Neither. It is whatever the Project Manager will accept by commercial negotiation - and the Contractor is willing to pay / have deducted from the Prices (and earlier Completion Date.
As Jon says - it is by commercial negotiation. The Contractor may offer a quotation for the Project Manager to accept to change the Works Information to accept the Defect (this is not however then a compensation event). The Project Manager can not make his own assessment of that quote in the way that they can for a compensation event. They either accept the quote which will adjust the total of the Prices and the defect need not be corrected, or they make the Contractor correct the defect.
Hi all, I have the same predicament with a Contract. A Defect has been accepted (in principle) to be included in the permanent works. I accept the value of the reduction in the Prices is by negotiation but what makes up the value? That is, what is the quantum of the cost reduction?
To re-iterate what I said before, but saying it in a slightly different way ! Contractually, it is up to the Contractor to make an offer to the Project Manager which, on behalf of the Employer, they will accept. No criteria is stated in the contract for the offer, so it is entirely up to the Project Manager how high or low he sets the threshold. However :
- if he/she sets it too high, then it may well undermine future relationships
- if he/she sets it too low, then it may set a precedent whereby the Contractor thinks they can get away with shoddy work / work in not in accordance with the Works Information.