Get with the programme

Clients want certainty; contractors want cash flow. These seemingly unrelated goals can actually both be represented in a project programme. When that goal is threatened, contract administrators are obligated to act.

In the last 45 years, with the advent of PCs and project management software, scheduling techniques have advanced considerably. Employers, investors and contract administrators (CAs) - engineers, project managers, quantity surveyors and architects alike - involved with large capital expenditures have evolved and, by necessity, are using structured and progressive approaches to risk and project management.

However, they are not necessarily the right people to create, implement and maintain a structured critical path programme. Therefore, relying on a contractor's experienced assumptions when developing an as-planned construction programme will always be an essential part of the process.

Contractor influence

Delays do not "go away" by themselves - they usually develop into disputes, leading both parties to a loss of time, money and future business. To avoid this, CAs need front-line skills to address programming delays as soon as they occur. Accordingly, CAs will increasingly have to decide if, and to what extent, they are going to trust, approve or accept a contractor's programme submissions.

One of the earliest books on the application of critical path method scheduling opens with the following: "Scheduling continues to be more of an art than a science." For many, the same is true today. Our industry still suffers from programmes being produced too quickly, too late and by inexperienced staff. The full scope of work might not have been represented accurately in the tender programme or the contractor's intentions might have changed prior to mobilising on-site.

There is a clear need for accurate and timely programmes reflecting the true intentions of a contractor. A CA's acceptance of a programme should only acknowledge his receipt and understanding of the contractor's intentions, and that the programme is contractually compliant.

The view held by some (Tavistock Institute, Interdependence and Uncertainty, 1966) was that: "At or about the time of contract, a programme is required of the builder. This programme will be produced and agreed. But such agreement cannot be undertaken at this stage except by collusion in acceptance of unreality by all parties. It is not possible to put exact dates to specified phases of the project at this time. The future holds too much uncertainty."

A programme is only an indication as to when work is likely to be achieved. Every task on a programme should be treated as a time-risk allowance. Despite this uncertainty, heavy reliance will be placed on these forward-looking programmes.

In today's software paradise, CAs must be able to detect common techniques or mistakes applied when reviewing programmes that attempt to or increase the likelihood of extension of time (EOT) awards. These techniques render a programme unable to function as a predictive tool for measuring progress or the impact of change.

Flawed schedules produced with powerful new tools are all too easy to create.

Contract conditions

One size doesn't fit all when it comes to assessing a contractor's EOT entitlement. The difference in contract wording regarding EOT entitlement is subtle. When one is tasked with the job of assessing, these subtleties are very significant.

ECC (2nd) clause 63.3

Our industry suffers from programmes being produced too quickly, too late and by inexperienced staff

"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 shown on the accepted programme."

ECC (3rd) now takes some of these concepts even further by requiring a "risk register" and introduces the concept of "key dates" which are to be represented on the programme, and monitored by the PM to determine whether the employer is entitled to damages when key dates are missed (sub-clause 25.3). ECC (3rd) has reduced the reliance on method statements, initially, and now requires the contractor to produce detailed method statements only after the contractor has a clear understanding as to how the works will actually be carried out.

The measurement of delay, in both ECC 2nd and 3rd, is relative to the currently "accepted programme". This requires a dynamic, forward-looking, approach and, more importantly, requires there to be an "accepted programme".

JCT 98 clause 25.3.1.2

"Completion of the works is likely to be delayed beyond the completion date"

The delay can again be prospective as measured against the fixed completion date. The recent case of Leighton Contractors (Asia) vs Stelux Holdings reinforced the fact that the actual status of works "at the time" of an event is more relevant than simply comparing actual dates with planned dates, which requires an accurate programme to be managed throughout the course of the works.

The JCT form has also evolved into a 2005 form, in which the familiar clause 25 "extensions of time", has been replaced with the more pro-active title "adjustment of completion date". This will presumably allow more flexibility to move the date forward, or backwards. Other changes noted between clause 25 in the JCT 98 (with contractor's design) and the 2005 form (clause 2.23) are listed below (provided by Fladgate Fielder partner, Gillian Birkby):

• The notice, particulars and estimate which the contractor must supply do not have to be sufficient before the employer is required to act on them

• The employer must make an assessment, and grant an extension if appropriate, whether or not it is "fair and reasonable" to do so

• When an EOT application is submitted less than 12 weeks prior to the completion date the employer is not required to respond before but completion date, but is only obliged to "endeavour to do so prior to the completion date"

These revisions enhance the dependence on a detailed programme, but do not provide further guidance on how these assessments are to be made.

MF/1 Clause 33.1

"... the contractor shall have been delayed in the completion of the works..."the engineer shall... grant... either prospectively or retrospectively such extension of the time... as may be reasonable."

Flawed schedules produced with powerful new tools are all too easy to create

Here, the delay has to have occurred ("have been delayed"), but the engineer can prospectively or retrospectively assess a reasonable extension.

ICE clause 44.3

"Should the engineer consider that the delay suffered fairly entitles the contractor to an extension of time for the substantial completion of the works..."

Here the delay event has to have occurred ("delay suffered"), but leaves to the engineer's discretion as to what is fair. Failure to act fairly can invalidate a contract administrator's certificate due to the lack of an "analytical approach" and the architect's reliance on an "impressionistic" extension of time assessment.

Whether FIDIC, ICE or JCT forms are used, both the engineer and architect are required to act independently. A recent posting on chat forum planningplanet.com, frequented by the true anoraks of the planning world noted:

"...An engineer trying to fulfil the role of the employer's contractual guru (such as the role of the engineer in FIDIC contracts) can be an absolute nightmare. Such individuals are never trained in contract administration, are often too full of themselves to admit their (and their employer's) mistakes, and their inability to administer contracts properly and their failure to be flexible and attempt to reach constructive solutions to contractual problems, simply provides fodder for claims consultants."

This view is not universally accepted, but it is not unheard of for an engineer to lean in his employer's direction when making an assessment. It was also recently decided, in a High Court decision regarding an ICE form of contract, that;

"...the engineer in the present case was under a duty to act independently and honestly". (AMEC Civil Engineering V Secretary of State for Transport, 2005)

In a similar decision related to project under the New Engineering Contract it was found that:

"It would be a most unusual basis for any building contract to postulate that every doubt shall be resolved in favour of the employer and every discretion shall be exercised against the contractor... I am unable to find anything which mitigates against the existence of a duty upon the project managers to act impartially in matter of assessment and certification." (Costain vs Bechtel, 2005)

These conclusions are no more relevant anywhere than they are when assessing contractors' entitlement to EOTs.

Avoiding disputes can only be accomplished through early planning and managing the impact of change and unforeseen events throughout the project's lifecycle. It is time the programming effort is given weight equal to commercial considerations when investing in the early stages of any capital improvement programme.

Successful programme management requires goodwill, honesty and an acceptance by all parties that a programme is no more than a dynamic tool representing time-risk allowances for a series of events. Employers are the ultimate beneficiaries of improvements in programme performance, financial certainty and the overall quality delivered by the project team.