Proceedings of the Institution of

Civil Engineers
Management, Procurement and Law
163
May 2010 Issue MP2
Pages 59–64
doi: 10.1680/mpal.2010.163.2.59
Paper 900033
Received 02/05/09
Accepted 19/08/09
Glenn Hide
Keywords: Consultant, Director of GMH
contracts & law/project Planning Ltd, Langton Green, UK
management

Producing a programme under the NEC form of contract

G. Hide BEng

The NEC suite of contracts puts far greater contractual is to produce and manage a programme to a good level of
requirements upon the contractor to produce and manage detail, and for the project manager to recognise and accept the
a detailed programme than other forms of contract contractor’s plans as a true reflection of where the parties are at.
currently in existence within the construction industry. Other forms of contract probably assume that this process of
The contract requires this programme to be regularly using and updating the programme will just happen. Like many
updated and resubmitted for acceptance by the project of the NEC clauses, the programme aspects are just good
manager (who acts on behalf of the employer), thus practice project management, with the contract simply
becoming the new accepted programme under the formalising the fact that these processes must take place.
contract, superseding any previously accepted
programmes. When administered properly, this should 1.1. Clause 31.1
lead to both parties having a clear understanding of how Clause 31.1 confirms that a programme can either (a) be bound
the contractor plans to carry out the works in accordance into the contract or (b) constitute a first programme issued for
with the works information and any associated liabilities in acceptance after award of the contract within the timescales
relation to the movement of the completion milestones. indicated within the contract data part 1. If a programme is
This paper will give an overview of the considerations incorporated into the contract then this in effect becomes the
required to create a programme under the NEC first accepted programme.
Engineering and Construction Contract (the most
commonly used contract within the NEC suite) and offer It is fundamental that a detailed, thorough programme by the
some advice as to how section 3 (time) of the contract contractor should be provided at tender stage. From the project
should be interpreted and managed efficiently to the manager’s perspective this would demonstrate that the contractor
benefit of both parties. (a) has the ability to produce a programme and use the associated
software, and (b) has clearly demonstrated that it understands the
1. CLAUSE 31: PROGRAMME REQUIREMENTS project and has reflected this in a clear logical format. For this
It is probably fair to say that the construction programme is reason the produced programme should be a significant factor in
under-utilised and under-valued on many if not most the assessment of the overall tender submission and be reflected
construction projects and rarely used to its full potential. The as such in any scoring or weighting that the employer may use to
benefits of an up-to-date programme reflecting both the stage evaluate the tender. From the contractor’s viewpoint, rather than
the contractor has reached and how the contractor plans to simply providing a series of ticked boxes, a detailed programme
complete the remaining works is fundamental to the team should verify that the determined contract period is achievable
working efficiently and effectively to achieve success in any and thus that the resultant tender price submitted is much more
project. The NEC form of contract has long recognised this and likely to be correct. Too many contractors base their price on the
translated it into firm contractual obligations that bind parties employer’s completion date in contract data part 1, and only
rather than just hoping or assuming that they will when they win the work do they consider a detailed programme
independently manage such a process. While this now means and actually find that the date is unachievable or will require
that the NEC requires the contractor to manage the programme, considerably more resources than originally envisaged and priced
there is nothing that the contract is asking for that the for.
contractor should not already be doing to efficiently manage its
works. The resultant by-product is that there is a clear This first programme is very important when we consider clause
contractual mechanism for agreeing change between the parties 50.3, which allows the project manager to withhold 25% of the
as it happens and not waiting for the traditional end-of-project price for work done to date (the interim contractor valuation) if
‘sport’, where both parties spend time/effort/resources in trying an accepted programme is not in place or has not been issued
to agree the entitlement to any extensions of time and the showing the information that the contract requires. This is the
resultant final account figure. only place in the whole of the contract that allows the project
manager to withhold money from the contractor, and
The NEC has not created any fundamentally new ‘rocket demonstrates the importance it puts on the programme process.
science’ procedures. What the contract asks the contractor to do This is, however, only applicable to the first programme. Once it

