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1

NEC3 ECCIntroductory Training

John Rayner

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2

Introductions

John Rayner

Name:NEC3 Knowledge:

Content

• General Overview & principles

• Payment

• Early warnings and compensation events

• Roles and responsibilities, Defects and the programme



3

Perceptions….

“Contractual”negative, aggressive, claim conscious

contractual = transparent = less disputes = more satisfactory result

“transparent”positive, collaborative, pro-active

Objectives of the NEC

Clarity

Flexibility

Stimulus to good

management

4


Clarity

Flexibility

Stimulus to good

management

Clarity

• written in straight forward plain language -avoids legal phrases and as far as possible subjective terms

• no long sentences – uses bullet points

• no cross referencing between the clauses

• process driven, with flow charts available to demonstrate the process and ensure that there are no open ends

• series of defined terms identified within the contract

• contract specific items kept separate in Contract Data


Clarity

Flexibility

Stimulus to good

management

Flexibility

• used across the whole of the construction industry

• flexible design allocation responsibility

• used across a range of contract strategies

• allows a series of “bolt on” optional clauses to allow the contract to be tailored to meet the requirements of a specific project

• used internationally as well as domestically

5


Clarity

Flexibility

Stimulus to good

management

Stimulus to good

management

• clauses/processes intended to help the management of the project, not hinder

• obligates actions, and within period stated or within period of reply

• identifies risk early when effects can be best managed

• assessments of compensation events based on predicted not retrospective effect.

• programme revised and accepted forms integral part of the contract

Overview of the NEC3 - Principles

Clause 10.1

The Employer, the Contractor, the Project Manager and the Supervisor shall act as stated in this contract and in a spirit of

mutual trust and co-operation.

6

Overview of the NEC3 – The Suite

• Engineering and Construction Contract

• Engineering and Construction Sub-contract

• Engineering and Construction Short Contract

• Engineering and Construction Short Sub-Contract

• Professional Services Contract

• Professional Services Short Contract

• Adjudicator’s Contract

• Term Service Contract

• Term Service Short Contract

• Framework Contract

• Supply Contract

• Short Supply Contract

ECC General Structure and Form

• The Core Clauses

• Main Option Clauses

• Secondary Option Clauses

• Contract Data Parts 1 & 2

• Schedule of Cost Components

• Works Information

• Site Information



7

Contract Format

Core Clauses

Main Option Clauses

Secondary Option Clauses

Y (UK) Option Clauses

Contract Data Part 1


Schedule of Cost

Components

Works Information

Site Information

Core Clauses

Main Option Clauses





Schedule of Cost

Components

Works Information

Site Information

Core Clauses

Core Clauses

• Arranged in a structure that helps gain familiarity

• Clearly defined sections

• Limited cross referencing

• Written in ordinary language

• Flow chart basis led to simplified structure

• Are not altered by the Options, merely added to with unique numbering

8

Core Clauses

Core Clauses

• 1 – General

• 2 – The Contractor’s main responsibilities

• 3 – Time

• 4 – Testing and Defects

• 5 – Payment

• 6 – Compensation Events

• 7 – Title

• 8 – Risks and Insurance

• 9 – Termination

Core Clauses

Main Option Clauses





Schedule of Cost

Components

Works Information

Site Information

Main Option Clauses

Main Option Clauses

• Option A: Priced contract with Activity Schedule

• Option B: Priced contract with Bill of Quantities

• Option C: Target contract with Activity Schedule

• Option D: Target contract with Bill of Quantities

• Option E: Cost reimbursable contract

• Option F: Management contract

• Option W1 or W2 Dispute Resolution

9

Main Option Risk Balance

A

F

B

D

C

E

Contractor – increasing financial risk

Emp

loye

r –

incr

easi

ng

fin

anci

al r

isk

Activity Schedule

Bill of Quantities

Target Price with Activity Schedule

Target Price with Bill of Quantities

Cost reimbursable

Management contract


Core Clauses

Main Option Clauses





Schedule of Cost

Components

Works Information

Site Information


• X1 – Price adjustment for inflation

• X2 – Changes in Law

• X3 – Multiple currencies

• X4 – Parent Company Guarantee

• X5 – Sectional Completion

• X6 – Bonus for early completion

• X7 – Delay damages

10



• X12 – Partnering

• X13 – Performance bond

• X14 – Advanced payment to the Contractor

• X15 – Limitation of the contractor’s liability for his design to reasonable skill and care



