I am working on a substation project and the main contract is NEC3 Engineering and Construction Subcontract April 2013 - Option A.
The drawings we tendered under has been revised and has resulted in Steel Tonnage increase among other items.
We have raised the Compensation Events for the steel and the client has assessed this and used the BOQs rates submitted with our tender. We are actually paying more to the subcontractor and have presented these quotation to the client for openness.
Could someone advice if the client is correct in using the BOQs rates please?
What is our position if Client position is to use the bill rates? Can we decline to do the works?
In the standard contract, the default for assessing a CE is the change in Defined Cost + fee due to the event. Rates can be used by agreement between the PM and Contractor, so if you have not agreed then the PM is not correct to use rates.
Option A is an Activity Schedule so I’m not clear why you refer to BoQ rates. Given that you submitted BoQ rates with your tender, I suggest you check your contract to see if the standard has been amended for the rates you submitted to be used for assessing change.
If the standard provisions apply then (in the lack of any other agreement) the assessment should be based on the Shorter Schedule of Cost Components. This is not simply subcontractor cost + fee.
In respect of carrying out the work, no you can’t decline to do the work since it is a valid instruction (I have presumed you were instructed under clause 14.3).