I am the project manager on a project using ECC option A. We are in the process of agreeing the quotation for a compensation event to delete items of work from the contract. The items have prices in the activity schedule. Why would the quotation not be simply the value of these items in the activity schedule? The contractor is suggesting otherwise and provided a cost build-up of about 60% of this value. The activity schedule has items to cover all general items with site establishment and supervision cost and so on, and the work is not reducing time on site as it is not on the critical path.
Answer
The simple answer to your question as to why the value is not the amount in the activity schedule is because that is what the contract says.
The deletion of work in the works information is an instruction to change the works information issued in accordance with clause 14.3, which is a compensation event under clause 60.1(1). Compensation events are assessed in accordance with the rules set out in clause 63. Specifically clause 63.1 states they are assessed as the effect the compensation event has upon the forecast defined cost of the work that is not to be carried out, plus the fee. Therefore, in the case of deleted work, you are required to assess the forecast defined cost of carrying out the deleted work to which the fee is added. The resultant figure is then deducted from the total of the prices in the activity schedule – see clause 63.12.
The process and timescales involved in assessing compensation events can be found in clauses 61-65. If you do not agree with the contractor’s quotation, you are entitled to make your own assessment – see clause 62.3 and the 2nd bullet of clause 64.1.
