Currently on site, works are 50% complete, the work done to date is all work, carried out at a very low margin of profit, the final part of the project is where we can recover costs, however the PM is now stripping out the final parts of the works and saying it’s simply a change in the quantities in the pricing schedule. At present they have now stripped out approximately 28% of the initial value of the works , most of which would be our higher end margin work. A few queries, are they correct to be zero’ing the quantities so that we essentially get nothing from the omitted works, secondly at what stage can they continue to strip out value from the job? Is this an open ended thing for them? We believe there is more cost stripping & savings to come which will continue to affect the job performance For us , have we any come back on this amount of work being stripped out?
Hi clauses 63.1-63.10 covers the assessment of compensation events. I’d suggest the key clauses to read are 63.1 and 63.2 which generally explains how changes are assessed. Having quickly looked at this, where quantities are in the Price List (63.1) no adjusted appears to be made to rate for loss of profit, so you would lose the profit in these quantities even if it is higher than other elements in the Price List. Clause 63.2 does allow adjust for profit on lump sums in some scenarios.
what stage can they continue to strip out value from the job? and have we any come back on this amount of work being stripped out?
I will ask @stevencevans and @Rob_Horne their thoughts on this question. My scanning on the contract is that its silence on negative change beyond the clauses above.
Thanks, I’m also curious, if the PM wishes to omit an element of works say for example a contractor design element of works, the PM wishes to remove the element of works before the actual build has taken place, however we have already carried out the design works, so technically is this dealt with as not a straight change to the price list in terms of quantity but by defined cost +fee percentage uplift,as technically we have already started an element of the works being removed albeit it was the design.