NEC contracts—price and payment

The following Construction practice note provides comprehensive and up to date legal information covering:

  • NEC contracts—price and payment
  • NEC ECC payment provisions
  • Interim payments
  • ‘Negative’ interim assessments
  • Corrections to the amount due
  • Final payment
  • Option A—Priced Contract with Activity Schedule
  • Option B—Priced Contract with Bill of Quantities
  • Option C—Target Contract with Activity Schedule
  • Option D—Target Contract with Bill of Quantities
  • More...

NEC contracts—price and payment

This Practice Note looks at how payments are made and how the contract price is calculated under the NEC Engineering and Construction Contract (ECC). It provides an overview of how each of the main pricing options operate, how the price for the works is calculated and how the risk of increased costs are shared between the parties. For information on payment under construction contracts more generally, see Practice Notes: Interim payments in construction contracts, Payment in construction contracts under the HGCRA 1996 and The final account in construction and engineering contracts.

This Practice Note covers both the NEC3 and NEC4 editions of the ECC. For consistency, the term ‘Client’ is used throughout this Practice Note as this is the term used for the developer/employer in the NEC4 contracts (the NEC3 ECC uses the term ‘Employer’). The term ‘Scope’ is used throughout this Practice Note as per the NEC4 ECC to describe the document which specifies and describes the works which the Contractor is to carry out (in the NEC3 ECC the term ‘Works Information’ is used). For a glossary of NEC terms, see Practice Note: NEC contracts—glossary. Where no distinction is made between clause numbers, the clause numbers throughout this Practice Note refer to both the NEC3 and NEC4 versions of the ECC.

NEC ECC payment provisions

The NEC ECC contains core clauses which

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