Make a decision.....

I often say there are no hiding places within NEC3 contracts for those with responsibilities to make decisions. What I mean is that the contracts demand lots of decisions to be taken and failure can have consequences. Those unable or not willing to make decisions will very soon cause a bottleneck, in any contract to be fair, but probably will surface more quickly in NEC contracts (which is a really good thing in my experience). For example, the Project Manager (PM) in the NEC3 Engineering and Construction Contract (ECC) has any number of decisions to make during the contract management stage:
- is the Contractor's design acceptable?
- is the event a compensation event?
- is the quotation for a compensation event prepared in accordance with the contract?
- does the work meet the Condition stated for the Key Date?
- and so on.

Lots of decisions, so (clients) make sure your ECC PM (or equivalent in other NEC3 contracts) is a competent decision maker. In a recent training course I was pointed to a quote from Theodore Roosevelt....

 

'In any moment of decision, the best thing you can do is the right thing, the next best thing is the wrong thing, and the worst thing you can do is nothing.'

 

I couldn't locate the absolute source of this other than general reference in a Google search but this sums my point up brilliantly. Make sure you have available all the data, support, opinion etc to help you make that decision, then make it!

 

Happy deciding!

Using schedules of rates with NEC3 contracts

There's a number of occasions users have asked 'am I ok using a published schedule of rates with NEC3 contracts'? The sorts of questions are about using the SoR for:
- ECC for assessing compensation events (clause 63.14, if both Project Manager (PM) and Contractor agree),
- TSC or TSSC for use in/as the Price List,
- the quotation procedure when setting up the NEC Framework Contract.

The simple answer is yes(ish), the longer answer is really more of a 'watch it'. By this I mean take care to find out precisely what are in (or out) of the SoRs - do they include overheads & profit, financing charges, insurance premiums and the like? If they do, how are you going to work that through with things like the ECC Fee % taking care not to double up or leave something out. So read the front end of the published SoRs very carefully indeed to make sure you know the basis of the rates you wish now to use.

It would be good one day if all such published SoRs were neutrally drafted to enable them to be used by any standard form contract. Until then, take care!

Learn to love ECC clause 14.1....

...and the equivalent in other NEC3 contracts.

To remind us, the clause says "The Project Manager's or the Supervisor's acceptance of a communication from the Contractor or of his work does not change the Contractor's responsibility to Provide the Works or his liability for his design."

So the ECC  requires the Project Manager (PM) and Supervisor to accept various things at various times:
- the PM accepts the Contractor's design (clause 21.2)
- the PM accepts a submitted Contractor's programme (clause 31.3)
- tests may be accepted by the Supervisor as being required in the WI
and so on.

The contract uses 'acceptance' and not 'approval' (the latter being legally problematic of course) and basically is saying even if the PM accepts a Contractor's design, if the design later proves to be wrong the Contractor is still liable for his design. Nothing has changed through the acceptance.

I'm not suggesting for one minute therefore that PMs/Supervisors become cavalier but we've previously discussed people's reluctance to say yes but you have the whole weight of this clause behind you. Try to say yes, work with the Contractor to say yes, possibly even give them the slight benefit of the doubt and appreciate that, if there is a problem then the Contractor is still 100% responsible to Provide the Works and 100% responsible for any design the WI states he is to design. Then if there is a problem, roll your sleeves up and get stuck into helping him fix the problem.

Should the contract stay in the bottom drawer?

You must have heard this saying before and I think, with traditional contracts, there was some sense to this. Most standard form contracts are drafted quite negatively and seem to expect failure...if you do this wrong, this is how hard I will kick you.....not quite drafted like that but you get my drift!

I think NEC3 contracts are different. I think we should regard NEC3 contracts as a sensible tool to help parties solve problems or exploit joint opportunities. So rather than roll them up and bash the Contractor over the head, why not have them out on the table, well thumbed and use them to create some good outcomes for all. And don't be afraid to quote clauses and stay inside the contract; the more we veer away from the contract the more likely we end up in someone else's playground, who will love your attendance!

Thoughts?

Why aren't we collaborative by nature?

