Hi,
3 further student questionnaires if you could give up 5 mins or so of your time for each of them, they would be extremely grateful.
http://www.surveymonkey.com/s/W599P6G
and
http://www.eSurveysPro.com/Survey.aspx?id=9c7abb24-fbd0-494c-acb3-7ea37b652f6c
and
http://www.esurveyspro.com/Survey.aspx?id=822d5d59-f1a5-49e7-9c7f-08959089e470
Regards,
Rob
Monday, 14 March 2011
Thursday, 17 February 2011
NSCC No Retention Policy
National Specialist Contractors Council (NSCC, see www.nscc.org.uk) launched the NSCC No Retention Policy on 16 February 2011 - see press release below.
http://www.fairpaymentcampaign.co.uk/docs/press/10NSCCCelebratesLaunchof%27NoRetention%27Policy.pdf
All good stuff of course, retention is long overdue an overhaul. Maybe one day we will be defect free, rending all of this debate redundant. If not, contractors will actually do what they promised they would do in accordance with the terms of the contract in the first place (ie fix the defect in a timely manner, assuming of course it is indeed a defect!). Finally, if all else fails, in many instances the cost effective provision seems to be have a retention bond in place to call off. The old fashioned method of tying up retention monies for long periods of time often at a level that is greater than the profit to be gained in delivering the works is crazy, especially as the money is only intended to act as an 'incentive' or 'stick' for the contractor to correct and only therefore only needed towards the end of construction. If you absolutely must have retention, have a look at NEC3 ECC Option X16 which provides for a retention free amount.
My preference is the 1st 2 outcomes, anything else is waste, costs money and gets us pretty well nowhere as an industry.
Rob
http://www.fairpaymentcampaign.co.uk/docs/press/10NSCCCelebratesLaunchof%27NoRetention%27Policy.pdf
All good stuff of course, retention is long overdue an overhaul. Maybe one day we will be defect free, rending all of this debate redundant. If not, contractors will actually do what they promised they would do in accordance with the terms of the contract in the first place (ie fix the defect in a timely manner, assuming of course it is indeed a defect!). Finally, if all else fails, in many instances the cost effective provision seems to be have a retention bond in place to call off. The old fashioned method of tying up retention monies for long periods of time often at a level that is greater than the profit to be gained in delivering the works is crazy, especially as the money is only intended to act as an 'incentive' or 'stick' for the contractor to correct and only therefore only needed towards the end of construction. If you absolutely must have retention, have a look at NEC3 ECC Option X16 which provides for a retention free amount.
My preference is the 1st 2 outcomes, anything else is waste, costs money and gets us pretty well nowhere as an industry.
Rob
Friday, 4 February 2011
Measured Term Contracts - Good Value?
For a while now I've been wondering about the merits of using measured term contracts as the basis for procuring maintenance work. As a QS, I can see the benefits of having an agreed set of rates to cover the types of work likely to be required over the contract period - the contractor's QS measures and values, the client's QS checks. As the Meer Cats say, simples!
But hang on a minute, is that the best we can do in the 21st Century? Does the process of measuring and valuing really add any value to the client or does it just keep QSs gainfully employed? Oh dear, I can almost hear the sharp intakes of breath ... have I offered up the sacred cow?
On construction projects we have become familiar with cost plus arrangements so why can't we apply this methodology to maintenance work? We have the technology these days to be able to handle the large amounts of data that would need processing - operatives using handheld devices to record on / off site times, cost clerks coding and inputting invoices, use of online CAFM systems for managing workload and payments.
I can hear someone at the back saying "but if the contractor puts down that a job took 3 hours, how do we know that it actually did take 3 hours, or if it should have taken 2 hours?". Good question. Surely we could carry out sample audits to confirm that the resources being paid for have been used. Surely we could carry out annual benchmarking exercises to confirm that value for money is being delivered? Couldn't we use KPIs to incentivise improved performance? I'm sure it isn't beyond the wit of man to devise such checks and balances.
I'm convinced that a properly set up NEC3 Term Service Contract could deliver this, now I just need to convince a client to give it a go!!!
But hang on a minute, is that the best we can do in the 21st Century? Does the process of measuring and valuing really add any value to the client or does it just keep QSs gainfully employed? Oh dear, I can almost hear the sharp intakes of breath ... have I offered up the sacred cow?
On construction projects we have become familiar with cost plus arrangements so why can't we apply this methodology to maintenance work? We have the technology these days to be able to handle the large amounts of data that would need processing - operatives using handheld devices to record on / off site times, cost clerks coding and inputting invoices, use of online CAFM systems for managing workload and payments.
I can hear someone at the back saying "but if the contractor puts down that a job took 3 hours, how do we know that it actually did take 3 hours, or if it should have taken 2 hours?". Good question. Surely we could carry out sample audits to confirm that the resources being paid for have been used. Surely we could carry out annual benchmarking exercises to confirm that value for money is being delivered? Couldn't we use KPIs to incentivise improved performance? I'm sure it isn't beyond the wit of man to devise such checks and balances.