• X16 – Retention

• X17 – Low performance damages

• X18 – Limitation of liability

• X20 – Key Performance Indicators (not used with X12)

• Option Z – additional conditions of contract

11

Option Y(UK) Clauses

Core Clauses

Main Option Clauses





Schedule of Cost

Components

Works Information

Site Information

Y(UK) Option Clauses

• Y(UK)1 – Project bank account

• Y(UK)2 – Housing Grants, Construction and Regeneration Act 1996 / Local Democracy, Economic Development and Construction Act 2009

• Y(UK)3 – The Contracts (Rights of Third Parties)

Act 1999


Core Clauses

Main Option Clauses





Schedule of Cost

Components

Works Information

Site Information


• Employer’s Information

• Key roles (E, PM, S)

• Boundaries of the site

• Period for reply

• Time scales, Defects, payment

• Compensation Events and risk

• Option clause requirements• Key date

• Sectional completion

• Contractor’s share

• Retention percentage

• Option Z

12


Core Clauses

Main Option Clauses





Schedule of Cost

Components

Works Information

Site Information


• Contractor’s Information

• Key people

• Matters to be included in the risk register

• WI for Contractor’s design

• First programme

• Data for the Main Option

• Data for the schedule of cost components

• Equipment rates

• Working Area Overheads

• Defined Cost rates and percentages for design and manufacture and fabrication

• People percentage

• Published list of Equipment and percentage adjustment

Schedule of Cost Components

Core Clauses

Main Option Clauses





Schedule of Cost

Components

Works Information

Site Information

Schedule of Cost

Components

• People

• Equipment

• Plant and materials

• Charges

• Manufacture and fabrication

• Design

• Insurance

13

Core Clauses

Main Option Clauses





Schedule of Cost

Components

Works Information

Site Information

Works Information

Works Information

• Specifies and describes the works

• States any constraints on how the Contractor Provides the Works

• Documents are referenced in the Contract Data

• Given in an instruction

Site Information

Core Clauses

Main Option Clauses





Schedule of Cost

Components

Works Information

Site Information

Schedule of Cost

Components

• Describes the Site and its surroundings

• Referenced in the Contract Data

– SI reports and test results

– Physical condition reports

– References to available information

– Statutory undertakers

– H&S Files

• Contains only factual information

14

Exercise

• The NEC3 uses the Contract Data to define the full terms and conditions. The pro-foma entry is:

• Write out the definition of the conditions of contract selecting the right options to ensure that the commercial requirements are met.

The conditions of contract are the core clauses and the clauses for main Option . . . . , dispute resolution Option . . . and secondary Options . . . of the NEC3 Engineering and Construction Contract April 2013.

Break

15

Payment Options (Main Options A – F)

• Payment provisions are stated in main options A to F

• Each options varies the financial risk

• Payment depends on the definition of Price for Work Done to Date

Option A

A


Emp

loye

r –

incr

easi

ng

fin

anci

al r

isk

Activity Schedule

16

Main Option A

• Priced Contract with Activity Schedule

• Activity Schedule does not have to describe all the work

• Paid only on Completing each activity

• Shorter Schedule of Cost Components – or agreed rates and prices

• No recovery for the costs of preparing compensation events

Option B

A

B


Emp

loye

r –

incr

easi

ng

fin

anci

al r

isk

Activity Schedule

Bill of Quantities

17

Main Option B

• Priced contract with bill of quantities

• Use chosen method of measurement

• BoQ corrected and new rates used/agreed

• Payment on a remeasure basis

• Final BoQ a complete description of the works

• No recovery for the costs of preparing compensation events

Options C & D

A

B

D

C


Emp

loye

r –

incr

easi

ng

fin

anci

al r

isk

Activity Schedule

Bill of Quantities



18

Main Options C & D

• Target Contract with Activity Schedule (C) or Bill of Quantities (B)

