Mission Impossible? A Brief Guide to NEC Programmes

Author: Eugene Lenehan

May 2023

INTRODUCTION

It is thirty years since the NEC was first launched, and I have still not found a programme that complies with the contract requirements! NEC-compliant programmes, if they exist, are far more than just a bar chart, they amount to a collection of documents, including method statements, resource schedules and information required schedules.

NEC PROGRAMMES

Programmes are crucial for the success of construction projects. Without a good programme, proper management of a project is almost impossible. It is also true that most disputes involve programme delays, and assessing the impact that compensation events have on time. The NEC contract includes detailed contractual provisions regarding the programme, which are aimed to encourage good project management, by not only ensuring that all parties are aware of what they must do and when, but also by promoting swift and prospective assessment of compensation events.

In practice, there is a lack of adherence to the NEC’s demanding programme procedures. There are a wide variety of reasons for this, but all too often it is because parties do not fully recognise what an Accepted Programme should contain, or understand the processes for updating it.

OBLIGATION TO PROVIDE A PROGRAMME

The Contractor must provide a programme, and revised programmes, in accordance with the following clauses:

Clause 31.1: If a programme is not identified in the Contract Data, the Contractor submits a first programme for acceptance within the period stated in the Contract Data

Clause 32.2: The Contractor submits a revised programme to the Project Manager for acceptance:

  • within the period for reply (stated in the Contract Data) after the Project Manager has instructed him to,
  • when the Contractor chooses to and, in any case,
  • at no longer interval than the interval stated in the Contract Data, from the starting date until Completion of the whole of the works.

Clause 62.2: With a quotation for a compensation event, when the programme for future works is affected.

In terms of what should be shown on each programme, clause 31.2 of the NEC contracts contains a long list of requirements. The importance of complying with clause 31.2 can be seen at clause 31.3, which provides that a reason for the Project Manager not accepting a programme is “it does not show the information that this contract requires” (i.e., what clause 31.2 requires).

MISSION IMPOSSIBLE?

As a guest speaker at the 2014 Cambridge Seminar, I controversially explained to a room full of NEC evangelists why programmes that comply with clause 31.2 are as rare as hens’ teeth i.e. they do not exist!

Despite the NEC’s popularity having soared in the 30 years since the first edition was launched (in 1993), I can confidently say I have still never found a programme that is fully compliant with the contract. Over the years I have been in the offices of many main contractors (whilst assisting with claims / adversarial issues, and delivering seminars / workshops). In all this time I have never seen a contractor’s programme that comes close to complying with clause 31.2. Hence, I continue to conclude that my search for an NEC-compliant programme is akin to the quest for the holy grail. It is mission impossible!

CLAUSE 31.2

As explained in the Preface to the NEC4, one of the NEC’s objectives is to “facilitate and encourage good management of risks and uncertainties”. One of the main tools used by the NEC to achieve this objective is the programme, which is required to contain an abundance of detail. The drafters of the NEC considered that detailed and prescriptive programming practices are essential for better project management and to help avoid time-related disputes.

NEC4 clause 31.2 provides this detail, as follows:

The Contractor shows on each programme which he submits for acceptance 

  • the starting date, access dates, Key Dates and Completion Date, 
  • planned Completion, 
  • the order and timing of the operations which the Contractor plans to do in order to Provide the Works, 
  • the order and timing of the work of the Client and Others as last agreed with them by the Contractor or, if not so agreed, as stated in the Scope, 
  • the dates when the Contractor plans to meet each Condition stated for the Key Dates and to complete other work needed to allow the Client and Others to do their work, 
  • provisions for
  • float, 
  • time risk allowances, 
  • health and safety requirements and 
  • the procedures set out in this contract, 
  • the dates when, in order to Provide the Works in accordance with his programme, the Contractor will need 
  • access to a part of the Site if later than its access date, 
  • acceptances, 
  • Plant and Materials and other things to be provided by the Client and 
  • information from Others, 
  • for each operation, a statement of how the Contractor plans to do the work identifying the principal Equipment and other resources which he plans to use and 
  • other information which the Scope requires the Contractor to show on a programme submitted for acceptance.

