We have employed a contractor on an ECC option C (target contract with activity schedule). The contractor has a potential dispute from one of its subcontractors which may well go to adjudication between subcontractor and contractor. If the subcontractor is successful and the contractor pays the amount awarded, does this then become part of the defined cost under clause 11.2(23)? If this is correct, then does it also form part of total of the prices for the purposes of calculating the contractor’s share? What, if any, impact does clause 11.2(25) second bullet have on an adjudicator’s decision in such circumstances.
Answer
The trouble here is you are confusing two different things, that is the price for work done to date, which is what the contractor gets paid each assessment (see clauses 50.2 and 11.2(29)), and the total of the prices, which is the original tendered total of the prices plus or minus things like compensation events, and is commonly called ‘the target’. These two only come together so to speak, after completion, when the project manager has to calculate the contractor’s share – see clause 53.
If the contractor is required by the adjudicator to make a further payment to the subcontractor, then that is an ‘amount of payments due to Subcontractors’ and therefore falls within the first bullet point of the definition of defined cost in clause 11.2 (23). It is therefore payable as part of the price for work done to date in accordance with clause 11.2(29).
However that does not mean that it will be added to the total of the prices as well. That will depend upon whether or not it is a compensation event. Making a payment to a subcontractor because an adjudicator has said you should is not a listed compensation event.
