We have a Subcontractor undertaking works under an Option A Subcontract. Listed as part of their Activity Schedule are scaffolding costs on various lines. The Subcontractor hasn’t provided any scaffolding and has been using our access to complete their works.
As a result of the above, is the best method to instruct a negative CE to remove this element of the works from their Activity Schedule as we shouldn’t pay for work which hasn’t happened.
If for example they have £2k for scaffolding on their Activity Schedule, would the negative CE be for £2k and we don’t apply the fee percentage as we only want to remove the item in the Activity Schedule.
I assume that your Subcontract Works Information (Scope) stipulates the requirement for the Subcontractor to provide scaffolding (or the necessary access). That way you can instruct a change to the Works Information to alter this requirement so they no longer need to provide this. To be clear, I would state exactly what timescales this instruction relates to.
The matter should then be notified as a compensation event under clause 60.1 (1) and you assess the matter in terms of the effect on Defined Cost, rather than what is included in the Activity Schedule, unless you both agree, however, to value the CE using rates and lump sums instead.
With regard to the fee percentage, it would depend upon how this is included in the Activity Schedule. If this is part of the lump sum prices, as you suggest, you don’t then apply the fee percentage, however an assessment using Defined Cost would apply the fee percentage to the net assessment.
In terms of payment, the Price for Work Done to Date (PWDD) only includes the value of completed activities. As this activity would never be completed, it won’t actually be paid.
Andrews answer makes an assumption that your Works Information (or Scope under NEC4) stipulates requirements to provide scaffolding which is not necessarily the case. Under option A risk in errors in the activity schedule are theirs, and if there is no change to the Works Information then more or less scaffold required is their risk. If they haven’t provided scaffolding and have found another way to install the works then that is their prerogative.
What they do need to do is propose a change to the activity schedule as they have now changed their method of working and redistribute that £2k cost across other activities. As long as the revised activity schedule is in line with the programme, adds up to the correct price and is sensibly distributed then there is no reason not to accept the revised activity schedule.
Finally, IF as Andrew suggest there was a clear requirement for them to provide scaffolding in their Works Information and now you instruct them to remove it from their scope as you are going to provide it then that would be a (negative) compensation event. However, the £2k in the activity schedule is not used unless by agreement. It would be based on an assessment of forecast defined cost as to how much the scaffold would have cost - which no doubt the subcontractor may say they could have provided the scaffolding much cheaper than £2k (but the Contractor can then assess themselves if they do not agree with that quotation)