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NEC3 ECC: Activity Schedule - Option A; errors and 'fair play'.

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Further to previous queries raised on the subject of - NEC3 Main Option A - Activity Schedule.
I have a further query regarding the use of Activity Schedules, its construction and the potential for errors therein.
Firstly, there is no guidance as to how an AS should be compiled, it is neither Works nor Site Information, and therefore as far as I am concerned it belongs to the Contractor.  We know that any change must comply with the Accepted Programme and have the prices distributed reasonably, so it is safe to assume that the original AS must comply with these rules.  There can be as many or as little lines as the Contractor desires, in fact if the estimator used a BOQ this could form the basis and although Option B is a BOQ, the client my not want to pay a compensation Event when a quantity changes so uses A to pass on that risk.
Owing to how the contract is written if an error in the description is made in the AS and a sum of money is mistakenly allocated against that error and it is for an item of work which is not in the Works Information, then this sum will not be realised.  Despite the fact that the Client has agreed a tender price - the PWDD will never reach this amount.  I am sure that the author of the NEC did not intend for this anomaly to happen.  I think it makes absolute sense that as the AS is only a vehicle for ‘interim’ payments it should be PWDD up to the penultimate payment, with the final payment (CEs aside) being the agreed Tender Sum.  I cannot believe that the author of the NEC would expect the client to benefit from any silly errors the Contractor could make in compiling the AS.  Therefore this would have the effect of eradicating errors in the descriptions for the AS.
Secondly, this brings me to my query.  We have an error!  The estimator in his infinite wisdom took an old build up template and juggled all the descriptions to suit the new work unfortunately, leaving in an item which was not on the Works Information, this was compounded into the programme and a line afforded to it.  I compiled the AS and cut’n’pasted from Microsoft Project the headings into Excel to produce the AS, time did not afford me the luxury of checking the work our estimator produced.  The client had told me that we could have as many headings in the AS as we liked, and although the basic price was built up initially with only about 10 items I tried to maximise cash-flow by utilising many more items.  Unfortunately, I allocated £4.7K to this line.
The client became aware of this error and explained that as it will never be done it will not form part of the PWDD, so we will lose this item.  Obviously, in the price build up I never found any money against this item, but allocated monies from elsewhere, to pad out the number of prices.  I even demonstrated to the Client where this money had come from, but to no avail, reasonableness not forthcoming!
We are beyond the end of the tender programme, and into extended time; the works have significantly changed owing to the nature of the work in opening up and making visible the sub-surface and there are a number of very costly CEs, so I have duly recalculated the AS, as I am entitled under the Contract Clause 54.2.  I see no reason as to why I cannot remove this erroneous line and re-distribute the remaining moneys to agree to the Accepted Programme.
There are 3 conditions that the new AS must follow, and as far as I am concerned all 3 comply, but the Client is not accepting because I removed the erroneous line!  The Client wants to basically benefit from the error and take without justification the £4.7K.
It is too small an amount to seek adjudication on, but how can I demonstrate that this is not fair play?  Clause 10.1 may come into play – Mutual Trust and Co-operation!!!
asked Jan 20 in NEC3 Payment by philiphales (310 points)  
   

1 Answer

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If the Contractor has an item in the activity schedule that they no longer plan to do - either it as an error in first place or they now plan to do that activity another way the they can propose a change to their activity schedule. If the Contractor initially planned to provide a storage facility for £20k but are no longer doing that - they can apply that cost to other activities - especially when the lack of storage will mean bringing in materials on a daily basis which will increase cost/duration/risk elsewhere.  The risk of errors in the activity schedule remain with the Contractor - and it follows that any benefits should also remain with the Contractor (Employer cant have it both ways). At tender the Employer has agreed a lump sum fixed price - the activity schedule is just a payment mechanism to pay progressively and end up cumulatively t that lump sum.

I therefore agree that your £4.7k you are entitled to spread elsewhere - and as long as your revised activity schedule is representative of the programme, adds up to right number and the costs are evenly distributed then there should be no reason not to accept the activity schedule.
answered Jan 20 by Glenn Hide (26,200 points)  
Just for the record, I absolutely agree with Glenn here, so that's two NEC experts who support your view.
Thanks to both of you.