NEC programmes: a practical guide for project managers

KEY POINTS

• NEC programmes are a formal contractual document requiring regular updating by the contractor and timely acceptance by the project manager.
• Project managers should help and encourage contractors to produce high-quality programmes that are likely to be accepted – and be clear and correct in cases of nonacceptance.
• Scopes need careful drafting to avoid over-complicating the NEC programming process with additional requirements.

What sets the NEC apart from other contract forms is its unique approach to programming: the programme is a formal contractual document – often regarded as the most important in the contract. Core clauses 3 set out a process of regularly updated programme submissions and, ideally, timely acceptances. When executed well, this process exemplifies collaboration in action, but when mishandled, the programme risks becoming a large, indecipherable report.

The NEC benefits of a collaborative environment supported by regularly accepted programmes are numerous. They include: a clear understanding of project timescales by all stakeholders; assurance that the full scope is captured in the programme; regular opportunities to review progress and identify issues early; understanding of the critical path and how this may have changed as the project progresses; and a reliable baseline for managing changes through compensation events.

Acceptable programmes

A key role of NEC project managers is to review contractors’ submitted programmes to determine whether to accept them. It is clear that it is in everyone’s best interest to ensure that contractors submit programmes that are acceptable so that the above benefits can be realised.

The review process involves much more than simply reading a programme once a month: it requires proper contract administration, clear scope documentation and proactive coaching and encouragement of the supply chain to submit high quality programmes. This is particularly critical in markets like Peru, where NEC experience is less common, but equally important in mature markets such as the UK.

Almost every project stakeholder has a keen interest in project timing so that they know when they will get what they need and when their input will be required. In a high quality and contractually compliant programme, this information is provided through key dates, sectional completion and other milestones. The programme should be more than just a Gantt chart only understood by planners – it must be accessible and meaningful to all involved.

NEC contracts specify that each submitted programme should include: important dates (access dates, completion dates, key dates); sequence and timing of works performed by the contractor, client and others; provisions for health and safety, float, risk allowances and contractual procedures; requirements for equipment, plant and materials, information and other resources necessary for the works; and a statement on how each task will be executed.

Scope drafting

Equally important is understanding what the contract does not mandate as standard. Almost anything can be required of contractors by its inclusion in the scope. Items that NEC contracts do not require as a standard but are often required in reality include: programmes to be submitted using a predetermined software package; compliance with programme quality standards; earned value or cost loading analysis linking work and cost breakdown structures; and other forms of extensive analysis of submitted programmes.

While the above and other elements can be required by the scope, their inclusion must be carefully considered. Clients should think about whether their inclusion will be beneficial to the project, whether they are well understood in the market, whether they will be complicated to manage, and whether they could potentially increase costs and administrative overhead. Clients should remember that the NEC programme’s primary purpose is to communicate clearly up-to-date time-related matters to the project’s stakeholders and ensure this is complemented – not overshadowed by – best practice ideals.

For example, earned value management (EVM) is often required on construction projects in Peru. Although not a standard NEC requirement, it can be included through the scope. To ensure it works effectively alongside the contract’s other provisions, the scope needs careful drafting. NEC recognises that early programmes and estimates are based on incomplete information, and its process of regular submission and acceptance of programmes helps manage changes as projects evolve. When combined with EVM, however, this can create confusion.

NEC does not define a baseline, which is central to any EVM system. Depending on the scope, an accepted programme may update the earned value baseline, the baseline may be fixed at contract award, or – as often seen in Peru – a ‘performance management baseline’ that combines the first programme with implemented compensation events is adopted.

The right approach depends on the nature of the project, as well as the requirements and capabilities of its stakeholders. Clear drafting of the scope, supported by proper engagement with both client and contractor, is essential. This ensures that additional processes are not only implemented effectively but also understood by all parties in relation to the contract, and local norms and expectations.

Managing non-acceptance

For less-experienced NEC users, non-acceptance of programmes is sometimes more common than acceptance. The contract is clear: there are only four valid reasons to not accept a programme: the contractor’s plans which it shows are not practicable; it does not show the information which the contract requires; it does not represent the contractor’s plans realistically; or it does not comply with the scope.

It is crucial that non-compliant programmes are not accepted to maintain the integrity of the process. Equally important is recognising when grounds for non-acceptance do not exist. Common, but invalid reasons for non acceptance include: non-compliance with supposed planning ‘best practices’ not required by the scope; changes to working sequences that do not breach the scope; inclusion of non-accepted compensation events; discomfort with a contractor’s date for planned completion if this is later than the completion date; or fear that acceptance of a programme equals approval of late delivery.

Regarding the last point, clause 14.1 is clear that acceptance of a communication does not change the contractor’s responsibility to provide the works. Programmes that are not accepted erroneously can damage the ‘spirit of mutual trust and co-operation’ that is so important to successful delivery of NEC projects, leading to undesired outcomes. If a contractor is not able to be honest with the project manager about delays or intended working plans, then the benefits to all parties that come from understanding and solving these problems with anticipation will not be realised.

Conclusion

The ultimate aim of NEC programme management is to maintain a contractually compliant, readily understandable programme that allows all project stakeholders to be informed of project progress at any time and to coordinate their efforts effectively.

Well drafted scope documents and fair, consistent administration of programme acceptance and non-acceptance encourage contractors to submit honest, realistic programmes. While a contractor’s programme may sometimes deliver uncomfortable news, timely and transparent communication fosters early resolution of issues within the spirit of mutual trust and co-operation – the very ethos NEC contracts seek to promote.