Why an up-to-date accepted programme is essential for success

Key Points 

• Accepted programme is a defined term in NEC4 ECC and a vital management tool.
• Some projects run into problems when they do not have a consistently and regularly updated accepted programme.
• Correct and fair assessment of compensation events is particularly difficult without an up-to-date accepted programme.

Administration of the programme is a vital part of an NEC4 Engineering and Construction Contract (ECC). Part of the core contract clauses, programme management is the basis for managing the flow of a project, requiring considerable details of the contractor’s planned delivery of the works. It also creates a series of obligations and entitlements that have contractual significance.

The intention of the programme management procedure is to have a regularly updated programme to facilitate the NEC objectives of ensuring the parties know what they have to do and when they have to do it, and to assist with managing associated risks. The ‘Accepted Programme’ is defined at clause 11.2(1) as ‘the programme identified in the Contract Data’ or ‘the latest programme accepted by the Project Manager’.

However, many NEC projects often do not have a consistently and regularly updated accepted programme, which can be problematic. Frequently this is because the parties do not fully understand what should be included in the accepted programme or the contractual processes for updating it.

Programmes submitted for acceptance

ECC clause 3 details what should be included the first accepted programme. The contractor needs to show the order and timing of the contractors works, the order and time of the works of the client and others, and what the client is to provide and by when. The information should be clearly detailed to ensure the parties are aware of their contractual responsibilities.

An anomaly is that a programme referenced in the contract data is not obliged to comply with clause 31.2, but it is nevertheless the first accepted programme. Under ECC a programme may be referenced as an optional requirement in contract data part two or, where this is not the case, a first programme is required to be submitted to the project manager for acceptance within the period stated in the contract data (clause 31.1). When submitting a first programme for acceptance, clause 31.2 states what the contractor needs to include on all programmes submitted for acceptance including the starting date, access dates, key dates, the completion date and planned completion.

Subsequent programmes submitted for acceptance must also show the requirements stated at clause 31.2. ECC requires the contractor to submit updates at regular intervals, with this period noted in the contract data. Clause 62.2 further supplements this where, if a compensation event delays the completion date or key dates and the programme for remaining work, the contractor includes these alterations to the accepted programme in the quotation. Quotations, including programmes for acceptance are issued within 3 weeks of being instructed to do so.

However, the project manager, in agreement with the contractor, can extend the time allowed to submit the quotation and programme for acceptance or the reply before submission is due.

Under clause 32.1, a revised programme for acceptance is also required to show actual progress achieved on each operation, the effect of timing of remaining works, how the contractor plans to deal with any delays, plus any other changes to programme the contractor proposes to make. These are additional to the requirements at clause 31.2 for the programme submitted for acceptance.

Furthermore, clause 32.2 requires the contractor to submit a revised programme if: no acceptance has been notified by the project manager within the period for reply following a project manager’s instruction; when the contractor chooses to; and at no longer intervals than stated in contract data.

Response by the project manager

Where a programme is submitted for acceptance, the project manager is obligated to respond within two weeks, either accepting the programme or giving reasons for not accepting it (clause 31.3). The reasons for not accepting the programme are limited to the following: the contractor’s plans are not practicable; it does not show the information required by the contract; it does not represent the contractor’s plans realistically; or it does not comply with the scope.

Note the programme is not ‘approved’ by the project manager, but accepted, which is effectively a response of non-objection. It is also one of the few communications that require an acceptance response to be ‘notified’ by the project manager, demonstrating the importance of the response.

The project manager is required to notify the contractor of acceptance or non-acceptance. If the project manager does not notify within the period allowed, the contractor may notify the project manager of that failure. If this failure continues for a further week after the contractor’s notice, then the programme is treated as default-accepted by the project manager. This provides a solution to situations where the project manager does not respond.

Under clause 13.4, the project manager replies to a communication submitted or resubmitted by the contractor. If the reply is non-acceptance, the project manager must state reasons in sufficient details for the contractor to correct the matter.

What accepted programmes are used for

The accepted programme ensures all parties understand their programme-related obligations and the methods of delivery; enables prompt assessment of compensation events as they occur, including the possible effects on time; and stimulates good project management and collaboration. The issues and problems that arise are required to be resolved as work progresses.

The client and contractor need to know when they are to provide certain things and the dates and times when the client or others are providing their programme-related obligations. This allows the project manager, the client and contractor to track progress by operation or group of operations against any stipulated contract dates.

