Understanding the Contract Programme
WHAT IS THE CONTRACT PROGRAMME?
The Contract Programme (CP) is a document showing, by way of a gantt chart, the intention of the Contractor in respect of the execution of the project (legally speaking – the ‘Works under the Contract’) at or around the time when the Contract is executed.
The first programme prepared by the Contractor is usually the Tender Programme. The CP is prepared subsequently and should include additional detail, reflecting further knowledge, involvement and thinking that the Contractor developed whilst negotiations with the Principal progressed. These negotiations are then finalised by way of a signed Contract.
The CP should be settled and agreed between all parties (Principal, Superintendent and Contractor) just prior to the execution of the contract or shortly afterwards (say up to 14 days later) but prior to site possession.
In our experience, the CP is often the only agreed programme between the parties. Once delays have started to develop, it is increasingly difficult to agree on the CP as the Contractor and the Principal may differ in relation to the interpretation of the delays and their consequences.
WHY IS IT IMPORTANT?
The CP is important because it is a common platform for:
Measuring the Contractor’s progress in executing the project
Assessment of delay claims raised by the Contractor.
The initial CP is the ‘baseline’ or the starting point showing how the project is intended to be carried out and completed. The CP must be comprehensive, balanced, realistic and achievable (see further details below), otherwise it will be difficult to use it to measure progress and assess delay claims.
It is crucial to understand that despite best endeavours, the way the project is actually executed can be different (sometimes very different) compared with the original plan. This does not necessarily make the CP ‘wrong’, it merely reflects the unpredictable nature of construction projects.
SHOULD THE CONTRACT PROGRAMME FORM PART OF THE CONTRACT DOCUMENTS?
Our recommendation is to include the CP as one of the documents forming part of the Contract’s documents, either when the Contract is executed or shortly afterwards. If this is not done, arguments may arise when the Superintendent measures the progress of the Contractor and assesses the Contractor’s delay claims (see bullet points above) at the early stages of the project.
Including the CP in the Contract’s documents minimises the potential for uncertainty and confusion by all parties and, subsequently, the likelihood of disputes.
If the CP is included in the Contract documents, the parties should understand that this was only the initial revision and changes may occur by way of an updated CP. The Contract should include a detailed description (possibly by way of a ‘schedule’) of the mechanisms to update the initial CP.
UPDATING THE CONTRACT PROGRAMME
In the construction industry, it is not unusual for delays to start as early as the day of site possession. In our opinion, the CP must be updated to reflect the way the project is being carried out, otherwise it becomes meaningless very quickly.
How often the CP should be updated depends on the mechanisms forming part of the Contract as well as the frequency and significance of the differences between the CP and the way the project is actually being executed (arising from delays, variations etc.).
Some Contracts state that the CP can only be changed if approved by the Superintendent. Such provision can be problematic if the Superintendent refuses a reasonable request by the Contractor. All parties must exercise good will and act reasonably.
The original CP starts as a ‘top drawer’ document but usually becomes a ‘bottom drawer’ document because of the amount of changes in construction projects.
The original CP may become somewhat irrelevant early in the project due to many changes. Therefore, it is advisable that it is updated so that the original CP is no longer be used for measurement of the Contractor’s progress and assessment of its delay claims.
A degree of professionalism, flexibility, cooperation and good will must be maintained by all parties to ensure the CP can be updated genuinely and correctly throughout the execution of the project.
SUBCONTRACT PROGRAMME
The principles discussed in this article are applicable to a Subcontract Programme as well. Head Contractors tend to compress the Subcontract Programme beyond what we consider reasonable. We do not recommend this approach as it may backfire on the Head Contractor.
TECHNICAL ASPECTS
Level of Details (LOD) – In terms of LOD, the CP should be developed to say level 5, which is at least one level further compared with the LOD of the Tender Programme. This is to reflect the more advanced level of knowledge, involvement and understanding the Contractor should have in relation to the project. The LOD should be reflective of the complexity of the project or part of it.
Rescheduling – The revised CP must be rescheduled on each update to correctly show the contemporaneous critical path and any subsequent completion dates.
Work Breakdown Structure (WBS) – the WBS of the CP should be comprehensive and represent a balanced programme.
Calendar – to be accurate, the CP should be based on a calendar (or potentially multiple calendars) representing the planned working regime.
Interim Completion Dates – each completion date in the Contract should be correctly represented in the CP, with secondary critical paths leading to it.
CONCLUSIONS / RECOMMENDATIONS
These are the conclusions of our article focusing on the Contract Programme (CP):
It is in the best interest of all parties to have an agreed initial CP just before or shortly after the execution of the Contract.
The CP must rely on sound technical foundations, be detailed, realistic and include a clear identification of the primary and any secondary critical paths.
The Contract should include a copy of the initial CP as well as a detailed mechanism pertaining to how the CP should be updated.
It should be acknowledged that the CP is a live, dynamic document that should be updated throughout the project to remain relevant.
The Contractor’s progress should be measured, and its delay claims should be assessed against an updated CP.
The main objective of our article is to facilitate the administration of the CP hence minimise time-related conflicts between the Contractor, the Superintendent and the Principal.
FURTHER QUESTIONS
If you have any queries in relation to the CP, please do not hesitate to contact us.
Written by Uri Shachar
Director of Greenwich Planning
Note: This article uses terminology used by the Australian Standards AS Construction Contracts