Reference no: EM133255006

Question 1

An Option B contract has been awarded for the construction of a new road.

The requirements for street lighting were not included in the Scope. The Project Manager instructs a change to the Scope to include the street lighting but does not notify a compensation event. The Client, who has budgetary constraints, is now stating that, as 10 weeks have passed by, the Contractor is not entitled to a change in the Prices or Completion Date.

a. Is this correct and how should the Project Manager deal with this?

The work has been undertaken and completed. The Contractor argues that as no rate exists in the Bill of Quantities, the compensation event should be based on the Contractor's actual costs plus Fee.

b. What key clauses define how the compensation event should be assessed and is the Contractor correct?

c. The Contractor notifies a compensation event under clause 61.3. Is this correct? How should the Project Manager respond and within what timescale?

The Project Manager fails to respond to the notified compensation event. Four weeks later the Contractor realizes this.

d. What options are available to the Contractor? If the Project Manager continues to fail to respond to a notified compensation event, what impact will this ultimately have?

The Project Manager eventually responds, accepts that this is a compensation event and instructs the Contractor to submit a quotation. Two weeks into the quotation response period the Contractor telephones the Project Manager stating it is very difficult to assess.

e. What is the default method of assessing a compensation event under Option B? What other option is available to the Project Manager and Contractor?