Compensation Event Defined cost

Our client has instructed us to carry out some minor additional works and we have provided a quotation, The quotation was based on utilising resources currently on site for the contract works. The CE has no delay to the project. The PM has accepted the labour costs but disallowed items of plant stating that they have not increased the contractors defined cost because they were already on site. Is this correct ? Working under NEC3 Option B.

You can’t ‘disallow’ costs in a submitted quotation, either the quotation is accepted or not accepted.

If you can demonstrate that these items of plant (Equipment) would increase your Defined Cost as a consequence of the CE then they should be included in the quotation.

It may be that they would have been on Site but not in use, in which case you would add reasonable ‘costs of use’ and possibly any associated risk allowance for breakdowns etc. It may also be that the Equipment was on Site when the quotation was assessed, although the assessment should consider the effect of when the actual work is programmed to be undertaken, with the Equipment planned to be ‘off hired’ at that point in time, but is now required to be on Site.

It is useful to provide details with a compensation event quotation, to explain how the matter has been assessed, which often assists with understanding.