• Activity Schedule or Bill of Quantities is not a payment document

• Contractor paid on a Defined Cost plus Fee basis• Pain/Gain share on Completion and final account• Risk in the target similar to Option A• Contractor recovers the costs of preparing

compensation events

Option C&D Pain/Gain

Pric

es (ta

rget)

at a

ward

Pric

es (ta

rget) w

ith

CE

’s a

t Com

ple

tion

PW

DD

PW

DD

Contractor’s share (% set at tender stage)

Emp

loyer p

ays

19

Option E

A

B

D

C

E


Emp

loye

r –

incr

easi

ng

fin

anci

al r

isk

Activity Schedule

Bill of Quantities



Cost reimbursable

Main Option E

• Cost reimbursable contract

• Contractor paid Defined Cost plus the Fee

• Compensation events require the Contractor to re-forecast

20

Option F

A

F

B

D

C

E


Emp

loye

r –

incr

easi

ng

fin

anci

al r

isk

Activity Schedule

Bill of Quantities



Cost reimbursable

Management contract

Main Option F

• Management contract

• Contractor does no or little work

• Contractor lets work packages

• Contractor is paid a tendered fee for the work undertaken

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Option A

A


Emp

loye

r –

incr

easi

ng

fin

anci

al r

isk

Activity Schedule

Activity Schedule - Definitions

• 11.2 (20) The Activity Schedule is the activity schedule unless later changed in accordance with this contract.

• 11.2 (27) The Price for Work Done to Date is the total of the Prices for• each group of completed activities and• each completed activity which is not in a group.• A completed activity is one which is without Defects

which would either delay or be covered by immediately following work.

• 11.2 (30) The Prices are the lump sum prices for each of the activities on the Activity Schedule unless later changed in accordance with this contract.

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The Activity Schedule - Programme

• 31.4 The Contractor provides information which shows how each activity on the Activity Schedule relates to the operations on each programme which he submits for acceptance.

The Activity Schedule - Payment

• 54.1 Information in the Activity Schedule is not Works Information or Site Information.

• 54.2 If the Contractor changes a planned method of working at his discretion so that the activities on the Activity Schedule do not relate to the operations on the Accepted Programme, he submits a revision of the Activity Schedule to the Project Manager for acceptance.

• 54.3 A reason for not accepting a revision of the Activity Schedule is that it does not comply with the Accepted Programme, any changed Prices are not reasonably distributed between the activities or the total of the Prices is changed.

23

Activity Schedule - CE’s

• 63.12 Assessments for changed Prices for compensation events are in the form of changes to the Activity Schedule.

The Activity Schedule

• Effectively they are a bar on a bar chart, which the Contractor has priced

• An activity can include fixed overheads, time related charges, temporary works, materials on site as well as the permanent works.

• The activity schedule is drawn from the programme, but is a separate document

Under Option A, Priced Contract• Contractor is paid price for activity if completed by

next assessment date• Determines cash flow & the Prices

24

Lunch

Early warnings

• The NEC

… is based on the principle that foresight applied collaboratively mitigates problems

and shrinks risk

25

Early warnings

• Clause 16

• What is it’s aim

• Note early warnings do not give entitlement to additional money or time – only compensation events will do that.

