Managing Reality, 2nd Edition. Book 4: Managing Change

Managing Reality is a series of books written by NEC experts well versed in using NEC3 in industry that explains how NEC3 can be used to optimum benefit in everyday environments. Ultimately, this suite of books forms the complete and authoritative guide to getting the most from NEC3 for your projects.

The books are based on usage of the NEC’s core document – the Engineering and Construction Contract – although the principles and procedures they discuss apply equally across all the documents in the NEC suite.

Managing Reality, 2nd edition, places great emphasis on offering ‘practical tips’ at appropriate points in the text and highlighted examples. Standard forms are included with their usage explained together with checklists. Managing Reality, 2nd edition, are practical manuals designed to aid both existing and new users in implementing the NEC, vital for anyone involved in preparing, administering or contributing to a NEC contract.

Managing Reality Book 4 Managing Change is for those who are managing change under the contract; whether for the employer or the contractor (or subcontractor) the management of change is often a major challenge whatever the form of contract. The ECC deals with change in a different way to traditional forms. This book sets out the steps to efficiently and effectively manage change, bridging the gap between theory and practice.

Compensation events

1.1 Introduction
1.2 Compensation event procedure: background
1.3 What is a compensation event?
1.4 Where to find a list of compensation events
1.4.1 Core compensation events
1.4.2 Main Options B and D only
1.4.3 Secondary Options X14, Y(UK)2 and X15
1.4.4 Contract Data (part one)
1.5 Roles of the Project Manager and Contractor
1.6 Administering compensation events
1.6.1 Changes to the Completion Date
1.6.2 Changes to the Prices
1.6.3 Procedure for change
1.6.4 Cost of preparing for quotations
1.7 Notification of a compensation event
1.7.1 Proposed instruction or changed decision
1.7.2 Notification by the Project Manager
1.7.3 Notification by the Contractor
1.7.4 The four-point test
1.8 Quotations for compensation event
1.8.1 Introduction
1.8.2 When are quotations submitted?
1.8.3 Instructions for quotations
1.8.4 What is included in the quotation?
1.8.5 Acceptance of a quotation
1.9 Assessment of quotations
1.9.1 Assessment by the Project Manager
1.10 The use of the programme for the assessment of compensation events
1.10.1 Programmes which accompany compensation events
1.11 Implementation of compensation events
1.12 Reduction of Prices
1.13 Frequently asked questions
1.13.1 Eight-week barrier
1.13.2 Claims
1.13.3 Project Manager does not notify
1.13.4 Early warnings
1.13.5 Grouping compensation events
1.13.6 Amending the contract prior to execution
1.13.7 Removing compensation events
1.13.8 Adding compensation events
1.13.9 The Project Manager fails to act
1.14 Format of a compensation event quotation
Appendix 1 Compensation event procedure

Schedule of Cost Components

2.1 Introduction
2.2 What is the Schedule of Cost Components?
2.3 Why has this approach been taken?
2.4 Assessment options
2.5 When is the Schedule of Cost Components used?
2.5.1 Priced-based contracts – Options A and B contracts
2.5.2 Cost-based contracts – Options C, D and E contracts
2.5.3 Option F contracts
2.5.4 SCC summary
2.6 Defined Cost
2.7 The Fee
2.7.1 The Fee
2.8 The components of cost included under the full Schedule of Cost Components
2.8.1 Working Areas
2.8.2 Cost component heading 1: People
2.8.3 Cost component heading 2: Equipment
2.8.4 Cost component heading 3: Plant and Materials
2.8.5 Cost component heading 4: Charges
2.8.6 Cost component heading 5: Manufacture and fabrication outside the Working Areas
2.8.7 Cost component heading 6: Design outside the Working Areas
2.8.8 Cost component heading 7: Insurance
2.8A The components of cost included under the shorter Schedule of Cost Components (SSCC)
2.9 Contract Data part two
2.10 Putting it all together for payment – Option C
2.11 Audits
2.11.1 Compensation events
2.11.2 Options C, D and E
2.12 Use of the Shorter Schedule of Cost Components
2.12.1 People
2.12.2 Equipment
2.13 Practical issues
2.13.1 Working on multiple projects on the same site
2.13.2 Example of the principles of the assessment of change
2.13.3 Omissions
2.13.4 Project Manager’s assessment
2.13.5 Numerous small compensation events
2.13.6 Issue of Site Information drawings
2.13.7 Occasions when Defined Cost is not used
2.14 Preliminaries and people costs
2.14.1 Introduction

Appendix 2

Section A: Based on the full Schedule of Cost Components
Section B: Based on the shorter Schedule of Cost Components
Section C: Based on rates and lump sums
Appendix 3 Example people cost calculations
Appendix 4 Comparison between traditional preliminaries build-up and how they relate to SCC and SSCC
Appendix 5 Interrelationship between Contractor’s and Subcontractor’s share on target cost contracts

Index

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Hardcopy
Product code: L08808
ISBN: 9780727757241