NEC3 Option B - Defined Cost for BoQ rates

There are two items for the disposal of soil in the BoQ.
1 - Acceptable material
2 - Unacceptable material.
The BoQ mainly quantifies all the material as unacceptable however this was tendered at an incorrect low rate. Following testing, the material was classified as acceptable. A CE was submitted however the PM has rejected this on the basis of no impact on the Defined Cost i.e. it costs more the get rid of unacceptable than acceptable. This is correct but with rates in the BoQ for acceptable material and a rate error for unacceptable material is there any grounds for the Contractor to argue here?

It is not clear from your question what event the CE was notified for, a pricing error by the Contractor is not a reason for a CE.

If there is a rate in the BoQ for acceptable then this is the rate that should be used but mindful of clause 60.4 that provides for a CE (revised rate) if the final quantity of work (disposal of acceptable) meets the criteria set out in the clause. Also clause 60.5 which provides for a CE if the additional quantity causes a delay to Completion, which if it is the same overall quantity would appear unlikely.

I must admit I do not particularly like the words in 61.4 that states a PM can reject if they consider it has no affect upon Defined Cost - as this can be misused. They should let the quotation assessment be the test unless CLEARLY there is no change e.g. changing colour of something that costs same. This would certainly seem to be a compensation event IF it passes all three bullets of clause 60.4. If there is a lot more of that rate for acceptable, that rate is used until it reaches the third bullet threshold of 60.4 and then any remainder you can assess at the “actual forecast cost” rate that you will prove through your quotation.

This clause is intended to stop Contractors loading bill rates and getting away with a tied-in higher rate, but also to protect the Contractor if they have significantly undervalued something and they don’t carry on losing money if significantly more is required.

I would recommend sitting down with the PM and explaining this and seeing if you cant get to an agreement (using these clauses as the basis of the discussion).