The first myth for X22 on an Option C Contract is that the budget incentive replaces any Contractor’s share under Option.
There is nothing in X22 that replaces or change the Option C Contractors share in terms or calculation or payment. If on an Option C Contract the parties agree a budget incentive share for the Contractor, this is in addition to and not a replacement of the familiar Option C Contractors share.
Reference to NEC4 “Managing an Engineering and Construction Contract volume 4” page 98 commentary on X22.7 (Incentive Payment) provides
These provisions allow for two options for incentivising the Contractor. The first is using an Option C target arrangement based on the Contractor’s own cost. The second is for an incentive based on achieving savings on the Client’s budget. This allows for the Contractor to be paid a share of any saving on the Budget, but does not contribute to any overspend.
