NEC Option A: Priced contract with activity schedule

[edit] What is NEC?

NEC was first published in 1993 as the New Engineering Contract. It is a suite of construction contracts intended to promote partnering and collaboration between the contractor and client. It is now in its fourth edition, NEC4.

The Engineering and Construction Contract (ECC) is the most frequently used, and can be adopted on projects such as infrastructure, buildings, highways and process plants. It is used for the appointment of a contractor for engineering and construction work, including any level of design responsibility.

[edit] What is option A?

Option A is a priced contract with an activity schedule, which relates to a programme where each activity is allocated a price and interim payments are made against the completion of those activities. The contractor largely bears the risk of carrying out the work at the agreed prices.

The advantage of using an activity schedule is that it simplifies the administration of the interim payment process.

[edit] How are payments calculated?

The activity schedule on these types of project is submitted together with a contract programme as part of the tender.

The activity schedule is a more important document under Option A than under Option C, as it has a significant effect on the contractor’s cash flow by directly effecting the timing and payment amount.

The sum that is due to the contractor in each assessment period is defined as the total of:

• Each group of completed activities (those without defects).
• Each completed activity not in a group.

Only when the whole of an activity is complete does the payment become due to the contractor. There is no provision for part payment.

[edit] Related articles on Designing Buildings

• Activity schedule.
• Conditions of contract.
• Construction contract.
• Contract documents.
• Contractor's working schedule.
• NEC Option B: Priced contract with bill of quantities.
• NEC Option C: Target contract with activity schedule.
• NEC Option D: Target contract with bill of quantities.
• NEC Option E: Cost reimbursable contract.
• NEC Option F: Management contract.
• NEC3.
• Right to payment.
• Term contract.

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