I am currently the project manager, working on an Option A contract (NEC3).
The contractor has submitted a quotation, using CECA. (Note - CECA was stated in CD Part 2).
When assessing the contractors quotation, several rates (CECA) stated in the quotation are “excessive” and do not reflect current open market rates. Thus the costs (quotation) do not reflect the “cost” of the works being undertaken.
What, if any, options are available to the project manager?
Can the project manager requests substantiation, showing that the CECA rate reflects the cost the contractor will incur? or
Does the project manager have to accept the CECA Rate, as that is what is stated in CD Pt 2?
Any assistance would be helpful.
The default for Defined Cost is the Shorter Schedule of Cost Components and the published list so in your case CECA. There is no requirement for the Contractor to demonstrate alignment between CECA and incurred cost, the contract is the contract.
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Hello
As the PM you have to do what the contract says (clause 10.1)
The Employer, the Contractor, the Project Manager and the Supervisor shall act as stated in this contract and in a spirit of mutual trust and co-operation.
Clause 52 says: “Defined Cost includes only amounts calculated using rates and percentages stated in the Contract Data"
So yes as “unfair” as it may seem you have to use the contract data rates and percentages in the first instance. Then if there isn’t a rate or percentage then it is the second part of the clause that takes effect which is:
and other amounts at open market or competitively tendered prices with deductions for all discounts, rebates and taxes which can be recovered.”
Probably not the answer you wanted but that is what the Contract intends. The way to square this in your head is this is an Option A. The Contractor will be making money in some areas and losing in others. The “good rates” in CECA in Contract Data will be ensuring that the Contractor is making some money which is a good thing for the delivery of the scheme.