One Project Manager, fifty decisions a week? Aye, dead on.

NEC4 names one Project Manager, but the contract hands that role around sixty different decisions, most of them on a clock. Here’s why running it as a one-person job is where contract administration starts to slip.

We’ve compared the NEC Project Manager to a referee before, and I rabbit on quite a bit about the amount of responsibility the Project Manager holds. The referee analogy is still the best I know. But there’s one way it falls down: a referee makes a few big calls a match and, love it or hate it, in recognition of the importance of those calls and their impacts, VAR has been introduced. A Project Manager on a live NEC4 job can make fifty decisions in a week and their VAR is adjudication. If you think three minutes is slow, and the decisions are brutal, try an adjudication.

But, I hear you shout, fifty is a ludicrous number with no rationale behind it!

So, let’s count them.

The Count

We start with the NEC4 Engineering and Construction Contract and mark every place where the Project Manager has to decide, accept, assess, certify, notify or instruct. Doing this I get to around sixty separate duties before I’ve even looked at the secondary Options. They include:

• early warnings: issuing the first Early Warning Register within one week of the starting date, running the meetings and reissuing the Register within a week of each one (clause 15)
• acceptances: the Contractor’s design, key people, Subcontractors, subcontract documents, the quality plan and insurances, each with a short list of reasons you’re allowed to give for saying no
• the programme: accepting or rejecting it within two weeks of each submission (31.3)
• instructions: changes to the Scope, stopping and restarting work, resolving ambiguities, dealing with prevention events
• compensation events: deciding within one week whether a notified event is a compensation event (61.4), replying to quotations within two weeks (62.3), and making your own assessment when a quotation won’t do (64)
• payment: assessing the amount due and certifying within one week of every assessment date (51.1), and under Options C to F deciding what counts as Disallowed Cost, line by line
• Defects, Completion and take over: assessing the cost of uncorrected Defects, deciding the date of Completion and certifying it within a week (30.2)

Just for the doubters, the full list of 71 occasions where the Project Manager has to decide, accept, assess, certify, notify or instruct is provided below in Appendix 1.

Now put that on a mid-sized job, call it £50m, with an active Contractor but not a nut job who wants to early warning potential rainfall on Monday, in Inverness, in January – because no one could have seen that coming.

A normal week might bring a handful of new compensation event notifications, either due to instructions or Client risk events, the same again in quotations, a couple of early warnings, a revised programme, a design submission, a stack of site queries that need instructions, and a payment cycle. Fifty starts to look conservative.

There are some projects we have worked on where the last Thursday of the month could see fifty decisions in a day, never mind a week.

The clock is always running

Almost every one of those decisions has a time limit, either a specific one in the clause or the period for reply in the Contract Data. And NEC4 is not neutral about silence.

If the Project Manager doesn’t reply to a communication in time, that itself is a compensation event (60.1(6)); when you start seeing the 60.1(6) clause reference in notifications you know someone is heading towards trouble, be it the Project Manager or the Client.

In four places, failing to respond is eventually treated as a yes:

• a programme not accepted or rejected in time (31.3)
• a compensation event notification left unanswered (61.4)
• a quotation left unanswered (62.6)
• a Project Manager’s assessment that never arrives (64.4)

In each case the Contractor has to notify the failure first, and there’s a short further period before deemed acceptance kicks in. But the direction is clear. The contract was written on the assumption that the Project Manager would keep up with all those notices and if they don’t, the contract provides an answer. When the Project Manager doesn’t provide that answer, the Client pays for it, usually in time and money it never agreed to or maybe didn’t even know about.

One name, a team behind it

Here’s the part I think gets missed. The contract names one Project Manager, but it never assumed that one person would do all of this alone. Clause 14.2 lets the Project Manager delegate actions to other people, and cancel that delegation, as long as the Contractor is told.

That clause is there for a reason. Look at what a single compensation event can need: someone who understands the contract and the basis of entitlement, someone who can read and test a programme, someone who can check Defined Cost claims, and someone who knows the technical side well enough to judge whether the work was really a change. That’s rarely one person, and it’s never one person who also has forty-nine other decisions to make that week.

