We are currently using an Option D Contract. We are currently in the process of assessing a Compensation Event due to revised design which leads to reduction in quantities. If Parties did not reach agreement that existing BOQ rate or a new rate shall be used in assessing a Compensation Event, then Defined Cost plus fee will be used to assess the CE.
Question is how do you compute the adjustment to the Price?
the adjustment to the original Total of the Prices should be based on the change in Defined Cost + Fee due to the CE. You will therefore have to work out what the change is eg the Defined Cost + Fee to carry out 1,000 units = X the Defined Cost + Fee to carry out 800 units is Y therefore the adjustment is Y-X.
The assessment will also need to consider any effects on planned Completion and contractor’s risks.