Competent NEC3 ECC Project Manager (PM) Part III

It's been a while since we looked at this subject. It seems to be a topical question at the most but what sorts of traits/competencies should such a person have? Lots, that I can see, but a few to be thinking about are that the PM.....

• positively challenges Contractor submissions such as design/programme/cost. I'm not saying challenge for the heck of it, but being mindful of what it is the client actually is looking to procure....could there be a better way/solution that that designed by the Contractor? Does the programme look realistically achievable? Is the forecast Defined Cost realistic? Could WE do something different/better to create a more efficient outcome?
• makes sure that the PM and any of the PM delegates respond to communications in a timely manner. Late replies = compensation events! The ECC sets out precisely what is meant by timely, giving maximum periods of time for each communication. So knock spots off the time periods you have and use a QMS that is a help to logging/recording such communications, in and out.
• has one eye on the Employer - has the Employer done what he promises in the contract he will do eg payment within x weeks, free issue supply planned for y, etc?
• has another eye on the Contractor - has/is the Contractor doing exactly as he promised he would do in accordance with the contract?
• doesn't just become a proficient and competent PM overnight. It takes time, support and acknowledgement of role. An individual will have to invest into becoming that competent PM - maybe studies beyond their first degree, perhaps receives further training (see eg the new 4-day accredited PM training course), has a prolific working knowledge of the ECC, has complimentary soft skills, is perhaps mentored by their employing company if they are developing into that role, encourages, supports, offers others the opportunity to develop, and so on.

Thoughts on a postcard!

Change management - necessary/desirable

When using NEC3 ECC, you should of course ideally starting from the position of having an outstanding Works Information, with the expectation that change should be fairly minimal once the contract is awarded. It is of course a good idea to lay down a few rules in respect of post contract change management for the ECC Project Manager (PM) to comply with, whether the PM comes from in-house or a consultancy.

Apart from key things like monetary thresholds, how about getting the PM to distinguish between necessary change and desirable change? Necessary change is just that, something that absolutely must be changed (because it's wrong, or ambiguous, or inconsistent, or was missed off, and so on). Desirable change is where the PM considers it is not necessary, just would be better (aesthetics, quality, longer life, easier to maintain, and so on). This would at least give a client the chance of distinguishing between must have and nice to have changes.

Adjudication reports

I'm not sure if we've shared this before but those parties contemplating adjudication as a means of formal dispute resolution might like to quickly have a look at this service provided by the Glasgow Caledonian University.

http://www.gcu.ac.uk/ebe/businessservices/adjudicationreports/

The Adjudication Reporting Centre reports on the progress of adjudication in the UK. These reports examine trends in the number of adjudication nominations and on various aspects of the adjudication process.  For use by the construction and property industries, these reports contain data supplied by the Adjudicator Nominating Bodies (ANBs) and by adjudicators directly.

Whilst there is no particular reference to NEC, inevitably some of the adjudication references will be on NEC Contracts so it's good to have some sort of idea of the number of referrals, the trend of successful parties, primary subjects of the disputes, time limit compliance, and so on. Quite interesting!

'Trust, but verify'

Another interesting quote which appears to have been was originally said by Russians as one of their proverbs. It was later made famous by Ronald Reagan, who used it in his dealings with the Soviet Union.

So what is the relevance to NEC3 Contracts? Clause 10.1 of NEC3 Engineering and Construction Contract (ECC) gives an obligation of those parties named to act in a spirit of mutual 'trust'. When it comes to using eg Option C, when the Project Manager decides how much auditing of Contractor's Defined Cost should take place and when, I wonder how much more emphasis we put on the word 'verify' rather than the word 'trust'? Surely we should expect the Contractor by and large to only put forward Defined Cost in accordance with the contract, save the odd error of course. If the Contractor doesn't, there are really significant trust issues at stake. So, do we get the balance of these matters right in practice?

I was going to say something about phone/email bugging, but I won't as this is a highly professional discussion board....

'The secret is to gang up on the problem, rather than each other'

This quote, from Thomas Stallkamp, compliments the NEC early warning process superbly well. Clause 16.3 of the NEC3 Engineering and Construction Contract (ECC) demands that '...at a risk reduction meeting, those who attend co-operate in...seeking solutions that will bring advantage to all those who will be affected....'.

Collaboration, co-operation and common sense should all prevail when things go wrong.

Capturing ECC Option C Defined Cost

Question: Why do we need to capture Defined Cost in the ECC?
Answer: Because the contract demands (clause 52.2) that the Contractor keeps records of accounts of payments of Defined Cost, also proof that the payments have been made.