Management, Procurement and Law 163 Issue MP2 Producing a programme under the NEC form of contract Hide 59
 is accepted then this clause no longer applies; it assumes that from this failure that the employer incurs will be payable by the
the contractor will maintain this level of detail and content contractor. Unlike delay damages, which are defined in contract
from there on in. The project manager does have recourse, data part 1, these costs will not be defined in advance. For this
however, in other ways, inasmuch as if ever a subsequent reason it is very important that these key dates are managed on
programme is not compliant with clause 31.2 (see below) then the programme and that the contractor is aware, as the dates
he is not obliged to accept that programme. approach, of any implications that may result from not meeting
them. The key dates should be managed in accordance with the
1.2. Clause 31.2 early warning and compensation event (CE) processes, inasmuch
This clause is one of the longest in the whole contract and as if there is the possibility of a delay in meeting a key date
provides a comprehensive list of what should be included within then an early warning should be raised; if an event will be
each programme issued for acceptance. It includes the delayed by something not under the contractor’s control or
following liability then a CE is notified.
(a) starting date, key dates and completion date
1.2.2. Completion date and planned completion. The fact that
(b) planned completion
these two requirements feature as separate items should make it
(c) order and timing of the operations which the contractor plans
clear that they are distinctly different and need to be treated as
to do
such in the programme. There should always be ‘completion date’
(d ) provisions for float
and ‘planned completion’ milestones in every programme. The
(e) provisions for time-risk allowances
‘completion date’ is a fixed milestone and is the trigger point for
( f ) dates when, in order to provide the works, the contractor will
which delay damages are applicable. It can only move due to one
need
of two contractual mechanisms. It can move out (i.e. back) as a
(i) access to any part of the site
result of agreed CEs that affect the contractor’s ability to complete
(ii) acceptances
by the current planned date. Equally, there is only one mechanism
(iii) plant and materials provided by the employer
under the contract that will bring a completion date in (i.e.
(iv) information from others
forward). This is acceleration (clause 36). Interestingly, this is not
(g) any other information requested within the context of works
due to negative CEs, which, while almost certain to bring a direct
information (WI)
cost saving, will not move this contractual milestone.
(h) statement of how the contractor plans to do the work,
identifying principal equipment and resources which he plans
Planned completion is, in simple terms, when the contractor
to use.
‘plans’ to finish. It is linked to the contractor’s last planned site
The following sections consider in more detail each of the activity. It can be moved in or out in time depending on
points listed above to help the contracting parties understand whether the contractor is ahead or behind in terms of progress.
where exactly the contract is leading and how it might best be planned completion can move due to ‘anything’, but will not
managed. necessarily have a direct effect on the completion date (Figure 1).

1.2.1. Key dates. One aspect of the NEC contract is that there is 1.2.3. Order and timing of contractor’s operations. ‘Order and
no mechanism for the employer to nominate individual timing of activities’ can most easily be demonstrated by the
subcontractors or suppliers, as it would be unclear who would be traditional logic linked bar chart programme to show the activities
responsible for any delay or additional cost for underperformance. planned and the dependencies between them. This paper will not
The contractor might feel that any liability should be borne by the deal with which programme software you should adopt for a given
employer, while the latter might blame the former for not project. They are all much of a muchness in terms of what they do,
managing the subcontractors properly. The contract therefore although some are less powerful than others, making them
does not allow for this and the only place to put any such restrictive in what they show and how they show it. It is also
requirement is in the WI. However, the employer should consider important to remember that while the programme software is very
carefully how it includes this and how much choice it is giving the clever, an individual programme is created from the information
contractor in terms of approved subcontractors or suppliers. keyed by the operator. As with most procedures or systems,
‘rubbish in ¼ rubbish out’. Planners are generally clever people
Key dates are a new addition to the Engineering and who can make any number of activities fit between two fixed
Construction Contract (ECC3; third edition launched in June milestones! However, whether the programmes are realistic and
2005). ECC2 only had sectional completions and completion achievable within the timescales shown is a completely different
dates as contractual milestones. These did not really help the matter.
employer to add constraints without having to take over that
section of works. Key dates now require a contractor to meet
certain conditions by a certain date, for example the completion
of some construction work prior to letting in an electrical
company to install a panel, then completion of the remainder of
works in that building. These key dates should be identified at
tender stage, as they cannot be added mid-contract unless by
agreement.

