Under an Option E contract, is the Contractor’s management and supervision costs recoverable from the Employer when supervising a labour only Subcontractor to correct their defects after completion?
And if not the Employer, are they recoverable at all?
No, the management and supervision time spent on this would be Disallowed Cost under clause 11.2(23) i.e. “the cost of correcting Defects after Completion”. A Subcontractor’s breach under their subcontract with you is also your breach under your contract with the Employer. You cannot for instance argue that it’s their defect and not yours. See clause 26.1 “If the Contractor subcontracts work, he is responsible for Providing the Works as if had not subcontracted. This contract applies as if a Subcontractor’s employees and equipment were the Contractor’s.”
Thanks Neil. Alternatively, would it be possible to recover the Contractors management costs from the Subcontractor by contra charging the Subcontractor for this element?
You have limited rights under the subcontract to recover costs in respect of defects. Clause 40.6 gives you the right to recover the cost incurred in repeating a test or inspection after a defect is found, and clause 45.1 gives you the right to recover the cost of having to correct a defect yourself in the event that the subcontractor has failed to do so within the defect correction period.