2  Contractor Initial Response

2.1  Subject to paragraph 2 (Limits on Changes) of Part 1 (General Provisions), within ten (10) Business Days of receipt of the Authority Change Notice the Contractor shall provide the Authority with a Contractor Initial Response which shall comprise:

(a)  an indication of the Estimated Change in Project Costs that will result from the implementation of the Authority Change

(b)  the Third Party Costs as a firm or capped sum;

(c)  the details of the third-party activity that will be incurred in providing (and discussing with the Authority) the Contractor Stage 1 Response;

(d)  where applicable pursuant to paragraph 5 (Due Diligence) of Part 1 (General Provisions), the anticipated cost of the Senior Lenders carrying out due diligence (which shall be a capped or a firm sum); and

(e)  the Project Management Fee which shall be a capped sum, calculated in accordance with paragraph 2.4, that will be incurred in providing (and discussing with the Authority) the Contractor Stage 1 Response.

2.2  The Authority shall consider in good faith the Contractor Initial Response.  If the Authority finds that any material aspects of the Contractor Initial Response are unsatisfactory, it shall notify the Contractor of the same, giving reasons, and offer reasonable assistance to the Contractor to enable it to address such deficiencies and resubmit the Contractor Initial Response as soon as reasonably practicable.

2.3  The Authority shall, within ten (10) Business Days of receipt of the Contractor Initial Response (as may be amended pursuant to paragraph 2.2), confirm in writing (an Authority Initial Confirmation) to the Contractor that either:

(a)  the Contractor should proceed with developing a Contractor Stage 1 Response  (an Authority Initial Confirmation) and the Authority shall confirm in the Authority Initial Confirmation:

(i)  the agreed Project Management Fee in relation to the development of the Contractor Stage 1 Response and a reasonable period within which to discuss the same with the Authority pursuant to paragraph 3.1;

(ii)  the agreed Third Party Costs in relation to the development of the Contractor Stage 1 Response and a reasonable period within which to discuss the same with the Authority pursuant to paragraph 3.1; and

(iii)  the agreed date by which the Contractor Stage 1 Response shall be submitted which date shall reflect the complexity of the High Value Change and, where not agreed by the parties (each acting reasonably) shall be not more than [sixty (60)] Business Days from the date of the Authority Initial Confirmation; or

(b)  the Authority withdraws the Authority Change Notice.

2.4  The Contractor may charge a Project Management Fee for the time incurred by its employees in project managing the development, procurement and implementation of the High Value Change.  The Project Management Fee shall:

(a)  be based on actual time spent (validated by timesheet records);  

(b)  be calculated at the daily rates as set out in Part 5 of Appendix 2 (Project Management Fee) of this Change Protocol but capped at the sum set out in the Contractor Authority Stage 1 Confirmation;

(c)  not include the time of any person who is not an employee of the Contractor; or

(d)  not include any mark-up or profit cost or additional overheads;

(e)  be paid in two stages as follows:

(i)  on the Authority issuing an Authority Stage 1 Confirmation pursuant to paragraph 4.2; and

(ii)  on the Authority issuing an Authority Stage 2 Confirmation pursuant to paragraph 7.1(a) or withdrawing the High Value Change pursuant to paragraph 7.1(b).

and at each stage, the Contractor shall charge (subject to the applicable cap) only for the time incurred by its staff up to completion of that stage.