It can be complex for a contractor to demonstrate an entitlement to additional time under an NEC4 or NEC3 Engineering and Construction Contract (ECC) due to the administration of multiple compensation events and absence of an up-to-date accepted programme.
This article considers the concept of the accepted programme in the context of compensation event quotations and sets out a practical approach to demonstrating an entitlement to additional time.
Accepted programme
The concept of the accepted programme plays a significant part in managing an ECC project. It is important to recognise the distinction between the accepted programme regime, found in clauses 31 and 32, and the procedure for adjusting the completion date under the compensation event machinery in clause 60.
Contractors sometimes (wrongly) consider that submission of a revised programme for acceptance under clause 32 represents a claim for an extension of time and, project managers sometimes (unnecessarily) resist accepting revised programmes for fear of conceding entitlement.
However, the accepted programme should represent, at any given point in time, the contractor’s realistic and practicable plans for completing the works. It should incorporate the information required under clauses 31 and 32, which includes showing on each programme, ‘the order and timing of the operations which the Contractor plans to do in order to Provide the Works’.
ECC’s intention is to benefit both the project manager and contractor by having an up-to-date, agreed and realistic programme from which progress can be managed and monitored.
Clause 32 states that the contractor includes any other changes which it ‘proposes to make to the Accepted Programme’. This should include the forecast effects of all known delays and compensation events (implemented or not) at each progress date, such that the overall programme is realistic and practicable.
In the absence of such an approach, the planned completion date shown on a submitted revised programme may not be realistic, giving rise to the project manager’s right to not accept the submission on the basis that the, ‘Contractor’s plans which it shows are not practicable’ and that, ‘it does not represent the Contractor’s plans realistically’ (clause 31.3).
Assessing compensation events
It is sometimes the case on NEC projects that there is not an up-to-date accepted programme, either due to the contractor’s failure to provide a submission as required or due to the project manager’s reluctance to confirm acceptance.
Therefore, when assessing the effects of a compensation event, there can be a significant variance between the progress date of the latest accepted programme and the date of the compensation event. Delay analysis using the outdated accepted programme then becomes hypothetical, given the programme does not accurately model the status of the works at the time of the event.
In such circumstances simply updating the latest accepted programme to reflect the effects of a compensation event is unlikely to discharge the obligation to identify the length of time that, due to the compensation event, planned completion is delayed (clause 63.5 in NEC4 ECC, 63.3 in NEC3 ECC).
The requirement is to assess the impact of the compensation event on the, ‘programme for remaining work’ and not necessarily the accepted programme (clause 62.2). It is notable that, unlike the references made to the accepted programme elsewhere, clause 62.2 does not refer to a term that is defined in the contract and, as such, no specific programme is being referred to.
Programme for remaining work
It is therefore considered that the contract requirement is to address the realistic and practicable programme for remaining work that exists at the time that the compensation event arose. If that ‘programme for remaining work’ is altered by the compensation event, the contractor is required to submit, ‘alterations to the Accepted Programme’ in its quotation.
The starting point for the assessment should therefore be the latest accepted programme, but this should first be adjusted such that it details a reasonably accurate estimate of the programme for remaining work at the time of the compensation event.
To do so, progress achieved on all activities up to the date of the compensation event should be incorporated, in addition to the forecast effects of any other compensation events and other known delays which have arisen in the period between the latest accepted programme and the compensation event in question. This programme should then be rescheduled to produce an accurate and realistic programme for remaining work and date of planned completion.
Once the first stage has been carried out, the effects of the event can then be incorporated onto the programme for remaining work, such that the delay to planned completion due to the compensation event can be accurately assessed.
Conclusion
It is sometimes the case that NEC contractors approach the time element of compensation event quotations by inserting each compensation event on to the latest accepted programme, irrespective of whether that accepted programme accurately depicts the status of the works at the time of the compensation event. The resultant analysis is not likely to demonstrate the delay to planned completion due to each compensation event, as required by core clause 6.
Instead, to satisfy clause 6, a two-stage approach can be adopted. Firstly, the contractor needs to produce an accurate programme for remaining work for each compensation event quotation. This should be achieved by adjusting the latest accepted programme to take into account progress of the works in addition to the forecast effects of all known delays and compensation events.
| Secondly, the effects of the compensation event can then be incorporated onto the programme for remaining work, such that the delay to planned completion due to the compensation event can be accurately assessed. By following this two-stage procedure it is far more likely that an entitlement to additional time can be promptly agreed by the project manager, allowing the focus to remain on delivery of the works. |
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- Author
- ALEX BURTON, FTI CONSULTING – CONSTRUCTION SOLUTIONS
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