• Both parties are obligated to give early warnings (10.1)

Early warnings

16.1 The Contractor and the Project Manager give an early warning by notifying the other as soon as either becomes aware of any matter which could• increase the total of the Prices,

• delay Completion,

• delay meeting a Key Date, or

• impair the performance of the works in use

In the notification the Contractor and the Project Manager state whether the early warning must be dealt with immediately.

26

Two extremes of understanding:

• Project Manager stated that he “does not want any early warnings on this project”

two extremes of understanding:

• Project Manager stated that he “does not want any early warnings on this project”

• Project Manager says “Give me as many early warnings as you can”

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Absence of an early warning

If the Project Manager decides that the Contractor did not give an early warning of the event which an experienced contractor could have given, he notifies this decision to the Contractor when he instructs him to submit a quotation for a compensation event (61.5)

The Project Manager is able to review and incorporate in his assessment the consequences of a lost opportunity to mitigate the event (63.5)

Disallowed Cost if the cost was incurred because the Contractordid not give an early warning the contract requires him to give

Early warnings

• The early warning process is the contractual communication tool to– identify potential problems

– consider proposals to avoid or mitigate their effect

– seek mutually acceptable solutions

• Early warnings should be encouraged as a positive process

• They should not be seen as a precursor to a compensation event claim

28

Early warnings exercise

• Sketch out the flow chart for the early warning process

• Consider the interaction of the Project Managerand the Contractor

Early warnings exercise

29

Compensation events

• Compensation events are the NEC3 ECC’s mechanism to reimburse the Contractor for:

– Risk events

– Additional works

– Additional attendances

– Breaches of contract by the Employer, Project Manager and the Supervisor

The compensation event processNotification by PM or C

8 week time bar for certain CE’s (61.3.)

PM’s decision

Instruct a quote

C submits quote

PM response(accept / not accept / self

assess)

PM assessment (if required)

Implementation

< 2 weeksDeemed acceptance 2 weeks after reminder

Should an EW been given?

< 3 weeks

< 2 weeks

< 3 weeks

PM to state any assumptions

May be instructed to submit proposed or alternative quotes

Deemed acceptance 2 weeks after reminder

Only changes if PM’s assumptions are incorrect

30

Compensation event exercise

• Identify those events for which the time bar in clause 61.3 does not apply.

• Determine which of the scenarios are, or are not, compensation events.

Evaluating Compensation Events

63.1 The changes to the Prices are assessed as the effect of the compensation event upon

• the actual Defined Cost of the work already done,

• the forecast Defined Cost of the work not yet done and

• the resulting Fee.

31

Defined Cost

11.2 (22) Defined Cost is the cost of the components in the Shorter Schedule of Cost Components whether work is subcontracted or not excluding the cost of preparing quotations for compensation events.

Fee

11.2 (8) The Fee is the sum of the amounts calculated by applying the subcontracted fee percentage to the Defined Cost of subcontracted work and the direct fee percentage to the Defined Cost of other work.

32

Schedule of Cost Components

Core Clauses

Main Option Clauses





Schedule of Cost

Components

Works Information

Site Information

Schedule of Cost

Components

• People

• Equipment

• Plant and materials

• Charges

• Manufacture and fabrication

• Design

• Insurance

SSCC Pigeon Holes

Equipment

OHD’s

In WA

Agency

Visiting

Site based

Purchased

CT Data

In the List

Used in WA

Credits

Testing

Packaging

Delivery

Purchasing

Specials

PM & S

Authorities

Cancelled

PFPO

Rates in CD

Employees

Paid

Off Site

CHargesP&MPeople

Expenses

DesignM&F

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What’s in the Fee

• Everything that can’t be pigeon holed!

