NEC Compensation Events Programme

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NEC - Compensation Events Programme Delay
Issues

• Richard Bayfield BSc., MSc., CEng., FICE, FCIArb

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Original Brief

• CEs - Programme and Delay Issues
• Compensation, Delay (i.e. analysis)
• Analysis examination, investigation, scrutiny
• Synthesis creation, making, fusion.
• NEC predicated on synthesis
• Traditional Contracts emphasis on analysis
• Synthesis pro-active pre-empting
• Analysis re-active history (delay)

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Introductory Question

• What is the purpose of a programme?
• What is the purpose of a programme under the NEC?

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History of Construction in 3 Slides
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Industry Context and NEC

• Complexity - technical
• Complexity people / organisations intrinsic
  need for improved communications
• Fragmentation of industry
• Different interests
• Disputes arises from poor communication
• NEC addresses these issues at a strategic level

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Back to Programme who is programme for?

• Client?
• Contractor?
• Project Manager?
• Designer?
• Some one else the delay analyst?
• THE PROJECT

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Programme purpose?

• Project Management Martin Barnes 2 rules
• 1. "It is only possible to manage the future".
• 2. "All decisions must be directed towards
  meeting the clients' objectives".
• Programme - As a tool to help manage the project
  / the remaining activities (the future)
• Programme - Encourage what if scenarios
• Programme - Pre-empting if decision for x is
  delayed what is effect?

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Programme Management.

• Many industries including construction have
  success stories going back decades - Not a new
  invention
• .the traditional standard forms are weak on
  programme techniques
• Prof Capper SCL Paper Sept 1994
• Contract is a tool for managing risk (Prof
  Capper)
• No real difference whether programme is under NEC
  or not (strategically)
• Proper Programme Management adds value and
  reduces risk whatever the contract form

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Programme Management

• There is no reason why these techniques (critical
  path programming) should not be applied in a
  consensual manner within the contract and on a
  real-time basis in order to generate a regularly
  updated analysis of employer and contractor delay
  periods.
• - Professor John Uff QC Are we all in the wrong
  job? SCL Paper July 2001
• SCL Delay Disruption Protocol 2002
  www.eotprotocol.com

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NEC Programme Clauses 3 Time

• Cl 30 Starting Completion
• Cl 31 The Programme requirements (31.3)
• CL32 Revising the Programme
• Cl 33 Possession
• Cl 34 Instructions to stop / start
• Cl 35 Take over
• Cl 36 Acceleration

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NEC Programme Philosophy Accepted Programme

• The programme is an important document for
  administering the Contract. It enables the PM and
  Contractor to monitor progress and to assess the
  time effects of compensation events including
  changes to the completion date. - from
  Guidelines to Cl 31
• i.e it is a methodology for management of the
  overall project - Implications?
• Accepted Programme base document for assessing
  time and cost of CEs

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Assessing Compensation Event (CE)

• Cl 63.3 A delay to the Completion Date is
  assessed as the length of time that, due to the
  compensation event, planned completion is later
  than Planned Completion as shown on the accepted
  programme.

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NEC Programme update for Compensation Event (CE)

• Objective is anticipate the effect of the CE on
  the programme before it happens
• Completion date is then revised via the accepted
  programme
• Associated costs dealt with in advance as a a
  quote, not as part of an audit

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NEC Programme update for Compensation Event (CE)

• Forecasting prospective - quotation
• Allows Choice (but not always)
• What if?
• Subjectivity
• Synergy
• Fair
• Acceptable

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HONDA NEP PROJECT
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Case Study Major Client

• 2 Similar Projects on same site
• Built 10 years apart
• 40 Financial improvement on second project
• Positive Global comparison
• British Construction Industry Award 2002
• NEC philosophy and methodology project

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Case Study Major Client

• Compensation Events dealt with on a
  contemporaneous basis managed not audited.
• Final Accounts resolved within 3 months of PC
• Same methods for construction and process
  contractors
• Transparent programme updates every week.

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BRITISH CONSTRUCTION INDUSTRY AWARDS 2002

• Honda's new European plant at Swindon took the
  Building Award.
• The "one team one goal" culture of openness and
  transparency at Honda's New European Plant, and
  the company's refusal to accept the status quo,
  has been rewarded with a building cost of only
  701/sq m - a 40 improvement on the cost of the
  original plant at Swindon completed nine years
  earlier.

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Programme Management

• Transparency / visibility
• Emphasis on Communications
• Emphasis on Pre-planning
• Emphasis on detailed Programmes
• Weekly updates for actual progress
• Standard software (MS Project)
• Compliance by all trade Contractors.

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Programme meeting using whiteboard
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Whiteboard Meetings

• Consensual Visible
• Identify potential conflict early
• No where to hide
• Instant record email
• Saves Management time
• Synthesis not Analysis
• Meeting Minutes see example

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Overview

• Methodology works -
• Addresses some of the industry failings
• BUT
• Synthesis is harder than analysis
• Needs strong Client commitment (more than just
  words needs resources as well!)
• Needs a competent TEAM with adequate specialist
  support

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Finally

• Project successes due to
• Synthesis not Analysis
• Notes at www.richardbayfield.com