NEC ECC: Disallowed subcontractor costs for delays?

Under option C, Contractor causes a delay to the Subcontractor having failed to provide setting out engineer. Subcontractor stands for a couple of hours – no alternative work can be undertaken. Subcontractor raises a CE to the Contractor which is implemented and paid as a legitimate cost incurred.

Contractor makes monthly application to the Client and includes certified Subcontractor account (to include CE for standing).

PM disallows the cost of the CE under 11.2(25) stating the resource contained within the CE was not used to Provide the Works.

Contractor disagrees claiming that this is a legitimate cost incurred by the Subcontractor and paid as a CE so it should be included within the Contractor’s Defined Cost. Whilst not ideal, the delay caused by the Contractor impacts on them as this could potentially compromise any gain opportunity.

Surely the clause the PM is referencing is there to stop Contractors / Subcontractors from unnecessarily inflating the level of resources on site artificially to generate recovery (i.e. if they are not being utilised elsewhere), even in pain the PM would be liable for a percentage share of their costs up to a cap.

Thoughts would be appreciated.