We have a PSC Option C contract with a Consultant - The payment mechanism for them is as per stated in the Contract
11.2(16)The Price for Services Provided to Date is the Time Charge for the work
which has been completed, and,
50.3 The amount due is
-the Price for Services Provided to Date, .
-the amount of the expenses properly spent by the Consultant in Providing
the Services and
-other amounts to be paid to the Consultant less amounts to be paid by or
retained from the Consultant
However the Consultant has placed subcontracts with subconsultants for particular pieces of work under an Option A subcontract
The Question is… how do we pay the Consultant for the subcontracted work under an option A subcontract and how does the Consultant show their profit and overhead recovery for the subcontracted work in the absence of a “Fee”?
Does the subconsultants option A costs come under “Expenses” to the Contractor… I don’t think so but I’m not sure
Any help or guidance would be appreciated
@ken.mazey under the NEC3 PSC the Consultant is paid Time Charge based on staff rates in Contract Data part two, not Defined Cost, regardless as to how they choose to Provide the Services. The staff rates should be inclusive of overheads and profit as there is no concept of a fee percentage in the NEC3 PSC. The only expenses that the Consultant is entitled to be reimbursed in addition to the Time Charge are any stated as expenses in Contract Data. If no expenses are stated then the staff rates are also inclusive of expenses. Note I have carefully used italics to highlight what clause 11.1 states i.e. that terms in italics are identified in Contract Data.
@Neil_Earnshaw… So if they have subcontracted part of the service to a subconsultant under option A. How do they arrive at the number of hours necessary to to multiply the staff rates by? I really don’t see how this can work effectively with a level of transparency that would satisfy me if I were a client (Employer).
I have a priced activity schedule at tender stage that is now within the Contract and is only a “target cost” in Option C, and Option C is in effect a cost reimbursable contract… but the rates and hours may bear no relation to the cost incurred by the Consultant if they have subcontracted part of the service under a PSC Option A, which I have agreed to them doing through the subcontracting clause (24) which would include the contract sum in the Contract Data… It appears to me that the PSC is lacking the same controls in subcontracting as the ECC does by paying the subcontract sum + the fee… How does that translate in rates and hours?
In the PSC the Consultant has an obligation under clause 52.2 to keep accounts and records of Time Charge and expenses and to allow the Employer to inspect them at any time within working hours. The Consultant should ensure these records are kept regardless as to the commercial arrangements between them and their Subconsultant.
Things have changed now under the NEC4 PSC as Time Charge has been abandoned in favour of Defined Cost plus Fee and using a Schedule of Cost Components. Hopefully those using NEC3 PSC these days will be few and far between however the use of Defined Cost opens up a whole other can of worms for Consultants and Clients alike.