The Project Manager agreed to a compensation event and the Contractor submitted his quotation using Defined Cost as per the schedule of cost components. The Project Manager decided to make his own assessment and used rates in lieu of defined cost. The Contractor never agreed for rates to be used, how ever the Project Manager implemented the CE. The Contractor notified a dispute and unexpectedly, the Adjudicator ruled in favor of the Employer who stated that rates must be used. Please confirm that defined cost is the default for assessing CE’s and also that the Adjudicator doesn’t have the power to decide that rates must be used to assess a CE if there is no agreement with the Contractor.
I would agree that the Adjudicator did not have the power to decide to use rates. The Adjudicator’s job is to answer the question put forward in accordance with the contract that has been signed up to by both Parties. The contract clearly states that if both Parties agree rates or lump sums may be used. However, if you as the Contractor did not agree, then it has to be assessed using the Defined Cost rules.
The caveat to this (as ever) is that it assumes that there are no Z clause amendments that changes the standard clauses in this regard.
It is not the first time I am afraid where i have heard of an Adjudicator making clearly (in my opinion) an incorrect decision in accordance with the contract they are being asked to assess against.
From what you say, I strongly agree with Glenn and his caveat on option Z clauses ! Did the Adjudicator give any rational for his answer ?