If a compensation event moves planned Completion then there is an entitlement to move Completion Date and for the CE quotation to include prelim type costs. This quotation will be assessed using Defined Cost which is built up from the schedule of cost components.
The problem I have on two projects, one option A and one option C (so one using shorter schedule and the other using the full schedule) is that both of them have X13 Performance Bond that need to be extended. The later Completion Date means the performance bond has to be increased to cover a longer period which will be a cost to the Contractor because of the CE.
My question is this - where would this fit within the elements of the SCC/SSCC as I can not see where it fits. Surely there must be an entitlement to be able to claim this cost now being incurred as a result of the CE?
Anything not in the list is deemed to be included within the fee, but is this fair/right?
Is this recoverable as part of the schedule of cost components (either full or short version)?
I would be surprised if you had to pay more for the Performance Bond just because of a later completion date; but accepting that you do I would argue that this cost is covered in the SSCC under the costs of insurance. See item 8. The same would apply for the SCC.
No, if you look at the specific wording of section 7. Insurance under NEC3 or 8. under NEC4 (I think the wording is the same regardless and the same whether its the full SCC or Shorter SCC) it is essentially for what is not paid out by insurers, not for the cost of taking out insurance. So where would the cost fall?
If you are on Site longer then your site-based costs will go up, which means that the Fee applied to those increased costs will go up and that is where it will be covered … … hopefully.
I agree with you Jon regarding the insurance portion. Glenn kindly posted this question on my behalf which we are currently experiencing.
The further difficulty is that the contractor is in the design stage so there are no People components within the working areas to apply the people percentage too during the delay however the planned completion will be pushed out hence the Completion Date will also be pushed out. Lets assume by 2 months. The contractor now has to extend the performance bond by 2 months but how does it claim now or is this cost now a contractor problem?
This doesn’t sit well but struggling to find a workaround.
Unfortunately, I think that unless you can come to an agreement with the Employer/Client (as the PM does not have the power to vary the contract, only act within it), you have to ‘suck it up’.
Thanks Jon - its an unfortunate situation but something to be aware of going forward when advising clients.