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Streetwise Answers

Throughout our contract period, our Method Doc was changed to accommodate restrictions of access imposed by the main contractor. Eventually during the progress of the works a methodology was agreed but resulted in a reduction in the content of the testing work.

Post completion and post submission of our documentation , our client has taken the view that our Fixed price Order is now redundant and that he now has the right to modify our contract to a day rate Order based upon his personal appraisal of the time and our costs expended on site . Naturally he has chosen to bullishly ignore management time, supervisory site attendance and our loss of profit and overhead. Our time on site equates to 72% of our maximum time allowance.

We responded initially with a Without prejudice calculated good will offer to settle for 81% of the value for prompt payment, whilst maintaining our entitlement to the full order value.

There has been no dialogue written or otherwise regarding financial reductions during the course of the works.

We now take that the view the full amount is due as we and they made a commercial decision in pricing and their acceptance of our Quotation.

Are we correct in maintaining entitlement

Regards

Rick

Commissioning Specialists


Hi Rick

In the normal course of events once a contract sum has been agreed neither party can change that just because they have entered into a bad bargain.

So, (subject to seeing the terms of your contract) the original contract sum should definitely be the starting point.

However, you say that "...during the progress of the works a methodology was agreed but resulted in a reduction in the content of the testing work". In other words the scope of the works has changed.

If that is the case then that is a variation and it should be valued in accordance with the rules set out in the contract for valuing variations.

I would need to see the contract in order to advise you properly, but usually variations should be priced in accordance with the rates set out in the contract, where the work is of similar character and carried out under similar conditions.

So, it may be that the total contract sum may well be reduced by omissions, but from what you say your client seems to be making up the rules as he goes along!

If you haven't already done so take a look at the Free Report which is available under the Variations Section, but if that doesn't provide the answer please give me a call.

You should certainly get our advice before this goes too much further. You could save an awful lot of time and effort!

Best regards,

Barry


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