NEC - Compensation Events Programme & Delay Issues

NEC - Compensation EventsProgramme & Delay Issues Richard Bayfield BSc., MSc., CEng., FICE, FCIArb www.richardbayfield.com

Original Brief • CE’s - Programme and Delay Issues • Compensation, Delay (i.e. analysis) • Analysis – examination, investigation, scrutiny… • Synthesis – creation, making, fusion……. • NEC – predicated on “synthesis” • Traditional Contracts – emphasis on “analysis” • Synthesis – pro-active – pre-empting • Analysis – re-active – history (delay) www.richardbayfield.com

Introductory Question • What is the purpose of a programme? • What is the purpose of a programme under the NEC? www.richardbayfield.com

History of Construction in 3 Slides www.richardbayfield.com

www.richardbayfield.com

Industry Context and NEC • Complexity - technical • Complexity – people / organisations – intrinsic need for improved communications • Fragmentation of industry • Different interests • Disputes arises from poor communication • NEC addresses these issues at a strategic level www.richardbayfield.com

Back to Programme – who is programme for? • Client? • Contractor? • Project Manager? • Designer? • Some one else – the delay analyst? • THE PROJECT www.richardbayfield.com

Programme – purpose? • Project Management – Martin Barnes – 2 rules • 1. "It is only possible to manage the future". • 2. "All decisions must be directed towards meeting the clients' objectives". • Programme - As a tool to help manage the project / the remaining activities (the future) • Programme - Encourage “what if” scenarios • Programme - Pre-empting – if decision for x is delayed what is effect? www.richardbayfield.com

Programme Management. • Many industries including construction have success stories going back decades - Not a new invention • “….the traditional standard forms are weak on programme techniques……” • Prof Capper – SCL Paper Sept 1994 • “Contract” is a tool for managing risk (Prof Capper) • No real difference whether programme is under NEC or not (strategically) • Proper Programme Management adds value and reduces risk whatever the contract form www.richardbayfield.com

Programme Management • There is no reason why these techniques (critical path programming) should not be applied in a consensual manner within the contract and on a real-time basis in order to generate a regularly updated analysis of employer and contractor delay periods.” • - Professor John Uff QC – Are we all in the wrong job? – SCL Paper July 2001” • SCL Delay & Disruption Protocol – 2002 www.eotprotocol.com www.richardbayfield.com

NEC Programme Clauses – 3 Time • Cl 30 – Starting & Completion • Cl 31 – The Programme – requirements (31.3) • CL32 – Revising the Programme • Cl 33 – Possession • Cl 34 – Instructions to stop / start • Cl 35 – Take over • Cl 36 – Acceleration www.richardbayfield.com

NEC Programme Philosophy – Accepted Programme • “The programme is an important document for administering the Contract. It enables the PM and Contractor to monitor progress and to assess the time effects of compensation events including changes to the completion date.” - from Guidelines to Cl 31 • i.e it is a methodology for management of the overall project - Implications? • Accepted Programme – base document for assessing time and cost of CE’s www.richardbayfield.com

Assessing Compensation Event (CE) • Cl 63.3 – A delay to the Completion Date is assessed as the length of time that, due to the compensation event, planned completion is later than Planned Completion as shown on the accepted programme. www.richardbayfield.com

NEC Programme update for Compensation Event (CE) • Objective is anticipate the effect of the CE on the programme before it happens • Completion date is then revised via the accepted programme • Associated costs dealt with in advance as a a quote, not as part of an audit www.richardbayfield.com

NEC Programme update for Compensation Event (CE) • Forecasting – prospective - quotation • Allows Choice (but not always) • What if? • Subjectivity • Synergy • Fair • “Acceptable” www.richardbayfield.com

HONDA NEP PROJECT www.richardbayfield.com

Case Study – Major Client • 2 Similar Projects on same site • Built 10 years apart • 40% Financial improvement on second project • Positive Global comparison • British Construction Industry Award 2002 • NEC “philosophy and methodology” project www.richardbayfield.com

Case Study – Major Client • “Compensation Events” dealt with on a contemporaneous basis – “managed not audited”. • Final Accounts resolved within 3 months of PC • Same methods for construction and process contractors • Transparent programme updates every week. www.richardbayfield.com

BRITISH CONSTRUCTION INDUSTRY AWARDS 2002 • Honda's new European plant at Swindon took the Building Award. • The "one team one goal" culture of openness and transparency at Honda's New European Plant, and the company's refusal to accept the status quo, has been rewarded with a building cost of only £701/sq m - a 40% improvement on the cost of the original plant at Swindon completed nine years earlier. www.richardbayfield.com

Programme Management • Transparency / visibility • Emphasis on Communications • Emphasis on Pre-planning • Emphasis on detailed Programmes • Weekly updates for actual progress • Standard software (MS Project) • Compliance by all trade Contractors. www.richardbayfield.com

Programme meeting using whiteboard www.richardbayfield.com

Whiteboard Meetings • Consensual + Visible • Identify potential conflict early • No where to hide • Instant record + email • Saves Management time • Synthesis not Analysis • Meeting Minutes – see example www.richardbayfield.com

Overview • Methodology works - • Addresses some of the industry failings • BUT • Synthesis is harder than analysis • Needs strong Client commitment (more than just words – needs resources as well!) • Needs a competent TEAM with adequate specialist support www.richardbayfield.com

Finally • Project successes due to: • Synthesis not Analysis • Notes at www.richardbayfield.com www.richardbayfield.com

NEC - Compensation Events Programme & Delay Issues