– Insurance

– Bonds and warranties

– Costs incurred for overheads outside the Working Areas

– Costs incurred by people outside the Working Areas

– The cost of preparing quotations for compensation events

– Profit & risk (corporate rather than operational)

Break

34

THE ROLE OF THE PROJECT MANAGER AND SUPERVISOR

Role of the Project Manager

Principal Obligations

• To act in accordance with the Contract

• To act as an agent of the Employer

• To act impartially on certain matters

• To act in spirit of mutual trust and co-operation

35

Role of the Project Manager

Employer

Project Manager

Subcontractor

Designer

Supplier

Subcontractor

Subcontractor

Comm Mgt

Contract Admin

Project Control

Planning

Communications

Stakeholder Mgt

Doc Control

H&S

Design

Adjudicator

tribunal

Contractor

Key responsibilities of the PM

• To communicate in a form which can be read, copied and recorded

• To reply to a communication within the period of reply

• To issue certificates to the Employer and the Contractor

• To notify the Contractor before delegating any actions

• May give an instruction which changes the Works Information

• To give early warning of matters (delay, cost or performance)

• To enter early warning matters in the Risk Register

• To record decisions made by revising the Risk Register

• To accept particulars of the Contractor’s design

• To accept replacement persons proposed by the Contractor

36

Role of the Supervisor

Employer

Project Manager

Subcontractor

Designer

Supplier

Subcontractor

Subcontractor

Supervisor

Comm Mgt

Contract Admin

Project Control

Planning

Communications

Stakeholder Mgt

Doc Control

H&S

Design

Adjudicator

tribunal

Quality Control

Contractor

Role of Supervisor

• Ensure on behalf of the Employer, that the works are provided to the standard and performance required in the Works Information;

• Witness and/or carry out tests and inspections;

• Notification of Defects;

• Issuance of the Defects Certificate.

37

Defects

• What is a Defect?

• Who’s responsibility

• Correcting Defects

• Uncorrected Defects

Defects

Clause 11.2 (5)

A Defect is

• a part of the works which is not in accordance with the Works Information or,

• a part of the works designed by the Contractorwhich is not in accordance with this contract or Applicable Law or the Contractor’s design which the Project Manager has accepted.

38

Defect terminology

• Defect – see 11.2(5)• defect correction period

– The period of time the Contractor has to correct a Defect

• defect date– the period of time after Completion that the Contractor

is entitled to return to correct any Defects in the works

• Defects Certificate– A certificate issued after the defects date stating what

Defects remain uncorrected or a statement that there are none.

Notifying Defects

Clause 42.1• Until the defects date, the Supervisor may instruct the

Contractor to search for a Defect.Clause 60.1 (10)• If no Defect is found the matter is a compensation event

unless the search was needed only because the Contractorgave insufficient notice of doing work obstructing a required test or inspection.

Clause 42.2 • Until the defects date, the Supervisor notifies the Contractor

of each Defect as soon as he finds it and the Contractornotifies the Supervisor of each Defect as soon as he finds it.

39

Choices on defective work

Correction by the Contractor

• Pre-Completion (43.1)

• Post-Completion (43.2)– defects correction period / defects date / access availability

Correction by Others

• When access is provided – Cost to Employer (45.1)

• When access is not provided – Cost to Contractor (45.2)

Accepting non-correction of a Defect

• Submission of a Quotation (44.2)

Other commercial implications

Clause 11.2 (25)

Disallowed Cost

• Correcting Defects after Completion;

• correcting Defects caused by the Contractor not complying with a constraint on how he is to Provide the Works stated in the Works Information

40

Exercise

• Sketch (not to scale) a contract time line showing;– starting date

– Completion

– the defects date (assume 12 months)

– defects correction periods• 1) before Completion, and

• 2) after Completion

– Issue of the Defect Certificate

Defect Correction

Completion

Period between Completion and the defects date

(typically 12 months)

defects date

Defect

notified

defect correction

period

Defect

notified

defect correction

period

Defects Certificate

issued at this point

or at the defects

date if the defect

correction period

for the last notified

Defect ends before

the defects date

Completion Certificate issued

within 1 week of the Project

Manager deciding Completion

has been achieved

Defect

notified

Defect

notified

defect correction

period for Defects

notified before

Completion

Defect

notified

defect correction

period

41

Programme Objectives

• Understand the programming requirements of an NEC contract

• Understand the commercial and operational implications of the NEC programming mechanisms

