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Activity Schedule/Programme within the NEC Contract

9 replies [Last post]
Wed, 2009-11-04 08:04
Andrew Owenson
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I have to prepare a tender programme for a job using the NEC form of contract incl. an activity schedule. From what I understand the sctivity schedule is the programme with each activity priced so that payments can be linked to it. What I would like to know is: I have heard that the programme has to identify the float on each activity, and show the project float at the end. Hs anyone had any direct experience of producing an NEC programme and could they give some advice. What is the best way of producing it and is there a set of parameters detailed anywhere which describes how the programme should be produced and the information it should give.

Andrew
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Replies

Fri, 2009-11-06 09:48
#1
Gary Whitehead
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Indeed, the NEC form does bring planning to the fore of the project.

NEC doesn’t specify references for production norms. As with most contracts, it is the contractor’s responsibility to plan the works, including estimating durations. The client would only challenge a duration by exception if he feels it is unrealistic. There is no (I believe -doing this from memory) contractual defenition of "unrealistic", but typically a client would quote a recognised source of productivty info, or ask the contractor to explain how he came to that particular estimate.
These things (in my experience) tend to get sorted out quite quickly & amicably, but there is always an arbitration clause if the disagreement escalates -I’ve never seen this used, though. It wouldn’t be the best way to start a project!

Cheers,

G
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Wed, 2009-11-04 12:19
#2
Se de Leon
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Hi Gary,

It seems NEC contract is very ideal for planners/schedulers both on the client & contractor side. In my view, this contract will force, to some extent, Project Managers to fully learn about planning/scheduling.

On the expected duration, does NEC specify a certain reference for production rates/norms? How does the client and contractor come to an agreement about expected durations?
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Wed, 2009-11-04 11:12
#3
Gary Whitehead
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And / Or ask you to justify why it’s so large.

Ideally, the client would review TRAs in parallel with the risk register. If a large (say over 10% of duration) TRA was there, without a specific risk that was being mitigated, I’d start to get nervous.

It’s in both party’s interest to get the programme approved ASAP, and clients who choose the NEC form of contract generally do so because they want a more transparant / honest / partnership type of project, so it’s unlikely the client will be playing too many games with this.
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Wed, 2009-11-04 10:59
#4
Andrew Owenson
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He would have to justify his opinion though wouldnt he?
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Wed, 2009-11-04 10:22
#5
Gary Whitehead
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I should add that the client PM is within his rights to reject a programme if he thinks it is unrealistic, so you’re unlikely to get away with unduely large TRAs
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Wed, 2009-11-04 10:12
#6
Gary Whitehead
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No worries, Andrew.

TRA is also owned by the contractor. It’s there to cover contractor risks, and as such can’t be used to mitigate the effects of a CE (Compensation Event).

The only benefit to the client is that he has visibility of the risk allowance, rather than it being hidden within the planned duration as with other contract forms, and as such it gives him some comfort that the critical path is achievable.

Cheers,

G
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Wed, 2009-11-04 09:25
#7
Andrew Owenson
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Gary

Thankyou for your help. Item 2 is interesting, I know the terminal float is ours, but who owns the TRA ?

Thanks again

Andrew
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Wed, 2009-11-04 09:09
#8
Gary Whitehead
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Someone gave a very good presentation on the role of planning within NEC at last year’s Planning Planet conference. I don’t know who it was, but if they read this, it would be great if you are able to share it?
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Wed, 2009-11-04 09:02
#9
Gary Whitehead
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Clause 31 will tell you what you need to include in the programme -1st piece of advice is to review this in detail. There’s also a guidance document which accompanies the contract, which you should get hold of.
(NB: under NEC, 25% of your payments can be withheld until an acceptable programme has been submitted, so it’s important to get it right first time)

Regarding float, there’s 3 things you need to show on the programme:
1) Total float for each activty (just ensuring the relevant column is displayed is sufficient)
2) Any Time Risk Allowance (TRA) assigned to each activity (Not strictly float, this is the amount of time added to the expected duration of key activities to mitigate risk of delays -something every contractor does, but NEC requires you to be up-front about it). Typically, this is either added directly to the planned duration, and the TRA element noted in a user defined field, or a seperate TRA activity is used, linked using FS(0)
3) Terminal float. -This is the difference between contractor’s planned completion, & contractual completion dates. Depending on the software you are using, this can be displayed as ’buffer’ activity, hammock, or just the total float of the planned completion date.

Cheers,

G
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