5 key contract mechanisms for controlling cost on an Option C contract

1. NEC3 Option C 5 Key Contract Mechanisms Steve Jackson

4. Contractor’s overriding obligation 11.2(60) … to do the work necessary to complete the works in accordance with this Contract and all incidental work services and actions which the Contract requires 20 Contractor .. Advises on the design Prepares forecasts Ensures proper integration To ‘Provide the Works’ (He does what it says on the tin)

5. Financial Control Financial Control Disallow Costs Clause 11.2(23) Control the Target Cost Compensation Events Clause 60 Make Deductions Clause 55

6. Goal or no goal? You are the Russian Linesman The PM decides – Clause 11.2(23) You cannot expect the Contractor not to claim the costs It is your responsibility to allow or disallow Disallowed Costs

7. Disallowable Costs - 1

8. Disallowable Costs - 2

9. Disallowable Costs - 3

11. Record Keeping Site Records Accounts Records You set the agenda Be demanding Burden of proof lies with you Records must be communicated Feed the system!

12. Don’t expect a happy response Final thought on Disallowed Cost But remember what Andy Warhol said …. “ Art is anything you can get away with” The same applies to costs on a NEC Option C contract!!

13. Compensation Events “ If anything is certain, it is that change is certain” Philip Crosby “ A Compensation event is like a Cruise Missile – you know its coming but there is f**k all you can do about it” Anon

15. Clause 16 Early Warnings & Risk Reduction Clauses 60-65 What Assess Notify Quote PM Assessment Implement

17. How to Manage Time “ You may delay, but time will not” Benjamin Franklin

20. Communications “ The single biggest problem in communication is the illusion that it has taken place.” George Bernard Shaw

21. PM Contractor Emp Compare with Cl 10.1 Good communication facilitates working together

23. 13.1 Communication instruction record register proposal submission certificate direction order message refusal non-acceptance acceptance warning Copy – Read – Record

24. Communication v notification ‘ Gee, I’ve never had a pen pal before’ 11.2(11) Communication is any form of communication as defined in Clause 13.

25. Defects “ In a true zero-defects approach, there are no unimportant items” Phil Crosby

27. Thank you!