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Contractual answer to various programme scenarios?

Contractual answer to various programme scenarios?

I am mindful of putting together a guide for certain situations associated with programme acceptance. I actually don’t think there is a set of rules that fits all “what-if” scenarios that can happen within a programme, but I think we can have some clearer guidance for both Contractors and Employers.

  • What should the “programme rules” be in the following situations?
  • What stops the Project Manager instructing overlap of activities in a programme to maintain Completion Date?
  • What exactly is “mitigation” and where is the boundary between that and traditional “acceleration”?
  • What stops Contractor manipulating float – what is reasonable to use up?
To that end, I have a few scenarios below that I would be interested in your thoughts on. Assuming each of these scenarios has a first Accepted Programme in place, is there a contractual definitive answer for each of them that we can advise the industry? Also if there is a scenario I have missed let me know and I can add that to the review.

1. Access Date not met by Employer delaying whole programme by two weeks and hence planned Completion. Sounds easy that planned Completion and Completion Date should move by two weeks. Project Manager however feels that two activities on the original critical path could be done at same time with no significant extra cost/risk. He feels that whilst it is a compensation event that should attract cost, there does not need to be a movement in Completion Date.


Question: – can they challenge the original logic on the Accepted Programme? Specifically what clauses can we use to justify a specific definitive contractual answer here?

2. On the critical path of four two week activities (A/B/C/D) which follow on from each other, it becomes apparent that the Employer will delay B by two weeks. However, the sequence shown on the Accepted Programme is fairly arbitrary and it is the type of work that the Contractor could do an order of A/D/C/B at no additional cost or risk to the Contractor. Is the Contractor contractually obliged to mitigate in this way so that whilst there may be some cost as a compensation event for being held up on B (e.g. storage of materials that have already been ordered) there should be no change to planned Completion/Completion Date?

Question: is the Contractor contractually obliged to mitigate? Specifically what clauses can we use to justify a specific definitive contractual answer here?

3. Same scenario as item 2, but this time to switch the order to A/D/C/B will incur significant extra cost and increase risk and something they would prefer not to do. Whilst any increased cost could be assessed within the compensation event, most Contractors would feel this would be assessed by PM lower than the Contractor feels that they are worth – and there is little recourse to Contractor unless difference is big enough to warrant going to adjudication. Is the Contractor obliged to this level of “combined mitigation/acceleration” with no movement to planned Completion/Completion Date.

Question: to what level is the Contractor contractually obliged to mitigate? Specifically what clauses can we use to justify a specific definitive contractual answer here?

4. Same scenario as item 2, but this time access can’t be given to B, C or D until week 6. However, PM contends that all three activities COULD be done at same time and this is what the Contractor should do to maintain the week 8 Completion Date. Again, like point 3 this is achievable at significant additional cost which could be part of the CE quote, but is the Contractor obliged to do this?

Question: to what level is the Contractor contractually obliged to mitigate? Specifically what clauses can we use to justify a specific definitive contractual answer here?

5. Contractor issues a revised programme that changes their sequence of activities that uses up most of the float on a previously non-critical path of activities. The trouble is that there is the potential for a future compensation event on this chain of activities – which could effect planned Completion/Completion Date using this new programme if accepted. Does the Project Manager have to accept this programme – which reason would they give if not? Could the PM issue an instruction to re-sequence the activities back to their original order to get back the float which may or may not be needed in near future – and if so under which clause in 60.1 this would be assessed as a compensation event?

Question:

6. Since the last Accepted Programme two events have occurred that are difficult to pinpoint which exactly came first. Both events would individually move planned Completion by two weeks but they both occur at the same time in parallel with each other. One is a Contractor risk item and the other is an Employer risk and hence a compensation event.

Question: Whose liability is the movement in planned Completion – which will depend upon if there is an entitlement to move Completion Date?

7. A compensation event has been notified to design and construct a major element of new works (CE01). Until the design is done it will be difficult/impossible to ascertain the installation of those work on the programme. A period for design of six weeks can be identified but nothing more. The installation weeks could be 4-12 weeks depending on what the design throws up. This will affect the critical path but can’t be shown yet as it is unknown. In meantime Contractor significantly delays the works themselves through an issue that is their risk. This is shown first on the programme as the results are clear/known well before CE01 can be ascertained. When CE01 is eventually assessed a month or two later there is no further delay to planned Completion. It was known about first, but could not be assessed first.

Question: how can we deal with events out of sequence that we know about but have to move forward with the current Accepted Programme?

Anyone with strong views on what the contract says for these elements please drop me an email to glenn@gmhplanning.co.uk and I will be collating all the answers I get into some kind of guidance document for the industry.

 


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