The Accepted Programme

• Reflection of the work done and to be done• Not Site information or Works Information• Belongs to the Contractor• Each new programme when accepted supersedes

the previous one• Used to assess time in a compensation event• Fundamental to the management of a project• Requires considerable effort to maintain – for good

reason

42

The Accepted Programme

• Planned Completion, fluctuates with risk occurrences• Terminal float, maintains Contractor’s effectiveness• Key Dates: Employer requirements – clear and

unambiguous• Acceptances – especially Contractor design• Plant and Materials the Employer is to provide e.g.

specialist materials or standard plant• Order and timing of the work – documents must be

compatible• Resource statements – be careful when calling for

information

84

43

Float

• Free float: the amount of time a task can be delayed before affecting any other task

• Total float: the amount of time a task can be delayed without affecting planned Completion

• Terminal float: the float between planned Completion and the Completion Date – belongs to the Contractor

• Free float and total float are available to accommodate the time effects of compensation events and therefore in essence belong to the project

Float

Activity 1

Activity 5

Activity 4

Activity 2

Start Completion Date

Planned Completion

TRA

TRA

TRA

TRATerminal Float

Total Float

Activity 3

Free Float

44

Float

Activity 1

Activity 5

Activity 4

Activity 2

Start Completion Date

Planned Completion

TRA

TRA

TRA

TRATerminal Float

Activity 3

Free Float

Time Risk Allowance

Activity TRA -1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

Start 0w

Activity A 1w

Activity B 1d

Activity C 1d

Activity D 0d

Activity E 2d

Activity F 1d

Planned Completion 0d

Completion Date 0d

3 weeks

4 weeks

4 weeks

4 weeks

3 weeks

3 weeks

Activity TRA -1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

Start 0w

Activity A 1w

Activity B 1d

Activity C 1d

Activity D 0d

Activity E 2d

Activity F 1d


Completion Date 0d

3 weeks

4 weeks

4 weeks

4 weeks

3 weeks

3 weeks

45

Time Risk Allowance

Activity TRA -1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

Start 0w

Activity A 1w 4 weeks

Activity B 1d

Activity C 1d

Activity D 0d

Activity E 2d

Activity F 1d


Completion Date 0d

4 weeks

4 weeks

3 weeks

3 weeks

3 weeks

Time Risk Allowanceof 1 week

Time Risk Allowance

Activity TRA -1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

Start 0w

Activity A 1w 4 weeks

Activity B 1d

Activity C 1d

Activity D 0d

Activity E 2d

Activity F 1d


Completion Date 0d

4 weeks

4 weeks

3 weeks

3 weeks

3 weeks

CE – 1 week delayed access to A

46

Time Risk Allowance

Activity TRA -1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

Start 0w

Activity A 1w

Activity B 1d

Activity C 1d

Activity D 0d

Activity E 2d

Activity F 1d


Completion Date 0d

4 weeks

4 weeks

3 weeks

3 weeks

3 weeks

3 weeks

X

Time Risk Allowance

Activity TRA -1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

Start 0w

Activity A 1w

Activity B 1d

Activity C 1d

Activity D 0d

Activity E 2d

Activity F 1d

1 Week


Completion Date 0d

4 weeks

4 weeks

3 weeks

3 weeks

3 weeks

4 weeks

47

Impacts on completion

Activity Float -1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Start services 0w

Activity A 0w

Activity B 0w

Activity C 0w

Activity D 0w

Activity E 0w

Activity F 5w

Activity G 5w 5 weeks float

Activity H 5w

Planned Completion 0w

Completion Date 0w

3 weeks

4 weeks

3 weeks

3 weeks

4 weeks

3 weeks

3 weeks


Activity Float -1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Start services 0w

