A Contractor I have been working with is pricing a demolition project as an NEC3 Option C. They have had 4 Subcontractor quotes for the works, and have built the target to include the highest Subcontractor quote provided. Once in contract with the Employer they plan to Subcontract the works the lowest bidder and essentially pocket the difference. I feel this falls foul of several key clauses on an Option C, this is not “Value Engineering”. Cl.26 would require the PM to approve using the “cheapest” demo contractor and this would surely raise the question of why the difference in price is not returned to the client. The Contractor currently takes the stance that if the Works are delivered in accordance with the Works Information they are entitled to do this. Contract Data Part 2 does not require the Contractor to list the works they plan to Subcontract.
1 Like
Without being privy to the discussions between Contractor and Employer when agreeing the target, what the Contractor did makes perfect commercial sense - it priced the worst case scenario.
Let me put it another way; if the Contractor employed the subcontractor with the highest quotation, and the latter decided to raise their price before appointment, would the PM accept the target to be lifted by way of a CE? No, but the Employer would only share some pain at the final assessment, usually a smaller percentage than the Contractor’s.
At the end of the day, the Employer will eventually benefit from the “cheapest” option, as they will share the respective gain at the final assessment (usually a good enough percentage for the Employer).
3 Likes