Figure 1. Demonstration of what can change a planned

The main aspect of key dates is that if a contractor fails to meet completion or completion date milestone
the condition stated by the agreed date, then any cost resulting

60 Management, Procurement and Law 163 Issue MP2 Producing a programme under the NEC form of contract Hide
1.2.4. Float and time risk allowances. These are two of the main would mean that while this event is a CE (something that
considerations in terms of ‘float’ on a project, the other being the the contractor could not have planned for and is thus not
difference between planned completion and completion date, his risk/liability under this contract), any direct cost would
which is commonly known (and referred to in the NEC guidance be considered and evaluated, although here it does not have
notes) as ‘terminal float’. This paper will consider in detail the any time effect. Equally, the contractor could have chosen
three types of float, how they should be managed and, most to have started activity D 2 weeks late, perhaps due to lack
importantly, who owns which float under the contract. of materials, but that would not have affected the planned
completion at that time either.
(a) Float
Also known as ‘total float’, this demonstrates which
It is in both parties’ interest to have activities with as much
activities can slip in time without affecting planned
float as possible (i.e. that they be completed as early in the
completion and those that cannot. Float is something that is
project as is feasible), as this limits the risk of the project
generated by default within the programme software, not
over-running. Contractors might also question why they
something that has to be created manually. Once logic has
cannot show a contract programme with no float; in other
been created by the use of links (B cannot start until A has
words, every activity is critical and will affect planned
finished, C cannot start until B is complete, etc.) then this
completion if it slips by even a day. In most cases if
will determine the planned completion, which will follow
everything in a programme is critical then it is likely by
on from the last planned activity. By default this will create
default not to be achievable or realistic. This would be a
the ‘critical path’, which sets the overall duration of the
reason for a project manager not to accept a programme
project at that point in time and hence the earliest date that
(see reference to 31.3). Whether it was acceptable or not
you believe you can complete the project by. Questions
would also depend on any elements of time-risk allowance
have been raised as to why the programme requirements in
included, which leads to the next form of float that the
the contract do not ask for critical path. It is actually there
contract requires to be shown.
by default, inasmuch as the critical path is simply where
float equals zero and the contract asks you to demonstrate
(b) Time-risk allowance (TRA)
float. In the simple programme below, activities A, B and C
This is actually quite a simple element of float but it is
form the critical path and the logic states that by default
often much misunderstood and mismanaged. The contract
the remaining activities have elements of float (i.e. can
requires the contractor to demonstrate what elements of risk
afford to slip by a short time period without currently
it has applied to a given activity when ascertaining its
affecting the ability to finish by the planned completion
duration. In truth, in the past this would have been
date). In Figure 2 activities D, E and F can afford to slip by
considered during the estimating phase, but not necessarily
up to 3 weeks collectively without affecting planned
formally recorded and named ‘time-risk allowance’ (TRA).
completion.
During the estimating/tender period, it might have been
Establishing who owns this float in the contract is quite
considered that an activity would take 13 days to complete
simple: it is shared. To put it another way, it is also
based on the resources being used and the optimum output
whoever gets there first, although it is important that the
expected of a certain gang size in the particular site
parties do not have a race to see who can use it up first! It
conditions. However, those 13 days were probably the best
is shared inasmuch as it is available to accommodate either
that could be achieved. Therefore, a consideration as to the
the effects of a CE or lack of progress/re-sequence by the
likely risk for that activity in terms of, for example,
contractor. In the example shown in Figure 2, if activity D
weather, downtime, inefficiencies, etc. should be made,
is delayed by denied access to that area by, say, 2 weeks,
which might result in a duration of 15 days for the estimate
this will deny the ability to start it in week 1 and it will not
and programme purposes. Fifteen days will be carried
be able to start until week 3. This also pushes out activities
forward to the programme; the contract requires the
E and F respectively, which now means that there is only
contractor to show how much of that period is TRA. The
1 week of float remaining before planned completion. This
most simple and effective way to show this in terms of the
programme is to add an extra column titled ‘TRA’. The
programme will then show this activity as being of 15 days’
duration, but with a TRA of 2 days.