I was just watching a webinar on collaboration. It's good to see modern day emphasis on collaboration, working together, sharing risk, joint problem solving and so on. Tools like NEC3 contracts, BIM and the incredible pace of technology can only help reach whatever goal we have in mind. But when did we decide not to be collaborative? Does this trace back to our outdated social class system? Are we still dogged by professional snobbery?

From my observations of the UK construction industry in particular, it has been incredibly painful to watch people be as non-collaborative as they can possibly get away with. This must have had a huge negative implication on people. But how long will it actually take to re-shape such a fragmented industry to allow a huge and genuine cultural change? Any thoughts?

A survey on your thoughts on contracts

Dear all,

RICS are doing a short survey on your thoughts on the form of contract you use most. Unfortunately it's only available to members and you have to log into the RICS portal to get there but once you do search 'Contracts survey' and away you go....

Rob

Student dissertation on NEC

Dear all,

Please spare a bit of time to help this student in his research. In his own words....

I am currently doing my Masters degree in Construction Project Management. at University of Portsmouth and undertaking my research project on "efficiency of Early Warning System (EWS) used in NEC3 contracts to improve project risk management and overall project performance".

As a NEC3 user, I would be grateful if you spent few moments to answer the questionnaire. Your response on this survey
will be confidential and exculsively used by myself.

Regards,
Rob

https://docs.google.com/a/myport.ac.uk/forms/d/1ieNTkYMjlSLsr57oECu_mrNPpKC7LPkpQl50TyPztQY/edit

Student NEC dissertation

Dear all,

Hopefully you've 10mins this lunchtime to spend completing this research on z clauses. The student says......

If you could take the time to respond to this Survey I would be extremely grateful. The aim of this survey is to expand upon the issues identified both in the pilot survey and literature review and hopefully generate a really detailed piece of research on the subject matter. The Survey contains 66 mutilple choice questions and should take about 20 minutes to answer. All responses will be kept confidential and used solely for the purpose of this research. Thank you, for taking the time to complete this questionnaire and for all your help on this research topic

Rob

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

A dedicated change management team anyone?

We've sort of had discussions around this before, but in an ideal world wouldn't it be great if the following occurred.....
1. On a Monday, at the start of a job, we had the most brilliant Works Information and Accepted Programme (I saw you roll your eyes then..!). We were in a position to therefore manage the job for once and not just administer it.
2. During the day there were a couple of early warnings notified, a bit of a Contractor delay discovered and 2 compensation events popped up.
3. On Tuesday the [change management team] (basically add whatever name you want here) worked through the 5 things that arose on the Monday such that first thing Wednesday we had made a few changes to the Works Information, the Completion Date happened to stay the same, the Prices (let's assume it's an ECC Option C target contract) moved up a bit, we had a new Accepted Programme and the forecast Defined Cost slightly changed.
4. Repeat 2&3 for the next 6 months/year/whatever the duration of the job. The point being, we had some dedicated resource to work through the entire effects of the day before and conclude them all that day ready to pick up today's stuff tomorrow. Make sense?!

So,
a. do people do this (or have done, I'm not just talking about CEs)?
b. is this realistic?
c. do people want this?
d. what might this cost be and would this be cheaper than the way we do it now?

Answers on a postcard please.....

For dedicated resource I was thinking that Employer/Contractor pooled very capable people (planner, estimator, designer, QS, buyer and so on) and somehow split the costs. Possibly not even full time commitment, at least to start off. We're away from man marking here and we're into a real time process of dealing with risk and opportunity.

Insane end of the week head in a bucket of sand stuff, or something that would turn the industry on its head in terms of how we actually address risk and opportunity on a real time basis?

Don't restrict the use of early warnings.....

I've recently read an opinion that the 4 bulleted instances stated in clause 16.1 of the ECC are the only occasions the Project Manager/Contractor could notify an early warning. I don't think the contract says that at all.

For a start, the Contractor may notify any other matter which could increase his total cost (see clause 16.1), but even this is too narrow in its thinking. Regard the 4 bullets as the minimum instances an early warning must be given (this is in fact an obligation on PM/Contractor) therefore there is no maximum scenario in practice. The ECC does not say 'in these instances only' or 'do not otherwise notify' or anything like that. So why not think about notifying opportunities through the early warning process as well as the bad things..."Here's something we may be able to exploit, let's have a risk reduction meeting to discuss...."

