NEC Cost Flashcards
Who is responsible for assessing the amount due under NEC4? What is the implication if this has not been carried out correctly?
Project manager assesses the amount due - contractor submits application.
Implication - PM would then make their own assessment, but it would be a lower amount and contractor does not get paid.
How is PWDD valued under option A?
PWDD (price for work done to date less amounts to be retained from or paid by contractor).
It is valued by the total of the prices for groups of activities that have been completed and the completed activity must be free of defects.
How does the MC receive payment for preliminaries under NEC4 option A? How does the MC receive payment for materials on site under NEC4 option A?
Delivery and installation payments.
Activity schedule.
Under NEC4 option D is the MC allowed to get paid for defective work that has been carried out?
If the defect is made correct before completion date then they will get paid, if not then they wont. After completion, they would have to do it at their own expense.
What is unusual about how the PWDD is valued under option C - E? How is this usually managed?
Payment is essentially based around what the contractor spends doing the works - option C and D - this amount is then subject to variation as a result of the application of the contractors share. Option E is just simply the amount assessed as being due.
What are the requirements for provisional sums under NEC4?
Contractor has to submit a payment application.
- Price for work done to date
- Any other amounts payable by client to contractor
- Any amounts payable by the contractor to the client or to be retained by the client
Is there an option under NEC4 for fluctuations?
Options X1 (secondary option) - provisions for price inflation. For fixed price and target contract options. By selecting this secondary option, the client will assume the risk for any price inflation that occurs over the duration of the project.
What is the shorter schedule of cost components used for under NEC4?
Used for option A & B.
Only used to assess compensation events.
How would you advise the employer on what the implications are of submitting a late payment to a contractor under NEC4?
Performance of part of the works may be suspended if payment in full has not been made.
Compensation events can occur.
Under NEC4 how would you advise the PM on what costs can be disallowed under Option C-E?
5 classes which are disallowed on the decision of the PM.
5 classes which are disallowed should the stated events apply.
PM should seek assistance from the contractor by them submitting an application, and by assuring the records they are required to keep are properly available to the PM.
What is the main difference between how the final account is valued under JCT SBC 2016 with quantities and NEC4 option B?
NEC4 Option B - The sum of; quantity of work that the contractor has completed against each item and the proportion of any lump sum item included that the contractor has carried out.
JCT SBC 2016 -
Explain what would happen if the PM did not meet the final assessment date?
The contractor can issue an assessment of the final amount due to the client, not the PM. Must give details of how the amount has been calculated.
What are the optional X clauses in relation to payments that can be used?
X1 - price adjustment for inflation
X14 - advanced payment to the contractor
X16 - retention
Explain how JCT and NEC4 differ in relation to negative interim valuations and why?
JCT there is no right or obligation on the contractor to make an interim payment to the employer where there is negative interim certificate - unlike with NEC.
If the target cost under NEC4 is exceeded before completion of the works what are the risks for the employer and can the employer do anything about it?
The client will be required to pay the contractor a greater sum in the interim payments between the time that the target is exceeded and the payment immediately after completion.
