The short schedule of cost components in NEC is the simplified list used to work out Defined Cost on Options A and B. It exists for pricing compensation events without opening the Contractor's books, so it relies heavily on rates fixed in the Contract Data.
In NEC4 it is called the Short Schedule of Cost Components. In NEC3 it was the Shorter Schedule. For the wider picture, see the NEC payment and Defined Cost guide.
Where it applies
| Main Option | NEC4 | NEC3 ECC |
|---|---|---|
| A and B | It defines Defined Cost | It defines Defined Cost, at 11.2(22) |
| C, D and E | The NEC4 subcontract text says it is part of the conditions only for A and B | Available by agreement to assess compensation events, at 63.15 in those Options, and the Project Manager may use it for its own assessments |
| F | Not listed for this Option | Not listed for this Option |
The NEC4 column is based on the NEC4 Engineering and Construction Subcontract, which closely follows the ECC. If you are moving a C or D contract from NEC3 to NEC4, check the point in your own conditions rather than assuming you can still agree to use it. If you want it available, a Z clause can provide for that.
How it differs from the full schedule
| Component | Full schedule | Short schedule (NEC4) |
|---|---|---|
| People | Actual payments by category, on open book | People Rates in the Contract Data, multiplied by time in the Working Areas. All three categories of person are covered by the one item. |
| Equipment | Hire payments, open market rates or a change in value | Published list adjusted by a Contract Data percentage, Contract Data rates for other listed items, then competitively tendered or open market rates for anything else |
| Plant and Materials | Purchase, delivery, packaging, samples, tests | The same |
| Subcontracted work | Payments, with care to avoid paying or retaining twice | Payments for the subcontracted work |
| Charges | Utilities, authority charges, listed payments | The same list |
| Off-site manufacture | Contract Data rates and time | Contract Data rates and time |
NEC3 went further with its simplification. Instead of listing utilities and similar charges, its Shorter Schedule rolled them into a percentage for people overheads applied to the people cost at item 41. Don't expect that percentage in an NEC4 Contract Data part two without checking.
A worked example
A fictional NEC4 Option A contract. The Project Manager instructs an extra manhole, and the Contractor prices a quotation. All figures are illustrative, with a fee percentage of 10%.
| Component | Calculation | Amount |
|---|---|---|
| People | 2 operatives × 40 hours × £35 People Rate | £2,800 |
| Equipment, published list | Excavator: 5 days × £300 list rate × 90% (a minus 10% adjustment) | £1,350 |
| Plant and Materials | Rings, cover and delivery | £2,350 |
| Defined Cost | £6,500 | |
| Fee at 10% | £650 | |
| Change to the Prices | £7,150 |
Nobody looks at the Contractor's payroll. If the actual labour cost is higher than the People Rate, the Contractor absorbs the difference. If it is lower, the Contractor keeps it. That's a deliberate trade: certainty over accuracy, and it's why those rates deserve attention at tender. The same thinking applies to any forecast in compensation event quotations.
Getting the Contract Data right
The short schedule only works if these entries are complete. Check them before contract award and again before your first quotation.
- People Rates: are there categories for every trade you'll need? On NEC4 subcontracts, a missing category has to be agreed or, failing that, assessed by the other side from the existing rates.
- The published list: is the publisher named, and is the percentage adjustment clearly marked plus or minus?
- Rates for other Equipment: are the items likely to be used on this job actually listed?
- The time unit: does it match the list? Component 23 expects hours, days, weeks or months to be consistent with the data.
What people get wrong
- Using it as a payment tool. Interim payment under A and B doesn't use the schedule at all. It uses the Prices for completed work.
- Adding preliminaries on top. Time-related costs have to be priced through the components. Anything that doesn't fit falls to the Fee.
- Counting operatives twice. A published Equipment rate may already include the operator. If so, don't add that person under People. If not, the operator goes under People.
Related guides
- NEC Payment and Defined Cost: The Complete Guide
- Schedule of Cost Components: People
- Schedule of Cost Components: Equipment
- Schedule of Cost Components: Plant and Materials
- What Is Defined Cost?
- The Schedule of Cost Components Explained
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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.