What use is a contract programme?

Over recent years the use of contract programmes has become increasingly common. The increase in computing power and the availability, at affordable prices, of sophisticated planning software has allowed contract programmes to become the central management tool for most construction and civil engineering projects. In tandem has been the acknowledgement in modern forms of contract, principally the NEC, that a contract programme should be a contract requirement and is central to the effective management of the works. Why is this the case? This article sets out a range of key reasons why a contract programme is so important and provides genuine benefits, particularly for contractors and sub-contractors.

Firstly, its worth considering what a contract programme is. Essentially it is the agreed baseline programme for the project, typically shown as a bar chart of activities of varying complexity. It sets out the planned sequence and timing of activities from commencement to completion. However, it can include much more, including logic links between activities to show what activities are dependent on others, the critical path or paths, resources, delivery dates, information requirement dates and much more. As it is agreed between the parties, an accepted baseline exists from which progress and any deviations from this baseline can be measured.

Probably the most obvious reason to use a contract programme is to monitor progress. In days past, the nearest to achieving this was by interim valuations where “progress measurements” for each BQ item were taken. However, this was notoriously unreliable frequently using “finger in the air” assessments of work done to derive value, and which did little to establish the true progress of the project. Nowadays progress can be based on the percentage completion of specific activities and when this is entered into a logic linked programme which is then rescheduled, monthly progress reports can be produced to show how far each activity is ahead or behind the plan, as well as the overall project progress against the completion date and what activities are driving completion (i.e. the critical path).

The benefits of progress monitoring are invaluable as the contractor has accurate, up to date progress information that can be used for many purposes. Often people think that this is just ammunition for preparing claims, but this information can be used in a far more collaborative way which can help to reduce the need for, or impact of, claims. For example, if progress is delayed, the contractor has the information to establish why. It can look at individual activities to see what has caused delay, when and by how much, and what effect any delays have on the overall completion date. If the delay is the fault of the contractor, it knows the effect as soon as possible after the delay has happened and gives it the maximum opportunity to take remedial action. If the delay is caused by the employer, the contractor can notify the delay at the earliest possible opportunity, giving it a similar chance to take appropriate remedial action. Either way, by identifying delay early, both parties have the best opportunity to reduce the impact of the delay in a manner that is collaborative and less confrontational.

If a delay claim does have to be submitted, the process should be less confrontational as the employer is made aware of the delay at the earliest opportunity rather than having it sprung on it late in the day. The contractor also has accurate data upon which to make its claim and can demonstrate the delays through accurate progress and delay programmes. Progress monitoring therefore allows delays to be managed more effectively and earlier in the project which facilitates collaborative working for the benefit of all parties.

Contract programmes however are much more than just claims tools. The amounts of various resources, such as labour, can be input into the programme allowing the accurate monitoring of labour manhours. Activities can then be checked to see if they are being installed efficiently. Apart from being able to investigate and take corrective action to reduce productivity issues, the data gives further information which contractors can use to improve future estimating.

Resource loading also allows activities to be reviewed and amended in order to optimise resource usage. The visual production of labour histograms allows contractors to clearly see where peaks in labour occur and whether these can be smoothed to avoid potential labour shortages. Failing this it allows site management to focus on these pinch points so that resources can be managed more effectively.

It is not only labour that can be included in the programme but also information regarding materials and plant deliveries. The ability to review delivery dates based on actual progress allows the contractor to be far more efficient in its ordering. This is particularly important when working in small and logistically complex sites where space is at a premium. Ordering materials on a “just in time” basis is more efficient and helps improve cash flow.

Monitoring the provision of information is also more effective when based on the contract programme. The dates when information is to be provided by both employer and contractor can be clearly identified and appropriate notices issued if that information isn’t forthcoming. This forms part of the overall programme management where specific interim milestones and dates can be monitored and tracked. A well-structured contract programme allows a complex project to be broken down into smaller sections (and this doesn’t have to mean formal sections as in sectional completion) allowing it to be managed more easily. It also helps the contractor to deploy site supervisory and management resources to specific areas of the site with greater precision and in appropriate numbers.

The management of subcontractors is a further advantage of a contract programme. It allows the overall scope of the subcontract works to be incorporated into the contract programme to whatever degree of detail is appropriate and allows subcontract activities to be monitored and reported to the employer. Separately, the contractor and subcontract should agree their own subcontract programme, which can be produced in a greater level of detail if necessary, particularly for complex trades such as M&E. Subcontract programmes and their incorporation into the contract programme helps focus attention and manage the interfaces between different trades and subcontractors which is always an area rife with problems. The important thing is to ensure that any agreed subcontractor programmes are incorporated into the contract programme so that there is no conflict between them.

The impact of change can be shown effectively if using a contract programme, such as the benefit it had on our Chalk Lane project. If variations are issued, or if the effect of a potential variation is to be established, the changed work can be incorporated into the programme and rescheduled so that any change in the completion date can be shown. The various assumptions upon which a variation is carried out can be amended so that various scenarios can be identified and the best one chosen. This prospective assessment of change is essentially how the NEC forms of contract operate and is becoming far more common.

Another area where different scenarios can be helpfully modelled is acceleration and establishing the expected results of any acceleration measures. A contract programme allows an employer and contractor to set a baseline from which the effects of utilising additional resources can be measured. Without such programming, acceleration is far too imprecise and the employer is frequently unsure exactly what it is buying or even if the acceleration measures are successful. If the parties can see the effect of deploying additional resources this allows for clearer acceleration agreements to be implemented which can be monitored far more effectively.

There are also other financial management tools that can be generated from the programme such as cash flow management and earned value analysis, which, put very simply, establishes whether your project is within budget based on your current progress.

The importance of a contract programme cannot be understated, particularly when so many modern forms of contract (like those needed for the Cornerstone project) require the use of a programme. Although there are many benefits, much of these are derived from the use of quality planners who are capable of obtaining accurate progress information. As with all things, if the data used in the programme is inaccurate the results will be unreliable. Be aware that good planners command good salaries and can be an expensive overhead to employ full time. They are also a limited commodity. So carefully consider how you obtain and utilise your planning resources. Often it can be more cost-effective to outsource a planning position as the project may not require a full-time resource. However, once you have the services of a quality planner the benefits they bring through the effective use of a contract programme can be significant.