We have received a Bill of Quantities (NEC3 Option B) to price which is massively under measured.
The client is aware of this and the quantities for payment will change once in contract.
I have a few questions below regarding potential impact of Clause 60 as follows:
Question 1. Under Clause 60.4 would the Employer insist on having the submitted rates re-quoted due to quantity increase / value change if the re-measure exceeds the limits stated within Clause 60.4 bullet points?
Question 2. The quantities may have increased but the rates may not necessarily reduce if the rates are already based on maximum outputs for production per shift and programme requirements / restrictions.
In practical terms how is this dealt with? Assume CE and have to get new quotations or use exisitng rates if agreed with the PM?
Question 3. Clause 60.5 the re-measured work is likely to have an impact on delaying completion so therefore would this probably end up as a compensation event anyway due to additional time / prelims costs?
Q1. The PM (not the Employer) would have to justify as part of his/her assessment (should that be the case) that the Defined Cost per unit was reduced and not increased as per your assumed quotation - if neither applies, the 2nd condition/bullet point of cl. 60.4 is not satisfied and you don’t have a CE in the first place.
Q2. You need to be careful here; as you can see from cl. 60.5, an increase in the total quantities (which does not satisfy the conditions of cl. 60.4) will not be a CE if it does not delay Completion or the Condition stated for a Key Date. So, caution is required about rates remaining the same and the 3rd bullet point of cl. 60.4 (0.5% diff.).
Q3. Yes, correct.
Finally, I draw your attention to: -
cl. 11.2 (21) where it is clear that the BoQ can only be changed by an implemented CE or agreed acceleration quotation;
cl. 60.6, where the PM can correct mistakes in the BoQ leading to reduced Prices; and
cl. 60.7, where the Contractor, when assessing a CE resulting from inconsistency between BoQ and another document, is assumed to have taken the BoQ as correct.
Based on the above and your statement that the BoQ is “massively under measured”, my suggestion is that the BoQ is corrected by the client before you submit your tender and enter the Contract, because otherwise you’ll be walking on thin ice and , at the very least, you’ll spend valuable time and resources fighting over those issues.
Peter,
Thanks for your reply really appreciated, just a few other queries to your responses if you wouldn’t mind answering as follows:
Q1. The question I have is if the Contractor is happy with the original rates submitted and they don’t want to raise a CE can the the rates be used for the final measure on site for payment? or is it subject to the PM’s assessment due to the quantity change?
General Question. Do all the bullet points within Clause 60.4 have to be satisfied or can just one of the bullet points trigger a CE?
Starting from your second/general question, in my view, all the conditions of cl. 60.4 have to be satisfied.
With clauses 60.4 and 60.5 in mind, your cannot be paid for an item in the BoQ in excess of 5% of the total of the Prices unless you have a CE.
I admit that it’s not straight forward but think about it this way; if the quantities were exceeded - resulting in breaching the 5% threshold - without:
a change in the Works Information instructed (which would constitute a CE under cl. 60.1 (1)) or as a result of any other CE arising;
a change in the Defined Cost per unit of quantity (e.g. rates) that would lead to a CE under cl. 60.4;
delay impact that would lead to a CE under cl. 60.5; or
acceleration agreement, so that the BoQ would be changed,
then that increase would probably be cost neutral to the Contractor.