Under NEC4 Value Engineering (assuming default 50:50 ratio), if the value engineering is raised by a Subonctractor and accepted, the Contractor and Subcontractor share the saving 50:50 under the subocntract.
If the Contractor has to share this 50:50 under the main contract also, do they share their 50% split of the subcontract value engineering 50:50 with the Client?
Worked example:
£10k saving between Subcontractor and Contractor = £5k each
Does the Contractor pass on £5k to the Client, or £2.5k?
I’m afraid the answer is: It depends. I’m assuming here that the idea really is the Subcontractors.
When it gets to the head Contract, firstly we have to know which Option. If A or B, read on. Secondly we have to know if there is a VE saving in that Contract. The Subcontractor and Contractor’s Scopes may be different.
Assuming there is a VE saving to be passed on, and its Option A or B, then your example is right. This might make the ultimate Client question whether its worth accepting it, particularly if they have any concern about how good an idea this is.
Both contract and subcontract are Option A/B and the Scope is identical in relation to the works. Are you therefore saying the £2.5k is what would be due to the client?