Activity A 0w

Activity B 0w

Activity C 0w

Activity D 0w

Activity E 0w

Activity F 5w


Activity H 5w


Completion Date 0w Acceleration CE's

3 weeks

4 weeks

3 weeks

3 weeks

4 weeks

3 weeks

3 weeks

48


Activity Float -1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Start services 0w

Activity A 0w

Activity B 0w

Activity C 0w

Activity D 0w

Activity E 0w

Activity F 5w


Activity H 5w

Planned Completion 0w ANYTHING ANYTHING

Completion Date 0w

3 weeks

4 weeks

3 weeks

3 weeks

4 weeks

3 weeks

3 weeks


Activity Float -1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Start services 0w

Activity A 0w

Activity B 0w

Activity C 0w

Activity D 0w

Activity E 0w

Activity F 5w

Activity G 5w

Activity H 5w


Completion Date 0w

3 weeks

4 weeks

3 weeks

3 weeks

4 weeks

3 weeks

3 weeks

49


Activity Float -1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Start services 0w

Activity A 0w

Activity B 0w

Activity C 0w

Activity D 0w

Activity E 0w

Activity F 5w

Activity G 4w

Activity H 4w


1w

Completion Date 0w

3 weeks

4 weeks

3 weeks

5 weeks

3 weeks

3 weeks

4 weeks


Activity Float -1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Start services 0w

Activity A 0w

Activity B 0w

Activity C 0w

Activity D 0w

Activity E 0w

Activity F 5w

Activity G 5w

Activity H 5w


Completion Date 0w

3 weeks

4 weeks

3 weeks

3 weeks

4 weeks

3 weeks

3 weeks

50


Activity Float -1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Start services 0w

Activity A 0w

Activity B 0w 3 weeks

Activity C 0w

Activity D 0w

Activity E 0w

Activity F 5w

Activity G 6w 3 weeks

Activity H 6w


1w

Completion Date 0w

3 weeks

2 weeks

3 weeks

3 weeks

4 weeks

Dealing with Early Warnings

• The Contractor shows on each revised programme:

• The effects of implementedcompensation events

• So – what should be put onto a programme in terms of early warnings?

51


Activity Duration -1 1 2 3 4 5 6 7 8 9 10 11 12 13 14

DIG HOLE 4w

INSTALL PIPE 2w

BACKFILL 2w

INSTALL ACCESS ROAD 4w

OBSTRUCTION ENCOUNTERED

EARLY WARNING NOTIFIED (WORK STOPPED)

RISK REDUCTION MEETING


DIG HOLE 4w

INSTALL PIPE 2w

BACKFILL 2w






DIG HOLE 4w

INSTALL PIPE 2w

BACKFILL 2w






DIG HOLE 4w

INSTALL PIPE 2w

BACKFILL 2w






DIG HOLE 4w

INSTALL PIPE 2w

BACKFILL 2w







DIG HOLE 4w

INSTALL PIPE 2w

BACKFILL 2w





• Risk reduction meeting actions:

• Designer revisits design of access road to consider 3 options

1. Relocate pipe route 2 weeks

2. Breakout section of obstruction 1 week

3. Breakout all of the concrete obstruction 6 weeks

• What is done and what is shown on the revised programme?

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• We are in Week 4 and due to submit a revised programme

• Given the above – what would you show on the revised programme

that

• you are about to submit?

1. Show event on programme but with no effect on planned

Completion

2. Show event and when linked/rescheduled – affects planned

Completion by 1/2/3/4/6/7/8 weeks?

