Pricing Plant Costs Under NEC Option A

Under an NEC Option A Subcontract can a Subcontractor claim for Plant Costs within a Compensation Event, if they are utilising existing plant and there is no extension to the Programme? I.e. MEWPS planned to be on-site for full project duration.

@Neil_Earnshaw @chriscorr @stevencevans can you advise DK1020 please?

In very general terms, no, as there is no increase in cost as the compensation event is just using up ‘float’ in the particular resource. However, NEC4 does recognise that the Subcontractor may be entitled to use that float itself to offset any other delay for which it might be at fault. This is where the ‘dividing date’ and the programme is used.

The dividing date is defined at clause 63.1 and for instructions for additional work, the dividing date is the date of the instruction. The compensation event is assessed as the effect on actual Defined Cost of the work done by the dividing date and the effect on forecast Defined Cost of the work to be done after the dividing date.

Let’s focus on the forecast part and let’s say one MEWP is forecast to be on site for a further 6 weeks and, of that 6 weeks, is fully utilised for 5 weeks, spread sporadically over those 6 weeks. We would know what work the MEWP is to be used on as the programme is required to show the resources that are planned to be used.

That MEWP has 1 week of ‘resource float’.

If an instruction is issued which is a compensation event and requires the MEWP for 2 days of that 1 week float (and providing it is on the days when it is not programmed to be used) then there is no effect on the Defined Cost of hiring the MEWP.

If the Contractor wishes to rearrange the programme to utilise the MEWP on other works, then that should be by way of a programme update that would then show the reduction in resource float.

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Further to the example that Steven outlined, the additional 2 days of equipment utilisation would incur some additional costs in fuel, lubes and servicing. If the operator was only planned to be on site for the programme activities then there would be the additional 2 days of her attendance and associated travel/accommodation.
The 2 days of work may also require additional access or platforms to be constructed and tested.

Therefore there may additional costs incurred, even if there is no entitlement to adjust Completion Date or Key Dates.

Alternatively to Steven’s reply; if the MEWP was planned to be used for 6 hours every day and the instruction introduced 2 days of continuous work, then the programmed work would be disrupted and delayed and the impact on the programme would have to be assessed accordingly [assuming the MEWP activities are on the critical path].

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