Prices

The NEC Prices definition isn't a single sentence: each main Option has its own. On A and B, the Prices are what the Client pays for completed work. On C and D, their total is the target. On E, they are only a forecast of cost plus Fee. So the same phrase in a clause can have very different money behind it.

There's no core definition to read, because the term sits in clause 11.2 of each main Option. The full guide to the Prices sets out how each works. This shorter page covers what readers tend to confuse. It's part of the NEC definitions glossary.

The three figures people mix up

Term	Question it answers	On Option A	On Option C
The Prices	What did we agree for the whole job?	The Activity Schedule's lump sums	The same, but they form a target
Price for Work Done to Date	What's been earned so far?	The Prices of completed activities	Forecast Defined Cost plus the Fee
Amount due	What's the cumulative amount in this assessment?	PWDD plus or minus other amounts the contract requires	The same, plus or minus the contract's other items

"Total of the Prices" is also a separate idea from what's been spent. On Option C, the Contractor could spend less or more than the total, and the share mechanism then deals with the difference.

Where a clause uses it

The same word has different consequences depending on the Option:

• Early warning. A matter that could increase the total of the Prices has to be warned about under 15.1. On Option A that usually means a compensation event. On Option E the Prices already rise and fall with forecast cost, so more things can qualify.
• Compensation events. Assessment moves the Prices by the effect on Defined Cost plus the resulting Fee. On Option C, that moves the target.
• Reductions. Under 63.3 in the NEC4 subcontract text, or 63.2 in NEC3, a compensation event usually can't reduce the Prices unless the contract says so. Check the number in your own edition.

A worked example

A fictional section of pipeline, tendered at £1,000,000 in the total of the Prices, with illustrative figures. A compensation event adds £50,000 to the Prices. The job costs £1,040,000 in Defined Cost and Fee, before any share.

	Option A	Option C (50/50 illustrative share)	Option E
Total of the Prices at the end	£1,050,000	£1,050,000 (target)	Forecast only: tracks at around £1,040,000
What the Client finally pays	£1,050,000	£1,040,000 plus half of the £10,000 saving: £1,045,000	£1,040,000
What the event did	Added to the amount paid	Raised the target, so the saving appears	Changed the forecast only

Why it causes problems

• Lifting wording across Options. A letter saying "the Prices will be reduced" reads very differently on A and on E. Say what you mean in pounds and name the Option.
• Treating Option C's activity prices as payment amounts. They don't drive what's paid each month. The Activity Schedule still has to be kept accurate, because its total sets the target.
• Option A activities with missing scope. The Prices are for what's on the Activity Schedule, but the Contractor still has to Provide the Works. Omitting an activity doesn't remove the work.
• Option B's rates and quantities. Prices there are rates multiplied by quantities in the Bill. They change through measurement rules, as well as compensation events, so the phrase has to be read alongside clauses 60.4 to 60.7.
• Option E and F wording by edition. Under NEC3, the Prices on E and F are Defined Cost plus the Fee. Under NEC4 E, they're a forecast of total Defined Cost plus the Fee. There's no main Option F in the NEC4 ECS, and NEC4 ECC Option F has its own wording, so check your copy.

Related guides

• NEC Definitions: A Glossary of Key Terms
• Price for Work Done to Date
• Risk Register
• Scope
• People
• Plant and Materials

This guide is general information in our own words, not legal advice. Your contract and its Contract Data always govern. NEC, NEC3 and NEC4 are trade marks of Thomas Telford Ltd; Contract Status is not affiliated with or endorsed by NEC.