We have priced prelims to the Planned Completion as per our submitted tender programme. We have had to increase the Completion Date to the Contract Completion date, which is an additional 6 weeks.
We are not contending whether additional prelims are due, they are not, but the Project Manager is splitting our remaining prelims over the whole of the remaining contract period. Which in effect means we currently owe them money. We don’t agree with their current proposal at all.
Can they do this? Surely the last 6 weeks, from our original planned Completion date, to the contract completion date, are our risk? So if we choose to work those last 6 weeks for nothing, we can?
The prelims have been priced as a mix of time related, and lump sum items.
Few things to point out here. Whilst not wanting to seem pedantic it is quite important to use the correct terminology. “Planned Completion” is where the Contractor plans to achieve the definition of Completion. “Completion Date” is the date by which the Contractor has to finish to avoid paying Delay Damages under X7. It is not helpful to use wrong terminology such as “contract completion date”. Unpicking your first paragraph therefore what I believe you are saying is that you previously were planning to finish six weeks before the Completion Date, but now through things that are your own issues, planned Completion has now moved six weeks and is now level with Completion Date.
Next issue is how you originally split your prelims in the first place. The issue with option A is that you get paid when an item is complete. If you then had an item on your activity schedule “prelims” and it is a single activity of say £100k, you would not get paid any of that item until you are complete. If you then delay yourself by a further six weeks then it would delay this payment. Much better would have been to have either spread the £100k across your construction activities, or split that item out into say 10 separate activities of “Jan prelims”, “Feb prelims” etc. Some would claim prelims is not an activity so should not be split down that way but personally I do not have a practical or contractual problem with it. However – that is more a point for the future than will help you here at this seemingly relatively late stage of the project.
Rather than “their current proposal” it should be a case of doing what the contract says. On your activity schedule at your next payment date you are entitled to be paid whatever items are complete on your activity schedule. Anything else will simply have to be by agreement, but you can’t rely on it.