We have an NEC3 ECC Option A contract.
The Contractor incorrectly priced the activity schedule and did not include an installation cost for a particular item, only the fabrication. This wasn’t picked up by any party and the contract sum was agreed.
A CE has just been issued amending the initial design of this element slightly and the Contractor has provided a quote for the CE which now includes the installation costs that had previously been missed. (which has added significant cost above the original activity schedule price).
My thought is that the CE quote is correct in this approach and it shouldn’t just be a valuation of the cost difference for the change, but should be an accurate figure of the entire cost - am I correct?
In effect, by changing the design slightly on this particular element, the client has enabled the Contractor to correct his earlier mistake.
No this is incorrect. Errors in the activity schedule under option A are the Contractor risk.
Just because there is a compensation event that changes the design slightly, the compensation event should be the difference between the design they SHOULD have allowed for originally and what the more expensive design will now be. This would be in terms of cost and time.
They do not get to claim for the amounts they forgot to price for originally at tender stage as part of this compensation event.
Glenn’s answer below is generally correct because generally it is Contractors who prepare the activity schedule, so if they make a mistake then what used to be called the ‘contra proferentum’ rule applies. This is that the interpretation of ambiguity is against the the party which proposed or drafted the (part of) the contract or clause. So normally this is against the Contractor who prepared it.
However, your wording implies - but does explicitly state - that the Employer drafted the activity schedule. In this situation, it applies the other way around.
However, the ‘contra proferentum’ rule is a sort of backstop in that you look at other things first before relying on this. In the case of the unamended contract, it probably would apply. But often when the Employer’s take it upon themselves to do the activity schedule there is often
- other wording in the Z clauses which says if we have missed something, that’s tough on you, or
- they put in ‘anything else we haven’t explicitly mentioned’ activity in the activity schedule.
So, if the Employer prepared the activity schedule, check your contract for something like this.