During the course of the subcontract there has been a revision in the drawings/specification which results in a greatly reduced quantity of an item, not a whole activity from the AS. What is the correct procedure for evaluating this change? For example can the Contractor ask for a negative CE?
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You assess a de-scope exactly the same way you would tackle additional scope. Under option A, you do NOT use activity schedule rates to assess a compensation event UNLESS both Parties agree (and even then on a case by case basis). You would assess the forecast Defined Cost(using shorter schedule of cost components to build up) of not doing a chunk of that quantity (which may well mean the bit they are still doing will cost more per unit rate if significantly less) and also take into account any time savings on prelim type costs if this will bring forward the planned Completion. The saving should also include Subcontractor fee.
Whilst the quote should attract “prelim” type costs if planned Completion comes forward, this will not lead to an earlier Completion Date. The only thing that can move that forward would be formal acceleration under clause 36.
Not ask, but instruct ! (under clause 60.1(1))
You should notify a compensation event at the same time.
The Subcontractor should then give a quotation in accordance with the clause in sub-section 63. A reduction in scope is one of the few compensation events that can result in a negative compensation event for the Prices.