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.