To create a compensation event, the PM can either select Project Managers Notification of: Compensation Events from the red create new button in the top bar of the page or by going into the appropriate module “PM’s CE Notifications” and by selecting the blue create new button (detailed in the general section of this document). This will take you to the compensation events template. Fill out all the fields and click the Create button at the footer of the form which will take you the draft compensation event page.
If the Project Manager wants to get a quotation from the Contractor for an item that they MAY want to instruct then they can use this form. They would instruct the quote, and then once the Contractor has submitted the quotation which would demonstrate cost and time effects then they can make a decision if they wish to instruct it or not. Project Manager’s should use these seldomly as they will very quickly lose their effectiveness if they regularly request quotes that do not go ahead. The Contractor will spend less time on the quote and just add significant risk each time.
The Project Manager should state when they plan to give the instruction by, and also any PM assumptions the quotation should base the quotation upon so that they can put in a more definitive quotation with sensible risk allocation.
How to Manage Proposed Instructions
The PM is to complete the subject title and details of the potential instruction. They also need to state the date by which the Contractor is to assume an instruction will be given, otherwise, it will be difficult to give a definitive quote. There is an option for the Project Manager to state any assumptions the quotation will be based upon – again so the Contractor can give a more definitive quote.
How to Accept a Contractor's Compensation Event
After receiving a Compensation Event Notification from the Contractor they can determine as to whether they agree or not it is a compensation event. If the PM selects the PM Reply tab from the Contractors CEN they can select that the CE “Is a Compensation Event” which will request the Contractor so submit of a quote “Not a Compensation Event” which will end the process.
How to Submit a Quotation
When the PM has requested a quotation from the Contractor either via a Compensation Event, Proposed Instruction or accepting the Contractors Compensation Event the Contractor can select the quotes tab from the applicable notification which will now show the “Create Quote” button which once clicked on will pop up with the Quote creation form.
When submitting a quote through FastDraft the Contractor is required to fill out the following information:
- Subject – the title of quote
- Amount— the value of quotation
- Quotation summary – summary of the quote, the Contractor can upload a detailed quote as an attachment
- Effect to accepted to Programme—if the Contractor selects “There is an effect on the Accepted Programme but this has been mitigated by measures as detailed:” or “There is an effect on the Accepted Programme which we are unable to mitigate” then the Contractor will be required to provide details on what has changed on the Programme and with the later they will also need to enter in the impact to the completion date
How to Accept a Contractor's Quote
After the Contractor has submitted a quote the PM will receive an email notification, the PM can then access the quote by going to the corresponding CE/Proposed Instruction and access the quote from the Quotes tab. After selecting the quote the PM can then fill out their response by selecting the Assessment tab. The PM will have the option to Accept the quote, ask the contractor to submit a revised quote or decide to make their own assessment.
How to Implement a Compensation Event
It's very important to get a compensation event to implemented so both Parties understand their liability in terms of time and cost, and indeed if (from a Contractor’s perspective) they wish to dispute this further in terms of raising this to “senior representative” level or even to adjudication.
How to View Implemented Compensation Events
Select the “Implemented Compensation Events” module from the navigation. The implemented register shows a summary of the implemented CE’s in terms of change to Prices and any time effect on Completion Date and/or Key Dates/Sectional Completion Dates. Each quote can be accessed from the register to see the detailed history of quote/responses
How to Make a Project Manager's Assessments
The PM should make their own assessment in accordance with 64.1 which is where:
• Contractor not submitted a quote on time
• Do not agree with the Contractor’s quotation
• CE affects remaining works and no programme has been submitted with a quote
• Latest programme rejected or not issued for acceptance
Once implemented it is full and final so important the PM makes sure they make a correct assessment in accordance with the contract. Good practice to informally share a draft with the Contractor so they have the last chance to try to convince the PM that they are wrong – which they can consider before implementing into the system.
Making a PM Assessment
The PM can make their own assessment of a quotation if the Contractor has not submitted one or they do not agree with the quotation submitted (and the Contractor has not been asked to resubmit a new one). They will have to identify which CE they are assessing, what their assessment is in terms of Price and programme effect and then describe in detail how they got to their assessment. There is the option to attach further substantiation before implementing.
How to Propose a Contractor's Assumptions
We have introduced proposed Contractor Assumptions to cut through a big issue that still has not been specifically resolved contractually. Project Manager can state assumptions on which to base the quotations but there is no way for the Contractor to propose assumptions. Where historically they have included these within their own quotations stating their own assumptions, many have believed (incorrectly) that these become PM assumptions if they accept the quote. That is not the case. So within FastDraft, we have brought this to a head whereby the Contractor can propose an assumption for the PM to accept. If they do not accept or do not respond it simply means the Contractor will price the risk. This is a chance though for the Contractor to submit a more sensible quotation if the PM is willing to agree to the proposed assumptions – which FastDraft then confirms are now PM assumptions under clause 61.6.
How to Create a Contractor's Assumptions
The contractor can suggest an assumption which they believe is necessary to be able to give a sensible quotation. The Register on this tab will show a list of any assumptions issued for acceptance and their relevant status. To submit an “Assumption” form the following is needed to be completed:
- The subject, Prices,
- Select compensation event – this will show the live (and only) compensation events that this assumption could be applicable to. Select the relevant CE.
- The decision required by – state the date by which an answer is needed which should be a few days before the quote is due to allow the Contractor to complete the quotation accordingly. Without the agreement of these suggested assumptions, the Contractor will instead by pricing the risk. This is, therefore, the chance for a more sensible quotation to be submitted, all be it by the Employer retaining that risk (so decreasing cost certainty).
- Details – description of the assumption being suggested and the reasons for it. These should only be for the type of risk that would otherwise be very difficult to price.
Once completed this will create a draft letter to check. It also allows the option for an attachment to be added if relevant. Once ready to submit click on “Communicate Notification”. Once submitted Project Manager can then respond by using “Acceptance” tab to then confirm if that assumption has been accepted or not accepted completely with comments.