But in any case, doesn’t the Contractor have a corporate obligation in the eyes of any jurisdiction I’m aware of to capture cost (not quite Defined Cost, but not too far off!)? So how difficult is it to tag cost – tag for accountancy/legal purposes, tag for ECC Defined Cost, Disallowed Cost, Working Areas overheads, and Fee %’s and so on. Each cost can only go in one place so surely any Contractor needs an outstandingly simple but effective cost recording system, all neatly offered up in one system and available to view from the perspective of an accountant or the ECC Project Manager (PM). Simples!

Any cost into the Contractor’s company (real cost) can then be tagged according to the pre-determined set of rules in ECC that determine what is, and what is not, recoverable as Defined Cost, Fee and so on. Auditing by the PM becomes far easier, the Contractor in turn has a good basis to provide the required forecasts of total Defined Cost under 20.4, maybe has the basis for producing earned value analysis (EVA) (if required), trending, and so on.
So, in the interests of sharing good practice, who has such a great system?

Managing the tender chaos

A few thoughts on some practical advice to tenderers when tendering for eg NEC3 ECC projects:

·         Carefully read the Works Information (WI). Anything ambiguous or inconsistent should be queried – the sensible tenderer surely has a better chance of beating the gamblers with a level playing field using a high quality, clear, objective and coherent WI as the basis? (Advice to clients – for goodness sake get the WI right in the first place or at least act upon queries raised by tenderers).

·         Think about variants where you have a great innovative idea but make sure you submit a compliant bid as well.

·         Look at the quality of the Site Information, is it sufficient for tendering purposes?

·         Think carefully about health & safety, the CDM pre-construction information, your programme/cost allowances for these.

·         Know how to fill in Contract Data part two, get some training, don’t ring up the NEC Users’ group helpline asking what the heck is the subcontracted fee percentage for a bid due in 1 hour (it has been known!).

·         Make sure you know how Contract Data part one works.

·         In fact, make sure the client provided documents are sufficient/clear/objective then set about compiling an excellent offer, possibly with variants, for the right price etc.

Otherwise, and not surprisingly, chaos = chaos = chaos!

Challenge one another

My observations of our extremely fragmented industry is that there is an incredible amount of waste that plagues us, holding us back at every opportunity. In our slow and windy road towards integration, or at least better co-operation and collaboration, why not helpfully challenge one another’s’ assumptions, plans and so on? Neither the buying nor selling side know everything there is to know about themselves, let alone each other, so why not challenge and therefore perhaps better understand and contribute to a more successful outcome? For example, from Contractor to PM:

• Why have this particular constraint in place and will it be necessary to retain it for the duration of the contract?
• Why specify this type of product when a far more cost-effective whole life solution is available?
• We note access to this part of the Site is delayed, can we help to bring this forward at all?

From PM to Contractor:

• Why are you commencing this particular activity at that time of year?
• Why is the productivity of this Equipment or gang so low?
• On your design of xxx, why did you opt for that particular solution?

And so on. Challenge each other, learn, contribute, actually try and shape a more informed industry.

Early warnings are good, compensation events are bad. Discuss….

Of course this is extremely over simplistic but within NEC3 contracts, the early warning (EW) process has been called the jewel in the crown. That’s easy to comprehend. The more notice you have of an impending matter, the better chance you have of doing something about it. Co-operative behaviour, where people solve problems, is surely a good place to be from all perspectives (other than those that derive an income from chaos!). When a compensation event (CE) arises, all the parties are left to do is agree the additional time/cost associated with the CE – at this point it is what it is and most of the opportunity to be creative and solve such problems has been lost.

So how are we doing in all of this? As a rule of thumb on NEC projects, are there more or less EWs than CEs? If more, do the parties fell they are in a good state of management control? If less, what on earth is going on with that project and how are you going to change it?

Remember, early warnings are good, compensation events are bad….!

Try to accept submitted programmes

Having an Accepted Programme in place at all times is a cornerstone of good management of NEC3 contracts. Dark clouds gather where the first programme submitted for acceptance is late, or does not show the information the contract requires as 1/4 (25%, lots!) of the Price for Work Done to Date is retained (until the clause is complied with). That's bad enough but then the assessment of compensation events is taken away from the Contractor and given wholly to the Project Manager to assess. Who would want to put themselves in that position, even allowing for an outstanding Project Manager who is not a fortune teller/mind reader?

So don't let that happy, keep the sun shining on the project and work damn hard as a team to regularly update, submit and accept successive programmes, giving all parties an outstanding tool to check progress, help make decisions in risk reduction meetings, assess compensation events, and so on.

What does this mean in practice?

