Q3.
An Option B ECC contract is being used to construct a new road.
Secondary Options X1, X2 and X7 are included in the contract. Any
response referring to dispute resolution should identify whether Option
W1, W2 or W3 applies as an assumption.
The Contractor has been on Site for 5 weeks.
a. When should the first payment be made and what happens if
the Contractor does not submit an application for payment?
[5 marks]
Part of the works includes a lagoon to alleviate flood risk. This has been
part priced as a lump sum and part as a rate. The concrete rate for the
foundations is priced on a m3 rate and the Project Manager considers that
this is overpriced compared to another project worked on recently and is
arguing that it does not represent value for money for the Client.
b. How should the lump sum item be dealt with in terms of
payment and can the Project Manager certify what it considers to
be better value for money for the concrete?
[4 marks]
It transpires that the Contractor’s costs overall are far less than the Bill of
Quantities rate and lump sum, but that the bill rates for the lagoon are
actually underpriced.
c. If an Option D contract had been adopted how would
the Project Manager assess the amount due?
[5 marks]
The first compensation event occurs for an increased length of road.
The Contractor is stating the existing rates in the Bill of Quantities should
be applied and has failed to provide a quotation within the three weeks.
d. Is the Contractor correct about the Bill of Quantities rates?
How should the compensation event be assessed and what should
the Project Manager do next?
[6 marks]
The Project Manager fails to make an assessment of the compensation
event. An assessment is eventually made four months later.
The Contractor had undertaken the work within one week of the original
instruction and is complaining about the impact of this late assessment on
its cash flow.
e. How should this be dealt with in the next payment certificate?
[5 marks]
