The Accepted Programme contains an allowance for an Employor’s risk. This was not realised at the time because it was not shown (it was hidden within the activity itself) and the activity was on a shared critical path.
The risk allownace came to light following discussion regarding a PMI adding scope that was required prior to the above activity and part progress of the above activity demonstrated that the remaining duration of the activity was too long (by c. 5 days).
CE’s amending the contractual Completion Date have already been implemented up to the last Accepted Programme.
Can the Accepeted Programme be corrected?
and/or
Can the risk allowance be excluded from the assessment of the CE for the PMI and a seperate CE raised if the risk arises? This would ensure that the status quo is maintained and neither party gains or looses.
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I have a couple of questions here I think before I can answer fully:
- why was an Employer risk shown on the Contractor’s programme. The Contractor does not need to and should not be showing Employer’s risk on their programme. If such a risk occurs then it will be assessed as a compensation event. What if that risk did not occur? if that brought forward planned Completion by not occurring then that would create terminal float which the Contractor owns!
- I am not sure what you mean by a “shared critical path”. The critical path on the Contractor’s programme will be through the path of activities that leads to planned Completion which if we really need to allocate an owner should be the Contractor’s.
I think the question you may be asking is: “if a Contractor’s activity on the accepted programme was over optimistic by five days, if there is a compensation event that is five days long can the two off set each other thus maintaining planned Completion and Completion Date”. If that is the question then my answer would be “No”. Even if the Contractor’s activity was over-optimistic, any advance in the planned Completion would be assessed first and is the Contractor’s benefit (clause 63.3), As highlighted above the resultant terminal float is owned by Contractor and planned Completion and the Completion Date would move by one week.
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The risk was not shown on the Accepted Programme, the Contractor had assessed the activity as though the risk was his when in fact it was actually an employer’s risk. This wasn’t realised until an amended programme for a subsequent PMI was reviewed and during discussions between the parties regarding the programming of this additional work the inclusion of this risk allowance came to light.
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Not sure how relevant this is, but what I meant by ‘shared critical path’ was: ‘one critical activity followed by two concurrent paths (one containing one activity and the second two) and both these finishing on the same day, (which happens to be the date of planned Completion)’. I suppose this would have been better described as concurrent critical paths. I think these concurrent critical paths contributed to the exteneded duration for the employer’s risk not initially being noticed, if the risk was not included this concurrent path would not have been on the critical path.
Due to other project reasons the PMI works are now required before the activity containing the risk allowance and this activity (including the risk allowance) now sticks out to the right on its own. Would it be fair to strip the risk allowance from the assessment of the change in planned Completion when assessing the change to the Completion Date for this CE? After all its not the contractor’s risk, but I accept that this would be seen as bringing in the Completion Date!
Could an option be a CE giving a change in the contract Completion Date for the total change in planned Completion but with a PM assumption that the duration for the employers risk would be subsequently corrected if different?
I think the contractors view is that because they showed this duration on the Accepted Programme they are now contractually entitled to keep it.
The key point is - the Accepted Programme contained something it shouldn’t and this is now (due to a PMI) on the critical path of the amended programme for the CE, can the CE correct this?
Should the amended programme and the assessment of the CE include the full length of this activity (including risk allowance) as per the Accepted Programme or should it be adjusted so that it is realistic and relates only to the Works Information and not an employers risk?
I hope I haven’t made it more confusing!
My practical answer to this is very similar to my contractual answer, although the contract is a little less clear on this point than it should be. Contract states quite clearly that you use the last Accepted Programme as the basis to assess compensation events against. However, is that the last Accepted Programme with or without progress and other changes that have happened since it was last accepted - particularly bearing in mind it may have been several months since last accepted? Contractually I believe it has to be the latter and I have written an article on this which I have copied the link below:
Following this logic through - if there is now a compensation event to assess I would take the last accepted programme and first update it with everything i know about what has or will happen prior to considering the effect of the CE. That will include any progress and any errors in the programme. If it is now known that the Contractor has allowed in the Accepted programme a risk period that they ad not needed to show (and is critical) then they can assess that first. The effect of this would be to bring forward planned Completion and in turn create terminal float between that and Completion Date. If the CE then moves out planned Completion by X weeks, then Completion Date moves by X weeks.
In this case, if you used the last Accepted Programme to assess then the movement in planned Completion as a duration would actually be the same, it would just be a later date. Don’t forget as well that the removal of the initial risk item only ever brings forward planned Completion - never Completion Date. The “terminal float” that results form the removal of this risk item is owned by the Contractor (see clause 63.3) even if the Employer might feel he is the one who created the time saving.