We have a contract ongoing whereby there is / will be a number of VE options. We have got a few smaller items agreed already but we have identified a proposal that would save both sides a 6 figure sum.
How should this proposal be valued correctly? There is agreement on how much the revised works/scope would cost but agreement on the starting point is difficult.
4 different people have had a look at it and come up with 4 different ways of pricing.
Tender Activity Schedule - Taking the activity schedule and deducting the VE option from it. This does not see fair to me as it is not a defined cost
Revised Activity Schedule - This is the schedule being used for applications. Again it doesn't involve defined cost
Works Removed - Costing up the works not being undertaken and splitting the differece.
Defined Cost - Costing up honestly what the works would have cost to do and what they are doing now.
The client is obviously taking the path of the biggest figure which is the tender activity schedule and unless we can convince them otherwise they will make a PM assessment to that effect.
What is the correct way of pricing a VE?
How should this proposal be valued correctly? There is agreement on how much the revised works/scope would cost but agreement on the starting point is difficult.
4 different people have had a look at it and come up with 4 different ways of pricing.
Tender Activity Schedule - Taking the activity schedule and deducting the VE option from it. This does not see fair to me as it is not a defined cost
Revised Activity Schedule - This is the schedule being used for applications. Again it doesn't involve defined cost
Works Removed - Costing up the works not being undertaken and splitting the differece.
Defined Cost - Costing up honestly what the works would have cost to do and what they are doing now.
The client is obviously taking the path of the biggest figure which is the tender activity schedule and unless we can convince them otherwise they will make a PM assessment to that effect.
What is the correct way of pricing a VE?