Civil Engineering Reference
In-Depth Information
and the resulting fee, is to be expressed as a change to the prices. Therefore,
broadly it is the effect on the actual cost and forecast actual cost which is
translated to the prices. Since the prices will be the original tendered rates,
the notional actual cost (that is the actual cost before the effect of the
compensation event is taken into account) should not be very different, if
at all, from the original rates. Nevertheless, it is the notional actual cost
which should form the baseline for the effect of the compensation event.
That is to avoid the contractor being able to recover for the financial effects
of his own inefficient working.
Except in the situations where the contract expressly so states (e.g. clause
60.6) or the event is a change to the works information or the correction of an
assumption under clause 61.6, the prices are not reduced if the effect of the
event is to reduce the total final cost (clause 63.2).
The difference between 'planned Completion' and 'Completion Date' is
important in clause 63.3. The delay to the completion date is to be assessed
as the length of time that the compensation event has caused planned
completion to be later than planned completion shown on the accepted
programme. The exercise will necessitate careful examination of the pro-
grammes in the normal way, but with regard to the planned completion. It
is only when a decision has been reached about the delay to the planned
completion that the length of that delay is transferred to the completion
date. The contractor should be able to demonstrate his reasoning by means
of the revised programme that he is obliged, under clause 62.2, to provide to
the project manager.
Clauses 63.5, 63.6 and 63.7 set out various terms of general application.
Clause 63.6 reasonably states that assessments are to be made on the as-
sumption that the contractor has reacted both competently and promptly to
the event, that additional actual costs are incurred reasonably and that the
accepted programme can be changed. The general law would imply these
assumptions in any event.
Clause 63.7 deals specifically with compensation events which arise from
instructions to change the works information in order to resolve an ambigu-
ity or inconsistency. The way that it is to be treated depends, again quite
reasonably, on whether it is the information provided by the employer or by
the contractor which is changed. If it is the employer's information, the
effect of the event is assessed in the way most favourable to the contractor.
If it is the contractor's information, the assessment is to be done in the way
most favourable to the employer. It is unlikely that the general law would
imply this procedure.
The most difficulty is caused by clause 63.5. It states: 'Assessment of the
effect of a compensation event includes cost and time risk allowances . . . '.
Matters which are at the contractor's risk are set out in clause 81.1. Some
commentators seem to believe that the effect of this clause is that the
contractor must bear the risk of such things as ground conditions which
an experienced engineering contractor should have anticipated. It is reason-
ably clear that certain risks under clause 81.1 must be borne by the con-
tractor. Clause 81.1 states that those risks are the risks not carried by the