The project manager should primarily be interested in

critical path items that have some elements of TRA to both
provide a greater degree of comfort and ensure that the
completion date is achievable. TRA is not, however,
available to absorb the effects of CEs. In the example shown
in Figure 3, if activity A is denied access by, say, 3 days
and agreed to be a CE, it cannot use up the 3 days TRA
allocated to it and thus not show a delay to planned
completion. The 3-day delay would be added as a CE on the
programme, it would delay the start of activity A by 3 days,
Figure 2. Demonstration of critical (shaded) and non-critical
(unshaded) programme activities the 4-week duration would be retained along with the
remainder of the critical path and thus planned completion

Management, Procurement and Law 163 Issue MP2 Producing a programme under the NEC form of contract Hide 61
 contract requirements can be summed up by saying ‘any employer
or third party interfaces that have the ability to affect the
contractor’s works should be shown on the programme’. However,
they will not normally be shown with the same level of detail that
the contractor will require for its own activities. Either an activity
or a milestone can demonstrate to all concerned the date that the
contractor needs a design signed off, free issue material, or third
parties to have completed an element of work before it can
proceed with the next stage of its work. As long as these are shown
Figure 3. Demonstration of time risk allowance within clearly on the accepted programme, and things such as acceptance
programme activities periods shown are in accordance with the WI (one cannot limit
employer approval periods to those in the WI), then it should be
clear what the resultant effect would be should that element not
(and ultimately completion date as well) would be delayed occur as programmed. It is very important that the contractor has
by 3 days. a suitable level of detail in its programme. If there is an element of
work that is, for example, 8 weeks long and a CE affects part of
To summarise these points, TRAs are risks allocated to an that works, how can it be clearly demonstrated how much of the 8
individual activity and are contractor owned. weeks has been affected? If this activity is broken down into
smaller chunks then this assessment will be clearer and much less
(c) Terminal float (difference between planned completion subjective.
and completion date)
This, the final element to be considered in terms of float, is This should result in the contractor’s programme being
owned by the contractor. This is made clear in clause 63.3, integrated, which will work to the benefit of all parties. The
which reinforces the fact that the completion date moves contractor describes all of its own activities with a good level of
out by the amount that the planned completion moves out detail, as well as any employer/third-party activities that
on the last accepted programme due to the effects of a CE. interface with them. The contractor can also provide the project
This does seem logical, as it may well be that the contractor manager with a filtered programme of the employer’s
has expended additional cost to actually finish early for its deliverables that, provided they are met by the dates shown, will
own benefit; it would then not be right if a CE ate into that maintain the contractor’s ability to complete the programmed
period, preventing the contractor from leaving the site works on time.
earlier than planned.
1.2.6. Any other information required within the WI. As with
If planned completion is 2 weeks earlier than the any project, it is necessary to understand the contract that one is
completion date in the accepted programme, and a CE entering into and the implications of the specific contractual
affects the critical path (and hence planned completion) by clauses. The above are clauses common to all unamended ECC
2 weeks, the completion date also moves out by 2 weeks, contracts, but there may be additional requirements in the project-
maintaining the 2-week differential between the two specific WI that also need to be carried out or demonstrated. For
milestones. If the contractor takes 2 weeks longer to carry example, there could be specific or additional reports to be carried
out an activity and this is not a CE, then planned out with each programme submitted for acceptance, or there could
completion would move out by 2 weeks and the completion be the requirement to use specific planning software for the
date would remain where it was, with the contractor using production of programmes.
up his own terminal float.
1.2.7. Statement of how the contractor plans to carry out the
It is important to consider what benefit this actually gives works. The wording of clause 31.2 has subtly changed since the
the contractor, as it is not the case that it picks up any issue of NEC2, which used to read ‘a method statement of . . .’. The
specific defined cost for the period between planned words ‘method statement’ in certain circles conjured up a
completion/completion date. There is thus no direct misleading image of a more traditional health and safety ‘method
financial benefit. Equally, there is no issue with defect statement’ required for a site task. There have been projects that
liability or maintenance periods, as these would apply from the project manager did not accept under ECC2 because the
the completion date, which would/should follow quickly on contractor had not (a) produced an all-encompassing ‘method
from planned completion. The only real benefit in having a statement’, (b) issued all of the project method statements for a
planned completion prior to completion date is the given project, or (c) shown the statements in its programme. This
limitation in exposure to delay damages under the contract, was not the original intent of the contract.
which would apply should the completion date be exceeded.
The programme itself can easily demonstrate some of the
For a project manager, the only way within the contract to information that the statement is asking for. It is possible to
bring back a completion date if terminal float has been show resources in the programme, in particular labour levels.
established is to request acceleration under clause 36. This Indeed, it is difficult to see how a programme can be properly
is explored in more detail below. evaluated without having resource levels. The bars shown may
seem to be achievable in a given week, until you consider that
1.2.5. Dates when, in order to provide the works, the contractor each activity needs six operatives and the cumulative number of
will need access, plant/materials, acceptances etc. This group of resources you are showing as being required is more than the

