I was explain this in training yesterday and it is complicated !
Under the 3rd bullet point of 60.4, the threshold for musing Defined Cost + Fee to calculate the change to the target Prices is 0.5% of the Prices at the Contract Date but it is the FINAL quantity x original rate, not the CHANGE in quantities. What does this mean ?
1. If final quantity x original rate < the 0.5% threshold the adjustment to the Prices is the change in quantities x original rate. I.e. the Prices element is on re-measurement
2. If the final quantity x original rate > 0.5% of the Prices, then the original quantity x original rate still stands as a component of the Prices, but the adjustment is on change in Defined Cost + Fee, which can also be negative and therefore reduce the Prices.
However, if the operation is on the critical path, then any increase in quantities will delay Completion and hence will be a compensation event under 60.5. This will be assessed as the change in Defined Cost plus Fee.
Clear as mud (and that's not going into other bullets / clauses) !
Under the 3rd bullet point of 60.4, the threshold for musing Defined Cost + Fee to calculate the change to the target Prices is 0.5% of the Prices at the Contract Date but it is the FINAL quantity x original rate, not the CHANGE in quantities. What does this mean ?
1. If final quantity x original rate < the 0.5% threshold the adjustment to the Prices is the change in quantities x original rate. I.e. the Prices element is on re-measurement
2. If the final quantity x original rate > 0.5% of the Prices, then the original quantity x original rate still stands as a component of the Prices, but the adjustment is on change in Defined Cost + Fee, which can also be negative and therefore reduce the Prices.
However, if the operation is on the critical path, then any increase in quantities will delay Completion and hence will be a compensation event under 60.5. This will be assessed as the change in Defined Cost plus Fee.
Clear as mud (and that's not going into other bullets / clauses) !