Articles

Introduction

When projects are delayed and go into dispute, they are often referred to delay experts to provide an opinion on the cause and the impact of the delay events. The first challenge for these experts is to determine the method of delay analysis they will adopt. Many of these methods are described in the Society of Construction Law (United Kingdom) Delay and Disruption Protocol. The selection of the most appropriate method is highly dependent on the information that is available to the delay expert, not to mention the expert’s own preference.

Arguably it is the lack of progress and performance information in the first place that has contributed to the actions leading to a dispute. To avoid this, the focus, when drafting contracts and agreements, should be to ensure that the appropriate detail of reliable information is provided before and during the delivery of the project.

This article is the second in a series of three articles, that cover:

1. The importance of getting to an accepted programme;
2. Monitoring project progress against the accepted programme; and
3. What to do when delay claims cannot be resolved.

Baselining the Accepted Programme

In the previous article, we discussed items that should be considered when preparing a contract to establish the accepted programme. Once the programme is accepted, action should be taken to baseline the accepted programme. This means keeping a record of the programme and saving it as a benchmark to measure future performance. Without a baseline, it will be difficult for those involved to identify how the project is progressing against the contractual requirements.

This baseline record should not only include the Gantt or bar chart but also the key target dates and details on the underlying construction methodology that forms the basis for the programme. This requirement will assist others in understanding the intended delivery approach and the basis of the programme at the time it was established.

Measuring Progress and Performance

Too often we have seen that once the accepted programme is baselined, the programme is cast aside and no longer referred to. The project progresses and then, usually around the 80% to 90% duration mark of the original contract timeframe, comes the cry for help – ‘We are not going to finish on time, what can you do?’.

One organisation that we have worked with undertook benchmarking of their civil works projects over the last 10 years and found that if they had been consistently and accurately measuring the status of their project and forecasting the completion of their works, they would, at the 30% duration mark of the original contract timeframe, have a good idea if they were going to be early, on time or late.

This highlights the need to regularly undertake a status of progress and provide an honest forecast for the completion of the works based on the performance to date. This means having a good understanding of productivity impacts and how that might impact future performance.

The challenge for most parties is that the standard terms and conditions of a contract are usually silent on the format and content of progress and performance monitoring. The lack of requirements means that projects run the risk of running late as there is no performance measure against the baselined accepted programme. As mentioned above, it is often late into the project when this is realised.

When it comes to drafting contracts, consideration should be given to stipulating the frequency (no less than once a month) of status updates, the transparency on changes to the forecast, and the adjustments required based on the performance to date. The contract should also consider the format and content of reporting such as identification of the changes to critical handover and completion dates, the critical path to those dates and variance against the baseline accepted programme.

In addition to the identification of changes in key dates and the critical path to those dates, clients of complex projects should also consider requiring supporting information for the status update. This may include native versions of programme files, resource (personnel and material) reports, photographs, a detailed register of programme changes, details on the method of measure of progress and the identification of key issues, threats and opportunities.

It is important to stress that these programme revisions should incorporate only the status of the works as at the record or data date, and the forecast of the remaining works for the agreed scope. Proposed variations or extensions of time, should not be included until they have been agreed upon, however, this should not stop the programme revision from being issued.

Programme Implications under NEC4

Given the ongoing wave of interest and discussion about the recent introduction of the NEC4 suite of contracts to the Singapore market, it would seem remiss not to touch on how programme approvals are treated. 

Under NEC4, Contract Data Part One Item 3 allows clients to nominate a time when revised programmes are to be submitted. Clients, under Secondary Option X20, key performance indicators (KPIs), can consider the inclusion of performance metrics, such as the schedule performance index (SPI) if using earned value management (EVM), and the timely delivery of progress reports. Other items, such as the content of progress and performance reporting, should be identified either in the scope of works documents or as an additional condition of contract.

Changes to the Baseline Accepted Programme

Variations and delays occur too often during the delivery of the project and at times this may require a change to the baseline accepted programme to ensure that performance is measured against the current agreed scope of work and delivery methodology.

Standard terms and conditions of contract are generally quite prescriptive on how these changes are to be notified, quantified and determined. The biggest challenge we often come across is the lack of implementation of these changes in accordance with the contract, specifically the issue of notices, quantification and determination of delay.

While this can be addressed through good contract administration, a lack of agreement on the baseline accepted programme and a lack of progress information does not help. When a change does occur and it is agreed upon, this change should be incorporated into the baseline accepted programme and a revision of this programme checked, agreed upon and recorded for the purposes of monitoring delivery performance. When drafting contracts for complex projects, it is essential to require regular updates of the baseline accepted programme that incorporates the agreed changes. This ensures performance is being measured against the agreed scope and delivery approach.

The Importance of Monitoring Progress against the Accepted Programme

Being clearer in contract documents about the requirement to keep a record of the accepted programme and the use of it as the benchmark for measuring project delivery performance should be considered a critical requirement to improve contract administration outcomes.

Improved contract administration and regular monitoring of the progress of works, can help identify delays early and help support any claims for delay, making the notification, quantification and determination of delays more straightforward. In addition to regularly statused programmes, consideration should be given to keeping other contemporaneous records including photographs, video, weather station readings and site diaries. This information can then be used to support delay claims and changes to the accepted programme, and expert analysis if required.

The final article in this series will look at what to do when delay claims cannot be resolved.

Contributed by:

Grant Axman-Friend - Managing Director, Core Project Advisory