The Contractor provides a quote for a compensation event but cannot provide certainty as it depends on other factors. He asks the Project Manager for assumptions but he provides none so the Contractor includes qualifications in his quote. The Project Manager implements this quotation; do these qualifications become the Project Manager’s assumptions?
Can qualifications in a quotation for a compensation event become the Project Manager's assumptions?
1 Like
This is a common issue and misconception that if a Contractor includes assumptions within their quotation and the PM accepts the quote that these are deemed to have been accepted. Contractually this is not necessarily the case at all and I ask Contractors where will the be able to claim for this within the Contract. If they stated that they had made no allowance for bad weather, and then bad weather occurs, are they entitled to reassess this? Contractor will obviously believe so but the contract only says it is a CE if it exceeds a weather event in 60.1(13). It also says it is a CE if a Project Managers assumption proves to be incorrect, not a Contractors assumption (60.1.17).
Therefore there are two solutions to this problem. If the Contractor has very sensible assumptions they think allow them to price this event much more sensibly, they can propose them to the Project Manager to confirm them back to the Contractor as his assumptions before they submit the quotation. Alternatively they should simply price the risk within the quote and make it clear why it is so high/what it includes.
The use of the word “assume” and its derivatives get a different interpretation when applied by non native english speakers and the excellent answer given above indirectly confirms this anomoly. Some years ago, my bland statement that “no allowance has been made for fencing” was interpreted that we would indeed be doing the fencing, but for free!
Thus in making “assumptions”, the contractor would be wise to issue his quotation as “based on the folowing…” which incidentally should not include any “exclusions” but rather the opposite, hard as it may be to do.
Then in accepting the quotation, the PM is aotomatically accepting what makes up the costing.