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NEC3-Option C-NECPM states Subcontractor quotation is too high in Contractor quotation

0 votes
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We (main contractor) have compensation event which is a back-to-back compensation event with our Subcontractor.
We have obtained a quotation(lump sum) from our Subcontractor and we have included this value in our compensation event quotation which we have submitted to the NECPM.
The NECPM is stating that the Subcontractor's quotation is too high.
We have discussed this with our Subcontractor but he wont reduce his price.
Under the NEC contract are the main contractor and the NECPM obliged to do in this situation?
asked 4 days ago in NEC3 Compensation Events by Dave Parkinson (2,660 points)  

2 Answers

+2 votes
If the PM is not going to accept your quotation then he should either ask you to submit a revised quotation or make an assessment himself (clause 62.3). The PM's assessment is carried out in accordance with clause 64. You should note that under clause 64.4 you can force deemed acceptance of your quotation if the PM has not assessed within the time allowed.

If you are not happy with the PM's assessment your recourse is to dispute resolution.

Provided you can demonstrate that the Defined Cost of the Subcontractor: (1) "is at open market or competitively tendered prices" (clause 52.1), (2) is n accordance with the Subcontractor's conditions of contract that the PM accepted (clause 26.3), and (3) has been / will be paid to the Subcontractor (clause 11.2 (23)) then you have a strong case.

Presumably if the PM thinks the cost is too high it will also be a Disallowed Cost under clause 11.2(25) second bullet point.
answered 4 days ago by Neil Earnshaw (16,490 points)  
+1 vote
I can only assume that the PM has decided that the Subcontract part of the Defined Cost assessment is not considered to represent 'open market or competitively tendered' prices.  This could be very difficult to prove either way, however, for a specific package of work under a CE and whether the above principle applies to a 'resident' Subcontractor on Site or to a 'generic' Subcontractor (who would obviously price associated preliminary costs).

If the PM instructs a revised quotation then they would have to explain their reasons, so hopefully they would then say why they think the Subcontract quotation is too high.

Reading between the lines this issue might be caused by a budgetary constraint, although that is not your problem and shouldn't affect the quotation assessment.
answered 4 days ago by Andrew WI (10,830 points)