Contract: Option A (amended)
Scenario: The Project Manager has instructed the Contractor to remove and scrap a piece of equipment which contains a lot of copper and therefore has a high scrap value.
The cost of carrying out the works will be less than the scrap value i.e. £25k to remove £75k scrap value.
From this instruction it would appear that when pricing this work you would be £50k negative plus fee % and subcontractor % as a deduction. This seems an odd situation to myself as the cost with the fee on top puts the Contractor in a worst position than he would have been due to a scrap value which was never in the original scope.
I would think that a fairer way to assess this would be to give the credit note for scrap without fee % however I don't believe the contract allows for this. Has anyone had any similar situations? I am going to predict that contractually the correct way to do this is to give back the scrap value with the fee % on top, but as I have said this does not feel correct to me for scrap value situations.
Scenario: The Project Manager has instructed the Contractor to remove and scrap a piece of equipment which contains a lot of copper and therefore has a high scrap value.
The cost of carrying out the works will be less than the scrap value i.e. £25k to remove £75k scrap value.
From this instruction it would appear that when pricing this work you would be £50k negative plus fee % and subcontractor % as a deduction. This seems an odd situation to myself as the cost with the fee on top puts the Contractor in a worst position than he would have been due to a scrap value which was never in the original scope.
I would think that a fairer way to assess this would be to give the credit note for scrap without fee % however I don't believe the contract allows for this. Has anyone had any similar situations? I am going to predict that contractually the correct way to do this is to give back the scrap value with the fee % on top, but as I have said this does not feel correct to me for scrap value situations.