Friday, 2 December 2011

Achieving cost certainty with NEC

A few times now I have heard people suggest that cost certainty is more likely achieved by using NEC3 ECC Option A than any of the other Options. Interesting. All Option A is at the end of the day is a pricing mechanism, this one happens to be lump sum. In the highly unlikely event that no compensation events arise, the lump sum agreed is that which is paid so I suppose cost certainty has been achieved. Whether this is a lower price paid than would have been obtained using Option C is debatable however my point is these are just finer points and surely the best way for clients to achieve 'cost certainty' is to act intelligently by having a good, clear scope of works with little change thereafter (ie know what you want); sensibly avoid, reduce or mitigate as much project risk as you can; sensibly allocate the residual risk left over (of course ensuring the contract matches this); surround yourself with sensible people; make sure the 'price' is realistic; and then press the go button......

So which do you think is likely to achieve cost certainty
1. Option A?
2. Option C?
3. The intelligent client?

Rob

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