When a Contractor is notifying a compensation event it is essential that they present it in such a way that gives the PM no choice but to accept. It should be concise yet sufficiently convincing that they can give a definitive answer. If the PM does not agree it is a compensation event they should respond with a clear written response as to why they do not believe it to be a compensation event. If the PM agrees it is a compensation event they request a quote and have the chance to state any assumptions on which the Contractor should base the quotation upon. This is a good chance to ring-fence any risk or unknowns that otherwise the Contractor could price/programme excessively.
Managing Contractor Compensation Events
Contractor’s CE Notifications – The Contractor can notify a compensation event by completing the following information:
- Subject – the title of the event
- Compensation event type – selecting the contractual reason that makes this a compensation event
- Project Manager Instruction – here if applicable a relevant PMI can be selected to associate with this event.
- Description of the event – a concise yet precise description of the event so that the receiver fully understands why the Contractor believes this to be a compensation event
Upon creating the form it is possible to attach any relevant document(s) that will help justify that it is a compensation event.