A programme issued for acceptance is in the form stated in the Scope”.

Clause 31.2 is one of the longest in the contract, but it has been broken down into numerous bullet points to make the provisions easier to understand. I provide below some explanation in respect of these bullet points.

Starting Date, Access Date, Key Dates and Completion Date

The first bullet point in clause 31.2 is “the starting date, access dates, Key Dates and Completion Date”. These are all fixed dates to be found in Part One of the Contract Data, including in respect of sectional completion dates if secondary option X5 is used.

The starting date and access date will never change. Whilst Key Dates and the Completion Date are fixed at any one time, they can be changed by the compensation event mechanisms within the contract.

In addition to the programme stating the access date, the first sub-bullet point of the seventh main bullet point calls for “the dates when, in order to Provide the Works in accordance with the programme, the Contractor will need access to a part of the Site if later than its access date”.

Planned Completion

Planned Completion is a variable date, which indicates when the Contractor plans to complete. If secondary option X5 is used, it will include any planned sectional completion dates. Planned Completion dates will not be found in the Contract Data. Instead, they are determined by the planned durations and sequencing of the Contractor’s operations. The ‘planned Completion’ date will be the date that the last critical path activity is planned to be completed. This could be before, on or after the contractual Completion Date.

If the Accepted Programme shows planned Completion earlier than the Completion Date, the period between the two is ‘terminal float’, which belongs to the Contractor.

Whilst the Contractor’s initial programme is highly unlikely to include a planned Completion date that is after the contractual Completion Date, the planned Completion date might become later than the contractual Completion Date if the works are delayed for reasons which are not compensation events.

Order and Timing of Operations 

The third bullet point in clause 31.2 is “the order and timing of the operations which the Contractor plans to do in order to Provide the Works”. The fourth bullet point is similar, but is in respect of the “work of the Client or Others”. These bullet points deal with the main aspect of a programme, and prescribe the key information that any construction professional expects to see on a programme i.e., the start and end dates of each operation, and its sequence.

The Contractor must ensure that the programmes it submits capture the full scope of the Works and contain realistic durations. The NEC does not define what is meant by ‘operations’, so it is up to the Contractor to break his work down into the level of detail that he considers suitable. This not only includes the physical work activities on site, but presumably also design and procurement activities.

The third and fourth bullet points do not specify whether the programme is to be logic-linked with a critical path, or resourced. However, later bullet points effectively require such additional information.

In respect of the fourth bullet point, it is pointed out that there is a compensation event category listed in NEC in respect of the Client not providing “something which it is to provide by the date for providing it shown on the Accepted Programme” (clause 60.1(3)). If the Contractor’s programme does not show the things the Client is to provide, then this compensation event cannot occur.

Dates when the Contractor plans to Complete Works for Key Dates and Other Works

The dates required by the fifth bullet point (including in relation to any Key Date in the contract) are similar to planned Completion.

The Contractor is free to complete its obligations in respect of each Key Date prior to the Key Date identified in the Contract Data, but the programme must identify when the Contractor plans to meet such conditions. Likewise, the Contractor’s programme must also identify when it plans to complete any activities it is required to carry out in order to allow the client or ‘Others’ to do their work.

Provisions for Float and Time Risk Allowance

The sixth bullet point includes four sub-bullet points, the first of which means that the programme must identify float.

‘Float’ is spare time in the programme. It is the amount of time an operation can be delayed without impacting subsequent tasks, or the project’s overall completion. Hence, it is not enough for the programme to contain accurate durations for each operation, they must effectively be logic linked.

Although clause 31.2 does not expressly call for the critical path to be identified, it is effectively there by default i.e., the operations on the critical path are those where float equals zero.

Float indicates which operations can slip in time without affecting planned Completion. Once the operations have been logically linked, the planning software will determine the planned Completion, and which operations include float. The operations that cannot slip without planned Completion being delayed are on the critical path.

