I am working on a highways scheme and have a question related to disallowed cost. I am aware that the cost of correcting a defective caused by Contractor not complying with a specific constraint in the WI as to how they should provide that element is disallowed. Would a contractor’s error in setting out fall under this definition? If the contractor, for instance, works to a (his own) wrong setting which is subsequently found to be incorrect, should he be entitled to the remedial costs to put this right? In other words, can these costs be disallowed or should he be paid based on the fact that he has incurred costs rectifying his own mistake. Surely if this is his error he should not be entitled to claim for it?
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The fact you are talking about disallowed costs suggest this is an option C (or D/E/F) contract as there is no disallowed provision under option A.
This does not fit the standard disallowed cost provisions. an error in setting out is not “not complying with a constraint on how he is to provide the works”. Therefore this is not disallowed. Before you get too upset though, remember that he will now incur a cost, which will not raise the target under option C, so the cost of correcting defects before Completion is shared.
Whilst this may not seem “fair” don’t forget this will have been reflected in the Contractor’s price with a slightly lower target for a shared risk.
The message here is that simple errors by the Contractor are in the absence of any constraints a shared risk on the ECC cost based contracts.