# Webinar - Disallowed Cost in Practice: Why Issues Persist Despite Open-Book Principles

**URL:** <https://reachback.builtintelligence.com/t/webinar-disallowed-cost-in-practice-why-issues-persist-despite-open-book-principles/22660>\
**Category:** NEC3 and NEC4 Contracts\
**Tags:** academy, webinar\
**Created:** [11 August 2026 10:43 UTC](https://reachback.builtintelligence.com/t/webinar-disallowed-cost-in-practice-why-issues-persist-despite-open-book-principles/22660 "2026-08-11T10:43:00Z")\
**Posts on this page:** 1\
**Page:** 1

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**Post date:** [11 August 2026 10:43 UTC](https://reachback.builtintelligence.com/t/webinar-disallowed-cost-in-practice-why-issues-persist-despite-open-book-principles/22660/1 "2026-08-11T10:43:00Z")

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## Webinar - **Disallowed Cost in Practice: Why Issues Persist Despite Open-Book Principles**

Thank you for everyone who atteneded our **Disallowed Cost in Practice: Why Issues Persist Despite Open-Book Principles** webinar in collaboration with [CICES](https://www.linkedin.com/company/chartered-institution-of-civil-engineering-surveyors-ices-/) on 21/07/2026, hope you’ve enjoyed session.

Please feel free to connect with our presenter, [Cecelia Fadipe](https://www.linkedin.com/in/cecelia-fadipe-fcma-mba-91365858/), Commercial & Finance Director at [CFBL Consulting](https://www.linkedin.com/company/cfblconsulting/) on LinkedIn.

 ![image](https://europe1.discourse-cdn.com/flex013/uploads/builtintelligence/original/2X/b/b96311d8cb80b85364682e61d7b976ca7d1963f6.jpeg)

As promised, please find below the answers to the questions we didn’t have time to answer live on the session.

# **Governance & Assurance**

**Q: When should independent assurance be introduced?**  
Independent assurance should be introduced at contract mobilisation and maintained throughout delivery. Early assurance helps identify weaknesses in controls, records and cost allocation before issues become embedded.

**Key Principle:** Treat assurance as a preventative activity, not a retrospective investigation.

**Q: Can expenditure be audited proactively rather than retrospectively?**  
Yes. Continuous Verification and Assurance (CVA) provides an ongoing review of cost records, which improves accuracy, reduces disputes and supports timely corrective action.

**Key Principle:** Review costs while they are being incurred, not after they have crystallised.

# **Records & Evidence**

**Q: Should evidence requirements be agreed upfront?**  
Yes. Parties should agree at mobilisation what evidence will be required to support labour, plant, material and subcontractor costs.

**Key Principle:** Unclear evidence requirements are one of the most common causes of disallowed cost disputes.

**Q: Should evidence requirements be agreed upfront?**  
Yes. Parties should agree at mobilisation what evidence will be required to support labour, plant, material and subcontractor costs.

**Key Principle:** Unclear evidence requirements are one of the most common causes of disallowed cost disputes.

**Q: Timesheets do not show hour-by-hour activities. What is acceptable?**  
NEC requires costs to be justified by accounts and records. Timesheets do not need to record every hour, but they should demonstrate a clear link between resources, activities and the works provided.

**Key Principle:** Agree minimum evidence standards at contract outset

**Q: Are contract management systems such as FastDrafttm essential?**  
No, but they are highly beneficial. They provide structured records, approvals and audit trails that improve transparency and consistency.

**Key Principle:** Technology supports assurance but does not replace good governance.

# **Commercial Controls**

**Q: How should Defined Cost and Disallowed Cost be managed under Option E?**  
Implement robust records, regular audits, agreed evidence standards and early challenges of questionable costs. Option E places greater emphasis on disciplined cost management because costs are reimbursed as incurred.

**Key Principle:** Costs that cannot be justified through records may become Disallowed Cost.

**Q: Why does Disallowed Cost remain a persistent issue?**  
The challenge is often interpretation rather than contract wording. Resource allocation, support costs, affiliates and productivity losses frequently create disagreement.

**Key Principle:** Document agreed methodologies before costs arise.

**Q: Can an employer recover due diligence or audit costs when records are inaccurate?**  
Not automatically under NEC. However, costs may be disallowed, and additional contractual provisions can be included to recover audit costs arising from materially inaccurate submissions.

**Key Principle:** Accurate records reduce commercial exposure for all parties.

# **Labour, Plant & Materials**

**Q: How can plant utilisation be demonstrated?**  
Use site diaries, plant logs, GPS information, photographs, delivery records and productivity reports. Evidence should demonstrate that the plant was used to Provide the Works.

**Key Principle:** Availability alone does not necessarily justify recovery of cost.

**Q: What are the boundaries for inefficiency costs?**  
Contractor-caused inefficiencies such as poor planning or avoidable rework are generally Disallowed Cost. Client-caused disruption may be recoverable where properly evidenced.

**Key Principle:** Cause and effect must be clearly demonstrated.

**Q: How should excessive material wastage be assessed?**  
Establish expected wastage levels using industry benchmarks, manufacturer guidance or historic performance, then investigate material variances.

**Key Principle:** Reasonable wastage may be recoverable; avoidable wastage may not be.

# **Contract Administration & Information Sharing**

**Q: How should subcontractor delay costs be treated?**  
Costs should not automatically be disallowed simply because delay occurred. The underlying cause, contractual obligations and mitigation actions should be assessed before reaching a conclusion.

**Key Principle:** Focus on evidence and causation rather than assumption.

**Q: Does NEC4 require overtime approval?**  
No. However, organisations should establish approval thresholds and governance arrangements to ensure overtime is necessary, reasonable and adequately supported.

**Key Principle:** Pre-agreed approval processes reduce disputes.

**Q: How can open-book transparency be balanced with GDPR?**  
Use agreed data-sharing protocols, anonymise personal information where appropriate and restrict access to authorised personnel.

**Key Principle:** Transparency should be sufficient to validate costs while protecting personal data.

# **CFBL Key Takeaways**

- Disallowed Cost issues are usually caused by weak evidence, inconsistent interpretation or poor governance.
- Good records are the foundation of successful NEC cost recovery.
- Early agreement of methodologies prevents later disputes.
- Independent assurance strengthens confidence in cost submissions.
- Prevention is significantly more effective than retrospective recovery.