With NEC programmes it is important to make a distinction in respect of terminal float, which is the period between the Contractor’s planned Completion and the Completion Date. With NEC contracts, terminal float is ‘owned’ by the Contractor. This is important because, if there is a compensation event that impacts the critical path, the Contractor will keep the benefit of the terminal float.

The second sub-bullet point of the sixth main bullet point refers to ‘time risk allowances’. This term is an NEC phrase, but it is not defined within the contract. Time risk allowance can be described as a type of float. However, whereas traditional float occurs ‘between work activities’, time risk allowance is usually found ‘within an activity’.

More specifically, time risk allowances are periods included in the programme for specific matters which are at the Contractor’s risk and have a significant chance of occurring. Clause 31.2 makes it clear that time risk allowances must be identified. However, the contract does not prescribe how they are identified. Consequently, they can be shown as separate activities in the programme, or integrated within the planned activity durations.

In effect, the Contractor must consider what elements of risk it has applied to each operation, and to identify how much time it has allowed for this risk when ascertaining the operation’s duration. A typical example would be the allowance the contractor includes in its programme for possible lost time caused by weather conditions which are not so severe as to constitute a compensation event. In theory, this is the sort of thing a Contractor would always have considered during the estimating phase, but without formally recording and naming it as ‘time risk allowance’.

If the programme does not identify the Contractor’s time risk allowances, he could lose out on their benefit.

Clause 63.8 (or clause 63.6 in NEC3) requires assessments of compensation events to include both time risk allowances and cost risk allowances. If the programme is not properly logic linked/sequenced, the effect of compensation events could not be assessed.

Provisions for Health and Safety Requirements

The third sub-bullet point of the sixth main bullet point refers to provisions for “health and safety requirements”.

Clause 27.4 requires the Contractor to comply with any health and safety requirements stated in the Scope (/Works Information), in addition to his implied obligation to comply with statutory health and safety obligations.

The primary UK domestic legislation relevant to health and safety is the Health and Safety at Work etc. Act 1974, but this bullet point at clause 31.2 would also include in respect of the Construction (Design and Management) Regulations (“CDM”), which impose statutory duties on the Principal Contractor and others.

This clause could apply to the Contractor’s obligations in respect of the Health and Safety File, and revisions to the Construction Phase Plan. For example, whilst CDM regulation 12(5) requires the Principal Designer to prepare the Health and Safety File, the information necessary for the Health and Safety File is likely to be strewn across the contractor’s supply chain. Hence, the contractor has a duty to provide this information, and to ensure that all subcontractors do the same.

CDM regulation 12(4) also provides obligations to revise the Construction Phase Plan, as follows:

Throughout the project the principal contractor must ensure that the construction phase plan is appropriately reviewed, updated and revised from time to time so that it continues to be sufficient to ensure that construction work is carried out, so far as is reasonably practicable, without risks to health or safety”.

Revisions of the Construction Phase Plan are likely to be necessitated by variations (i.e., changes to the Scope / Works Information).

Provisions for the Procedures Set Out in the Contract

The fourth sub-bullet point of the sixth main bullet point refers to provisions for “procedures set out in this contract”. 

It is suggested that the purpose of this bullet point is somewhat vague, and its effect quite wide-ranging. However, it would not unreasonably include respect of:

  • the design submission process relating to each element of the Works to be designed by the Contractor and accepted by the Project Manager (refer to clause 21);
  • the process of any necessary approval from ‘Others’ regarding the Contractor’s design (clause 27.1); and
  • obtaining acceptance to subcontract works (refer to clause 26).

Acceptances

The second sub-bullet point of the seventh main bullet point requires each programme to show “the dates when, in order to Provide the Works in accordance with his programme, the Contractor will need acceptances”.

There are numerous issues where the Contractor is required to obtain acceptance from the Project Manager, including in respect of the following:

  • Contractor’s design (clauses 21.2 and 21.3).
  • Each proposed Subcontractor (clause 26.2).
  • Details of each proposed subcontract, unless its will be an NEC subcontract (clause 26.3).
  • Insurance certificates, for each renewal of the insurance policy (clause 85.1).

