Case 05

Subcontractor Quotation Review

  • Subcontract
  • Quotation
  • Defined Cost
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The commercial question

“The subcontractor quoted £75,000. Can the Main Contractor simply pass it through and add Fee?”

Illustrative scenarios

These are independently created fictional scenarios for professional learning. Figures and conclusions are illustrative, not project-specific assessments or standard rates.

Read the Commercial Desk Disclaimer

Project scenario

NEC4 ECC Option A

A mechanical pipework subcontractor is affected by a PM Scope change involving revised pipe diameter, additional valves, revised supports, some fabricated pipe becoming unusable, additional installation/testing and remobilisation.

Assume the CE is established. No movement to planned Completion is currently demonstrated.

Contractor position

The Main Contractor submission is:

£88,500

Plus Fee

Subcontractor quotation and Main Contractor additions
Materials£21,000
Labour£18,000
Re-fabrication£9,000
Testing£4,000
Supervision£5,000
Disruption / productivity£7,000
Head-office overhead£4,000
Profit£7,000
Subcontractor total£75,000
Main Contractor — Site Manager£4,500
Main Contractor — Quantity Surveyor£3,000
Main Contractor — general preliminaries£6,000
Main Contractor submission£88,500 + Fee

What would you challenge first?

  • The subcontract quotation is important evidence but still requires commercial review.

  • Additional labour and a separate productivity allowance may overlap.

  • Main Contractor resources are not automatically additional merely because the subcontract work changed.

  • Blanket preliminaries may duplicate separately claimed resources.

Key commercial principle

Key commercial principle

“A subcontractor quotation is evidence of cost — not the end of the commercial review.”

“The key question is not simply what the subcontractor quoted, but what amount the Contractor is forecast to pay under the subcontract and how that amount is treated under the applicable main-contract Defined Cost rules.”

Important nuance: Subcontractor overhead or profit should not be treated as automatically removable merely because the Main Contractor also applies Fee. The treatment depends on the applicable Defined Cost rules and the subcontract position.

Commercial Desk headline diagnosis

Commercial Desk headline diagnosis

Further subcontract and Main Contractor cost review required.

One Compensation Event may create multiple effects — direct changed work, labour and resource effects, plant, disruption, resequencing, temporary works, programme delay and prolongation. Those effects are not automatically separate Compensation Events.

How the conceptual comparison works

Without CE

Raw resource / cost position → Applicable SCC / SSCC rules → Without-CE Defined Cost

With CE

Raw resource / cost position → Applicable SCC / SSCC rules → With-CE Defined Cost

Identify the CE-caused Defined Cost effect, then apply the applicable Fee treatment.

See the Worked Commercial Solution

Full Worked Solution

Part of the upcoming NEC4 Compensation Events Pack.

The Pack includes:

  • Cases 01–06 full Worked Solutions
  • Main Option A–F impact analysis (not six recalculated versions of each Case)
  • Advanced Option B/D Quantity-change Module where applicable
  • Structured evidence and commercial assessment guidance
  • Example response wording

Planned launch price: £79 one-off. No subscription. Coming soon.

Based on the standard NEC4 ECC framework. Always check the applicable Contract Data, secondary Options, Y clauses, Z clauses, local amendments and governing law before applying the worked examples to a live contract.

Related Commercial Desk tools

Quotation Review

Check whether a CE quotation looks commercially complete.

Commercial Desk is an independent practical reference for construction professionals. It is not affiliated with or endorsed by NEC. It does not reproduce the NEC4 contract and is not a substitute for the applicable executed contract or professional or legal advice. Always check the relevant contract, Contract Data and amendments.