Under-priced Items - NEC4 Option B

Priced BQ refers to an Appliance Schedule which is priced as a single item.
Appliance schedule has a number of items, some to be supplied by the main contractor and others either supplied by either the Electrical or Mechanical Subcontractor and each item priced and the total included in the BQ.
I issued a PMI to issue a revised Appliance schedule - all items that were to be changed were electrical items. In the Subcontractor’s quote (and subsequently the main Contractor’s quote) they picked up the change of Scope items and also included for what they claim is a change in Scope as the manufacturer does not produce the particular model anymore. Correspondence with the manufacturer brought to light that the newer model is an upgrade on the previous, and cost is roughly similar.
It transpires that the Subcontractor has grossly under-priced the item at tender stage, (to the extent that the cost allowed in the appliance schedule is about 40% supply cost of 1 unit and there are 5 units) and is using the fact that the manufacturer has updated the model as justification that the Scope has changed and is therefore a CE.

I don’t disagree that as the original model has been discontinued that this is a CE, however as there has clearly been a pricing error, does this minor change allow the Subcontractor to omit the very low allowance and add current costs, therefore passing the cost of their error to the Client?

Any advice gratefully received.



Not to rush into conclusions here, but it doesn’t sound that the new model inclusion (which you did not instruct as you say) qualifies as a CE. It seems that the Contractor has priced something that was available when it submitted the tender but not any more.

It would be worth looking at the exception of clause 60.1 (1), i.e. that it is the Contractor who is providing a change to its design in order to comply with the Scope; assuming of course that the Contractor is responsible for the design.

If the above makes sense, I don’t see any reason for dealing with the main query.

Thanks for the reply Peter. The particular piece of equipment doesn’t fall into the Contractor designed work, so can’t rely on the exception in 60.1 (1).

Accepting the principle that the older model is not available any more, and the newer model needs to be installed, is it reasonable that the Subcontractor claims defined cost on the newer units and only omits the original under-priced amount? (I feel not)

No worries.

I still have my reservations as to which clause was this CE notified under (since as you say the PMI did not instruct that change) but if you’re content with it, that is put to bed.

Regarding your main query; the assessment of the CEs, as a first step, is based on the 3 bullet points of clause 63.1.

If we now consider that the 2nd bullet point applies to your circumstances, it refers to “the forecast Defined Cost” and not the difference from the Defined Cost the Contractor allowed for in its tender; don’t forget that this is a new item, albeit similar with the previous one. Therefore, in my view, what the Contractor claims for (through its Subcontractor I guess) is in compliance with the NEC4 ECC standard conditions. I wouldn’t want to comment on reasonableness, as it could be a two-way street.

I also draw your attention to clause 63.15, 2nd bullet point, which I assume applies to your situation i.e. the change is a new priced item for which there is no item in the BoQ - as the clause states, unless otherwise agreed with the Contractor, such item is compiled in accordance with the method of measurement.

Although not in line with your views, I hope this helps somehow.