The contractor has been formally engaged, a contract in place, and has started on site. He has admitted that his price for an activity under Option A offered and which was accepted has proven to be incorrect (he did not have the subcontractor prices when he submitted the priced activity schedule) and has submitted a CE for the additional cost which has now come to light… The WI is not being amended and the Employer is saying that the contractor should deliver the activity for the price accepted. Termination is now being discussed. How can this be best avoided?
this can be best avoided by the Contractor correctly pricing the items at tender stage!! Risk in the Prices remain with the Contractor under option A. That is the risk profile associated with this option. This is not a compensation event, as there is no change to the Works Information. Therefore there is no mechanism to pay the Contractor anything additional for this item.
Would the Contractor be offering the Employer a saving if they had under priced something? I suspect not - and again under this option any such savings would be Contractor benefit.
Sounds very drastic that termination is now being muted. All I can say is that I suspect the Contractor will be far worse off if they walk away altogether than the extra cost that the mis-priced item will cost them.
I agree with Glenn that the Contractor will almost certainly be worse off if they walk away as they will be probably be liable to the Employer for the additional costs of having to get another Contractor in to do the work that they would have done i.e. A3 in clause 93.2. That can include the Employer’s costs of retendering etc…
As the Employer follow the termination procedures to the letter to make sure that you terminate for a reason that includes A3 as part of the amount due. (See the table in clause 90.2)
Many thanks Glenn and Jon totally concur. Kind regards.