agree with @engineering. Sounds like you’ve put prelims as one activity when it ought to have been priced on a weekly basis or in accordance with your payment rhythm.

My mind is also blown by the contract situation - both parties are exposed to huge risk.

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Hi @engineering and @thatsaCE thank you both very much for your responses! To be fair, the prelims are put in the activity schedule as weeks, they are on one line but the Qty is 20 and unit is weeks for example.

The issue here is we don’t even have a contract yet as you have both highlighted and this is something I myself have highlighted also!

Not sure where we stand in terms of following the contract when it’s not even signed! I guess we will just have to wait for the completion of design to claim this last little bit of prelims. Painful, but a mistake on our behalf!

Thanks again for the valued responses!

Have a great Christmas and New Year.

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