The Employer has just entered into a contract with a Contractor which didn’t have an Equipment list included in Contract Data Part 2. The Contractor owns the majority of the Equipment to be used on the project so we now need to agree what rates will be paid as Defined Cost.
My reading of the Schedule of cost components is:
• Payments for the hire or rent of Equipment not owned by . . . the Contractor, at the hire or rental rate multiplied by the time for which the equipment is required (this would be demonstrated through purchase orders/ invoice).
• Payments for Equipment which is not listed in the Contract Data but is . . . owned by the Contractor, at open market rates, multiplied by the time for which the Equipment is required (this is what I believe we need to agree).
• Payments for the purchase price of Equipment which is consumed (I see fuel falling into this category demonstrated with delivery tickets and invoices)
The issue is that the Contractor is proposing rates that will be used for internal and external hire of Equipment and also include their assessment of fuel usage.
Had this been part of their tender submission there would arguably be no issue. However, post-contract I do not believe the ECC Project Manager has the authority to change the nature of Defined Cost, meaning that agreement of these composite rates would fall to the Employer and the Contractor.
The approach to be taken is becoming a bit of a sticking point and I’m wondering if I am overcomplicating things. Am I reading the Schedule of Cost Components correctly or is there a simpler viewpoint to take?