Construction Planning and Execution

Question: Discuss about the Construction Planning and Execution. Answer: Introduction: Construction planning and execution of construction planning is the most challenging activity for the management of construction projects. Numbers of things are involved in this such as choice of technology, how work tasks are defined, estimated time for resources which are required and also for individual tasks, and identify the risk involve in different tasks. It is necessary for good construction plan that it develops after considering the budget and work schedule. Construction planning is the most difficult task that is done by the management of construction. After considering the above technical aspects that are mention above it is necessary that management also focus on various organizational decisions related to relationship between participants of project and which organization should be included in the project. Therefore, it is clear that construction planning is the base for construction project and it must be done with complete understanding of things (Project Management f or Construction, n.d.). In this report, we discuss the actions required to be taken by the project manager and action required to be taken by the contractor in case of compensation events. This report also contains the procedure for events notified by the project manager and procedure for events notified by the contractor. A part of this report contains the explanation on conditions guiding payment in the NEC 3 ECC conditions of contract, contractual standing in terms of conditions governing contractual program in the NEC 3 ECC conditions of contract and Dispute resolution methods that can be used to resolve the problem in the NEC 3 ECC conditions of contract. There is also a separate section which describes the comparison of advice given by NEC3 ECC condition of contract with condition of contracts either JCT11 SBC/Q or the FIDIC Red Book form of contract. At last, we conclude the report with brief conclusion. Compensation events: Compensation events are those events which change the cost of the project and time required to complete the project, but usually these events are not happened because of the fault of the contractor. Events which result in change of the price of the project, key dates of the projects, and completion date of project. In large number of case contractor demands more time and money to complete the project. There are some good examples of compensation events: Employers actions such as employer fail to provide access of land to contractor on time. Actions conducted by project manager such as instruction given by project manager to stop or delay the work. Actions of supervisor such as when supervisor gives instructions to contractor for searching defects in project, and no defects are found. Actions which are conducted by other people such as actions of statutory bodies and other contractors. Other events which are not in the control of any party such as whether conditions. The above mention events are mention in the clause 60.1 of NEC3 (Kingston, 2015). Actions taken by project manager in compensation events: in case if compensation event is arise because of the instructions of project manager which is related to search of defect or there are some changes in the work. In such case the first duty of project manager is to notify the contractor related to compensation event, and then instruct him to provide quotation. In case of all compensation events, contractor notifies the project manager. When contractor receive notification from project manager and also receive an instruction to submit the quotation then he submit the quotation within 3 weeks. The period of 3weeks can be extended by the project manager in an agreement. When notification is received by the project manager from the contractor he responds in no or yes. Project manager says no if: That action is the fault of contractor. Event does not occurred and not going to occur. That event does not affect the completion time of project or cost of project. Event occurred is not listed in the agreement or clause. In all their cases, except above mention cases the project manager says yes to contractor to provide a quotation. When project manager gives instruction to the contractor for providing the quotation, the project manger after discussion instruct the contractor to provide other quotations also which mention the alternative method of dealing with the event. In some cases when event is not clear then project manager state some assumptions, and if those assumptions are not right then it will be considered as another compensation event (SCE, n.d.; Hide, n.d.). Actions taken by contractor in compensation events: The next step is filing of quotation by contractor to the project manager. In NEC3 quotation deals with both compensation events that is time and money. It has a special place in the NEC3. On receipt of notification from project manager or supervisor related to any defect or other matter, then it is the duty of the contractor that he submits quotation for such notification to the project manger or supervisor. It is necessary that quotation is prepared by following the procedure stated in the contract, and when contractor submit that quotation to the project manager or contractor then he must include all the details of assessment. If compensation event has any effect on the completion date or price then quotation must include all the revised details of that program (Devonshires, n.d.). When project manager receipt the quotation then it is necessary that he respond within 2 weeks from receipt of quotation or any extended period. Reply of the project manger to the quotation must include these responses: Acceptance of quotation by project manager. Confirmation that a proposed event will not be instructed by project manager. One more notification from project manager that quotation was not prepared properly by contractor, and quotation must be submitted again. Project manager also states reason for that. A notification that project manager will assess the compensation event (CECA, n.d.). In the present case, Ministry of Health decided to construct a new university teaching hospital, and this project consist new build accommodation and the refurbishment of existing properties. This new project also has underground car park and a dedicated cycle centre and ten electric car charging points. The project was given on the basis of NEC3 ECC conditions of contract, and contractor will design the part of work as stated in the information. In this compensation event is occurred because of the fault of employer, as employer does not handle the site to the contractor on time because of which work delayed. There are some other faults from employer side as the employer does not work within the time shown on the accepted program. There are some other issues also supervisor does not reply to the queries of contractor, and he also conduct test. Therefore there are number of compensation events which cause delay in this project. This project was also delayed because of the fault of contractor as contractor does not made agreed payments to workman and also pulled them off from site which results in dispute, but these events does not consider as compensatory events because this is the fault of contractor. Conditions Guiding Payment in the NEC 3 ECC: Now, construction projects for public have special requirements related to payment. These special requirements are set up by the OGC that is Office of Government Commerce. For the successful implementation of any contract it is necessary that contract must contain fair and