Peter, I just have a couple of follow up questions because I’m not good at contracts especially the NEC form of Contract as follows:

1. Under NEC form of contract, if a contractor fails to meet a Key Date because of problems associated with Provisional Sums not included in the programme, is the contractor liable for any delay damages?

2. “…This in turn reset progress % / manpower s curves etc.” Can you please specify the NEC sub-clause for this? Please specify also the NEC version.

Lastly, I thought you were only simply expecting a schedule suggestion regardless of the form of contract being used.

Please disregard also if my questions are irrelevant.

Regards,
Arman

Tom,
good point. They are in the contract (sort of) just as any potential VI work is - once it has been negotiated and accepted by both parties and a VO issued. Trouble is this can be a long drawn out process (hence the time limits in some contracts), the contractor feels obliged to take on the work and usually he feels he has got a better price for the variation work.
Trouble is some quite small changes can have unforseen consequences for which you have just accepted responsibility!

Hi Peter,

Just a suggestion...
500,000 for daywork labour:

Case 1 : Assume 70% of the budget to occur during the original contract duration & 30% during the defect liability period because client needs to reserve some budget to do some revisions after the original agreement have been satisfied.70% of daywork labour budget – I would forecast it to occur starting from 15% of project duration up to 85%. My percentages are just based on my experiences were changes orders or variations mostly occurred. However, I would only use very back loaded curve for this in order to be very conservative on the forecasted cash-in.

I’m so sorry I fall short of time today to make suggestions for the rests of the items. However, for the time being, I hope my suggestion make any sense to you.

Regards,
Arman

You pose some very interesting situations. While I have not encountered these exact items, perhaps some of these ideas may help. First let me say the programme or plan must reflect all activities that have a cost or time impact. Also, I draw distinction be between allowances and contingencies. Contingencies should be associated with specific project scope items which cannot be fully defined and only be held for as long as the risk remains. An allowance means you know the requirement, but can’t fully quantify it. Here goes:

£500,000 for daywork labour - as a general labour pool (labour not coming from resources assigned other tasks)plan a linear progression from mobilization to demob. Carry 0% progress until such time as the client "draws" on it. IF resources are pulled from other contract activities, the impacted activities duration should increase. If the activities are on the critical path, then you’ll be able to demonstrate cost impacts to general conditions.

£7,500,000 for 3 months of industrial unrest - sounds like a job site shutdown event. If so, add as an activity before the demobiliztion milestone to preserve the planned completion date. Hopefully, the allowance value covers unrest during peak resource periods.

£2,000,000 for choice of washed seawater aggregate as opposed to land based sourcing - build the plan for the more expensive option. Presumably a modification will be issued (new activity) to account for the credit the client will likely be looking for. When will the owner make his choice? What info does the owner need to make the decision?

£250,000 for a new access road in case we can’t get owners permission to cross his land - definitely need to show this as if you had to build it and include in your baseline. Once you get owner approval, you can set the duration to zero. Presuably the client will want the credit, so when the modification is issued, add the activity and record 100% progress for the deduct activity and 100% progress for new access road activity. Progessing both in the same month will avoid cash flow issues.

£50,000 for moving unknown underground services - was the dollar value pulled from the air or was it associated with duration?

£350,000 for the increased risks in novating a large purchase order from Client to Contractor - need to understand the relationship of the "increased" risks to the duration of impacted activities. It may be similar to handling the case of washed seawaster aggregate.

£XXXXX contractors incentive bonus provision - sounds like this would be add to awarded contract, therefore, not shown until bonus actually earned.

£75,000 if Client adopts the latest tech standard - how does this relate activities in the plan i.e. what changes? Add the cost and assume worst case scenario for durations. With an allowance such as this, I would be inclined to ask, what new information are you expecting before making up your mind? If the answer is none, challenge the client to make a decision now. Scope indecision seldom has a positive impact on a projects success.