On a building project, a main contractor would typically use approximately twenty-five subcontractors. In order not to cause any delay to the programme, each trade will have to be sublet by a particular date. Hence, as the project progresses, and the contractor seeks to procure a subcontractor for each trade, it will have to submit to the Project Manager for acceptance the name of circa twenty-five proposed subcontractors.

Clause 31.2 requires the programme to identify the date that each of these twenty-five subcontractors must be accepted. On this basis, I would expect the first few programmes to include circa twenty-five milestones, one for each subcontractor acceptance.

A large proportion of construction projects are design and build. On design and build NEC projects, clauses 21.2 and 21.3 require the Contractor to submit for acceptance details of its design (to the extent prescribed in the Scope / Works Information). Consequently, there should be a milestone on the programme for the date the Contractor will require acceptance for each relevant element of design.

Things to be Provided by the Client and Others

The third sub-bullet point of the seventh main bullet point refers to the dates when, in order to Provide the Works in accordance with his programme, the Contractor will need “Plant and Materials and other things to be provided by the Client”.

Whilst not many projects involve the Client providing the Contractor with Plant and Materials, it is not unusual for the Contractor to require outstanding design information. Traditionally, contractors might issue an ‘Information Required Schedule’. On NEC projects, Contractors should issue such information as part of its programme, including linking the requirements to the applicable work activities.

The fourth sub-bullet point of the seventh main bullet point also refers to the dates when, in order to Provide the Works in accordance with his programme, the Contractor will need “information from Others”.

Resourced Method Statements

The eight main bullet point requires the Contractor to provide a statement “for each operation of how the Contractor plans to do the work identifying the principal Equipment and other resources which he plans to use”.

This bullet point is drafted widely, applying to all operations of the Contractor’s programme. Each statement is required to include details of not only how the Contractor plans to carry out each operation, but also to identify the principal items of Equipment (i.e., machinery / plant) and “other resources”. The references to ‘other resources’ would obviously include labour, and arguably also materials, management and designers.

The drafting of this bullet point has subtly changed since the NEC2, which referred to a “method statement”. It is understood that the re-drafting was to move away from the health and safety implications associated with the term ‘method statement’. Nevertheless, it remains clear that this bullet point requires some sort of method statement for each operation on the Contractor’s programme.

Whilst the programme can itself be drafted to include details of labour and Equipment, this bullet point makes it clear that an NEC programme is more than the traditional bar chart type programme. Practically speaking, to also provide method statements for each operation would result in something more akin to a lever arch file with numerous dividers separating each statement.

I fail to see the need for the Contractor to provide this level of information with each programme. Indeed, the Contractor will be unable to provide this information for many operations where it has not yet procured a subcontractor. It is not until the Contractor has procured its specialist subcontractors that it can develop its programme and provide method statements.

With over 20 years’ experience of NEC projects, I have never seen anything close to this level of information provided with any programme.

Instead of every programme revision providing a method statement for every operation, I suggest that the programme be accompanied by a narrative:

  1. explaining what has changed, and why, since the last programme;
  2. concentrating on forthcoming activities, especially those on, or close to, the remaining critical path; and
  3. providing details on the labour and Equipment resources expected for each trade for which the Contractor has procured its subcontractor.

This statement should be issued with every programme submitted for acceptance. I believe this would help the Project Manager understand the programme, and hence speed up the acceptance process.

Other information Required by the Scope 

As if the rest of clause 31.2 did not ask for enough detailed information, the last bullet point calls for the programme to include “other information which the Scope requires”.

Form Stated in the Scope

NEC4 adds an additional line to the end of clause 31.2, the programme must be in the form stated in the Scope. The parties can include a requirement for the programmes to be created using a specific programming software package, such as Powerproject or Primavera.

