Case Study - Key issue 1

Question 1

What happens at sectional completion in the NEC

Answer 1

It is agreed in option Optional clause X5 sectional completion

Question 2

How are cashflows produced?

Answer 2

with the contractor and reviewed agaisnt programme

Question 3

How do you check the robustness of a contractors QS

Answer 3

Check the programme against the cashflow and see how the activities align with the costs

Question 4

How did you review the contractors application

Answer 4

Applicaiton is actual costs to date, so I reviewed the subcontractor applications to ensure they had only included for completed works.

Question 5

what is included wihtin a contractors application

Answer 5

Timesheet, site cabins, Plant and Materials, Fee & insurances

Question 6

What is the Change control process on the NEC

Answer 6

EWN, PMI, CEs

Question 7

What the benefits of using option C for Glangwili

Answer 7

Target cost contract, Pain gain mechanism to encourage the contractor to reduce spend

Question 8

What are the negatives of using option C for Glangwili

Answer 8

Do not have the cost certainty of a Option A/B

Question 9

Why was option C selected?

Answer 9

Project was part of the Welsh Health Estates frameworks, and Opiton C was the chosen Contract as part of this framework

Question 10

Would you have suggested a different NEC contract Option

Answer 10

Potentially option A - Price contract, however I as the project was not fully designed, option C encourages the contractor to look into options to reduce costs

Question 11

What measures were undertaken to achieve expenditure

Answer 11

Monthly reproting and cost contact with the Client financial team to keep costs low

Question 12

How long does an EWN last

Answer 12

8 weeks

Question 13

What are X clause

Answer 13

Optional clause to include into the contract

Question 14

What are Z clause?

Answer 14

Secondary option clauses, which can be specifically written into the contract

Question 15

How does a Contractor produce a compensation event

Answer 15

The can issue a NCE if the issue has raised in the past 8 weeks, PM has 2 weeks to review and then the contractor has 3 weeks to issue a CEQ and the contractor has 2 weeks to reposd to the CE

Question 16

How long was site closed for?

Answer 16

Initally the site was only closed for a few days

Question 17

In the NEC what are the provisions for closing a site

Answer 17

Contractor issued a EWN explaining of the situation

Question 18

How do you suspend works in the NEC

Answer 18

Clause 91 within the contract talks about terminitation table

Question 19

What activities would not be able to be carried out concurrently

Answer 19

laying the vinyl floor, this had to be carried out on the weekend.

Question 20

How is Option X5 worked into the contract?

Answer 20

Included within the Contract Data, with a brief description of the works and the completion date

Question 21

Would this not be a compensation event under 60.1(19) event that stops the contractor from completing get works?

Answer 21

This clause had been removed as part of the amended version of this contract

Question 22

How would you stopping works on the NEC contract?

Answer 22

• Under the NEC the contractor has an obligation to achieve completion by the completion date as per clause 30.1
• Clause 19.1 Prevention instruction to stop work would be a compensation Event 60.1(4)
• Contract would be entitled to a delay under this as the works have been stopped

Question 23

Health and safety question on working on-site with COVID-19?

Answer 23

Site must be safe for employees to work, as work was allowed to continue as long as COVID measure was in place. Contractor has to make work environment safe for team

Question 24

Why would stop all construction work be an option if the client needed to spend his budget?

Answer 24

• Client had target spend to achieve, but not to waste money in spend.
• The costs to stop works and start again 12 weeks later as per government guidance could be a cheaper and better solution then making cost amendments to make site “covid secure”

Question 25

How do you produce cashflow

Answer 25

Work with the contractor, work through subcontract packages along with the programme to understand costs

Question 26

what are the NEC timescales for change control

Answer 26

• 8 weeks from the event
• Contractor issues Compensation event
• 1 week for the PM to respond If pm fails to respond the contractor must notify)
• PM instructs Contractor to issue Quotation
• 3 weeks for Contractor to submit quotation
• 2 weeks for PM to respond
• PM asks for revised quotation – Contractor has 3 weeks to resubmit
• PM could refuse
• PM could make assessment, 3 weeks for PM to make an assessment

Question 27

What is an activity schedule?

Answer 27

Activity Schedule is a list of activities prepared by the contactor which he expects to carry in providing the works.

Question 28

Who produced the activity schedule?

Answer 28

I was not present at the tender stage of this project. My understanding is that it was the client and the contractor added to the activity schedule at the tender stage

Question 29

What is the build-up to the total of the prices?

Answer 29

The total of the prices is the priced activity schedule plus any compensation events

Question 30

What is the defined cost?

Answer 30

The price of work done today

Question 31

What is a disallowed cost?

Answer 31

Costs which the contractor has occurred but which the client does not have to pay.

Question 32

Would it have been easier to use option D target cost with BQ

Answer 32

Option D is a BQ and therefore does not have an activity schedule, it is set works. Not an option as the project design was not fully complete before going to tender therefore an activity schedule was the best option.

Question 33

Would it have been easier to use option A

Answer 33

I was not present at the tender stage, option Price Activity schedule lump sum would have protected the client. However, the cap on pain for the client does a similar job. Option C allows for the contractor to suggest value engineering options to reduce the Defined cost.

Question 34

Difference between NEC3 & 4

Answer 34

Terminology – Employer becomes client, Works information = scope
Early warnings – Risk register is now early warning register
Payments – Contractor must issue applications instead of PM being obliged to assess if they don’t

Question 35

What are valuations called on the NEC?

Answer 35

Total of prices to date

Question 36

What is included in the Total of prices to date on the Glangwili project?

Answer 36

People costs – Contractor staff costs & Supply chain
Equipment costs – Accommodation & storage
Plant & material –
Working Area Overheads –
FEE -
Insurance -

Question 37

What is working area overheads?

Answer 37

A percentage added to the people costs which covers the Overheads required to complete a job
Examples are small tool, paper and printer ink.

Question 38

How do you assess the application during COVID?

Answer 38

• Request site photographs and a narrative from the contractor of the works to date
• The client also issued a report of the works to date with photos
• review the subcontractor’s application and ensure it is only for the works that have been complete (actual costs)
• Review the contractor’s timesheets and plant and material invoices

Question 39

Was your assessment of the application correct?

Answer 39

• The assessment was issued with a caveat explaining the lengths I have gone to, to overcome the issue of not being able to visit the site. This was agreed with the client.

Question 40

Did the team succeed in meeting the required expenditure?

Answer 40

Yes, we did achieve this, in September WG allowed the client to amend the required expenditure following the COVID issue.

Question 41

What are the benefits of Option C over the other options

Answer 41

Encourage the contractor to look into Value Engineering options to reduce the defined costs through Pain & gain mechanisms

Question 42

Your project is based on the Welsh Health Estates Framework, how is a framework set up

Answer 42

A framework is a number of contractors & consultants sign up to a frame

Question 43

Clause X2.1 (change in the law) is this applicable to all NEC contracts?

Answer 43

No X2 is an optional clause, which is selected at the contract stage

Question 44

Was the CE they applied for both time and money

Answer 44

Yes, there was an additional 20 weeks after as well as money

Question 45

Options A & B talk about how you would not achieve the financial spending required for the year, was an advanced payment considered?

Answer 45

Advanced payments have been considered but the client do not like them as they have been promised but not delivered on in the past

Question 46

Who ended up taking the brunt of these COVID costs

Answer 46

Welsh Government confirmed that any COVID related compensation events would be funded by the client who would be reimbursed by WG.