Claire King edits Insight, our newsletter which provides practical information on topical issues affecting the building, engineering and energy sectors. In June 2022, Claire wrote about the NEC Accepted Programme. Here is an extract from that article.2
The Accepted Programme sits right at the heart of the NEC form of contract. Its aim is to encourage good project management by not only ensuring that all parties to the project know what they have to do and when, but also by facilitating the prompt and prospective assessment of compensation events as and when they occur on the project. In order to achieve these aims, numerous prescriptive procedures governing Accepted Programmes are provided for.
All too often, however, these procedures break down, sometimes right from the beginning of the project. This can be for a wide variety of reasons, but all too often it is because parties do not fully understand what an Accepted Programme should contain or the processes for updating it.
The NEC’s objectives are to “facilitate and encourage good management of risks and uncertainties, using clear and simple language.” To achieve that goal, the NEC encourages the early identification of problems and a proactive approach to addressing those problems. The idea is firmly that issues are resolved as work progresses so that there is no final account process (or associated dispute) at the end of the job. These goals are supported by prescriptive contractual procedures. All parties also have a duty to act in a “spirit of mutual trust and cooperation”.
The Accepted Programme is a key project management tool in the NEC form and is crucial for achieving the NEC’s objectives. Broadly, it has two roles:
The Accepted Programme is intended to encourage collaborative working and dispute avoidance. In particular, it provides a tool to allow the assessment of extensions of time (via compensation events) contemporaneously and without the need for a complex and expensive delay analysis.
Under Clause 63.5, the Accepted Programme is the tool the Project Manager should use for assessing compensation events. The Accepted Programme used for assessing an extension of time (compensation event) is the one current at the dividing date. The dividing date is set out in Clause 63.1:
“For a compensation event that arises from the Project Manager or the Supervisor giving an instruction or notification, issuing the certificate or changing an earlier decision, the dividing date is the date of that communication.
For other compensation events, the dividing date is the date of the notification of the compensation event”. [Emphasis added.]
Sometimes amendments are made to the definition of the dividing date. For example, stating that the dividing date is the date a quotation is requested. In the author’s view, this is to be discouraged. The logic of the dividing date in the definitions is that this is as close as possible to when the event itself occurred (assuming there is prompt notification of a compensation event). If the date is anything else, assessment can become much more difficult and theoretical (i.e., removed from the reality of what is happening on the ground), thus building in more room for unnecessary disputes.
Obviously, the closer the Accepted Programme is prepared to the dividing date, the easier it should be for the Project Manager to assess the impact of any compensation event (and for a Contractor to update the Accepted Programme to show the impact of any compensation event).
Incorporating crucial dates into the Accepted Programme is encouraged by the fact that there are a number of specific compensation events which cross reference to the Accepted Programme. These include:
Clause 60.1 (19), the NEC equivalent to a force majeure provision, also expressly cross references to the Accepted Programme and, more specifically, the date shown for planned Completion shown in the Accepted Programme, as part of the test as to whether there is a compensation event or not. Obviously, in order to claim these compensation events, the Accepted Programme must have been prepared properly and contain the relevant dates as hooks for any claim.
Given the central importance of the Accepted Programme, the NEC4 also contains both carrots and sticks to encourage their production and updating. Clause 50.5, for example, provides that if there is no programme in the Contract Data, one quarter of the Price of Work Done to Date is retained in assessments of the amount due until the Contractor has submitted a first programme (showing the information which the contract requires) to the Project Manager for acceptance.
Clauses 64.1 and 60.2 also provide a strong incentive for the Contractor to submit their programmes. If the Contractor does not do so, they lose control of the compensation event assessment process. First of all, the Project Manager is required to assess all compensation events3 and, secondly, the Project Manager should use their own assessment of what the programme should be to assess the impact of the compensation event.4
Section 3 of the NEC4 contains all of the key provisions governing what the first Accepted Programme is and what it should contain.
The first Accepted Programme is either the programme identified in the Contract Data or the programme to be submitted to the Project Manager for acceptance.5 It is important to note that the Accepted Programme and the Activity Schedule (for Options A or C) are not the same documents but are required to be correlated. Clause 31.4 (Option A) requires that “the Contractor provides information which shows how each activity on the Activity Schedule relates to the operations on each programme submitted for acceptance”. This is an ongoing duty and does not just relate to the first Accepted Programme.
Assuming the first Accepted Programme is not already attached to the contract, then the contractor needs to note the very detailed and prescriptive information listed in Clause 31.2. This includes:
An example of a programme showing key information is set out below:
Along with each Accepted Programme, there is also a requirement for a statement of how the Contractor plans to do the work (sometimes called a programme narrative).6 This should include details of the:
This is an important document and should be issued with every programme submitted for acceptance. Practically, it provides the Project Manager with visibility of what the programme is really showing. It also shows what has changed, and why, since the last Accepted Programme. As such, it is a vital project tool and, when done well, can help to prevent a breakdown of the Accepted Programme process.
Once the Accepted Programme has been submitted, the Project Manager has two weeks to notify his acceptance or reasons for rejecting it. The reasons for rejecting the programme are limited to the following:
When considering assessing the Accepted Programme, the Project Manager should act as they do when they are a certifier, i.e., impartially and take their duties under Clause 10 seriously.8
If the Project Manager does not respond within two weeks, then there is a useful deeming provision provided within the NEC4 which, unfortunately, is not present in the NEC3. After two weeks, the Contractor can submit a notice of failure to accept or reject the Accepted Programme under Clause 31.3. If the Project Manager remains silent after one week, then there is deemed acceptance of the programme.
Where you need to submit a quotation for a compensation event, this should include the assessment of (prospective) delay impact by the Contractor. As set out above, it is important to get the dividing date right and also to use the Accepted Programme that was “current at the dividing date”.9
Time impact is usually shown on the programme by adding new activities to model the delay event which will include new or extra time risk allowance (TRA) if appropriate. An example of how to show such a delay is set out below:
Unfortunately, too often we see issues building up right from the beginning of the project. For example, these problems include, but are in no way limited to:
It is, of course, much easier to list the problems than to find solutions to them. However, practical advice to resolve these issues includes:
Unfortunately, carrying out a delay analysis at the end of the job will take time and can be expensive. Furthermore, memories are not as fresh, staff leave, and records are lost, meaning that being in this position is always unattractive. For this reason, it is incumbent on all parties involved in NEC projects to try to understand, and fully buy into, the Accepted Programme process. In particular, to resolve issues as and when they occur so that they do not snowball. This is much easier if the programmes are accurate (both in terms of as-built data and logic) and supported by a detailed narrative explaining the thinking that lies behind it, and a transparent approach to showing delays and TRA is adopted.
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