What is included in the Fee? Option B


I have quotations from a contractor and within them, there are time items for a QS, Site manager, engineer and contracts manager.

My thinking is these are the ‘Fee’ so should not be part of the quotation as their already part of the fee sum - so double bubbling??.

Is there an actual list of what is the ‘Fee’?

Much Appreciated for responses

The Fee is the sum of the amounts calculated by applying the sub-contracted fee percentage to the Defined Cost of subcontracted work and the direct fee percentage to the Defined Cost of other work. These 2 items are completed by the Contractor as part of the Contract Data (Part Two-data provided by the Contractor) and should include site overheads and these should be agreed with the Contractor. There should be no double recovery (see the Schedule of Cost Components); so I would ask the Contractor for a breakdown to make sure that you are not paying twice.

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Thank you, the people mentioned above are indeed included within their rates in CD 2, so would you say that they are correct in including the cost for them within their quotations?

At sub-clause 52.1, all the costs not included in Defined Cost are treated as included in the Fee, as Mike has described.

Under main option B, (NEC3), Defined Cost is defined as the cost of the components in the Shorter Schedule of Cost Components (SSCC), so would only apply to compensation events (CEs).

Essentially the Fee would include all costs which are not included in an assessment using the SSCC, as well as profit. Certain elements of the cost components are not included under the SSCC and so would need to be allowed for in the Fee, including; People Providing the Works but who’s normal place of working is outside the Working Areas, preparing quotations for CEs, advertising and recruitment fees, general related overheads (HR, central IT, Accounts & Finance, etc), costs not incurred in order to Provide the Works (company events, general training etc).

The test would be whether the stated people align with the definition of Defined Cost, and can therefore be included as a component cost in the SSCC, and what their specific requirement is as a direct consequence of a CE, that is the difference with a person’s required ‘commitment’ to the project.


I agree with Andrew’s statement. Just to amplify Andrew’s point, it is the CHANGE in Defined Costs that the Contractor is entitled to. So if the QS and site manager are salaried (and don’t get paid overtime) and working full time there, it is unlikely there is a change in Defined Costs, even if they work an extra hour or so as result of the compensation event.