I am having a discussion with my commercial team.
Their view is that a PMI is not de facto a Compensation Event. The example they have given is if the PM instructs the Contractor to carry out an event in a certain way which is safer than the way they are currently doing it.
I say that any PMI results in a CE because this instructed change to working could equally result in a saving or a change to Defined Cost of zero value. But nonetheless if you instruct a Contractor to undertake work in a different way to that which they envisaged, then there is automatically an opportunity to look at whether that change incurs a cost or time implication (in either direction).
Their view is that it isn’t a CE as they should have been working safely in the first place.
Leading on from this, their policy is to issue a PMI and then wait for the Contractor to issue an NCE on everything they think might be a CE as a result of those instructions. This seems contrary to all the spirit of the contract, and in cases of issuing drawings, also contrary to the specific wording of the contract.
In the ‘Safety’ example above I suggested that a PMI would probably not be the best way of dealing with a safety issue.
Nonetheless we can’t agree - so is there ever a case where a PMI would legitimately not automatically result in a Compensation Event?