We should use the early warning process for good and bad matters; we should of course notify the matters we must notify but make sound judgement on those we therefore may wish to notify if we believe such are worth of our time.

Student NEC dissertation

Dear all,

Another student's questionnaire for you to complete at lunchtime if that's ok! In his own words....

"I am currently completing my MSc via Leeds Met the final part of which is my dissertation. I am going to do it on NEC3 and in particular bespoke Z Clauses. I have prepared a questionnaire which I am struggling to get responses to. Would you mind having a look at it and possibly completing it. Also if there is anyone you know suitable to complete it please forward it on. All in all it should make a good piece of research particularly as I feel Z clauses do not help or improve NEC3 in many instances."

Thanks in advance,
Rob

https://www.surveymonkey.com/s/TTG2YPR

Student NEC research

Dear all,

Another student would like 5 minutes of your time, but please act quickly. In his own words.....

"I am currently studying a degree in Quantity surveying part-time at Northumbria University. As part of my final year I am currently undertaking a research project in the form of a dissertation.  I am looking to examine whether, through its use on projects, it is felt the NEC3 suite of contracts can better help deliver over other traditional forms of contract on defined objectives of; time certainty, cost certainty, quality, partnering and value for money.

I am particularly looking at the contracts use on Public Sector Works within the UK, where secondary data research has highlighted these over-arching objectives should be on the agenda of all project teams working within the public domain.

As highlighted above the research is looking at UK Public Sector works only but respondents are welcome from all users of the NEC3 whom have engaged with or work within the Public Sector in delivering Construction, Engineering, Health and Energy, Oil & Gas projects.

An online survey has been design to collect data, the link to which is included with this correspondence. I would be very grateful if you could share a link to my online survey on the NEC3 User Group forum as it would allow me to expand my data collection from its current limit of the North East of England.

The questionnaire should take approximately 5 minutes comprising of 10 questions involving single choice, multiple choice and matrix questions only. The questionnaire will close for responses at 18:00hrs on Monday the 17th of March, 2014.

In responding to the questionnaire, participants are agreeing that you have been informed of the purposes of this research and that your responses may be used for the purposes of this research only.

All responses will be held anonymously and in confidence.

I very much hope that you will give the time to assist in my research and would like to thank you in advance for sharing your experience in this area.

Thank you for taking the time to read this and for your consideration on the matter."

Thanks,
Rob

https://www.surveymonkey.com/s/VYVJ2JC

Call for Papers 2015 - International perspectives on construction contracts

Dear all,

The journal Management, Procurement and Law are looking for papers as per the title above. Have a look and maybe you've a paper in you somewhere...!

Rob

www.icevirtuallibrary.com/upload/journals/MPLcontract.pdf

Student research on NEC3

Dear all,

A student is working on a dissertation entitled ‘Is The Philosophy of the NEC3 Form of Contract That of a Truly Collaborative Contract’.

The basis of his review on this subject is:
1. To evaluate and analyse the strategic, high-level procurement objectives of the UK Government;
2. Review 3 key reports into the state of construction (Rethinking Construction, Constructing the Team and Never Waste a Good Crisis);
3. Undertake primary data gathering research via a survey of people on NEC3 projects;
4. Identify whether the widely endorsed NEC3 contract is truly a collaborative contract.

In an effort to garner the true opinions of individuals with experience on projects where the NEC3 contract is or has been in use (item 3 above), he has pulled together a quick online survey (link below), which he would be very grateful if you could distribute kindly complete. This will form an integral part of his data from which he will attempt to draw conclusions and recommendations. All responses are completely anonymous and so all responses to the survey should be as honest and open as possible in order for an accurate analysis to be carried out. There are a total of 32 questions, 6 of which are optional text based responses, and the survey itself should hopefully take no more than 5 minutes to complete.

Thank you in advance for your assistance, the survey will remain open for 3 weeks.
Rob

http://freeonlinesurveys.com/s.asp?sid=onl1yyh87xceprb407231