In ECC option C, how does the target price adjustment process cope with situations of occurrences that causes delay. is there any contingency plans or fall-back positions that might be considered? The nature of this particular work is pre-stressing which in this case is unpredictable. The works are being done by a subcontractor for the main Contractor.
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Let us first assume that it is the Contractor doing the pre-stressing and that this is ‘risky’.
One of the reasons for using a target cost contract is that it shares the risks within the target Prices. However, the Prices may only be adjusted when a compensation event occurs i.e. compensation events are Employer risks. Most compensation events are listed in clause 60.1, but others may be found in optional clauses including the option Z : additional conditions of contract (which may delete, add to or amend the standard CEs).
So if a risk occurs which is not a CE, then the costs are shared under the pain / gain mechanism with the fulcrum being the existing Prices. Likewise, the contractual Completion Date is not moved. But if a risk occurs which is one of the listed CEs, then the Prices and Completion Date may be adjusted by the criteria stated in clause 63.
If the Contractor is subcontracting work, then exactly the same criteria apply at main contract level and for that matter at subcontract level. The difference might be that the subcontract is not a target price contract, so all the risk within the Prices is on the Subcontractor (vs being shared), but the Prices and Completion Date are similarly adjusted if a compensation event occurs.