Just some ideas.

Hi Rolyn,

I may take this as an opportunity to clarify where I am coming from as far as cost loading is concerned about Provisional Items within the Baseline(Target in P3). For me, Baseline is a Baseline, a record, not a document. It is something that should not be altered both values and activities contained in the programme. Such that no matter how the values of the Provisional Items varies (Working Programme), the Baseline value is always available to compare with. I only generate 2nd, or 3rd baseline should the need arises.

As an example, management sometimes may ask us planners to generate a Primavera report to answer how much is the target value of all or specific Provisional Item(s) for the next 3 months. Sometimes in the management point of view, it is important for them to have a good idea how would the Provisional Items affect the cash flow of the project as a whole. They need to study patterns so as the need to be prepared for such patterns.

Lastly, I would say that I find it very important for the Baseline to be completely loaded including Provisional Items with Cost. But then again, these all depends on how we do things best.

Regards,
Arman

Hi all,

1.It is important that the Baseline Programme Total Budgeted Cost should be equal always to the Original Contract Amount including the Provisional Items.

2.Provisional Items could possibly be part of the Critical Path. For example, Base Course in a road construction project classified as a Provisional Item. It is important that it should be included in the Baseline Programme otherwise the critical path would be incorrect not indicating the critical base course activity. The programme then would mandate everybody concerned to resolve the issue as it is critical.

3.Baseline should not be affected as the provisional items changes as it is only the working or current programme that is being updated. Such that no matter how you would change the layouts from the original line items of the BOQ to per structure, responsibility, etc., the total cash flow, s-curve for presentation and reporting purposes, would remain to be the Original Contract Price vs. the Current Contract Amount (Interim) could be additive or deductive subject for reconciliation upon project completion.

4.In my personal opinion, I believe that it is not really for us planners to just simply decide not to include provisional Items in the Baseline Programme just because we will find it hard or impossible to maintain our baseline. Management might be confused if in the summary level we have a different contract amount. Also, we might be losing potential opportunities of claims should we fail to demonstrate the effect(s) of this Provisional Items in our Critical Path. It should be reflected, monitored, managed, progressed and reported at all times.


Regards,

Hi all,

I would like to contribute my idea on this issue based on my experience as follows:

Some items during the time of CONTRACT NEGOTIATION remained to be incomplete as far as details of specific contractual requirements were concerned. Such that the contract was signed but many items were classified as provisional.But, it did not follow that although provisional those were not important for the completion of the contract. It has to be reflected in the programme. Some items were even part of the critical items or path. During the execution of the contract those items in the Psums that were reconciled already were extracted from the Psums and relocate it on its final item in the contract.

I think, it is a case to case basis and in my experience, The Provisional Sums had to be included in the programme.

Regards,

Arman

John,
just check your Provisional Sums shouldn’t be PC Sums. (The building industry in particular tends to muddy this distinction especially with nomsubs)

How could you show Prov Sums on a schedule in sufficient detail that you could later use this in a claims argument?

Prov Items by their definition might or might not occur, so leave them off the programme. When/If they occur you will get a VI so triggering the cost/new schedule clauses.

It may or may not be included in the project but its imerative that PC sums be inculded in the schedule so as to put the client on notice and caution him periodically if they may affect the completion of the project. This also helps in claims on a later date...

Cheers

Sunil

You can talk to client whether they want it or not.
Or submit your schedule with note as provisional items are not included or schedule for provisional items is just for refernece/information...

Hi Peter

I always try to avoid a low level of detail for any “Provisional Items”, only showing basically when the work would be best planned to be executed in line with the defined scope.

It is then up to the Client to accept the dates / logic etc or ask to have it removed from the plan etc, (usually if askes to take it out means you will not be doing the work).

If the client cannot meet the dates and still requires the work to be carried out hopefully it will conflict with the defined scope and hence into a “grey area”, which can be discussed and priced.

Regards

John