The Employer has implemented a CE to increase the the size of a bridge abutment ( the bridge abutment being part of the originally contracted works and measured in the BOQ) The Employer has remeasured using the BOQ rates , the revised volume of excavation, concrete and reinforcement etc of the increased size of the abutment and assessed the CE on this basis.
The Contractor is losing money on the bill rates for the original abutment and would therefore lose more money as a result of the CE if the BOQ rates are used for its assessment . The Contractor would like the CE based upon his increased actual costs for doing the additional CE works. What advice should be issued to the Contractor or is the Employer correct
You need to read clauses 60.4 - 60.7 (and check these have not been amended by a Z clause). 60.4 states that if an individual line item has a change in quantity that equates to less than 0.5% of the total of the Prices then you carry on using the BofQ rate. Anything over that, the extra over (only) would be assessed as defined cost. In simple terms this is a change of £5k for every £1mil your original contract value was let at.
The principle of this clause is that small changes you use the BofQ rates. Bigger changes then get assessed as a CE using defined cost. This stops Contractor’s loading BofQ rates artificially high for things they think might increase, but equally protects the Contractor in situations like you have here where you under priced BofQ items.
You need to go through each BofQ item that is relevant to this CE and apply this rule.
Your answer seems to relate to a situation where the measurement differs from the BQ quantity. However, reading the question it would appear that it relates to a situation whereby the PM has instructed a change to the WI under 60.1(1) to enlarge the abutment, and surely in that case the change is assessed under 63.1 as the change to Defined Cost?
All of what Glenn says below or above is true IF the re-measurement is a result of there just being more or less work to do and no change in the Works Information.
However, from what you say, the PM has instructed a change to the Works Information in which case the change in Prices = change in Defined Costs + Fee as per clause 63…
Under options B / D, except for the circumstances outlined in 60.4, it is only by agreement that you may use rates and lump sums to adjust the Prices as per the last sentence of clause 63.13.
So to cut a long story short :
- the PM is wrong to use the existing BoQ rates as the basis for the adjustment;
- it is the CHANGE in Defined Cost + Fee that should be used;
- but you are stuck with your original poor rates for the original work.
Yes indeed - as Jon has already highlighted in addition to my answer.