As with all compensation events, this one will be assessed based upon the effect it is forecast to have upon the defined cost to carry out the works plus the fee, see clause 63.1. If the works are now going to be carried out sometime later than originally allowed for, there is a risk that the defined cost will increase because of inflation. This has nothing to do with option X1, which is about who carries the risk of inflation.

Without option X1, the contractor normally carries that risk. But when assessing the compensation event, which is at the employer’s risk, the contractor is entitled to make an allowance for matters that have a significant chance of occurring and that are at its risk under the contract, see clause 63.6. This could include the risk of inflation being greater than that allowed for in its original price.

As for the cost of people, that is only allowed for those people whose normal place of working is within the working areas, see the first bullet of item 1 of the shorter schedule of cost components. It will also include other people when they are working in the working areas (see the second bullet of item 1 of the shorter schedule of cost components), but that latter item will not apply because nobody is as yet in the working areas. Also, the cost of people whose place of work is not the working areas is assumed to be in the fee, see clause 52.1.

If the people allocated to work in the working areas on this contract cannot be found other productive short-term work because of the employer’s problem, it is only reasonable that the employer pays for the costs of them being allocated to this contract for the additional time.

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