• Try and say yes, I accept your programme, wherever you can, even perhaps if there are a couple of small niggly points.
• As Project Manager, tell the Contractor your reservations.
• Challenge the programme/Contractor.
• As Contractor listen and work with the Project Manager putting your points across of course.
• Walk and talk each other through it, don't do this in isolation, use that 10.1 spirit of trust and co-operation.
• Maybe make this process even more regular than the fallback position the contract demands.

Again, why business will not benefit from having a realistic, up-to-date programme in place at all times?

Saying no is easy; saying yes can sometimes be a challenge. Even with saying yes remember clause 14.1 means the communication (the 'I accept' bit) does not change the Contractor's responsibility to Provide the Works in accordance with the Works Information.

Prospective quotations for compensation events - what's the problem?

Most quotations for compensation events will be for work not yet done ie to be done at some point in the future. I hear a sharp intake of breath from some at this point, 'what if we get it wrong?'. Why, what is the problem, how difficult can it be? Of course it is impossible to predict/forecast an event +/- one penny, I don't hear of any organisations wanting other than there or thereabouts when it comes to assessing change. What I don't get is a tenderer given something like 4-6 weeks to tender for a £10m+ contract (every penny of which is prospective) who then gets nervous at submitting a quotation for £5k, 'but it might be £5.3k' etc! Why are we so happy to commit our organisations to contracts involving millions of pounds on a prospective basis, but less confident post contract when it comes to compensation events involving fractions of that amount?

It doesn't make any sense to me, I'm not asking people to be cavalier in their quotations/assessments, just to put things into perspective, work together and come up with sensible agreements for quotations. Remembering of course to think about all time and/or cost effects to be included...!

Understanding ECC Defined Cost - part I

Dear all,

In the NEC Contracts, Official Group on Linkedin we are going to go through the provisions of the ECC in respect of Defined Cost and hopefully improve understanding in this area and dispel some myths. I'm not going to reproduce it here as there will be 2 debates/threads and hopefully this might turn out be a useful resource tool. So please join the Linkedin group if you haven't already done so..

Rob

Think of the goal as being an outstanding Works Information.....

Whether you are writing the Scope (for PSC), Service Information (for TSC), Works Information (for ECC), Good Information (for SC) and so on, a key deliverable must be an outstanding document that is produced, ready to go to tender. Is it clear, unambiguous, contains minimal subjective requirements, covers all the constraints and so on? Just how proud are you of this document at the point you go to tender? Don't rely on the tender stage to put the poor document right, don't assume the poor contract management team will have nothing better to do post-contract than to put right what should have been right in the first place either.

Use the how to write the (WI/SI/Scope) NEC3 guides as a basis, but they can only ever be a starting point that captures some good practice. Just how good is your tender document? Do you get supplier feedback and is there a post-contract review? What do we learn from the process?

The goal has to be an outstanding starting point - we either get this right and have an easier contract management experience allowing us to actually manage, or we get it right in the end through multiple changes post-contract and ensure the contract management process is 'interesting' (for that read chaotic)!

Rob

How important is honest and realism?

At a recent training event, there was good discussion on the virtues of honesty and realism, in particular how these values/behaviours likely make for better relationships/outcomes. My early experiences in UK construction seemed to have a distinct lack of either of these, in fact very close to the complete opposite. Presumably parties thought this approach meant that the client paid less or the contractor was paid more, depending on what side of the 'fence' you were. What I now finally and thankfully see emerging is at least the belief that if we all really acted in an open and constructive manner, and things such as programmes and tendered prices were indeed realistic, we are in much better shape to do sensible business and indeed the client side is far more amenable to helping the contractor achieve his objectives.

How do NEC Contracts support these? Not least through clause 10.1 mutual trust and the main contracts requiring realistic and practicable programmes. Not the be all and end all, but imagine starting with a good, sensible price (say a target cost). Then the contractor producing a challenging but realistic programme. Then there are discussions such as....
- oops, I realise now we've forgot to price/programme this activity...
- if I (the client) can't get this free issue item to you by that date, exactly where are we?
- have you thought about re-sequencing this part of the works because....
- what happens if....
- and so on.

If we put our efforts 100% into the project itself, being mindful there are (generally) 2 main parties who have objectives they each need to achieve, we can surely come up with some fantastic problem solving if indeed we are honest and realistic.

What do you think?

New Government Facilities Management Contracting Model – your chance to get involved

Dear all,

 

UK Government has asked we publicise the following......

 

A Prior Information Notice (PIN), below for the establishment of a new contracting model for Facilities Management across government and the wider public sector has been issued by Government Procurement Service (GPS). 

