I wondered how we stand and how we should deal with this Sub-Contractor.
We received an application #01 on 21st April for works to end April.
Within was a claim for £12K - stating Initial assessment; awaiting sheets, sheets to follow (presumed to be Piling Records).
On 02nd May, following a meeting to discuss progress we received an email confirming a number of points, with the final paragraph stating - do you require us to issue an EW to cover the events or submit a CE?
We replied that once you have all your site records - please advise how you wish to address this!
Application #02 received 31st May; including £54K - initial assessment based on 11days @ 10 hrs/day * £493 per hour for Rig.
No details, hence no certification.
Application #03 received 26th June same £54K - still no details.
Assuming if one accepted that the 21st April was understood as a notification of a Compensation Event and 8 weeks were allowed for the production that means the time for submission would be by 16th June.
Do you believe that this Sub-Contractor has shot himself in the foot, and barred himself from submitting a Compensation Event? This is Option A
There is an eight week time bar in the contract for notifying a compensation event, but the time bar is only valid for the events that the Subcontractor is obliged to notify. Twelve of the nineteen standard reasons fit into this category of being time-barred. It is also important to recognise that either party can notify a compensation event (clauses 61.1/61.3). It is not clear from this example if you knew this was a compensation event and I thin as a Contractor you could have made the process clearer as to what they should be doing. If this event was already affecting time/cost then there was no need to notify an early warning. If they knew it was a compensation event but did not know they extent yet, they still could/should have notified it as a CE to which you would respond with a yes/no agreement. The next stage of quotation is where they would have to forecast the cost or agree with you Contractor assumptions to base the quotation upon.
The timebar is to avoid surprises at the end., Whilst the Subcontractor has not quite followed clear process here, I would suggest you as the Contractor have been a little vague on helping them understand the process. They did raise the issue all be it not in the right format or on the right piece of paper. When they are banding around costs of £54k you could be pointing out that the event has not yet been agreed as a compensation event - which is the starting point here before they issue quotes.
So no, I would not suggest they have “shot themselves in the foot”. Neither party should be using the contract rules to hide behind - but to open up levels of communication and to help each other follow due process so that a fair/correct outcome contractually is achieved.
My suggestion here would be to start again with this event. Get them to notify why it is a compensation event and respond accordingly. If you agree it is, then you can invite their formal quotation, and then if you don’t agree you can assess yourself in accordance with the contract.
What Glenn has said is very sensible. One other point to note is that as a Contractor, you need to address your own commercial position under the main contract, so being a bit more proactive with Subcontract issues would seem to be a necessary part of that.