IACCM Contract Management Forum

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2017-02-08 16:42:19

Fixed price contract

Is a Buyer entitled to re-negotiate the price of a fixed price contract after work has finished due to the fact that Buyer involved its own resources and completed due to an unforeseen urgency app. 62% of the work. The Seller is asking for full payment stating that the contract is a fixed price and the commonly agreed completion was to provide certain number of resources within a period of time or completion of work, whichever occurs first. Any advise would be of great help
 •  Abu Dhabi National Oil Company  •   2017-02-09 06:25:56
On what basis did buyer and his company undertake the work that was on the contractors scope . If it was due to poor performance and this has been documented then you may have a case to re-negotiate the lump sum price. If buyer /company stepped in for there own reasons as indicated by your phrase" unforeseen emergency your probably "not in great position contractually as sounds like you have a take/use or pay contract ?

Look at what other commercial levers you have , for example if you have continued business need if the contract is based on providing certain number of resources then redeploy those resources on other business. Work with your technical colleagues on this . Is there other leverage you can apply such as future business , can you use your relationship management process to help. In summary think outside your contract as to what strategy/ tools you can use to use to renegotiate to a more equitable position
 •  New Zealand Defence Force (NZDF)  •   2017-07-20 22:28:26
Great points Andrew. Having just had to rescue a multimillion dollar project that didn't have a SoW, PO or accepted quote and yet the project commenced.

Without having seen the SoW & Agreement, the document would typically state the core deliverables what is in and out of scope and a process for any additional / adhoc work. It should also have Customer and Supplier responsibilities with what is Supplier furnished and Customer furnished. I'm also interested in whether there were any discussions between the parties where you stated that you would intervene and apply resource and their response to this. So without having a full picture our advise can only be based on what information we are furnished with...but happy to respond further as more info is provided.
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