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Disallowed Cost

Cost excluded by the applicable NEC contract’s Disallowed Cost provisions; the definition, payment option, evidence and amendments determine the assessment.

by Jack Butler-Kettle · About 1 min readShare

Further detail

Read this alongside NEC guidance on Disallowed Cost.

Disallowed Cost is a contractual category, not a general description of any cost the payer dislikes. Identify the applicable NEC form, edition, main option and amendments, then connect the proposed exclusion to the relevant wording and evidence. A cost appearing in a ledger is not enough to establish its treatment.

Keep the records needed to substantiate costs and identify disputed exclusions separately. Compare the supplier’s guidance on Disallowed Cost under NEC contracts with your actual agreement, rather than importing a clause from another form or option. A Signed contract review and action plan can help identify the applicable cost provisions and the records needed to administer them.

Sources

  1. Disallowed costs: how to avoid the contractual and commercial pitfalls (1 October 2025). NEC Contracts.

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