 

http://ted.europa.eu/udl?uri=TED:NOTICE:241692-2013:TEXT:EN:HTML&src=0

 

The contracting model will replace the existing framework for Facilities Management (RM708) which is due to expire on 27 July 2014.

 

If you are interested in tendering for this opportunity we would encourage you to respond to the PIN to register your interest as GPS is looking to actively engage with potential suppliers through a series of conferences planned for late September and early October in Manchester and London.

 

Find out more about the new contracting model and registration process below

 

http://gps.cabinetoffice.gov.uk/i-am-buyer/categories/property-solutions/facilities-management-contracting-model

Use NEC to lever up health and safety

Many times I hear, health and safety is the number one priority. Yet many more times I hear that we still haven't got the O&M manuals, as-built drawings, training for my operatives to safely and properly use the new asset and so on, sometimes well after Completion (which begs the question why was Completion given!). So here's a thought - why not give this the proper attention it justifies. Define the state of Completion (assuming we are using NEC3 ECC) in the Works Information at time of tender stating exactly what you want to happen before Completion will occur - if you want all of those things then ask for them, don't budge and don't compromise on Completion or health and safety - let's actually ratchet up the importance of this through objectivity and explicit requirements.

Time risk allowance & float - NEC3 ECC programme

In NEC3 ECC there is a requirement for the Contractor to show on each submitted programme both float and time risk allowance. Is there a feeling these terms are generally understood and if not, apart from why not (!), what more can be done to help?

Using the 'iron triangle' to focus the team

If you recall Martin Barnes' really simple but effective time/cost/quality triangle, I can't think who showed me this but you can use this triangle to tease out where people think a particular project's emphasis is, according to the requirements of the client. Some clients want utopia (the project tomorrow, for free and outstanding quality!) but thankfully most have a realistic understanding that there are trade-offs in the 3 points. Martin wants quality to be substituted with performance, which makes absolute sense, so draw a good sized triangle with the 3 points of time, cost and performance on a flip chart. Then, with a marker pen, ask each person (in the workshop, meeting or whatever the environment) to mark on the triangle a single dot representing where they feel the client expects the emphasis of this project to be. You may be surprised with the outcome, but it gives an opportunity to address the lack of alignment, if it exists.

Have a go, let us know how you get on....

Like the new NEC3 'How to...' guides?

Hopefully most of you have had the chance to look over the new 'How to...' guides that were launched in April. Do you like them, would you like to see more and if so, on what topics? These are intended to be fairly concise but practical guides to help users better understand the particular topic in the guide, which so far concentrates on communications, BIM and writing the Scope/Works Information/Service Information. Do let us have some feedback.

Rob

The NEC jigsaw....

I recently read a comment telling how somebody had assembled all of the NEC pieces over time and had now understood how they all fit together. To me, that's a great way of thinking about NEC. There's no cross-referencing in an NEC Contract so you have to read it cover to cover and then appreciate how the pieces interact. NEC isn't exactly a 2 piece jigsaw, neither is it a 1000 piece work of complexity. Get your head around the key processes, learn how they work together, then you will see how the likes of early warnings have hardly any interaction with compensation events, despite users' perceptions, and so on.

Using innovative KPIs with NEC3 Contracts

I was speaking with someone recently from a local authority in South Wales who advised of their use of really interesting Key Performance Indicators (KPIs) whilst using NEC3 ECC secondary Option X20. This was in respect of contractors demonstrating a positive local social impact during construction by employing people currently on job seekers allowance. The number depended on size of project.

So, does anyone have any great examples of X20 (or X12) KPIs that they consider to be innovative? Maybe there's a good article in here in due course...

Rob

NBS survey - send in your NEC Contracts....

NBS National Construction Contracts & Law Survey 2013

As with last year’s survey, RIBA Enterprises are looking for users interested in completing the 2013 survey - see below for a link. 

The closing date of the survey is the 31^st July 2013 and there will be a prize draw with one respondent winning an Apple iPad.

The aim of the survey is to gain a better understanding as to which construction contracts are being used and what are the contractual and dispute resolution issues that construction professionals face. The survey is the most wide-ranging independent review of contractual and legal issues throughout the industry, and will provide an accurate and in-depth picture of legal issues and disputes at each phase of construction, covering subjects such as:

·         tendering and procurement

·         pricing

·         the reference and adoption of BIM in contracts

·         collaborative working; and the

·         main issues of dispute, their duration and value

 

The 2012 survey revealed that disputes were still prevalent, despite the Government’s emphasis on collaboration, with almost a quarter of those who took part saying they had been involved in a disputes in 2011.