62 Management, Procurement and Law 163 Issue MP2 Producing a programme under the NEC form of contract Hide
 (iii) key dates as stated in the contract data for the project.
(c) The programme does not represent the contractor’s plans
realistically, for example
(i) contractor shown doing works that have already been
completed
(ii) duration relies on eight operatives to achieve the output
required, yet the contractor has only two operatives
working on that activity while the duration remains the
same
(iii) the sequence shown does not represent how the
operatives are actually doing the work at the point in
time that the programme was issued.
(d ) The programme does not comply with the WI, for example
(i) it does not show an element of work that is clearly part of
the WI
(ii) the WI requires a certain type of method to be used and
Figure 4. A typical programme demonstrating the requirements of the programme has used a different one.
clause 31.2
If the project manager chooses not to accept for any other
reason, then by default that would be a CE under clause 60.1(9).
total of the resources available to you. In that instance one
would either have to delay some activities or put less resources It is important to recognise that whether a programme has been
into each of them, which in turn is likely to extend their accepted or not is not a condition precedent for the contractor
duration. This can be included as an additional column in the proceeding with the works – that is, it cannot refuse to work
programme showing number of resources. One could also have until such time that the programme has been accepted. It is
another column showing key equipment required for each equally important to recognise that if the project manager does
operation. There is a balance to be struck here, as one may end not respond within 2 weeks of the programme being issued,
up with many columns on the programme (activity, start date, then the latter is deemed not to have been accepted. There are
finish date, float, TRA etc.), but it is a case of showing the no deemed acceptance conditions at all within the contract,
important columns alongside the bar chart itself for each other than three very specific ones associated with the
programme produced (Figure 4). acceptance of CE quotations or notifications.