Conclusions Regarding Clause 31.2

For the Contractor to expect acceptance of its programme by the Project Manager, it should show all the information listed under clause 31.2. This is a highly daunting task, involving vastly more information than has traditionally been included in construction programmes.

Some of the NEC requirements for programmes are simple to include, such as the starting date, planned Completion and the Completion Date. However, other aspects are far more challenging, e.g. providing a statement for each operation, including identifying the resources involved. In fact, the Contractor is unlikely to have all this information until some way through the project, after it has procured the relevant subcontractors.

The obligations at clause 31.2 are more difficult for design and build projects, with contracts invariably being let on the basis of preliminary drawings. During the early stages of such projects, there is uncertainty regarding the final design details, which will restrict the Contractor’s ability to comply with several criteria at clause 31.2.

In terms of a solution, I suggest there is a need to amend the NEC clauses relating to the programme. I believe the contract must provide a more pragmatic approach, with some flexibility to the criteria at clause 31.2, including to take account of how the Contractor will not have some of the required details until later stages of the project.

ACCEPTANCE OF THE PROGRAMME

Under clause 31.3, within two weeks of the Contractor submitting a programme to the Project Manager for acceptance, the Project Manager is to either accept a programme or notify his reasons for not accepting it. Under the Contract there are four reasons for rejecting the programme:

  • Contractor’s plans shown are not practicable
  • It does not show the information which the Contract required
  • It does not represent the Contractor’s plans realistically, or
  • It does not comply with the Works Information.

Under NEC4, clause 13.4 has been amended such that, if the Project Manager does not accept a programme, his response must state his reasons “in sufficient detail to enable the Contractor to correct the matter”. Hence, it is not enough for a Project Manager to say he is rejecting a programme because the Contractor’s plans “are not practicable”. He must explain how they are not practicable.

Under NEC4 clause 31.2, the Contractor’s programme can be treated as accepted, as follows:

“If the Project Manager does not notify acceptance or non-acceptance within the time allowed, the Contractor may notify the Project Manager of that failure. If the failure continues for a further one week after the Contractor’s notification, it is treated as acceptance by the Project Manager of the programme.”

[Emphasis added]

ASSESSING COMPENSATION EVENTS 

Clauses 63 and 64 provide details of how and when compensation events are assessed.

In terms of delays, compensation events are assessed relative to the current Accepted Programme, not the original baseline programme. This helps identify the actual impact of the compensation event. If the Contractor is already in delay for other reasons, the compensation event may have no effect on the Completion Date, and hence there will be no entitlement.

TIPS FOR CONTRACTORS

Here are a few tips for main contractors in respect of NEC programmes:

  1. Understand that on NEC projects, the programme will be a much higher priority than is the case for other types of project.
  2. Spend sufficient time in preparing and developing the programme, including giving consideration to the contents clause 31.2.
  3. Ensure that your subcontractors can provide the information you require. Get around the table with them and discuss programme and resource issues in detail.
  4. Throughout the project, comply with the contractual deadlines.
  5. Prior to formally submitting programme updates to the Project Manager, attempt to meet and explain how and why the programme has been revised.
  6. If your revised programmes are not accepted (for what you consider to be invalid reasons):
    1. Do not wait until the next programme issue to address the previous reasons for non-acceptance.
    2. Do not stop following the NEC contract procedures, continue to submit accurate updated programmes.
    3. Consider escalating the issue. Option W2 of the NEC4 allows for escalation to senior representatives. A more forceful tactic would be to refer the dispute to adjudication, asking the Adjudicator for a declaration that the revised programme should be accepted.

CONCLUSIONS

The NEC was spot on with its emphasis on the programme, and the closer the Contractor comes to complying with clause 31.2, the better his project management will be, with a reduced likelihood of disputes. However, the fact remains that the NEC’s obligations regarding the programme are so challenging that, in practice, Project Managers can always find reasons to choose not to accept the programme.

Compliance with clause 31.2 is a worthy aspiration but, in my experience, the existence of NEC-compliant programmes appears to be a myth. My mission to find one continues!

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