• Consider what time effect should be due this event…


Activity Duration -1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

DIG HOLE 3w

EW001 0w

Risk reduction meeting 1w

EW001 Design review 1w

Complete Excavtion 1w

EW001 Additional Works 1w

INSTALL PIPE 2w

BACKFILL 2w


• Show 3 week delay to the excavation

• Programme narrative explains that EW is under review and further time may / may not result once more details are established

• Next submitted programme shows full effect of what is likely to be a compensation event

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• INTENT

• To show realistic effect to contract on programme and get accepted as latest

Accepted Programme

• FACT

• Show minimum effect that this event will have on programme:

• HAVE already lost one week between EW notified and RR meeting

• WILL take minimum one week for designers to review options

• WILL take minimum one week for quickest solution

• SOLUTION

• Show three week delay to activity - programme

• Programme narrative explains that the event is under review and further time

effect may/may not result once more details established

• Next revised programme will show full affect of what is likely to be classed as a

compensation event at that stage

Assessing Time in CE’s – 63.3

A delay to the Completion Date is assessed as the lengthof time that, due to the compensation event, plannedCompletion is later than planned Completion as shown onthe Accepted Programme. A delay to a Key Date isassessed as the length of time that, due to thecompensation event, the planned date when theCondition stated for a Key Date will be met is later thanthe date shown on the Accepted Programme

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Programme Example

Programme ExampleActivity Duration -1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Start services 0w

Activity A 4w

Activity B 2w

Activity C 4w

Activity D 2w

Activity E 2w

Activity F 4w


Terminal float 1w

Completion Date 0w

• Activities A-E are critical

• Activity F is non-critical

• Delay damages at £10,000 per week

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Start services 0w

Activity A 4w

Activity B 2w

Activity C 4w

Activity D 2w

Activity E 2w

Activity F 4w


Terminal float 1w

Completion Date 0w

• Week 4 submission– A is three weeks behind and able to recover

– Unable to accelerate any future activities

– 1 week terminal float used up therefore pC is 2 weeks late


Start services 0w

Activity A 7w

Activity B 2w

Activity C 4w

Activity D 2w

Activity E 2w

Activity F 4w


Completion Date 0w

• Programme reviewed and accepted at week 5.

• Programme is Accepted and therefore is re-baselined

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Start services 0w

Activity A 7w

Activity B 2w

Activity C 4w

Activity D 2w

Activity E 2w

Activity F 8w


Completion Date 0w

• At week 6 the Project Manager issues CE001 the doubles the scope of Activity F – from 4 weeks to 8 weeks

• What happens to planned Completion and the Completion Date

• Is the Contractor liable for any delay damages (£10k / week)?

Programme Example

• Planned Completion is week 17, Completion Date still week 15 and Contractor liable for £20,000 delay damages?

• Planned Completion week 17. Completion Date moves to week 19 and Contractor liable for £0 damages?

• Planned Completion week 17, Completion Date moves to week 17, and Contractor liable for £0 damages?

• Something else….?

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Programme Example

63.3 A delay to the Completion Date is assessed as thelength of time that, due to the compensation event,planned Completion is later than planned Completionas shown on the Accepted Programme. A delay to a KeyDate is assessed as the length of time that, due to thecompensation event, the planned date when theCondition stated for a Key Date will be met is later thanthe date shown on the Accepted Programme

Programme Example

• Test under 63.3 is change to planned Completion

• Planned Completion is unaffected by the CE

• Answer is (1): Planned Completion is 17, Completion Date still week 15 and Contractor remains potentially liable for delay damages at £20,000

Activity Duration -1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Start services 0w

Activity A 7w

Activity B 2w

Activity C 4w

Activity D 2w

Activity E 2w

Activity F 8w


Completion Date 0w

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Programme Example

• Be careful when a revised programme shows a delay to planned Completion Date

• Check there is nothing you can practically do, i.e.

– Increase resources

– Overlap activities to be a concurrent as possible

– Remember the programme needs to be realistically and achievable

• Remember liability for damages – hence back to RELATIONSHIPS

Summary

• General Overview & principles

• Payment

• Early warnings and compensation events

• Roles and responsibilities, Defects and the programme

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The Cycle of (NEC) Life

The works Pay

EW’s

The works Pay

PayT&D

PayProg

PayCE’s

Questions ?