It is also used to assess the impact of compensation events when they potentially change the completion date, key dates or remaining works (clause 63.5).

The accepted programme that is current at the time of the compensation event dividing date is likely to be a minimum of 4 weeks old. The project manager includes in their notification an instruction to submit a quotation if the compensation event changes a key date or the completion date.

Issues arising from an out-of-date programme

Failure to get the first submitted or revised programme accepted is likely to create numerous problems for the parties, especially if there are many revised programmes submitted for acceptance that have also not been accepted. The key issues and questions arising from using an out-of-date accepted programme are as follows.

First, how does the project manager know and monitor the progress achieved in the period since the last accepted programme, what operations (if any) are in delay and what is the contractor doing to mitigate? Are the planned completion and completion dates still being met?

Under clause 31.2, there is a requirement to show what is to be provided, by when and by which party. The project manager provides access dates, key dates and completion dates and needs to understand if these will be met on each revised programme for acceptance. These could be unknown as changes may have occurred to dates and deadlines.

Under clause 33, access to and use of the site, the project manager needs to know if the contractor will be ready to start works on site on the access dates, and the contractor needs to know if it will be granted access by the project manager. Further, this could lead to a compensation event under 60.1(2) for failure to give access.

The timing of the work by the client or others, and acceptance dates by the project manager, cannot be assessed or known if the current programme has not been accepted. Are the access dates still relevant, and when does the contractor get access?

Another issue is whether planned completion and completion dates are still relevant. If there a risk to these dates, what mitigation is required? This could be deemed an act of prevention under the contract, and the contractor could seek a compensation event under clause 60.1(5) or possibly 60.1(19).

Other matters include impacts if there is a requirement to produce earned value analysis. This is almost impossible to produce accurately without a current up-to-date accepted programme. Also, there are client insurances, the contractor’s performance bonds, ultimate holding guarantees, and other associated costs relating to statutory authorities, landowners and interested third parties that all need consideration for either extension or release.

Pressure to catch up can lead to acceptance of the programme by the project manager that includes incorrect timescales or missing key information, such as compensation event impacts. All the above can lead to disputes which cost time and money, can disrupt and potentially damage working relationships, and can sometimes lead to a lack of trust and collaboration.

Impact on compensation events

With an out-of-date accepted programme, the impacts of compensation events are difficult to assess as the latest accepted programme is the one used for assessment. If an out-of-date accepted programme is used it can lead to inaccurate compensation event assessments, possibly disputes over delay entitlement and difficulty in managing the project progress, potentially impacting the completion date and key dates. Further, the programme, in terms of the record of the progress of the works and the remaining work, can be lost.

The closer the accepted programme is to the dividing date, the less likely it will be for the above difficulties to occur. It will be easier for the contractor to quote and the project manager to accept the compensation event quotations.

However, under the fourth bullet of clause 64.1, the project manager is required to assess the compensation event ‘if, when the Contractor submits quotations for the compensation event, the Project Manager has not accepted the Contractor’s latest programme for one of the reasons stated in the contract.’ And under the third bullet of clause 64.2, the project manager assesses the programme for the remaining work and uses it in the assessment of a compensation event if ‘the Project Manager has not accepted the Contractor’s latest programme for one of the reasons stated in the contract.’

How does the project manager assess the effect of the compensation event in the above circumstances? This is where collaboration with the contractor is required. On larger projects the project manager may have their own programming assistance, and possibly engineers and surveyors to assist. But on many projects, this is not the case, and the project manager will be solely responsible for assessing the effects of the compensation events. If compensation events are not assessed promptly and the accepted programme is not updated, the project manager may be forced to make a retrospective assessment, which can be complex and possibly lead to disputes.

Conclusion and recommendations

ECC encourages participants to make sure they have an up-to-date and realistic programme – this is simply good management. It is in all the parties’ interests to get the revised programmes accepted within the time periods after submission. The parties need to work together to do this, especially when assessing compensation event impacts.

Successful NEC projects require a mutual understanding and intent that it is in both parties’ interest to assess compensation events in good time. However difficult compensation events are to assess at the time, they will only get worse with time and become more subjective. To make things easier, numerous small or minor compensation events could be assessed as one.

Each programme period should assess the cumulative effect of that month’s compensation events and ensures that individual programmes, once added together, capture the full movement to planned completion. The parties should also make sure that wherever there is a delay, there are ‘compensation event’ labelled operations in the programme critical path that demonstrate the delay being assessed.