For an Option B, the changed Prices is assessed in the form of change to the BQ. Does it mean the changed Prices would be subject to change due to remeasurement of the CE quantity, or the changed Prices is firm (ie the CE quantity would not be remeasured?)
Clause 60.4 states that if a line item changes by more than 0.5% of the total of the Prices then the remainder is assessed as a compensation event. Put in simple terms, for a £1mil project, a single item has to change in quantity by the equivalent of more than £5k. Any extra over would then be assessed as a compensation event using Defined Cost i.e. actual cost they will incur.
This prevents Contractors “loading” bill rates at tender stage (as if) and taking advantage of an increased quantity, but also protects Contractor if they have undervalued an item which the Employer then decides they want much more of. This is about the fairest rule I think that either Party could expect.
Thanks Glenn, maybe I have not asked properly, my question is indeed, if a CE was accepted by PM, then then changed Price would be in the form of change to the BQ. So whether the quantity in changed BQ for the CE subject to remeasurement, or the changed Prices due to the CE deemed to be a firm amount such that the quantity and rate of the CE BQ item would not be subject to further change?
If you have triggered the switch point in 60.4, the remaining increase in quantity (or decrease for that matter) is then assessed at Defined Cost (i.e. actual forecast cost), but only the extra over. Otherwise you use the bill rates.
I am confused about the assessment. I note from other article that
“The CE therefore will calculate the reduction by multiplying the final quantity of work completed by the difference between the original rate and the reduced rate, assessed as a lump sum and that is then added into the BoQ.”
Is there any case for reference?