The statement, practically speaking, becomes what might be The accepted programme is one of the most important aspects
called a programme narrative, focusing on forthcoming of the contract for both parties in terms of understanding and
activities, critical path, and, importantly, what has changed and contractual liability. The impacts of this will be considered in
why since the last accepted programme. This statement should more detail in a subsequent paper.
be issued with every programme submitted for acceptance to
provide the project manager with a clear vision of what the 2. DEFINED TERMS ASSOCIATED WITH THE
programme is about. This should also speed up the acceptance PROGRAMME
process. If the project manager can see what has changed and There are a number of defined terms that are spread throughout
why, the only thing he needs to assess is whether he agrees with the contract that have implications for time/programme that are
the assessments and that it is not the contractor’s liability if it useful to consider when producing any programme.
has affected the planned completion. Capitalisation of the first letter of a term indicates that it is a
defined term, for which a definition can be found in section 11,
1.3. Clause 31.3 while italicisation indicates that it will be quantified within
Under clause 31.3 the project manager has to accept or not contract data part 1 of a particular contract. For ease of reading,
accept a programme within 2 weeks of submission. This has to all NEC contract terms in this paper are set in lower-case,
be notified separately to the contractor (clause 13.7) and give non-italic type.
reasons why if the response is non-acceptance. The four reasons
(a) Contract date – the date when the contract came into
under the contract, plus a selection of examples, are shown
existence (there is a legal interpretation of when this happens,
below.
but in its simplest terms it can be defined as when both parties
(a) Contractor’s plans as shown are not practicable, for example enter into the contract).
(i) multiple trades working in same vicinity, which is (b) Starting date – identified in contract data part 1 (normally the
neither practical or safe same as contract date, but can be later when an employer has
(ii) an activity starting prior to one finishing, which is engaged a contractor but does not want it to start work on the
impossible project for a while).
(iii) an activity duration which is not achievable. (c) Accepted programme – programme identified in the contract
(b) The programme does not show the information which the data or the latest accepted by the project manager.
contract requires, for example (d ) Possession/access date – identified in contract data part 1.
(i) float or time-risk allowance (e) Completion – when the contractor has done all the work
(ii) when the contractor requires employer free issue stated in the WI by the completion date and completed any
material defects that would prevent the employer from using the works

Management, Procurement and Law 163 Issue MP2 Producing a programme under the NEC form of contract Hide 63
 (note: this does not mean defect free, but would stop the programme issued for acceptance. The programme should
Employer from using the works). demonstrate the reality of what you know at any given point in
(f) Completion date – as specified in contract data unless time. To be sure, it may be out of date should something change
changed in accordance with the contract. 5 minutes after it was issued, but a line has to be drawn
(g) Planned completion – when the contractor plans to complete somewhere.
its work.
(h) Key date – stated work is to meet a certain condition by a 4. CONCLUSIONS
certain date as stated in contract data part 1. The contract puts considerable pressure on the contractor in
(i) Sectional completion – if secondary option X5 is chosen, the terms of the level of detail required. It is, however, in the
Employer will take over a certain area of the works by a contractor’s interest to show this anyway, as there is no
certain date. requirement requested in the contract that the contractor should
not want to be doing for its own efficient project management.
3. CLAUSE 32: REVISING THE PROGRAMME There has to be the level of effort made available to create the
What the contractor shows in each revised programme programme and to maintain it for the life of the project to
provide both parties with the transparency and understanding
(a) actual progress achieved on each operation and effect upon
they require. Once created and accepted, as well as being a
remaining work
practical management tool for the contractor, it will also
(b) effects of implemented CEs
become a key commercial tool in assessing any entitlement,
(c) how the contractor plans to deal with delays and correct
particularly when CEs are notified. Projects that do not set this
notified defects
up often become problematic and arrive at the very situation
(d ) any other changes that the contractor proposes to make.
that the drafting of the contract was trying to avoid in the first
Put more simply, the contractor should update its programme to place. A well-presented and understood programme will go a
reflect the reality of how it perceives that it intends to carry out very long way to limiting any disagreements that the parties
all remaining works. Any factor that has changed the logic or might otherwise have.
duration of activities has to be reflected. A very simple test
when updating a programme is to run a filter of the next week’s The companion paper mentioned above will look in more detail
works that it shows are planned to be carried out. Are those the at how to manage the programme for the life of the project, and
activities that are really intended to be done? If not, then in particular how to assess early warnings and CEs in terms of
whichever way you look at it that cannot be the correct contract the effect on the accepted programme.

What do you think?

To discuss this paper, please email up to 500 words to the editor at journals@ice.org.uk. Your contribution will be forwarded to the
author(s) for a reply and, if considered appropriate by the editorial panel, will be published as a discussion in a future issue of the
journal.
Proceedings journals rely entirely on contributions sent in by civil engineering professionals, academics and students. Papers should be
2000–5000 words long (briefing papers should be 1000–2000 words long), with adequate illustrations and references. You can submit
your paper online via www.icevirtuallibrary.com/content/journals, where you will also find detailed author guidelines.

64 Management, Procurement and Law 163 Issue MP2 Producing a programme under the NEC form of contract Hide