This is an issue I have always struggled with finding a clear contractual answer to. If there is an item missing from the Client’s Bill of Quantities that was in the original Scope, clearly that is a compensation event under clause 60.6 and I experience little issue or argument with that. Where the argument comes is whether the Contractor should have allowed for that within the programme, as they have to provide the works in accordance with the Scope.
No other compensation event separates time from cost, so any CE will assess the impact for both time and cost. Also 60.7 says in assessing a compensation event which results from inconsistency between B of Q and another document, the contractor is assumed to have taken the Bill of Quantities as being correct.
So should the Contractor be able to consider time (and it would have to be critical to have an effect) for a CE that has been omitted from the B of Q but in the Scope? Taking this one step further, does the Contractor only ever need to price the B of Q at tender stage for option B rather than the Scope (although clearly they should point out any such issues at tender stage and not create a dangerous commercial game here they might TRY to take advantage of)?
Wow, this is a really good question which has caused me to think!
If I was a Contractor, at tender stage, I would certainly not price the direct cost of the BoQ omission.
If the work was OFF the critical path, with no implication on preliminary costs, I would have nothing to gain from not showing it on my programme … although, if I won the job, I might have an argument with the PM about why I didn’t bring it to their awareness pre-contract, but contractually I would be in the clear.
if it was on the critical path though, I would potentially miss out, as the change in Defined Costs would exclude my time-related prelims, as the PM could point at my programme and say, you have allowed for them already.
Hi Jon, can you clarify why prelims would be deemed as already allowed for by the PM, if this omission was on the critical path?
My interpretation would be that this 60.6 / 60.7 compensation event should assess the time impact to the programme (assuming it was not originally allowed for) and any time-related costs would be applicable should the programme be extended.
The only way I could see prelims being already allowed for would be if the omitted work in the BOQ was priced as a bill rate, but as this event is a compensation event it should be priced on defined cost (and therefore prelims would be applicable).
Thanks for any clarification.
My reasoning was that the PM would only deem that Prelims had already been allowed for if the Contractor had already shown a time allowance on the critical path for the omitted (from the BoQ only) work. Consequently, he/she could point at the programme and say you already have allowed for prelims for this as they are shown on your programme.