The Client has set A budget which we are forecasting to surpass due to additional works etc.
The Project Manager is therefore looking for cost savings and has intimated that they may remove sections of work from our contract.
If we are instructed through a CE to remove elements of work from our scope how would this affect the contract Completion Date? Would the negative CE reduce the contract period by moving the contract completion date back or would this only affect planned Completion?
According to clause 63.3 an instruction to accelerate is the only tool the PM has to reduce the contract completion date.
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I probably have good and bad news for you. No, Completion Date does not come forward (earlier) with a “negative” compensation event. However, the cost of planned Completion coming forward should be included within the quotation. Therefore any “prelim” type savings should be given back and also you do not get to keep loss of profit on the works that are being omitted. The only real benefit to the Contractor in now having an earlier planned Completion is that if it ever gets delayed you will not be charged delay damages under X7 until the Completion Date is exceeded.
Do also remember that the works being omitted, you price at what you believe they would have cost you (using defined cost/schedule of cost components) and not the relevant activity schedule item as a single lump sum. You only ever use the activity schedule rates if both Parties agree to.