Civil Engineering Reference
In-Depth Information
8.1.6 Payment under the NEC3
hesixmainOptionsundertheNEC3arebasedondiferentmechanismsforassess-
ing payments due to the Contractor, and provide different bases of allocation of price
risk between the Employer and Contractor. An analysis of the various options and
methods of assessing the payments due to the Contractor is beyond the scope of this
chapter;however,thesemainoptionsareasfollows:
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
Option E: Cost reimbursement contract
Option F: Management contract.
Notwithstanding the different options available, the core payment provisions in the
NEC3 are to be found in core clause 5. Where the contract is a construction contract
in terms of the 1996 Act, Option Y(UK)2 of the NEC3 applies. Core clause 5 requires
to be read in conjunction with Option Y(UK)2 as the latter seeks to make the pay-
ment provisions compliant with the 1996 Act. This section will consider the payment
provisions of the NEC3 where Option Y(UK)2 is applicable.
Clause 51.1 provides that the Project Manager certifies a payment within one week
of each assessment date. Part one of the Contract Data should identify the starting
date, at section 3, and the assessment interval at section 5. The first assessment date
must fall within this period, though the exact date is within the discretion of the
Project Manager. Further assessment dates occur at the end of each assessment inter-
val thereafter.
Clause 51.2 provides that each certified payment is made within three weeks of
the assessment date. Clause Y2.2 of Option Y(UK)2 provides that the date on which
payment becomes due is seven days after the assessment date, while the final date for
paymentis14days(orsuchotherperiodasstatedintheContractData)aterthedate
on which payment becomes due. Clause Y2.2 of Option Y(UK)2 also provides that
the Project Manager's certificate is the notice of payment to the Contractor specifying
the amount due at the payment due date and stating the basis on which the amount
was calculated. No obligation is imposed upon the Contractor to make an application
for payment to the Project Manager, but clause 50.4 permits the Contractor to submit
an application for payment, and accordingly, if the Project Manager fails to certify
within the relevant time period, the amount stipulated in the Contractor's application
forpaymentwouldbecomethenotiiedsumandbepayable(subjecttotheissueof
a Pay Less Notice). Clearly it would be good practice for a Contractor to submit an
application for payment in accordance with clause 50.4.
Clause Y2.3 of Option Y(UK)2 provides that if either party intends to pay less than
the notified sum, he must notify the other party not later than seven days (the pre-
scribed period) before the final date for payment by stating the amount considered
