Hello everyone. It would be great to have your thoughts . There has been a delay in the planned Completion Date due in which the Subcontractor has notified a CE which has been accepted.
The Subcontractor has quoted for its people and time relating to the delay. However, the Subcontractor is also in a separate Subcontract under the project in which it’s people (which are shared resources between Subcontracts) have also been allowed for - let’s call this Subcontract B, also NEC3 Option C.
The delay in Subcontract A overlaps with the time in Subcontract B in which the people have been allowed for in Subcontract’s B target. Added to this is the fact that the Subcontractor has recovered prelims in previous CEs which has been over and above its Defined Cost.
I’d appreciate your advice on how best to assess this quotation in light of the shared resources, overlapping periods, and prior prelim recovery. Should any adjustments be made to prevent double recovery
The fact that you now believe you have awarded costs for prelims in previous CE’s which were wrong, is irrelevant, as you cannot revisit implement CE’s unless you wish to go to adjudication.
The question as to the recovery of shared resources is a different matter.
IF both A and B subcontracts are Option C, there should be a target cost for executing the original scope and that target cost should have a level of prelim resources allocated to each Subcontract (or potentially 1 project with the other priced with little or no prelim).
You just have to go back to first principles, and determine what prelims was he obliged to allow for in Subcontract A originally. If the CE requires an increase in that resource then you have to raise the target to account for that. Remember the CE only raises target, it is not a payment directly to the subcontractor.
The fact that the contractor is optimizing and sharing resources should result in both Subcontract A and B coming in below the target and a gain share for both parties.