Blog author: Will Cooper – Senior Associate, Clyde & Co LLP
The programme produced and maintained by a contractor is one of the most important documents for any works. Of course, the programme’s primary function is to ensure effective sequencing of the various components of the works. However, it has an important secondary role in assessing contractor applications for extensions of time and assisting with the resolution of disputes between contractor and employer, roles not always readily appreciated by contract draftsmen. It is the second of these two roles of the programme that this article focusses on, while also looking at how the drafting of two contracts from the JCT suite tackles this issue.
The issue
It should be pointed out that it is more in the employer’s interest than the contractor’s that updated programmes are made available at regular intervals. The employer’s project management team may find itself being presented with an application for an extension of time which is unaccompanied by any supporting programme. Alternatively, where programme information is supplied in support of an application, it is often the case that it cannot be read against previous iterations and, perhaps even less helpfully, such a programme may have been prepared solely to justify the application and may lack any objective data. It is perhaps not surprising that this practice is common, given the reputation of construction in the UK for adopting an adversarial approach. Viewed in this light, the reluctance of a contractor to supply information that might reveal its own contribution to the delay in question is understandable.
Meanwhile the employer’s project management team, faced with such an application and a paucity of programme information, often simply put off reaching a decision acceptable to both parties, to encourage continued focus on the project while holding out for more information to support the application. This practice has the effect of increasing the likelihood of disputes, as by postponing an extension of time award the unresolved part of the entitlement will continue to accumulate until, by the end of the works, a substantial claim has arisen. A sizeable unresolved entitlement can, by its very nature, be more difficult to reach compromise on. By extension, the early resolution of disputes of this nature can be facilitated if the parties, at an early stage, exchange their respective delay analyses for assessment, thus revealing the strengths and weaknesses in each. Without satisfactory programmes in the hands of both parties, it is difficult for this process to take place.
It should be noted that there is no common law right to programme information. So, if this is required for a project, the building contract will need to make allowance for this. This is recognised in the industry, with many standard form contracts addressing these questions around programme, albeit with differing approaches and degrees of prescription.
The solution
To address the issue set out above effectively, the relevant drafting of a building contract should address three distinct points.
Firstly, the contract should seek to establish the agreed methodology for the programme. This can be achieved in a number of ways, but perhaps the most straightforward is for the drafting to make provision for an agreed initial form of master programme which incorporates all packages and work items to a prescribed level of detail. In addition, the contract should set out what information all future iterations of the programme should include and in what manner this should be presented. The question of key dates, logic links and float within the programme should be dealt with, perhaps with reference to the approach adopted by the initial master programme. This should ensure that the scope for disagreements between the employer and contractor as to what programme information is required to be provided is much reduced.
The second consideration with any drafting relating to programme is the frequency with which an updated programme should be prepared and issued to the employer. In particular, care should be taken to ensure that the contractual regime for updating and issuing the programme is not overly onerous as this can add unnecessary cost, and increase the administrative burden on both the employer’s and contractor’s administrative staff. Worse still, an update requirement that is too onerous might ultimately become unworkable and have to be abandoned, leading to uncertainty as to what the parties are in fact required to do once the contractual regime has been discarded. With this caution in mind, the requirement for regular periodic updates of the programme should perhaps be eschewed in favour of the requirement for an updated programme to accompany any application for an extension of time.
Finally, the programme provisions should include some form of mechanism for enforcing the obligation on the contractor to produce a programme and/or resolving any related deadlock between the parties. One option is to include a right for the employer to withhold interim payments. However, this is likely to be regarded by most contractors as unacceptable, and may precipitate disruption to the works or lead to a dispute if enforced. In addition to being crude in application, this drafting approach offers no practical remedial step for producing a programme. A better approach in these circumstances, in the absence of a programme produced by the contractor, is to allow for the employer to produce its own alternative programme, the cost of which may be deducted from future payments to the contractor.
The JCT Standard Building Contract 2011
Viewed from the perspective of the proposals above, the JCT Standard Building Contract 2011 adopts a notably pragmatic approach which is married to an admirable economy of drafting. Clause 2.9.2 requires the contractor to produce the master programme at its own cost as soon as possible after the Contract is entered into. Moreover, the Conditions deal with the form that this master programme should take by leaving the detail to be set out in what is presumably meant to be the technical sections of the Contract Documents. Given the technical nature of the information involved, this approach is undoubtedly the most appropriate.
On first reading, the drafting perhaps leaves open the question as to the frequency with which the programme should be provided to the employer and does not seem to address any question of resolving the non-provision of the programme. That said, both of these points could be easily dealt with in the technical sections of the Contract Documents, providing care is taken to tie these requirements back into the relevant contractual terms. On this point, the draftsmen of the relevant part of the Contract Documents shouldlook closely at clause 2.9.2 and 2.27 (the latter clause dealing with the notices on delay that the contractor is to provide).
The JCT Design and Build Contract 2011
In contrast to its sister contract, the JCT Design and Build Contract 2011 does not expressly deal with the question of programme information. This approach is largely appropriate, given the nature of works carried out by way of design and build and the flexibility as to programming allowed for as a result. However, the employer may still need access to programme information to assess extensions of time, and contractual requirements should therefore be included to address the points set out above. Furthermore, in the event of a disagreement arising between the parties, joint access to the contractor’s programmes may, as discussed above, be the most expeditious and forensic way of resolving this.
As with the JCT Standard Building Contract though, many of these requirements can be (and, arguably, should be, given the nature of the information involved) incorporated in the technical parts of the Contract Documents (with the most appropriate location being in the Employer’s Requirements) without any amendment to the terms of the Conditions being required.
Conclusion
It is essential to ensure that the requirements dealing with the use of programme information for assessment of extension of time applications and resolving disputes are addressed in the building contract. The contractor may feel that the terms outlined above represent an intrusive attempt to look into his underlying management of the works, but the benefits to both parties in fully transparent programme information must ultimately come to be regarded as outweighing this concern.
In light of this, the mechanisms provided for in the two JCT contracts considered above provide pragmatic and unfussy drafting approaches to this point, although they will only be of real benefit to the parties if the relevant technical parts of the Contract Document provide the detail required and dovetail with the drafting of the Conditions.
Note: Blog posts are the views of the author(s), and do not necessarily represent the views of JCT.