NEC3 –a Model for Best Practice Project Control · – PM entitled to assess CE’s if no regularly updated programme (64.1 and 64.2) – Clear express responsibilities with PM

NEC3 – a Model for Best Practice Project Control

‘foresight applied collaboratively mitigates problems and shrinks risk’

Dominic Doig BSc (Hons),MRICS,MACostE,MCIarb,CertConstLaw,AdvDipQSEng

What is Project Control?

• ‘Project Control is the discipline of planning, organising, motivating and controlling resources to achieve goals……on time and on budget’

Setting the scene…..our project …..

• New Wind Farm

• £24 million – funded by investors

• 3rd party design substantially complete

• Fixed Price Contract

• Time of the Essence – payback period important

• Project Control critical

• Employer has heard about success at Olympics – wants to use NEC3

• Great start, Employer wants to use NEC…..

How does NEC align with Project Control? Delivering projects on time/on budget…

• Clause 10.1 sends out a clear signal that attitudes have changed……in a spirit of mutual trust and cooperation (case law)……and must be passed down supply chain (26.3)

• Trust is achieved by carrying out your actions in the timeframes allowed (be reliable and consistent)

• Plain English, understandable, short sentences, no cross ref (simple QA manual? 30.2)

• Encourages communication between parties……periods for reply (13.3 otherwise CE 60.1(6))

• Separate communications 13.7

• Provides a set of procedures, a useable framework, who does what and when

• Set of interlocking documents…..promotes consistency

• Stimulates good management….“awakens responsibility” (check out 61.4)

• PM needs to give reasons for any non acceptance….good practice, and possible CE (60.1(9))

• Proactive programme management……not reactive

• Encourages early risk identification

• Cost neutral change management….no hidden costs……

Quick Overview of NEC Contract Structure

• Main Options

• Secondary Options

• Contract Data Part 1 and 2 (Defined terms and Identified terms)

• Pricing document

• Works Information

• Site Information…..

So let’s get the Contract set up correctly to deliver effective Project Control

• Main Option– Employer chosen Priced Contract with Activity Schedule (Option A)

• Secondary Options……consider using the tools available…..

Secondary Options

• X5: Sectional completion (Employer may wish to takeover sections) – see CD Pt1

• X6: Bonus for Early Completion

• X7: Delay Damages (the converse)...provides compensation and limits liability for delay

• X5 and X7 together

• X12 Partnering

– Defines the Partners, Partnering Information and KPI’s

– Spells out what actions the Partners will take

– States how the Partners will work together

– Sets out payments to be made for achieving KPI’s

• X20 KPI’s (not used with X12)

– Incentivisation eg

• incentivise regular PC reports

• Meeting programme update timescales

• Providing accurate EV analysis

• Close out of CE’s within 4 weeks?

• Final account agreed within 4 weeks of Completion

Project Control Strategy

• It is clear that contract strategy, main and secondary option choices influence effective project control

• So what other documents form the NEC contract

Works Information…..how can it affect project control?

• WI specifies and describes the works, and states any constraints on how the Contractor Provides the Works (11.2(19))

• Contractor Provides the Works in accordance with the WI (20.1)

• Provide the Works means carry out the contract and all incidental work, services or actions (11.2(13))…..so here is the opportunity to consider;

– project control process

– WBS reporting / Activity Schedule breakdown

– Earned Value reporting

– Subcontractor reporting

– Contract administration requirements

– Planning/programme requirements – what, how, when, tools, joint programme

– Requirement for photos

– Online admin tools eg 4P…rigid systems can ensure compliance

– Records required etc

– Meeting schedule/agenda/frequency

• If not in WI, then Contractor doesn’t need to do it……or becomes CE (60.1(1))

Site Information…..how can it affect project control?

