We have recently implemented Compensation Events for additional works which were priced on a Forecast of Defined Costs basis. The Subcontract is an Option B and the CE’s were priced on the SSCC, not a revised BOQ rate. When it comes to paying the Subcontractor for these works via their Interim Applications do they need to be assessed on the actual cost of the works? For example, if the CE was based and implemented on 100 hrs for a General Operative but following completion it only took 90 hrs. Do they get paid on a lump sum basis for the 100 hrs or the 90 hrs with the associated timesheets etc? On an Option D it would be the 90 hrs for payment and 100 hrs to amend the Target, but is this the same for Option B
Under the Option B payment should be the implement CE value. If the Subcontractor had taken longer than its forecast then the same would apply because the risk sits with them.
Yes, under the Option D the Target (Prices) would be adjusted by the value of the implemented CE, the Subcontractor would be paid its Defined Cost + Fee (PWDD) and the difference would be reflected in the calculation of the Subcontractor’s share. The risk/reward being shared.