Stopping payment on a target contract: Option C

NEC3 and NEC4 Contracts
1

I have recently read the below statement:

" It is common when using the NEC form of target cost contract for Employers to cease payment to contractors if the target cost is exceeded by a stated percentage."

Surely this is fundamentally wrong under Cl.10.1 and Cl.53.1. The Employer/PM should pay all amounts due and recover any amounts due back via other methods (i.e. retention).

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2

In an un-amended contract, you are correct.

However, the situation you are describing is a reasonably commonplace amendment. A suggested edit to your statement, in bold italics.

“It is common when using the NEC form of target cost contract for Employers to amend the Contract to cease payment to contractors if the target cost is exceeded by a stated percentage.”

I could agree with that.

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3

Thanks, nice clear reply Andy,

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