Time related activities

Can an Activity Schedule under ECS3 Option A contain a breakdown of time related activities across a series of months (for eg design and manufacture of items) to aid the subcontractors cash flow in lieu of payment of those activities on completion.


There is not too much indication within the contract as to how the activities should be broken down within the contract. Prelims is often a bone of contention, where some Contractors split management costs down to monthly amounts as activities/milestones on the programme. E.g. £100k of management costs for a 10 month project is split into 10 milestones of £10k. Some Employers are happy with that and others insist that the management cost is spread against the physical activities on the project. Some argue that a monthly management cost is not an “activity, although activity is not a defined term. 11.2(27) does state that a “completed activity is one without Defects” which would again suggest that these are intended to be more physical activities. From a Contractor or Employer perspective I am quite happy with either solution. It ensures that the Contractor has a steady cash flow to manage the works which neither Party should consider a bad thing. I always recommend that any item on the activity schedule is a “tangible/measurable” item rather than a subjective percentage complete (which is the whole point of the payment mechanism that gets away from payments being a series of subjective percentage complete).

So back to your question. Design activities could be split into monthly costs as indicated above, or attached to physical design outputs which could be a number of drawings or achieving a particular stage of the design. Manufacture of items is a bit trickier. You can imagine that an Employer would not be too keen on paying a lot of money for materials that they have not yet seen on site. Paying for delivery of materials as an activity once they arrive on site is never an issue, but paying for them before hand some Employers you could understand would be less keen. Having said that, if it was an option C contract the Employer pays what ever the Contractor can prove that they have spent, which will no doubt include lots of off site procurement/manufacture. Therefore why should option A be so different that you can not get paid for such items? There is always the option under section 7 of the contract for the Supervisor to mark Equipment, Plant and Materials which are outside the Working Area as being owned by the Employer, which may make them more comfortable to pay for off-site materials.

An other option that you could discuss at tender stage is X14 where a sum on money is paid up front to assist the Contractor’s cashflow from the outset, but this is not too often used and only likely to be proposed/accepted by the Employer for very specific projects that would otherwise lend the Contractors risk to cashflow high that would increase their tender price.

Bear in mind that you propose your activity schedule at tender stage. It is up to the Employer as to whether they accept your activity schedule and tie it into the contract. You can therefore break it down as you see fit, but that will no doubt form part of the tender review which the Employer may or may not accept. The contract states that after Contract Award the Contractor can propose a revised Activity Schedule if it no longer reflects how you are carrying out the items on the programme, which then has to be accepted by the Project Manager. Only reason for not accepting a revised activity schedule would be the costs are not evenly distributed (i.e. not all front loaded) or it does not add up to the total of the Prices.

The bottom line is that however a Contractor is paid and whether his cashflow is good or bad, his contractual obligations are still the same to complete the works in accordance with the Works Information. I think that by agreement you can break the activities down pretty much how you like, providing it is for transparent reasons and obviously you get the Employer/Project Manager acceptance of it.