NEC3 Option D: Who carries the risk of exchange rate increase if the contractor received the forecasted payment to supplier in different currency in advance?
Contractor’s monthly IPA includes other currency transaction which is forecast defined cost. Contractors IPA includes 7 weeks forecasted cash out and that includes transaction to be paid in other currency.
Meaning 7 weeks before the actual payment of all projected foreign currency transaction has been paid to the Contractor in advance.
PM opinion: The risk of exchange rate increase is now with the Contractor and should not be included in the contractor’s IPA.