• Site Information describes the Site and its surroundings

• Relevant for physical conditions CE (60.1(12)) and 60.2

• Wrong/poor info = later CE’s

– Site surveys

– Existing services info

– Water levels/borehole information

Programme – Controlling Time

• Concepts

– Contract Date (11.2(4))

– Starting date (CD1) – 81.1 ‘on risk’

– Access date (CD1)

– Completion (11.2(2))…..a status to be achieved

– Completion Date (11.2(3))

– Key Date (11.2(9)) and 25.3 – benefits for project control

• Programme

– In traditional forms, no requirement for regular updates denies PM info

– In traditional contracts air of mistrust, no sanctions for failure to update regularly

– NEC recognises it is essential for project control

– Original programme forms part of tender or produced within period from Contract Date (CD1)

Programme – Controlling Time

• Information on Programme

– Refer to 31.2 and link to CE’s

– Resources on Programme means PM can view programme from schedule and cost perspective

– 25% of assessment retained until adequate first programme submitted for acceptance (50.3)

– Revised programmes show above + Actual progress, implemented CE’s, dealing with delays, proposed changes (32.1)

• Concept of Accepted Programme

– Regular accurate programme keeping all parties informed and aware of status

– Updated at intervals stated in CD, within period for reply after PM instruction, or as Contractor wishes (32.2)

– Reduces the traditional air of mistrust….programme manipulation

– Provides a forensic analysis to assess CE’s

– PM entitled to assess CE’s if no regularly updated programme (64.1 and 64.2)

– Clear express responsibilities with PM responsible for reviewing and accepting….forces action and agreement…..PM’s don’t be afraid, take responsibility, remember 14.1…

Pricing Model

• Priced Activity Schedule

– Specify the level of detail you require pricing in WI

– Remember payment linked to completion of activities (50.2 and 11.2.27)

– Activities linked to Programme (31.4)

– If Contractor revises method of working so Activity Sch doesn’t align to Programme, he revises Activity Schedule…..both should always be aligned (54.2 and 54.3)

• Only compensation events change Activity Schedule (63.12)

• Programme aids assessment of CE’s….resources are included

• Ensure understanding of Shorter Schedule of Cost Components

– People, People Overhead %, Direct Fee% etc

– Don’t be confused with daywork rates used on traditional contracts

– Ensures effective project control (no loading of rates etc)

Joint Contract Development….pulling it together…

• Ensures clarity of understanding

• Joint induction training

• Factsheet production

• Once its set up, need to get the max from post contract project control…

Change Management• Follow the Early Warning process, which in simple terms is;

– Either party gives Early Warning of matter which ‘could’ increase price, delay completion, delay meeting a key date, or impair performance of the works

– Importantly, Contractor may give EW of a matter which could increase his costs!

– EW are entered in Risk Register

– Each can request the other to attend risk reduction meetings, why?

– To discuss proposals, seek solutions and agree actions to mitigate risks

– PM updates Risk Register and issues

– Get in the habit of letting the other party know of matters

– Don’t be afraid to issue EW’s

– Make sure you convene regular risk reduction meetings …aids project control

– Don’t forget, if a matter later becomes a CE and no EW was raised (when it should have been)…the CE is assessed as if it had.

• Follow the 4 stage CE process….notification, quotation, assessment and implementation

– Make sure you are aware of notified matters (prior to quotation)

– Beware that Contractor has 8 weeks to notify, keep liaising with Contractor to see whats coming…

– Quotation next....3 weeks to quote, 2 weeks for PM’s reply

• Remember the timescales and default position …aim to better them

• Work towards joint agreement of CE’s

Programme Management• Update as required

• Develop jointly agreed programmes

• Integrate subcontractors programme

• Update regularly, don’t wait for contractual requirements (often month end dates)

• Ensure PM accepts the programme

• Ensure project control and planner communicate regularly

Relationship Management• The project control tools are inherent as explained –now set weekly/monthly reviews

• Work to KPI’s in the contract

• Consider engaging auditor to ensure project compliance

• Use NEC Healthcheck service

• Invest in the right team

• Work hard, very hard!

In Summary…• Common statement is that NEC project control is expensive. Not true, these best practice principles should be used on all

projects……

• Remember, upfront effort brings rewards

• ‘Poor Planning promotes poor performance’

• Should see improved project control (on schedule, on budget)