 

http://surveys.ribaenterprises.com/surveylogin.asp?k=137042536701

 

Top Terms in Negotiation 2012

Dear all,

If you've followed this in the past few years, a really interesting report produced by the IACCM show the top terms in negotiation, usually nr 1 is limitation of liability, but this year IACCM say.....

This year’s study reveals changes that are far more dramatic than at any time since inception of the report. Among the highlights:

• Markets are fragmenting; major corporations are either choosing or being forced to shift the focus of their negotiation in international markets as local issues or concerns challenge standard templates.
• The buy-side / sell-side agenda has become more polarized, reflecting a growing divergence of concerns and increased focus by Legal and contracting specialists on supplier risk.
• The frequency of negotiation and of post-award claims and disputes has increased, driven by a combination of rapid power shifts within industries and between countries, and economic conditions that result in cost-cutting and adversarial behaviour.
• There are encouraging signs that negotiators are placing greater focus on terms that impact risk probability. However, there are also indications of diminished trust between buyers and suppliers, with collaboration occurring only between a select few.

These changes have significant implications for workload, skills, operational management and risk. They demand revised contract and commercial strategies and increase the urgency of steps toward ‘intelligent contracting’.

The sad news is this now seems to be locked down and you need to be a member of IACCM to read this report. Maybe IACCM will review this policy and give themselves a pat on the back....?!

Rob

http://www.iaccm.com/news/contractingexcellence/?storyid=1403&utm_medium=email&utm_campaign=CE_November_2012%20EMEA&utm_content=CE_November_2012%20EMEA+CID_b4269456f987f621a5b95f976f83ad05&utm_source=Campaign%20Monitor&utm_term=Read%20more

Student NEC research

Please find below a survey monkey link from Peter Higgins who is in his final year studying Quantity Surveying at the University of Ulster. If you could please take the time to complete Peter’s questionnaire to assist him with his studies, this would be most appreciated.

 

Rob

 

https://www.surveymonkey.com/s/YN9FNQT

Student NEC research

In the student's own words.....

The reason I'm contacting you is because I require assistance with my dissertation project I am currently undertaking at Glasgow Caledonian University and have emailed you as I feel your input would be extremely valuable. I would be grateful if I could borrow 10mins of your time to assist in my research.

Programme : BSc (Hons) Quantity Surveying
Dissertation Title :  The challenges faced in implementing NEC3’s proposed culture in today’s industry

I am currently an Honours Degree level student based in the Cumbernauld office for BBUS on the above programme and as part of my final year studies, I am required to undertake a Dissertation project.

I have tried to speak to as many people as I can before emailing this so as it comes as no surprise but unfortunately not been able to contact all. If I haven’t spoken with you directly before and sending you this email its due to someone recommending your name as someone who could have a valuable input into my research.

My chosen title is “The challenges faced in implementing NEC3’s proposed culture in today’s industry”, and I am writing to ask if you would be prepared to assist me with my research, this should take no more than 10 minutes of your time.
I would confirm that all information obtained as a result of the above will also be used solely for the purposes of fulfilling the dissertation criteria. Also, all respondents will remain anonymous and confidentiality of responses is guaranteed.

If you are able to assist me it would be greatly appreciated. I have tried to provide as much multiple choice answers as I can so it’s more convenient to finish the survey, but some of the answers will require some text input as the research will be based on people’s opinions of culture/NEC.

The closing date was 19/3/13 but seems to still be open.

Rob

https://www.surveymonkey.com/s/NEC3Culture

Student NEC research

Steven Foster is studying Quantity Surveying at the University of Ulster and the title of his research is ‘Does using the NEC3 contract reduce disputes within the construction industry?'

Please spare 10 mins for him...

http://www.smart-survey.co.uk/s/70385JCFLW

MPL call for papers on BIM

Dear all,

It's snowing, no golf, no football so what better to do than catch up on many emails/Blogs etc that have been hanging around a bit too long.....

The first is a call for papers on best practice and new directions in building information modelling (BIM). This is from Management Procurement and Law (MPL) who publish original research and practice papers on all civil engineering and construction aspects of management, procurement and law as part of the proceedings of the Institution of Civil Engineers.

Have a look and please contribute if you have a paper in you, maybe from an NEC contractual angle....

Rob

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https://docs.google.com/file/d/0B0zCdliicY9meDF5MkNKbVd3X1E/edit

MPL call for papers on EU construction

Dear all,

There's a call for papers from Management, Procurement and Law (MPL) journal
on the similarities and differences affecting management, procurement and law as it affects construction in the EU. See below if you are interested in more details on this...

https://docs.google.com/file/d/0B0zCdliicY9mRjJ4SGJoU1ByWUE/edit