Prelims In a CE Quote

NEC Supply Contract


We are a subcontractor on a project which has been delayed by contractor, and majority of work was put on hold. When submitting a quote for a CE we have included prelims for the delay. We calculated them by dividing the cost estimate by the original duration to give each management type a cost per day, and the multiplying by the delay duration. I feel like this is a standard way to calculate prelims and have done this for many other projects the same way.

The contractor is disagreeing with the prelim calculation and arguing that while the work was on hold then management prelims shouldn’t be included as no one was working on the project. I argued that while on delay the management team are still assigned to the project and additional workload can’t be assigned to them until the project has ended.

Contractually, who is correct? Is there any specific clause I can look to for guidance on this?

Just my thoughts…

On your assessment of the delay, it is for the Supply Manager and you, the Supplier, to agree whether or not you use the Price Schedule to assess the impact of the delay (63.1). Should one party not agree to this you will use actual and forecast Defined Cost (63.2).

You say ‘delay’ and ‘hold’ so i’m not clear on what has actually happened. Has the Supply Manager not provided something in time, has the Supply Manager instructed you to stop ? It’s worth clarifying this.

If you’ve been stopped, you should have received an instruction from the Supply Manager to stop works and a Compensation Event should have been raised, preferably with an Assumption advising you of a new start date. Your quotation will then evidence the Defined Cost, the level of proof of which would be for you the Supplier to demonstrate you could not reallocate staff.

I’d suggest keeping very detailed records during this time.