I'm convinced that a properly set up NEC3 Term Service Contract could deliver this, now I just need to convince a client to give it a go!!!
Monday, 13 December 2010
Local Democracy ... Act
We are often asked on the NEC helpline, 'will there be changes to W2/Y(UK)2 as a result of the new Act?'
The Local Democracy, Economic Development and Construction Act 2009 contains a substantial number of provisions in the broad areas of local democracy and involvement, local authority governance and audit, boundary and electoral change, local and regional economic development and construction contracts. It received Royal Assent on 12 November 2009. Part 8 of the Act amends the Housing Grants, Construction and Regeneration Act 1996 to improve payment practices and dispute resolution in the construction industry. The new Act is enacted but not in force, which commentators consider is now likely to happen mid-2011 or in October that year.
The NEC Panel have been monitoring progress and have produced most of the necessary changes to NEC3 contracts which will be issued when this finally comes into force as they will not be needed until then.
Rob
The Local Democracy, Economic Development and Construction Act 2009 contains a substantial number of provisions in the broad areas of local democracy and involvement, local authority governance and audit, boundary and electoral change, local and regional economic development and construction contracts. It received Royal Assent on 12 November 2009. Part 8 of the Act amends the Housing Grants, Construction and Regeneration Act 1996 to improve payment practices and dispute resolution in the construction industry. The new Act is enacted but not in force, which commentators consider is now likely to happen mid-2011 or in October that year.
The NEC Panel have been monitoring progress and have produced most of the necessary changes to NEC3 contracts which will be issued when this finally comes into force as they will not be needed until then.
Rob
Sunday, 5 December 2010
Most negotiated terms and conditions - IACCM
The International Association for Contract & Commercial Management (IACCM) has launched its' 10th annual study of ‘the most negotiated terms and conditions’. This unique study is used by companies and advisors around the world to develop and inform their contracting and negotiation strategies. As a contributor to the survey, they will then provide you the results.
This survey will take 5 – 10 minutes to complete and they ask you to tell them which terms you negotiate with greatest frequency, as well as your view regarding some key trends in negotiation. The results of this study offer insights to jurisdictional, geographic and industry perspectives, ensuring that it can immediately be put to practical use as well as inspiring new ideas and approaches to managing today’s complex negotiations environment.
I will paste a link to the results when they are out if you don't want to complete the survey.
What's the relevance to NEC? My opinion is that the past few years of this research has been quite enlightening, although showing things like limitation of liability is very frequently discussed, the future is far more likely to be around goals of the parties - something close to the heart of NEC.
Thanks,
Rob
http://www.iaccm.com/research/current/
This survey will take 5 – 10 minutes to complete and they ask you to tell them which terms you negotiate with greatest frequency, as well as your view regarding some key trends in negotiation. The results of this study offer insights to jurisdictional, geographic and industry perspectives, ensuring that it can immediately be put to practical use as well as inspiring new ideas and approaches to managing today’s complex negotiations environment.
I will paste a link to the results when they are out if you don't want to complete the survey.
What's the relevance to NEC? My opinion is that the past few years of this research has been quite enlightening, although showing things like limitation of liability is very frequently discussed, the future is far more likely to be around goals of the parties - something close to the heart of NEC.
Thanks,
Rob
http://www.iaccm.com/research/current/
Tuesday, 16 November 2010
Retention
Rudi Klein would be delighted to explain why retention is an out of date method of providing some security to the buyer. I still see retention included in many contracts. So, whilst I concur with Rudi, we still need to advise those using retention to make sure they are familiar with some unique provisions of (most) NEC3 contracts and how they deal with retention.
Considering the NEC3 Engineering and Construction Contract (ECC), secondary Option X16 provides for retention. So, point to note is that retention is not automatically included in the contract unless expressly stated in Contract Data part one (1st bullet). The second point is that the % figure to be held is determined by the buyer (the Employer in ECC) who states this at time of tender. Half of the retention held is released upon Completion of the whole of the works and the remainder upon the defects date. This is similar to most standard form contracts.
One difference is that Completion of any sections of the works does not result in a reduction or paying back of retention, this is linked to Completion of the whole of the works. The main feature I wanted to point out here is the retention free amount. If you think about it, on say a 2 year contract, why do we take retention each month from the Contractor when really we only want security at the back end of the contract to provide a stick to get the Contractor back to correct Defects? Who pays for the financing of such monies held? The buyer of course. Is this good value? Probably not. So, a key differentiator with retention on NEC3 contracts is that you can specify a retention free amount whereby retention is only held after the retention free amount is reached. This eases the Contractor's cash flow burden, must reduce the financing charges and therefore the price payable.
So, if one absolutely must have retention, then think both about the retention % but more importantly how much retention free amount can properly be included.
Any thoughts?
