The NEC suite of contracts is designed to give flexibility in choosing the most suitable payment mechanism for a project. This choice is set out in the Main Option Clauses, which include:
- Option A: Priced contract with activity schedule
- Option B: Priced contract with bill of quantities
- Option C: Target contract with activity schedule
- Option D: Target contract with bill of quantities
- Option E: Cost reimbursable contract
- Option F: Management contract
- Option G: Term contract
In this article, we’ll take a closer look at Option B: Priced Contract with Bill of Quantities (BoQ).
What is Option B?
As the name suggests, Option B includes a priced Bill of Quantities. Each item on the BoQ has a corresponding rate, and together these form part of the contract price.
Unlike Option A, however, the price under Option B is not fixed. Instead, the final price is determined by a re-measure—either during interim payments or at the end of the project.
In practice, this means the contractor is paid based on the actual measured quantities multiplied by the agreed rates.
But it’s not always that simple…
Clause 60.4 – Adjustments for Significant Differences
Under Clause 60.4, a compensation event can occur if the difference between the quantity in the BoQ and the actual measured quantity leads to a significant change in Defined Cost.
This prevents either party from being unfairly locked into a rate that no longer reflects the reality on site.
Example:
If the BoQ includes 10m³ of excavation, but the actual works require 100m³, the rate may be adjusted down to account for economies of scale.
This clause helps maintain fairness and commercial balance between employer and contractor.
Pros of Option B
- Fairer when quantities are uncertain – the employer pays for what’s actually built.
- Clear mechanism for payment – straightforward valuations if the BoQ is well-prepared.
- Encourages transparency – payments are based on measured work.
Cons of Option B
- Upfront effort – preparing a detailed and accurate BoQ takes time and cost.
- Measurement reliance – regular, accurate remeasurement is essential; if it slips, commercial control weakens.
- Potential disputes – disagreements may arise around remeasurement and how Clause 60.4 is applied.
Final Thoughts
NEC Option B strikes a balance between flexibility and structure. It provides a fairer system where quantities are uncertain and gives a clear route for payment. However, it also requires disciplined measurement and careful preparation of the Bill of Quantities to avoid disputes later on.
In short: Option B works best when accuracy, transparency, and regular measurement are built into the project from the start.
