As a Contractor I included an assumption in our tender submission that we have NOT allowed for a certain element of the Works Information. That page of Contractor tender assumptions has been included within the signed contract.
The Project Manager requires this element to be done as it states within the Works Information - but she is saying that they do not agree this is a compensation event as the Contractor created an ambiguity with their assumption and that will go in their favour.
I understand that it would have been better to have the contract amended in line with the assumption and then it would be very clear. But in the situation where there are assumptions in a signed contract that contradict the Works Information - is the Contractor protected here or not? The intent is pretty clear from the Contractor and they have had their bid accepted with their assumptions included, but can the Project Manager still wriggle out??
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You donât say which main option this is under and, therefore, what the âpricing documentâ is under the contract. Notwithstanding this, however, there is a discrepancy in what has been included in the âpricing documentâ, by virtue of the tender assumption, in that what has been priced does not accord with the Works Information, as described.
If dealt with as an inconsistency under the contract, it is not clear what the Project Manager would actually instruct as the Works Information, as it is stated in the contract, does not need to be changed.
It seems that this is a matter which is resolved by applying the principles of contract interpretation. That is to objectively determine what a reasonable person would have understood the parties to have meant, taking into consideration all the background knowledge available to the parties at the time of the contract.
Such an interpretation suggests that the Employer was fully aware of the Contractorâs express exclusion of a certain element of the scope within their submitted bid. The fact that this assumption was included as part of the contract documents clearly implies that this âofferâ from the Contractor was âacceptedâ by the Employer.
The intention to exclude this element from the Works Information was not actually concluded, however, by amending the Works Information to reflect this. Had the Employer not accepted this âofferâ then there was a reasonable opportunity to respond to the tender assumption and to request that the Contractor include for this element within their priced bid.
The Project Manager is correct that this is not a compensation event, as it is not a matter that can be reasonably resolved by instructing a change to the Works Information. What is required is a variation to the Contract between the Contractor and Employer to either formally exclude this element of the scope or for this to be priced and included as part of the âcontract sumâ.
I think it would mainly depend on the contractual status of the document in which the assumptions are stated, so here is my tuppence (thinking as I write) :
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if the exclusions are in the Contractorâs WI/Scope, then the PM could either
a. remove the assumptions from the Contractorâs WI/Scope, so the Contractor would still have the obligation to do the work and it would not be a compensation event under 2nd bullet of 60.1(1) or
b. change the Employer/Clientâs WI/Scope to remove the work in which case it would be a negative CE;
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if the assumptions were in a document not referenced in the Form of Agreement or from the Contract Data (as an additional entry), then they would not exist contractually due to the entire agreement clause 12.4
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if the assumptions were in a document referenced from the Form of Agreement or Contract Data (but not their WI/Scope), then the argument would be based on offer and acceptance e.g. if the Contractor said here is my offer, but it doesnât include doing this work, and the Employer/Client accepted the offer, then I think the exclusions would apply.
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however, if the Form of Agreement contained an order of precedence clause and the exclusions had a lower level of precedence than the WI/Scope, the WI/Scope would over-write the exclusions.
I agree with Jon, you are at a disadvantage.
Depending on the extent of the issue you might want to consider taking legal advice on whether or not rectification could apply. If the client agrees then it should be an easy process to correct. If not then âŚ