I don't have the contract to hand in order to cite the correct clause references however I can explain the principle that underpins all Option C NEC3 contracts. It's quite simple really, the Party who's idea is implemented benefits the most. So if the Employer (through the PM) suggests an idea that saves time and/or money the target cost is reduced, however if the Contractor suggests and idea that saves time and/or money the target isn't reduced.
In the first scenario the target is reduced due because it was the Employer / PM who came up with the idea, however the Contractor still gets paid for the work. This payment maybe less than what he would have been paid before the idea was suggested, but he still gets paid the Defined Cost plus Fee of the work that he does and hence still makes a profit on those works.
In the second scenario the target isn't reduced because it was the Contractor who came up with the idea, however the Employer still saves money as the Defined Cost plus Fee is less than it would have been which creates more of a saving against target cost which the Employer benefits from in accordance with the share ranges and percentages stated in CD pt 1. The Contractor makes more profit than he would have as he still recovers profit from the Defined Cost plus Fee of the work done, but also recovers additional profit through a greater saving as the target cost isn't reduced this time.
Note that you can't rely on clause 10.1 to resolve every problem "in a spirit of mutual trust and co-operation". The clause says "act in accordance with the contract AND in a spirit of mutual trust and cooperation. You seem to be suggesting that mutual trust and co-operation trumps the written word in the contract when in actual fact it doesn't. You have to follow the contract AND do it in a spirit of mutual trust and co-operation.
I recently wrote an article on just this theme which can be found at http://www.neconsult.co.uk/mutual-trust-and-co-operation-walking-the-line/.
In my experience it's one area that integrated teams can overlook, they go too far over the line and the boundary between Employer and Contractor becomes blurred which leads to commercial confusion.
In the first scenario the target is reduced due because it was the Employer / PM who came up with the idea, however the Contractor still gets paid for the work. This payment maybe less than what he would have been paid before the idea was suggested, but he still gets paid the Defined Cost plus Fee of the work that he does and hence still makes a profit on those works.
In the second scenario the target isn't reduced because it was the Contractor who came up with the idea, however the Employer still saves money as the Defined Cost plus Fee is less than it would have been which creates more of a saving against target cost which the Employer benefits from in accordance with the share ranges and percentages stated in CD pt 1. The Contractor makes more profit than he would have as he still recovers profit from the Defined Cost plus Fee of the work done, but also recovers additional profit through a greater saving as the target cost isn't reduced this time.
Note that you can't rely on clause 10.1 to resolve every problem "in a spirit of mutual trust and co-operation". The clause says "act in accordance with the contract AND in a spirit of mutual trust and cooperation. You seem to be suggesting that mutual trust and co-operation trumps the written word in the contract when in actual fact it doesn't. You have to follow the contract AND do it in a spirit of mutual trust and co-operation.
I recently wrote an article on just this theme which can be found at http://www.neconsult.co.uk/mutual-trust-and-co-operation-walking-the-line/.
In my experience it's one area that integrated teams can overlook, they go too far over the line and the boundary between Employer and Contractor becomes blurred which leads to commercial confusion.
