Frequently Asked Questions
The definition of defined cost is set out in clause 11.2(5), and it includes, ‘the amount paid by the contractor…for...work subcontracted by the contractor’. This clearly means that, when using defined cost to value compensation events, the contractor is paid what it has paid or is forecast to pay its subcontractors. That would include for any plant and materials supplied by the subcontractor.
How that figure is calculated will depend upon the terms of the subcontract the contractor has with the subcontractor. It therefore may, or may not, be a cost-based assessment. To this cost is then added the percentage for overheads and profit added to other defined cost, as stated in the contractor’s offer in the contract data.
Clause 21.2 covers matters such as risks and insurances. It does not and cannot alter the meaning of a clearly worded clause of the contract about something completely different.