How is payment made under option C? Is it based on :
- actual cost incurred
2.Actual cost incurred but only for completed activities on the schedule.
3.Lumps sum payments for completed activities ?
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Well it is not your answer 2 or 3, it is closer to answer 1. The Contractor assesses his Price for Works Done to Date which is primarily made up of Defined Cost established from the schedule of cost components. The Contractor is entitled to be paid for anything that he can prove he has spent or will spend prior to the next assessment date (plus his fee). The activity schedule plays no part whatsoever in assessing what he is due to be paid.
Unlike option A, for option C the only use of the activity schedule is to establish what the target cost is. Any implemented compensation events during the life of the project get added to the activity schedule to keep the revised target up to date.
I agree with everything Glenn has said, except for one word and that is ‘prove’. Prove is a strong word and, under civil law, we operate “on the balance of probability” not “beyond all reasonable doubt”. Secondly, the word used in clause 11.2(25) is “justify”.
So replace ‘prove’ with ‘justify’ and, beyond all reasonable doubt, I agree with Glenn !