NEC defined cost


Overview
The purpose of this standard is to provide learners with an opportunity to increase their understanding of defined cost, what is allowable as defined cost under the main options and what constitutes disallowed cost, under NEC Engineering and Construction Contracts.

Duration

Minimum 1 day of 6 learning hours

Purpose/scope

The purpose of this standard is to provide learners with an opportunity to increase their understanding of defined cost, what is allowable as defined cost under the main options and what constitutes disallowed cost, under NEC Engineering and Construction Contracts.

The scope of this standard covers:

  • use and content of the schedule of cost components and shorter cost components
  • the three definitions of defined cost under the six main options
  • key differences between the definitions of defined cost
  • treatment of payments to subcontractors, suppliers, design consultants, labour-only subcontractors and agencies
  • use and coverage of the rates and percentages stated in the contract data part two
  • treatment of people and equipment
  • fee and fee percentages
  • cost of preparing quotations
  • disallowed cost – relevant cost and items
  • key differences in defined cost between the different types and versions of NEC Engineering and Construction Contracts

Occupational relevance

Training delivered against this standard would be relevant to the following occupational group(s):

  • developers, contract administrators, sub-contractors
  • commercial managers, quantity surveyors, management and leadership

Candidate pre-requisites

There are no candidate pre-requisites as part of this standard. However a basic knowledge of NEC Engineering and Construction Contract terminology and procedures would be beneficial and it is advised that the NEC contract introduction course is taken in advance.

Instruction/supervision

As a minimum, course instructors must be able to demonstrate that, in relation to this standard, they have:

  • a train the trainer or instructional techniques course certificate
  • successfully completed training to this standard 
  • at least 2 years relevant industrial experience
  • a verifiable CV.

Delivery

Delivery may be in an on or off the job environment.

All materials and equipment must be of a suitable quality and quantity for candidates to achieve learning outcomes, and must comply with relevant legislation.

The class size and candidate/instructor ratio must allow training to be delivered in a safe manner and enable candidates to achieve the learning outcomes.

The following delivery methods may be used in the delivery of this standard:

  • classroom
  • a blend of classroom and e-learning

This standard is considered to contain 51% or more theoretical learning.

This standard is considered to be set at an intermediate level.

Assessment

For the successful completion of training, candidates must complete an end of course practical assessment or knowledge test that measures the learning outcomes and has a pass or fail criteria.

Quality assurance

Quality assurance against this standard will require initial approval of the training organisation and their content mapped to the standard. 

CITB will also conduct an approval intervention, either desk-based or centre visit, to ensure the training organisation can meet the requirements of the training standard. 

Approved training organisations (ATOs) will be required to present information on records of training and assessment upon request to CITB for desk-based analysis. They will also be visited annually by the CITB quality assurance team.

Renewal/refresher

There are no mandatory renewal or recommended refreshment requirements for this standard.

Approval date

To be confirmed

Review cycle

Either on request or in 5 years from approval date.

Learning outcomes

The candidate will be able to: 
Additional guidance to support learning outcome
explain the three definitions of defined cost under the six main options, for at least three of the main options
describe the key differences between the definitions of defined cost
  • NEC3 and 4 differences.   NEC4 increases in items of cost in lieu of percentages on work area and people costs
describe the use and content of the schedule of cost components and  shorter schedule of cost components
describe the treatment of payments to subcontractors, suppliers, design consultants, labour-only subcontractors and agencies
  • NEC3, all labour, as if employed by contractor (rates) plus percentage
  • NEC4, sub-contractor cost plus percentage
explain the use and coverage of the rates and percentages stated in the contract data part two – rates for designers, working areas overheads percentage, people overheads percentage
  • NEC4, working area overheads and people cost  percentages removed
describe the treatment of people and equipment as a defined cost
explain fees and fee percentages
explain what costs of preparing quotations can be included as defined cost
  • watch for bespoke ‘Z’ clauses which may negate or delete the inclusion of preparing quotation costs
explain what are disallowed costs with reference to relevant cost and items
  • primarily relevant to ‘target cost’ contracts and rectification of defects
describe the key differences in compensation event procedures and assessment between the different types and  versions of NEC Engineering and Construction Contracts
  • between primary and short contracts and between NEC versions (3 and 4)
  • terminology changes between NEC 3 and 4