PhD student survey on co-operation

Dear all,

If you get chance please have a look at this survey. In the researcher's own words....

I retired last year after decades in contracts and commercial work and I am working on a PhD at Leicester University and part of the work involves a survey of experienced contract professionals , contract and project managers , procurement people and legal professionals on the role of cooperation in contract management. It would be very helpful if you could complete the survey and if you were able to find colleagues in the right discipline to do so too. The survey will be open for some time to come so this is not an urgent request.

 

The link to the survey is below and the survey should take around 20-30 minutes to do according to feedback from the pilot and from participants. I hope you find it interesting and if you’d like to hear my overall findings please let me know.

 

Regards

 

Haward

 

C Haward Soper

 

https://leicester.onlinesurveys.ac.uk/contract-conflict-contract-management-and-co-operation

Negotiation or competitive tendering - which is best?

Whilst I'm not the greatest fan of first past the post/competitive tendering, the market will at least give you a 'price'. You know where you are and can make a judgement accordingly. The trouble is the price could be low for various reasons - bid error, start up in new sector, new client and so on. But, where the price is too low, will the buyer actually get everything they bargained for or will the seller cut corners in delivery? In preparing the price, how well do bidders in the short period they have to tender, truly grasp the project and its risks? These are the main issues.

With negotiations, hopefully this will allow adult conversations to thrive on deciding best for project, problem solving and optimise the scope/price accordingly. But there's always this nagging doubt that the buyer is paying a premium for negotiation as it's uncompetitive. I like how the sellers eyes are opened so that they get their head around risk and are encouraged to price/programme accordingly. I also like how the seller can open the buyer's eyes to the whole life cost of technical requirements. Every chance is offered up in negotiations that really is not readily available in the world of competitive bidding.

That said, is there a place for both or does one size fit all? Ignoring Ojeu requirements (as that's tail wagging the dog stuff), what works best in people's experience or does it just depend?

NEC survey for use in Hydropower

Contacts for hydropower

 

Richard Patterson of Mott MacDonald and Warwick Fergusson of Transpower NZ are presenting at Hydro 2015. The paper is on 'NEC contracts - good for hydropower?

 

To inform the paper they has set up a short survey to find out what hydropower people need from their contracts and the extent to which their current contracts provide this. The link to the survey was in July's International Hydro Association newsletter.

 

If you are in the hydro sector, whether or not you have used NEC, please find the five minutes it will take to complete it.

 

Many thanks.

 

http://bit.ly/iha-newsletter-31-july

 

How important is the language we use in communicating?

Most NEC3 contracts require us to communicate in a form that can be 'read, copied and recorded' - see clause 13.1 of the NEC3 ECC. But what sort of language should we actually use in such communications, and when we are in say a risk reduction meeting, what language should we use there? I say this, following on from earlier posts today, that often I hear people using I/you quite prolifically rather than we/us. What state of mind do you think that creates? If somebody in a risk reduction meeting starts finger pointing at you saying 'You have messed up, it's your risk/fault, what are you going to do about it?' then funnily enough you may not be quite as engaging and may not be quite as creative/helpful as the pointing person hopes! To neutralise this as best you can, why not try (at the same risk reduction meeting)....'We have a problem here [explain] so what do we think we can do to avoid or reduce the effects of this matter'? Suddenly you've given yourself a chance to tease some good ideas out of those in attendance and can hopefully come up with something really good out of this and action it. Or is this a bit fluffy and the 'bloke' within many of us wants to make sure everyone knows who is the boss?! Which approach do you think is most likely to best minimise the time/cost effects of problems: A. I/you, or B. We/us?

Q. Do you issue or raise an early warning?

A. Neither of these. Assuming this is NEC3 ECC, clause 16.1 requires the Project Manager (PM) or the Contractor to give an early warning by 'notifying' the other as soon as blah blah. All either party needs to do is fill in a very simple communication form (such as those produced by NEC) that says eg 'Under clause 16.1 I notify you that a Subcontractor may be going insolvent/a supplier may be delivering some key Plant and Materials later than promised/the Employer has requested we change the permanent fencing layout (yet again!)/a protest group has threatened to invade the Site....' and so on. The contract does not ask either party to say anything more than stating the matter itself that is giving concern - it does not say fix it, or somehow rank it, or submit proposals or anything other than what is it, and this needs to be properly communicated via a notification. Use the NEC Project Manager's notification form or the Contractor's notification form. PMN or CN if you like acronyms. Simples. So again, this is about properly and closely following what the contract requires you to do, no more, no less. Follow the language. Follow the processes.

