On an option C contract the Contractor has repeatedly prepared and sent quotations that have not been instructed by the PM - all were notified events under Cl. 61.3 and the PM responded to the matters under Cl. 61.4 (all responded with ‘is not one of the compensation events under the contract’). Could the staff time to prepare such quotations be treated as disallowed costs?
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If the matter has not been acknowledged as a compensation event by the Project Manage (or defaulted to one under 61.4) then there is no requirement to produce a quotation and therefore the staff “cost” is not in order to Provide the Works.
The staff time is not disallowed cost it is not Defined Cost in the first place (to be disallowed from).
Obviously an argument may be that the time (and therefore “cost”) required for staff does not reduce for them not doing the quotes – a reversal of the argument that staff cost does not automatically increase due to extra work, but that’s specific detail.
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thanks for the reply Dave…if the Contractor’s staff time is not Defined Cost and the PM suspects it’s been charged could an assessed reduction in People cost be taken from the Contractor?..I guess how it’s proved the staff time was charged might be one thing. But at the end of the day the staff could be working on other tasks as opposed to creating quotations that haven’t been instructed.
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From the question it is not possible to gauge the scale of the issue but in principle, yes it could. The Defined Cost needs to be in Order to Provide the Works. Therefore if the quotes are not required (because there is no compensation event to quote) the work to produce them it is not providing the works.
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