Plain English Explanation
When the PM assesses a compensation event that involves an uncertain future event, they can state assumptions about that event and instruct you to quote on that basis. If those assumptions later prove wrong, the PM must notify a correction — and that correction itself is a CE.
For example, the PM might assume 'the ground conditions beyond this point will be similar to those already encountered' as a basis for quoting a CE. If the ground conditions turn out to be very different, the PM must notify a CE correction. This mechanism prevents parties from being locked into unfair quotations based on flawed assumptions.
This CE is an important safeguard when pricing uncertain or future scope — if you are asked to quote on assumed conditions, make the assumptions explicit and ensure they are documented in the PM's assessment.
Key Takeaway
When quoting a CE on uncertain conditions, ask the PM to state the assumptions in writing — if those assumptions prove wrong, clause 60.1(17) gives you an automatic further CE for the difference.
What This Means for Subcontractors
When quoting for CEs that involve uncertain or future scope, always ask the PM/main contractor to state clearly what assumptions they are making. Ensure those assumptions are part of the agreed CE quotation. If those assumptions change, you have a clear CE entitlement under 60.1(17). This is often overlooked but can be commercially significant.
Common Risks & Disputes
- 1The PM making informal assumptions that are not clearly documented, leaving the basis for the original CE quotation disputed
- 2Assumptions being too broad or vague to be testable against actual conditions
- 3Failing to track whether the assumed conditions materialised, missing the CE notification window when they did not
- 4The PM arguing the original CE quotation was given without any assumptions and therefore 60.1(17) does not apply
- 5Delays in the PM notifying the correction, which can further complicate the CE assessment
Sources
Related Clauses
Client instruction to change the Scope
Scope change CE whose quotation may have been based on stated assumptions
PM gives instruction changing a decision previously communicated
Changed PM decision — original decision may have formed the basis of an assumption
Physical conditions within the Site not weather
Ground conditions CE — assumption corrections most commonly arise here
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