Under an ECC option B contract, there is a bill item for “install 100mm of pipework” to which a rate has been applied (say £100/m). Further on in the bill, the same item is listed and a rate of £200/m has been applied. It was an error on the Employer initially to list the item twice, and a subsequent error on the Contractor to put different rates against each item.
How much should the Contractor be paid once this item is complete?
Reading option B, clause 60.6 “The Project Manager corrects mistakes in the Bill of Quantities which are … due to ambiguities or inconsistencies. Each such correction is a compensation event which may lead to reduced Prices.”
From what you have said, this fits with being an ambiguity or inconsistency. Correcting it would result in one of the descriptions and rates being deleted. I was going to quote clause 60.7, but this only applies to inconsistencies between the BoQ and other documents. In fact, I think the contract is silent on this so we have to revert to contract law.
A general principle of contract law is that a party cannot suffer if the other has made the original mistake, unless specific condition precedents - or contractual hoops to jump through - are stated for the other to claim. E.g In the ECC, this is following the compensation event process and time scales.
None are stated, so we are left I think with three alternatives :
- the Contractor is paid for both rates i.e. £100/m + £200/m = £300/m ! I think this is over-generous to the Contractor and it is not that they are suffering, they would be positively gaining from the error !
- the Contractor is paid the lower rate i.e. £100/m. As a Contractor, I would argue I am suffering, so does not apply.
- the £200/m seems to be the sensible middle ground both commercially and legally.
I will ask one of our lawyer contributors to confirm though.
This is a really interesting question! I could say that presumably the two types of pipework will have different BoQ numbers so I suspect that the PM will be instructing the use of the cheaper one. However, that doesn’t really deal with the issue.
The legal answer gives you either £100 or £200, probably after a fight and spending some money. The commercial answer would give you £150 without the cost. Again, not really answering the question but something to bear in mind.
Here the contractor has created the confusion (the Employer may have listed the same item twice but that is not, in my view, confusing on an objective basis) and therefore should be held to the lower price unless/until he can prove otherwise.
One interesting question will be which of the two figures were used to identify the total of the Prices?