NEC3 Engineering and Construction Contract Option D: Target contract with bill of quantities (ECC3-D)
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ECS Code: 
ECC3-Opt D
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Option D is a target cost contract.  A contractor tenders rates and lump sums in the bill of quantities prepared by the employer to arrive at the total of the Prices at award of contract (the target).  But the contractor is paid for work done at Defined Cost uplifted by a tendered fee percentage.  At the end of the contract the total of this is then compared with the target and the two parties share any overrun (the pain) or the underrun (the gain) in a pre agreed proportion.  The target is adjusted when compensation events occur and the bill is remeasured to keep the share arrangement equitable.  Clearly both Parties are incentivised to come within target to improve the expected financial outturn.   

This document is the ECC3 black book with the other main Options A, B, C, E & F deleted and the Option D clauses merged into the core clauses in their appropriate place.  It is useful to persons only ever likely to require an Option D type of contract.

The SA National Treasury Standard for Infrastructure Procurement and Delivery Management has, with the exception of the NEC3 Framework Contract (a head contract), endorsed the NEC3 family of contracts for use by organs of state in South Africa to serve their infrastructure needs.

The NEC3 family of contracts support a wide range of procurement strategies which can lead to improved project outcomes and in so doing realise value for money.

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Schedule of Options
Core clauses
• 1 General
• 2 The Contractor’s main responsibilities
• 3 Time
• 4 Testing and Defects
• 5 Payment
• 6 Compensation events
• 7 Title
• 8 Risks and insurance
• 9 Termination
Dispute resolution W
• Option W1
• Option W2
Secondary Option clauses
• X1   Price adjustment for inflation
• X2   Changes in the law
• X4   Parent company guarantee
• X5   Sectional Completion
• X6   Bonus for early Completion
• X7   Delay damages
• X12 Partnering
• X13 Performance bond
• X14 Advanced payment to the Contractor
• X15 Limitation of the Contractor’s liability for his design to reasonableskill and care
• X16 Retention
• X17 Low performance damages
• X18 Limitation of liability
• X20 Key performance indicators
• Y(UK)1: Project Bank Account
• Y(UK)2 The Housing Grants, Construction and Regeneration Act 1996
• Y(UK)3 The Contracts (Rights of Third Parties) Act 1999
• Z     Additional conditions of contract
Note Options X3, X8 to X11 and X19 are not used
Schedule of Cost Components
Shorter Schedule of Cost Components
Contract Data