Sojisub
Civil/Environmental
- Apr 8, 2021
- 10
We are issuing a deductive change order. And the contractor is not including the overhead and profit in the cost proposal.
Our argument is they should because in the contract, it reads the following:
"For Work to be deleted by Change Order, the reduction of the Contract Sum shall be computed on the basis of one or more of the following: (i) Unit Prices stated in the Contract Documents; (ii) where Unit Prices are not applicable, a lump sum based upon the costs which would have been incurred in performing the deleted portions of the Work as calculated in accordance with Paragraph 6.06, supported by a Cost Proposal as required by Paragraph 6.03. Neither
Contractor nor the Subcontractor shall receive a markup on their respective Lower-Tier Subcontractors
to administer the credit Change Order. 1. When both additions and credits are involved in any one Change Order, Contractor's markup shall be computed on the basis of its direct costs and labor productivity for the net change in the quantity of the Work. For example, if a Change Order adds 14 units on one Drawing and deletes 5 units on another
Drawing, the markup shall be based on the net addition of 9 units. No markup will be allowed if the deductive cost exceeds the additive cost."
Since this is a unit price, we are expecting the costs..as calculated in paragraph 6.06. I am not going to include this paragraph but it has subparagraph A for labor, subparagraph B for Material, and subparagraph C for overhead and profit. Paragraph 6.06 treats overhead and profit as a cost so we believe the overhead and profit should included as part of this deductive change order.
Our argument is they should because in the contract, it reads the following:
"For Work to be deleted by Change Order, the reduction of the Contract Sum shall be computed on the basis of one or more of the following: (i) Unit Prices stated in the Contract Documents; (ii) where Unit Prices are not applicable, a lump sum based upon the costs which would have been incurred in performing the deleted portions of the Work as calculated in accordance with Paragraph 6.06, supported by a Cost Proposal as required by Paragraph 6.03. Neither
Contractor nor the Subcontractor shall receive a markup on their respective Lower-Tier Subcontractors
to administer the credit Change Order. 1. When both additions and credits are involved in any one Change Order, Contractor's markup shall be computed on the basis of its direct costs and labor productivity for the net change in the quantity of the Work. For example, if a Change Order adds 14 units on one Drawing and deletes 5 units on another
Drawing, the markup shall be based on the net addition of 9 units. No markup will be allowed if the deductive cost exceeds the additive cost."
Since this is a unit price, we are expecting the costs..as calculated in paragraph 6.06. I am not going to include this paragraph but it has subparagraph A for labor, subparagraph B for Material, and subparagraph C for overhead and profit. Paragraph 6.06 treats overhead and profit as a cost so we believe the overhead and profit should included as part of this deductive change order.
