We are on an option C contract, but have a compensation event for a specific item with an agreed programme, completion date and agreed CE value. We have finished earlier than our agreed programme/completion date, but have had a CE which has caused a delay. In effect we have finished early, but would have finished earlier.
Are we entitled to recover costs (preliminaries) for the delay albeit we have completed in advance of our agreed completion date anyway?
You will be paid Defined Cost to the point of Completion. The PM should then certify the works. The difference between the Price of Work Done to Date and the contract Target will be shared as a “gain share” under the Target (percentage split listed in Contract Date Part 1). The implemented CE’s would have moved the target (assume these were positive and lifted it?). In essence the earlier you complete the works (in accordance with the scope) the better the potential “gain share”, this is the incentive in a target contract.
In your example you can’t apply for the prelims after Completion, but you will pick up a “gain share” instead, for the early Completion.
In example: You have a £1,000,000 contract (target). Towards the backend of the programme and event occurs which is a Compensation Event. The CE is quoted at £200,000 by the Contractor, and implemented by the PM. The target is lifted to £1.200,000. You complete the CE works for £100,000, this is invoiced as Defined Cost. The “gain share” is now £100,000. Say the split was 50/50 the Contractor gets £1,150,000 in total (£50,000 gain share"). Note: the direct fee percentage is not applied to the “gain share” payment as it’s not a Defined Cost.
Apologies, I probably haven’t made myself clear. The gist of my query is re Compensation Events.
If you have an item of work with an agreed completion date and an agreed value and you finish early, however, not as early as you could have done because of a further CE are you able to recover costs for that CE. even if your prelims are already included in the original CE value.
Say the CE value is £100k with an agreed programme of ten weeks with prelims of £2K per week included. You would have finished in 6 weeks, but a further CE meant you take an additional week giving 7 weeks are you able to claim the £2K for the additional week albeit it is included in the original £100K?
You have finished early, but not as early as you could have done and in effect you have been prevented from saving one week’s prelims by the additional CE.
No you can’t claim for the prelims finishing earlier, it’s the same principal as my first answer. Each CE is assessed as it’s own impacts on the Key Dates, Planned Completion & Completion Date, they are moved with implementation of the CE quote & impact programme. You are ahead of works on CE1, but moved it by an implemented set cost & time. This would allow you to start CE2 works earlier. You will end up reaching Completion sooner and therefore hopefully come in under the “target” and net the gain share margin.