Q. Do you raise or instruct a compensation event?

A. Neither of these. The answer is that you notify a compensation event (CE). Most CE's arise (in an ECC contract) because the Project Manager (PM) has instructed a change to the Works Information (WI). Hence why we call this a PMI, a Project Manager's instruction. In most instances this will be a CE that has an effect on the Prices (the lump sum or the target, etc) and so I think we try to shortcut things even further by using the phrase 'The PM instructed a CE' - what we really mean is that the PM gave an instruction which changed the WI and this instruction is also a CE which may or may not have an effect on the Prices/planned Completion. We don't seem to like the latter as it's too long so often this is turned into the former. But the former is wrong, does not accord with the contract and gets confusing. I also want people to stay inside the contract, following its provisions, that's a far better place to be than operating outside of the contract. So, the logic is.... 1. The PM gives an instruction to change the WI (clause 14.3) & let's ignore the possible obligation to notify an early warning before this! 2. Communications are in a form that can be read, copied and recorded (clause 13.1) 3. The Contractor must obey such instructions (clause 27.3) 4. The Contractor Provides the Works in accordance with the WI (clause 20.1) 5. Clause 13.7 demands that notifications which this contract requires are communicated separately from other communications 6. That brings us nicely on to the CE process. Assuming neither bullet of 60.1(1) applies, a CE arises where the PM gives an instruction to change the WI. 7. As this CE has arisen due to the PM giving an instruction then then PM should notify the CE to the Contractor at the time of the communication (ie when the PMI was given). 8. If the PM does not notify this CE (which is a bit naughty but there you go!) then the obligation falls to the Contractor to notify this CE to the PM (clause 61.3) and this will not fall foul of the time bar rule in clause 61.3 as it should have been notified by the PM but was not. So I've stretched 'The PM instructed a CE' into 8 parts but that's important. Parts 1-4 make sure the PM properly keeps the WI up to date and reflects the Employer's requirements. Part 5 gives us a basic rule that means administration of communications becomes that bit easier, although of course more communications result from this (maybe that's another thread another time...). Part 6-8 deal with the basics of getting the CE acknowledged in principle, and away you go from there. So what's the moral here? It is to follow the wording of the contract, nothing exciting there, but it is important to make sure you do what the contract requires you to do, nothing more, nothing less.

It's good to get (NEC) accredited.......

With the widespread growth of the (UK) construction sector and increasing confidence confirmed in the Chancellor’s summer budget last week, NEC has responded to an industry-wide demand for advanced project management.

George Osborne’s first budget of the new Government, announced last week, confirmed that manufacturing, construction and services all grew by 3% or more in 2014,  the first time since records began in 1990. This news, coupled with the vital role managers play in the success of NEC projects, means there is a greater industry need to set high level frameworks and benchmarks for those in leadership roles on projects.

NEC's two new advanced level accreditation programmes for ECC Supervisors and TSC Service Managers, aptly align with this need. Coupled with the hugely successful ECC Project Manager Accreditation, they form the NEC Accreditation Suite.

We need highly competent people to create brilliant outcomes in our industry - I hope that personal accreditation is just the basis we need to help shape a better future.

http://bit.ly/1HAaRDX

After discussing with the Contractor.......

5 brilliant words I've taken from the NEC3 Engineering and Construction Contract (ECC), clause 62.1. How many people actually use these prolifically I wonder in the management of compensation events?  What the clause actually says is...'After discussing with the Contractor different ways of dealing with the compensation event which are practicable, the Project Manager may instruct the Contractor to submit alternative quotations.'

Imagine that. Truly acting on behalf of the (your) Employer by discussing with the Contractor the fact that this particular Employer is really focused on time for this project, or cost, or whatever. Then getting a quotation for the normal resources etc for dealing with the compensation event, then an alternative (if possible) where maybe nights and/or weekends and/or double shifts/gangs or re-sequencing, or whatever, are utilised.

Then we can make a sensible decision on what's best in the circumstances. So please communicate with each other, it's a good, healthy thing and maybe we can achieve each others' objectives along the way too.

An anonymous question from a civil servant on the possibility of advanced payments.....

I've been asked to ask this question anonymously from a civil servant. Here's your chance supply chain members to raise clients' eyebrows and to try and bring about massive change in payment practice - from negative cashflow to positive cashflow, and please tell all of the potential savings/positive behavioural change and so on............

