I received a PMI to arrange a buy-back or re-sale of sheet piles purchased by the Contractor for the works which had been delivered to site several weeks ago. Upon the Client changing the Works Information, not to proceed with some parts of the works, we received a PMI to sell-off the already delivered piles on site as mentioned above.
My initial approach was to issue a negative CE quote on the back of the PMI as we have gotten a buyer at a reduced price which the Client is happy with BUT; upon further reflection(after posting the quote) we believe this shouldn’t be a negative CE quote but rather a positive one to cover for the Contractor arranging the loading and transportation of the piles to the purchaser’s yard/warehouse. My Bosses have discussed this and have all agreed we should issue a revise positive CE quote to cover our additional cost.
Please share your thoughts on the best cause of action and how as the ECC PM still believes it a negative CE quote.
You are right in principle, the quotation would be prepared on an add and omit basis. Any cost and time you can attribute to the removal of work from the Works Information can be included in the quotation.
The PM can instruct you to provide alternative quotations however they are required to discuss this first. You haven’t said who supplied the piles but I’m assuming it was the Contractor, in which case the alternatives could have been re-stocking with the original supplier, selling on to another contractor or selling for scrap. Each quotation could include the cost of you making the arrangements.
Without knowing more about the contract it’s difficult to comment further however, in most cases the overall cost of omitting work would be negative, even if you have to add back the abortive cost. This said, if you can prove otherwise, and do this in accordance with the contract, then you might well be right that overall it’s a + CE and not a - CE. In which case maybe the PM could’ve exercised his right to instruct you to provide a quotation for a potential instruction to understand the impact of this decision to remove work before he actually instructed it!
You only mention cost but it’s also worth talking about time. If the PM removes work the Employer may benefit from reduced cost however they don’t benefit from reduced time. The Completion Date never moves backwards as a result of a CE.
Surely the PMI to sell the piles would form part of the overall assessment of the CE for the removal of some parts of the works as part of the changes to the WI. It seems that you are trying to treat this as a separate CE, when actually the CE is the change in the Works Information, for which the treatment of the piles may only be a minor part. When looking at a CE you would expect some consultation with the PM as to the best way of dealing with the CE (62.1). The cost for the materials is also covered in the Schedule of Cost Components whereby you would be paid for the purchase cost with the credit being given on disposal.