transparent payment practices. It is necessary for parties to working with each other in good faith and with mutual trust. On 1st January 2008 following payment commitments are set up by OGC: It is the right of the company that they receive full and clear payment on the due date. From ethical point of view it is not right that payments are delay, and holding of payments without any valid reason. It is necessary that fair payment will be decided between the contractor and client, and also throughout the complete supply chain. The process of payment must be transparent, and properly communicated to the members of supply chain that when and how much they received. Companies must consider whether it is appropriate to operate some relevant contracts on open book basis. The correct payment made by the client also represent that the work is carried out in proper manner, and products are supplied according to the contract. If client hold any amount then it must be partial, and withholding must be on valid reason that was justified according to the terms of contract. For ensuring the effective cash flow system under contract, it is necessary that contract of construction states provision related to regular payments and period of payment must not exceed more than 30 days. It is necessary to avoid the payment delay that clients and contractor must agree on the procedure related to payment at the outset of their agreements. Payment must be made through BACS transfer and will be transferred through supply chain. Procedure related to monitoring, auditing and dispute resolution must be agreed between the parties to the contract and stated in the contract (NEC3, n.d.). Procedure of payment under NEC3 Engineering and Construction Contract: When contractor get paid by the client? On each assessment date contractor calculate the amount due to the contractor. Calculation of amount due: the price for the work done till that date + any other amount that is due for payment to the contractor, and less any amount which is already paid to the contractor or retained from the contractor. Within 7 days from assessment date, project manager will certify the amount due to the contractor, and within 14 days from the assessment date the deadline for withholding must be issued to the contractor. Within 21 days from assessment date payment must be made to the contractor. In case if client does not pay the amount or send any withhold notice then in such case contractor has right to suspend the work or contractor can go for adjudication (CCC, n.d.; CCC, n.d.). Terms and conditions governing contractual program in the NEC 3 ECC: NEC3 contracts are the standard contracts, and they ensure good management of construction contracts, and also flexibility and clarity in contracts. These contracts can be used for the entire project, and they will be helpful in complete life cycle of the project. It is necessary that construction contract must contain some general clauses, and those general clauses are (NEC, n.d.): General terms- contract must include some general terms such as in case of any failure by any party in enforcement of any term, and then in such case such failure shall be considered as waiver of that term. Any waiver shall not affect the validity or enforceability of the contract. Contractors responsibilities- the employer, contractor, and project manager have a responsibilities which must be stated in the provisions of the contract, and it also stated not only contractual terms but some trust and co-operation terms also. Such terms must be defined in alphabetical orders, and some important terms are Equipment and Plant and Materials, key dates related to construction project, information related to site, etc. Time, testing and defects- in contract the completion date must be specified. It must contain provision related to period in which contractor submit the project to the client. Both starting and completion date must be set out in the contract. Starting date is necessary because from that date risk is passed to the contractor. Testing clause is required to test and inspect the work at the site by the client and other experts, and in case any defect is found then set the accountability for that defect. Compensation events- contract of construction must described the events which are considered as compensatory event in the time of construction, and also stated terms which relate to the effect of those events on completion time and key dates. It also states the events which are at employer risk and does not occur because of the fault of contractor. Payment- it is necessary that contract must define payment procedure, so that later conflicts can be avoided by the party. Payment option are mainly defined in these three key terms that is contract price, price for work done till that date, and defined cost of the project. Risk and insurance- contract also mention the risk involved in the contract, and which risk is covered by employer (NEC, n.d.; NEC, 2016). Dispute Resolution Mechanism under NEC3: In NEC3 contracts there are two approaches for resolving the dispute that is adjudication and arbitration. First stage is adjudication; if dispute is not resolved at this stage then second step is arbitration and litigation. ECC contracts provide two methods for dispute resolution that is W1 and W2. W1 is used at those contracts where Housing Grants, Construction and Regeneration Act 1996 are not applicable. W1 is the recycled version of NEC2 provision, and it mentions the right of parties related to adjudication. Whereas, W2 is usually used in UK, and this is different from W1 where any party can make referral of arbitration. The arbitrator can be decided by the parties, and his name must be named in the contract data. In case arbitrator is not mentioning in the contract or he resigned and unable to act then in such case parties can choose another arbitrator (Sheriden Gold, 2010). Comparison between NEC3 ECC and FIDIC: NEC and FIDIC are the standard form of contract, that become part of families for procuring works or consultancy services (FIDIC) and goods, works or services (NEC). In 1991 NEC was launched, and this contract is identified for the purpose of clarity, flexibility and to set good management practices (NEC, n.d.). FIDIC contract is a traditional form of contract, and used at international level, and in 2006, Palestine cabinet ratified this contract. In Gaza more than 37% Palestine use these contracts. Some main difference in these contracts is related to time, quality and cost. In NEC the project manager shall act on behalf of the employer and in FIDIC engineer act on the behalf of employer. Both the contracts have number of differences but both contracts are designed for the purpose of international use, and both have their roots in common law of jurisdiction (Besaiso, 2012). Conclusion: At last, the report is concluded that NEC3 contracts are standard family contracts, and are designed to use at international level. These contracts almost define every important aspect related to construction contract such as time, payment, compensatory events, risk, liability, etc. compensatory events are those events which change the cost of the project and time required to complete the project, but usually these events are not happened because of the fault of the contractor, and in the present case there are number of compensatory events which cause from the fault of supervisor and employer. In this report we described every important aspect of contract, and it is necessary in terms of contract that we state all the important clauses of contract in construction contract. 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