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NEC ECC: Option A - Activity Schedule - Is it acceptable for a Contractor to front load costs within prelims

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The contract has been awarded under a framework agreement. The activity schedule has been submitted post award and the contractor has listed significant monthly values within the preliminaries, particularly months  1- 4 of a 24 month contract.

Can the Project Manager insist that activities reflect more closely the defined costs.

The issue here is that the value of the works carried out will be substantially less than the amount paid for work done in the early months.
asked Mar 23 in Payment by gerdazshaun (390 points)  

Many thanks, I totally agree with your response.

1 Answer

+1 vote
Best answer
Not sure why the activity schedule has been submitted post contract award to avoid these exact problems. It is expected that the activity schedule is submitted as part of the option A tender submission and referenced accordingly in contract data part 2.  This would then have been reviewed as part of the tender submission and any "excessive" front loading challenged and revised before being accepted and included within the contract.

However, given that has not happened, if I was the Project Manager I would look at the three contractual reasons for not accepting a revised (all be it this is the first one) activity schedule and apply them accordingly. Those are that the activity schedule is 1) not in line with the programme, 2) does not reflect the correct total of the Prices, and 3) not reasonable distributed. That being the case I would be rejecting this activity schedule as Project Manager as it is not reasonably distributed. Until this is accepted, the Contractor has no way of being paid so it is in their interests to present a version that the Project Manager does agree is a fair reflection of their likely costs that they would incur.

A "bit" of front loading to make a Contractor cash positive to help them deliver the works I would not have an issue with. Excessive front loading I would not want or encourage to be accepted as they would have less motivation to be meeting the programme (although same overall liability at the end).
answered Mar 23 by Glenn Hide Panel Member (82,630 points)  
selected Mar 23 by gerdazshaun