What commercial benefits would we (clients) gain if we used advance payrments on projects and would this have any challenges to NEC3 contracts? If money was paid up front a project through a project bank account would it interest you? Particularly would like replies from Tier 2 suppliers and consultants?

Just a thought on z clauses......

Having reviewed a few tender documents recently and the horrors of z clauses within them I was thinking just how much the z clause industry is costing the economy? How much time/cost is involved in preparing (hashing?) the z clauses, which passes to x tenderers to their advisers then all of their suppliers and tier 2 contractors and there advisers and on and on and on......The cost must be horrific and to what end? Nobody says NEC3 contracts are perfect and in an unamended form will always address all client's needs, but one document I reviewed recently had 40+ pages of these things, even including a z clause that deleted a secondary Option (rather than just not select it in the Contract Data) - who had that brainwave? Do you really have the right starting point when you end up with amends bigger than the original contract? Do advisers actually listen to how their clients wish to do business and ensure that their requirement is met, or do advisers tinker for their own ends? And what does all of this cost the taxpayer I wonder in public sector contracts?

So here's a (brave) thought for the second half of 2015.....

Clients about to engage advisers to write reams of z clauses.....stop. Don't do it. Leave the contract as is, give half of the money you would have paid the advisers to charity and invest the other half in making sure the Works Information (for ECC, Scope etc for other NEC3 contracts) is a quite brilliant document. This will lead to better behaviour, lower tender costs, sensible contract management and a better industry.....who's first up to give this a real go and let us know how you get on?!

NEC student survey

Dear all,

A very short survey from a student for your completion if you would be so kind.

Thank you.

http://1drv.ms/1IlfZPy

NEC student survey

Dear all,

Another student survey, is there just enough lunchtime left for you to do this?!

In the author's own words.....

I am a final year student carrying out my dissertation of clause 10.1 within the NEC.

I require results from the contractor, client and legal sides and as I carried out my placement for Costain last year, currently all results I'm getting back are from the contractor's view point.

The link to the questionnaire is below and shouldn't take more than a few minutes.

Many thanks

Jamie

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

The most important clause in ECC is......

.....what do you think and why?

'TBA' is hereby banned.......

Having recently reviewed probably the worst tender document ever seen I was shocked to find the consistent use of 'TBA' in the very last places I imagined it could be. How can the starting date, access dates and Key Dates (amongst others) all have 'TBA' against them? How can any Contractor price this, or programme, or when might they decided/by whom and what if they are not?

And there I was thinking we had half a chance of being a world class industry....

By the way, 'TBD' was also used (just to break the monotony of 'TBA' I assume) - what does 'TBD' mean, 'To Be Decided'? 'To Be Drunk'? Something else? TBA/TDB are now officially banned, anyone found using them will face the consequences.....

Wanted - your great TSC plans........!

Dear all,

We are developing a new training product and would love to showcase any great examples of NEC3 Term Service Contract (TSC) clause 21 Contractor's plans and X19 Task Order programmes. So if you think you might have one of these that you can share, please let me know....

Rob

Student NEC research

Dear all,

It's the season for dissertation research! Hopefully you've a bit of time this lunchtime to complete the attached survey on supply chain management.

Rob

https://surveyplanet.com/54fc5cec218af44853351aa4

Student NEC research

Dear all,

Another student doing a dissertation on NEC. In his own words....

As part of my up and coming university dissertation I am to construct and issue a survey relating to my chosen topic.

Chosen topic:  PARTNERING WITHIN THE CONSTRUCTION INDUSTRY – ARE THEY COMPATIBLE?

Can I ask you to answer the 10 questions by following the link below (should only take 5 minutes);

Thanking you in advance.

https://www.surveymonkey.com/s/ZJKVLN2

Student NEC dissertation

Dear all,

Another 5 mins of your time please for this student's research. In his own words....

I am presently completing a MSc in Construction Law and Dispute Resolution and would appreciate if you and any of your colleagues with experience of the ECC C would complete my survey.

 

The questionnaire aims to capture the opinions of construction professional experienced within the use of the ECC Option C form of contract and the research seeks to establish ‘if in administering disallowed costs under ECC Option C, the Project Manager is in danger of breaching the required spirit of mutual trust and co-operation’.

 

The survey will only take 5 minutes to complete and all  responses provided will be combined and analysed collectively to ensure no one contribution is identifiable, therefore ensuring the anonymity of the participant and their organisation

 

Many thanks for your assistance and time.

 

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

 

 

 

Student NEC dissertation

Dear all, more student research if you'd be so kind. In the student's own words......

