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NEC ECS: Pricing risk in a compensation event
In accordance with Clause 62.3 of the option A subcontract we have with a Subcontractor, the Subcontractor submits a quotation within 2 weeks of being instructed to do so by the Contractor and the Contractor replies within 4 weeks.
If the Subcontractor uses his full 2 weeks to submit the quotation i.e. he submits the quotation on the last working day of the second week of the 2 week period from the date of the instruction, is the Subcontractor in his quotation entitled to ignore the known impact of the compensation event in terms of resources used within this 2 weeks and include for forecast resources which are potentially higher?
If the Contractor uses his full 4 weeks to reply i.e. replies in the last day of week 4 Is the Contractor in his assessment (given that at this stage the impact of the compensation event in terms of resources used is known) entitled to remove the forecast allowance for the 4 weeks period (and also the Subcontractors 2 weeks forecast allowance) and replace it with the actual resources used.
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The quotation is in most situations a forecast not actual (see clause 63.1) so the actual cost for the first two weeks for the Subcontractor is irrelevant as is the response time from the Contractor. It should be a forecast at the point when the works were instructed, or for all other events when the compensation event was notified.
Incidentally if the actual costs were more than the Subcontractor had planned would you have paid them more than the quote? (no - i didn't think so...)
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