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