AMD 1996 Annual Report Download - page 167

SCHEDULE 16.2.4
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EXAMPLES OF QUALIFYING AND NON-QUALIFYING
ADDITIONAL REIMBURSABLE COSTS
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As a general rule, COMPANY shall pay for the design, labor and
materials involved in designing, purchasing and installing each element of the
Project once. If CONTRACTOR forgets to design in a part that the Facility
requires, then COMPANY will pay for the added design and construction cost (but
not the added redesign costs), even if CONTRACTOR was negligent in leaving it
out of the original design. If CONTRACTOR designed in the wrong part and that
part is installed and now needs to be removed, COMPANY shall not pay the re-
design costs and CONTRACTOR will be fully responsible for the cost associated
with installing and removing the wrong part (including the cost of the wrong
part if it cannot be returned to the vendor or used elsewhere in the Project),
and COMPANY shall pay only the material and construction costs for the correct
part (and there will not be an adjustment in the Project Schedule). If
subcontractors make mistakes, CONTRACTOR will be responsible for associated
costs (and the Project Schedule will not change to account for the mistakes).
Also, if market conditions change the price of materials, COMPANY shall pay the
cost change, but the Budgeted Cost of the Work will not be adjusted.
SCENARIO: The Design Documents prepared by CONTRACTOR and approved by COMPANY
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show a 2 inch pipe. A 2 inch pipe is installed. However, the Facility requires
a 4 inch pipe. The 2 inch pipe is torn out and replaced by a 4 inch pipe.
RESULT: COMPANY originally paid the cost of designing the pipe and of the
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2 inch pipe's procurement and installation. COMPANY now pays the cost of the 4
inch pipe's procurement and installation but receives a credit equal to the
amount originally paid to procure and install the 2 inch pipe. The amount of
the credit and the cost of any redesign work are borne by CONTRACTOR. The
Budgeted Cost of the Work is not adjusted.
SCENARIO: The Design Documents show a tank in one location and a pipe running
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past the tank. A subcontractor negligently installs the tank in the space in
which the pipe is to run.
RESULT: COMPANY originally paid for the design of the tank and pipe and
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for the cost of procuring and installing the tank and pipe. CONTRACTOR will pay
the additional cost of either removing and relocating the tank or relocating the
pipe. The Budgeted Cost of the Work is not adjusted.
SCENARIO: Soil studies obtained by COMPANY show a subsurface area clear of
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obstructions. The Design Documents prepared by CONTRACTOR and approved by
COMPANY show a pipe running through the unobstructed area. When the area is
excavated, granite is found.
RESULT: Because the presence of the granite was not foreseen, COMPANY
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shall pay the additional cost of reconfiguring or relocating the pipe or of
removing the granite. The Budgeted Cost of the Work is adjusted. However, if
CONTRACTOR had reason to know, or should have known, of the presence of the
granite, then CONTRACTOR would pay the additional cost of reconfiguring or
relocating the pipe or of removing the granite. The Budgeted Cost of the Work
would not be adjusted.
Source: ADVANCED MICRO DEVIC, 10-K, March 20, 1997