Considering the NEC3 Engineering and Construction Contract (ECC), secondary Option X16 provides for retention. So, point to note is that retention is not automatically included in the contract unless expressly stated in Contract Data part one (1st bullet). The second point is that the % figure to be held is determined by the buyer (the Employer in ECC) who states this at time of tender. Half of the retention held is released upon Completion of the whole of the works and the remainder upon the defects date. This is similar to most standard form contracts.
One difference is that Completion of any sections of the works does not result in a reduction or paying back of retention, this is linked to Completion of the whole of the works. The main feature I wanted to point out here is the retention free amount. If you think about it, on say a 2 year contract, why do we take retention each month from the Contractor when really we only want security at the back end of the contract to provide a stick to get the Contractor back to correct Defects? Who pays for the financing of such monies held? The buyer of course. Is this good value? Probably not. So, a key differentiator with retention on NEC3 contracts is that you can specify a retention free amount whereby retention is only held after the retention free amount is reached. This eases the Contractor's cash flow burden, must reduce the financing charges and therefore the price payable.
So, if one absolutely must have retention, then think both about the retention % but more importantly how much retention free amount can properly be included.
Any thoughts?
Wednesday, 10 November 2010
Postive cash flow anyone?
The UK construction industry in my experience is a terrible one for payment. Some of the records of payment terms are worse than archaic. Is there a worse industry around I wonder?
Why do we expect the next guy down the chain to basically fund the next guy up the chain? Can you imagine popping into your local supermarket, taking the goods and commenting you will probably pay some time in the next 100 days or so if they are lucky - unlikely (if you want to avoid arrest), but that is basically quite often how we operate.
The UK government is trying to address this and has a very noble aim (through the Fair Payment initiative) to get monies from clients all the way down to tier 3 all within 30 days of an assessment date. Of course it can be achieved, there is simply no reason at all why not. Cut through most beaurocratic processes and paying becomes straightforward. There is of course the facility of a project bank account on the right sized job, such a provision can be found on http://www.neccontract.com/.
Anyway, all of this still promotes a negative cash flow running through the supply chain. So why not conisder flipping this over and promoting positive cash flow contracts - guess what, these are usually quite a bit cheaper than the negative cash flow contract as the seller(s) no longer funds/charges the chain above.
In the NEC3 Engineering and Construction Contract (ECC) there is secondary Option X14 Advanced payment to the Contractor. Decide the amount of advance payment to be made (within 4 weeks of the Contract Date), get an advanced payment bond, decide over how many months the Contractor repays the amount and away you go.
In the private sector, ask tenderers at tender stage to price with/without the advanced payment (make it a very reasonable amount) - if you decide the saving is worth doing then go for it.
In the public sector there is some work to do. The rules are different, it appears, in that goods, works or services should not be paid for before receiving them - this surely is nonesense. This is one rule (as a UK taxpayer) I would love to change - why on earth should this rule exist, actually does anyone know precisely where it does exist?! If I can get things x% cheaper as a taxpayer with the slight risk associated, wouldn't this mean I get more bangs for my buck, isn't that best value? When Latham/Egan said we were inefficient, there was waste in the system, then surely the simple consideration of equitable payment terms can make a huge difference?
What do you think?
Rob
Why do we expect the next guy down the chain to basically fund the next guy up the chain? Can you imagine popping into your local supermarket, taking the goods and commenting you will probably pay some time in the next 100 days or so if they are lucky - unlikely (if you want to avoid arrest), but that is basically quite often how we operate.
The UK government is trying to address this and has a very noble aim (through the Fair Payment initiative) to get monies from clients all the way down to tier 3 all within 30 days of an assessment date. Of course it can be achieved, there is simply no reason at all why not. Cut through most beaurocratic processes and paying becomes straightforward. There is of course the facility of a project bank account on the right sized job, such a provision can be found on http://www.neccontract.com/.
Anyway, all of this still promotes a negative cash flow running through the supply chain. So why not conisder flipping this over and promoting positive cash flow contracts - guess what, these are usually quite a bit cheaper than the negative cash flow contract as the seller(s) no longer funds/charges the chain above.
In the NEC3 Engineering and Construction Contract (ECC) there is secondary Option X14 Advanced payment to the Contractor. Decide the amount of advance payment to be made (within 4 weeks of the Contract Date), get an advanced payment bond, decide over how many months the Contractor repays the amount and away you go.
In the private sector, ask tenderers at tender stage to price with/without the advanced payment (make it a very reasonable amount) - if you decide the saving is worth doing then go for it.
In the public sector there is some work to do. The rules are different, it appears, in that goods, works or services should not be paid for before receiving them - this surely is nonesense. This is one rule (as a UK taxpayer) I would love to change - why on earth should this rule exist, actually does anyone know precisely where it does exist?! If I can get things x% cheaper as a taxpayer with the slight risk associated, wouldn't this mean I get more bangs for my buck, isn't that best value? When Latham/Egan said we were inefficient, there was waste in the system, then surely the simple consideration of equitable payment terms can make a huge difference?
What do you think?
Rob
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