Where the Contractor has received charges for equipment damaged equipment from the supplier, are these charges “defined cost” or are they disallowance by the Project Manager?
The contract defines disallowed cost as “cost which the Project Manager decides; was incurred only because the Contractor did not; follow an acceptance, procurement or other procedure stated on this contract or; give an early warning which this contract required him to give”. The suppliers specification is not stated in this contract, and the damage was incurred whilst providing the works, are the costs disallowed?
In the insurance table at clause 84 the Contractor is required to provide insurance against loss of or damage to the works, Plant and Materials until take over and Equipment until the Defects Certificate or termination certificate has been issued.
Note the use of capital letters above, in particular the terms Plant and Materials and Equipment are both defined terms in the contract at clause 11.2. Essentially Plant and Materials are included in the works and Equipment is used to Provide the Works.
Damaged Equipment isn’t Disallowed Cost per se however in Schedules of Cost Components under component 7 the cost of events for which the contract requires the Contractor to insure are deducted from cost.