The Contractor notifies a Compensation Event under Clause 60.1(19). The Project Manager requests a quotation but upon reflection determines that the criteria for Clause 60.1(19) have not been met since the event did not prevent the Contractor from completing the works, nor did it prevent them from completing by the date shown on the Accepted Programme.
The Contractor contests that by requesting the quotation, the Project Manager has accepted the event as a CE, and thus his quote must be considered.
Is the only recourse for the Project Manager to notify his intention to undertake his own assessment and value this as at £0?
It is an interesting question. Looking at Clause 61.4, the Project Manager may decide if a notified event is not a compensation event stated in Clause 60. It it is not stated in Clause 60, the Project Manager notifies the Contractor that nothing is going to be changed. However, if the Project Manager believes that the event meets the requirements under Clause 61.4, he notify the Contractor to give quotation under Clause 62.
Thus once the Project Manager decide that it is a compensation event and ask the Contractor to give quotation, there is no provision for the Project Manager to reverse his decision. If the Project Manager insists to change the decision, it constitutes another compensation event under Clause 60.1(8).
And I think you are right, the Project Manager is allowed to make his own assessment under Clause 64.1 bullet point 2, although it is not suggested as it breach the spirit of mutual trust and cooperation. I believe you should look into the Contractor’s quotation regarding the compensation event. Check if he could demonstrate his loss and if affirmative, you should consider to take his quotation into account.
The Project Manager has completed the contractual action of instructing the submission of a quotation, so the consequential contractual action is for the Contractor to submit a quotation.
The Contractor should include alterations to the Accepted Programme and any delay to the Completion Date as part of the quotation assessment.
If the following occurs;
- The Contractor does not submit a programme with the assessment,
- The programme does not show a delay to the Completion Date
- The quotation is not submitted within the contractual timescales,
Then the PM may make their own assessment and assess the value accordingly. If a programme is submitted which shows a delay to the Completion Date then the PM may still make their own assessment but would need to evidence why there is unlikely to be such a delay.
The Contractor is correct in that the PM must assess the submitted quotation but the PM is under no obligation to accept it where conditions allow the PM to make their own assessment.
This is quite a common situation but usually works the other way around whereby the PM does not accept a CE and then subsequently changes their mind. Often the information presented to evidence that a CE has occurred is not sufficient to conclusively determine the matter.
Whether the PM accepts or not accepts the matter may also be influenced by the Main Option, as there is a far greater effect on the Contractor’s cashflow under A and B, than for C and D.
I would disagree that the only recourse for the PM is to notify his intention to undertake his own assessment and value this at £0. Until the CE has been implemented, the PM can change his mind. A change to a decision which he has previously communicated would in itself would be a CE 60.1(8) and could allow the Contractor to recover costs incurred in preparing a quotation and/or providing further justification as to why the event is actually a CE.