The second myth for X22 on an Option C Contract is that the Contractor is paid defined cost and fee for Stage One, the equivalent of Option E.
This is partly correct, partly incorrect and partly controversial.
The Contract includes in their Proposals for Stage Two a revised Activity Schedule for the Stage Two works and includes the PWDD (Price Work Done to Date) in Stage One (Clause X22.3(9)).
Note that the reference is to a revised Activity Schedule. There must be an Activity Schedule included in the contract for this to be revised.
The Project Manager issues a “Notice to proceed to Stage Two” under X22.5(1) when a list of four bullet points is satisfied, the third of which is “the Project Manager and the Contractor have agreed the total of the prices for Stage Two”.
If the project proceeds to Stage Two, it is clear that the PWDD in Stage One is included in the revised Activity Schedule.
What is not clear is what happens to the PWDD of Stage One if the parties do not proceed to Stage Two.
If the Contract is terminated before a Contractor’s Proposal for Stage Two has been made the Activity Schedule is not revised and Clause 93.4 & 93.6 apply. The Contractor’s share could be pain.
If the Contract does not proceed to Stage Two after a Contractor’s Proposal for Stage Two has been made (which includes the PWDD for Stage One in the revised Activity Schedule). Clause X22.5(2) states that the work required in Stage Two is removed from the Scope. If the Stage One works are complete and the works required for Stage Two have been removed from the Scope, the Contract is complete. The Contractor’s share should be calculated and paid in accordance with Clause 54.
The controversy arises whether the original activity schedule, as amended by Compensation Events should be used, or the revised activity enclosed within the Contractor’s Proposals (less the omitted Stage Two Works).
In summary there is some truth in this myth, if the right conditions prevail.
