We have recently submitted some quotations for additional works that were instructed under a PMI. The physical works had already been completed prior to the quotation landing with the client.
it is my understanding that the quotation is priced as if it was being priced when the instruction landed and not when the actual quotation was submitted (clause 63.1). in line with this philosophy, a reasonable amount of risk was included within the quotation. Subsequently the client has rejected the quotation on the basis that the event has passed, the risk didn’t occur and they believe we should be using actual cost. Does the contract allow them to do this?
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No - providing the risk had a significant chance of occurring AND was the Contractors risk under the contract (63.6). The way to test this would be to turn it on its head - and ask the client (using your terminology which under the ECC is the Project Manager) that had more risk kicked in than you allowed for in the contract would they with the same benefit of hindsight assess it higher than you asked for? We all know the answer to this would be no.
The contract does not allow the Employer to have their cake and eat it (although Z clauses may well allow them to do both!).
Clause 63.1 makes it clear it should be based upon a forecast from when the compensation event was notified or quotation requested.