nec3 –a model for best practice project control · – pm entitled to assess ce’s if no...
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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)