We are currently working on an NEC4 Option C Contract. We have submitted our usual application for payment with the costs incurred and the records that support this. We have had hours disallowed as the Project Manager assesses them as too high for the activity completed. We have called for a meeting to discuss as this is not correct in our opinion. The hours are justified and required by the Scope so the fact that they feel it took longer than they anticipated is not a disallowable cost in our opinion. Am I correct in this view?
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@WilliamBrown any advise for Waterside Surveyor?
Hello,
It sounds to me that you need to sit down with the Project Manager and go through each bullet point within the definition of Disallowed Cost at clause 11.2(26).
The fact that the work took longer than the PM thought it would - it not mentioned within the definition of Disallowed Cost. The incentive for the Contractor to work efficiently under Option C, is beating the target to achieve a larger gain share.
It is also worth reminding the PM that - in essence - Option C is a cost reimbursable contract, that has a pain / gain share at the end. Subject to the definitions of Defined Cost and Disallowed Cost, the Contractor should be paid whatever it happens to cost to build the project. If the total of these costs comes in under the target, both parties share the gain. If the total goes over the target, both parties share the pain.