As part of my up and coming university dissertation I am to construct and issue a survey relating to my chosen topic.

 

Chosen topic:  ‘AN ANALYSIS ON CONSTRUCTION PROJECT CHANGE’  

 

Can I ask you to answer the 10 questions by following the link below (should only take 5 minutes).

 

Thanking you in advance.

 

Kind regards,

 

Jamie Budgen

 

https://www.surveymonkey.com/s/XM5PYFW

Do we manage contracts or just administer them?

What's in a word (or two)?

A while ago we used to call the stage when the contract was running 'contract administration'. We employed Contract Administrators, I think the odd standard contract used this term. I'm not convinced we ever properly administered any contract but that's another theme for another day. My point is that things happened and we reacted accordingly. We used hindsight. We were on the back foot. We argued long into the night about who did or didn't do what and chaos ensued. We could have done something different but we did not. We have long running final accounts and even longer dispute resolution processes, with only ever one winner. The frame of mind needed for this style of contracting is actually quite negative.

Now, thankfully, I see the term 'contract management' used more and more, clients looking to engage 'Contract Managers'. For me, there is good synergy here with NEC3 contracts and the mind-set required to properly run/manage a contract. We need to be proactive, to make decisions on the basis often of just foresight, we are now rolling our sleeves up and getting stuck into jointly solving problems or exploiting opportunities.

Contract management is a good place to be, contract administration is (hopefully) a thing of the past.

Any thoughts?

Z clauses....thinking about them from a different angle (part III the decision)

Having established the mischief then justifying the need to address it, next we need to make a decision and perhaps test it.

So does it stack up (perhaps sometimes financial appraisal only will not justify the need) and shall we put this into effect? Do we really need this in a one-off contract or could we elevate it somehow to a barrier to entry to working with our organisation - if you (as supplier) cannot demonstrate this or have done that then unfortunately there's a mis-match and we cannot do business together. Policing issues at this level should be far more effective than trying to make it happen with countless contracts. Surround yourself with suppliers that should give you the best service possible.

Once you've made a decision that perhaps a z clause is needed why not test this - why not ask tenderers to offer a price with and without this z clause. What if this causes the tenderer to significantly increase his tender total beyond the level you thought it would? How will you otherwise ever know?

There are loads more things you could look at here but you think there is justification, you need to make a decision to effect the z clause but possibly have one more chance at tender stage to test the financial impact this brings to tenderers.

After this, you can only measure what impact this has and consider the applicability of this for future contracts. As usual, be careful what you wish for!!!

Z clauses....thinking about them from a different angle (part II the justification)

Having established the mischief and everyone being comfortable with that, I wonder if we can bring a simple scientific test to help justify the need.
Hopefully there are challengers in the drafting team and we are not letting people loose with blank cheques to write z clauses, so the challenger(s) says:
1. What is the likelihood of this mischief actually occurring on this project (somewhere between 0% and 100%)?
2. What would be the severity of this if it did occur (try not to complicate, 1st go at this just think about additional cost the client might be put to) - order or magnitude, is it £1, £100k, £1m or something else?
3. What would be your fee to write the z clause, write a corresponding guidance note and set of flow charts so all are completely clear what it addresses and how it fits into the rest of the NEC3 contract?

You must by now know where by stealth I'm going here.....if 3 in £££ will cost more than the £££ of 2 x the % of 1 then only the z clause salesperson will be better off. It would be cheaper to give half of the sum of 3 to charity and can the proposed z clause.

So this part of the note is making sure there is justification, the proposed z clause not only has merit but also is financially prudent. Funnily enough, this is now looking like a business case!

Z clauses...thinking about them from a different angle (part I the mischief)

I think I must be getting punch drunk not only on z clause discussions but on similar themes too. Many discussions are along these lines....

'We need to include a z clause for this particular bit of legislation.
Why?
Because we need to be seen to take it seriously (and of course they mean to take it seriously)
But how and why will a z clause saying you have to do what you have to do because statute says so make any difference at all in your contract?
Silence.
We just need to include this in our contract'

So in this line of questioning (where if you keep asking why you may just root out the mischief) we failed to discover the particular aspect of a piece of legislation for which there may not be a contractual remedy to run alongside some other remedy available to that party. If we could uncover that particular mischief then we can get our heads around the problem and decide a sensible way forward. Just randomly pointing to something in the hope everything will work out just fine is naïve at best.
So this note, part I, is about actually establishing the mischief you are trying to decide whether or not you need to contractually (or otherwise) address.