On an option C contract the Contractor has promoted a change to the WI that the PM has accepted. Whilst price was briefly discussed nothing was firmly provided from the Contractor. The PM has instructed the agreed change, notified a CE and requested a quotation. The Contractor failed to provide a quotation and claims none is needed because the Prices are not changing - this is not disputed, however surely they are still required to provide a quotation noting what they estimate will be saved (even though the actual costs will be what is paid, or saved in this case). The failure to provide a quotation has meant the PM is going to undertake an assessment of what the saving is assessed to be. Is it correct that the quotation was required from the Contractor?
Yes of course! Like any compensation event quotation the Contractor should have been confirming what they value it as - whether it be a small or large saving. In the event of no saving being offered, the PM is now in a position that they will assess it themselves, and no doubt assess the saving more than the Contractor thought it would have been! They should have put their marker in the sand to explain why they think it is a zero cost saving.
I disagree with Glenn ! Why ?
Because you say “the Contractor has promoted a change to the WI that the PM has accepted”. Presumably, this falls under option C clause 63.11 as “a change to the Works Information provided by the Employer which the Contractor proposed and the Project Manager has accepted” and therefore the Prices are not reduced. So I suppose the Contractor or Project Manager can produce a quotation, but it would be for zero value.
What the Project Manager is entitled to is “forecasts of the total Defined Cost for the whole of the works” under clause 20.4
Isn’t the outworking of this that a quotation is needed up front from the Contractor prior to the PM issuing an instruction in line with the 'other than ’ scenario detailed in 63.11. Either way, a quotation (issued before the instruction or following it) is needed even though the Prices are not reduced.
Thanks Jon(and thanks for pointing out) - yes I need to caveat my answer which I slightly rushed. It also depends now if you are on NEC3 or NEC4.
NEC3 first of all. It depends if this is an Employer designed scheme or Contractor design. My answer assumed it was an employer designed scheme, and if so then the total of the Prices CAN reduce. If it was a Contractor designed scheme, then as Jon pointed out the Prices can’t be changed and under option A that would be their Contractor benefit and under option C it would be shared benefit.
NEC4 now changes the rules. It allows the Contractor to suggest value engineering even if it is an Client designed scheme and the total of the Prices under option A would be decreased by an agreed value engineering ratio, and under option C sorted out in the gain/painshare.
What cant change under NEC3 or NEC4 is the Completion date moving forward. That can only be done through acceleration - and that has to be by agreement.
Don’t think that a quotation is needed upfront before issuing the instruction, but under NEC3 clause 61.4, a quotation is, strictly in accordance with the contract, needed.
Its an NEC3 Option C. Its a D&B scheme and it’s definitely a change in the ‘other than’ category of cl. 63.11 i.e. a change to the WI provided by the Employer, which the Contractor proposed and that’s been accepted by the PM. We’re content that in line with 63.11 and 63.2 the total of the Prices doesn’t change. However following issuing the instruction to change the WI, notfiy a CE and instruct a quotation the Contractor has declined to provide the quotation saying its not needed because the Prices haven’t changed. This isn’t disputed - but how do we know what the saving might be unless we receive a quotation?
Yes you are right - although the contract does not formalise what level of detail the Contractor would go to here in terms of presenting the details of the level of saving it would bring.However, you would imagine the Contractor would want to do this anyway when they propose their “value engineering idea” otherwise you may not agree to the change to the Works Information without that information. If you have already accepted the proposal and instructed the change to the Works Information without such a quotation - contractually you may not be able to make them, but practically I have no idea why they would not be prepared to anyway especially if you make it clear it is only for your reporting purposes and nothing else.