NEC3 Option A Contract.
Being asked by Client to provide quotations for “Proposed Instructions”
Can someone please clarify if the cost for preparing quotations for “proposed instructions” is part of defined cost. Some of the proposed instructions are taking a lot of time and effort to prepare.
We understand that as per 11.2 (22) defined cost for CE’s excludes the cost of preparing quotations for “compensation events”.
However a “Proposed Instruction” is not a “compensation event”
The answer is that the Contractor bears the costs as per clause A11.2(22).
However, read the words literally : are just preparing a quotation ?
Or are you doing additional work outside of the Works Information in order to prepare the subsequent quotation ? In which case, the former is a change to the Works Information and a compensation event in itself for which you can charge.
The general principle of cost of preparing quotations is that for options A&B the cost of preparing the quotations is expressly excluded and therefore Contractors cost. However, if a Contractor is regularly asked to do quotes that don’t go ahead or for large elements of works then a Contractor might be tempted to not spend long on it and just add loads of risk. The guidance notes point out that if there are lots of small quotes or one large one then the project Manager MAY pay the Contractor to provide quotes (but equally May not!) I am not convinced this is right or encourages the correct behaviors that the contract generally encourages but that is what the contract says.
As a point of note it is not excluded for options C-F so is able to be included within the quotation and will for option C/D will raise the total of the Prices. However, if a proposed one does not go ahead then the total of the Prices will not change so the Contractor will be paid for the quotation but it will eat into their own gainshare.