When the role is run as a one-person job, the symptoms are predictable. Replies drift past their deadlines. Assessments get pitched low because there’s no time to do them properly. Programmes get rejected on technicalities because nobody has had the chance to look at the substance. None of that is bad faith. It’s overload. But to the Contractor it looks exactly the same as bias, and it ends up in the same place: a dispute because the Client-nominated Project Manager looks like they are siding with the Client.

What good looks like

The best-run NEC jobs I’ve seen treat contract administration as a team with one accountable lead:

• a named Project Manager who owns the decisions and signs them off
• written delegations under 14.2, notified to the Contractor, so everyone knows who can do what
• suitable contract administration software for every notification, submission and quotation, with its deadline visible and reminders issued before the deadline hits
• commercial, programme and technical support that the Project Manager can call on without waiting and that are seen to be involved in the project
• reasons recorded for every decision, so it can be explained, and defended, if it’s challenged later. A detailed narrative, rather than a note saying rejected, builds trust and protects positions.

The takeaway

The referee, and the paying public, have VAR to ensure the correct decision is made under extraordinary time pressure during a game of football.

An NEC4 contract runs for months or years, not ninety minutes, and the decisions never stop coming. The Project Manager is one name on the contract. Making it work takes a team behind that name that has the competence to ensure that no one thinks the VAR is at it.

Questions about how your NEC contract is being administered? Let’s talk.

Appendix 1

The NEC4 ECC Project Manager Obligations

1. Early warnings and risk (clauses 15, 16, 17, 19)

1. Notify early warnings of matters that could raise the Prices, delay Completion or a Key Date, or impair the works in use (15.1).
2. Prepare and issue the first Early Warning Register within one week of the starting date (15.2).
3. Hold the first early warning meeting within two weeks of the starting date, then at the intervals in the Contract Data until Completion of the whole of the works (15.2).
4. Decide who else attends an early warning meeting (by agreement with the Contractor) (15.2).
5. Call an extra early warning meeting at any time (15.2).
6. Record the decisions taken and revise and reissue the Register within one week of each meeting (15.4).
7. Reply to a Contractor’s proposal to change the Client’s Scope to save money, within four weeks: accept it, say the Client is considering it and instruct a quotation, or reject it for any reason (16.1 to 16.2).
8. Accept or reject a Contractor’s proposal to add an area to the Working Areas. Reasons allowed: it is not necessary for Providing the Works, or it is used for work not in the contract (16.3).
9. Resolve ambiguities and inconsistencies in or between the contract documents by instruction (17.1).
10. Decide whether the Scope requires something illegal or impossible and, if so, instruct a change to the Scope (17.2).
11. Instruct the Contractor how to deal with a prevention event (19.1).

2. Design, people, subcontractors and other acceptances (Section 2, plus 40, 84 and 86)

12. Accept or reject the Contractor’s design (21.2). Reasons allowed: it does not comply with the Scope or with the applicable law.
13. Decide whether to call for the design of an item of Equipment, then accept or reject it (23.1).
14. Accept or reject a replacement for a key person (24.1). Reason allowed: the replacement’s relevant qualifications and experience are not as good as the named person’s.
15. Instruct the removal of a person, with reasons. The Contractor must remove them within one day (24.2).
16. Assess the cost to the Client of the Contractor not providing services and other things it was required to provide (25.2).
17. Decide whether a Condition for a Key Date was met and, if not, assess the Client’s additional cost within four weeks of the Condition being met (25.3).
18. Accept or reject a proposed Subcontractor (26.2).
19. Accept or reject proposed subcontract documents, or agree that no submission is needed (26.3).
20. Notify which Others should be given access to the work (27.2).
21. Give instructions in accordance with the contract, which the Contractor must obey (27.3).
22. Accept the quality policy statement and quality plan, and any changes to them (40.2).
23. Instruct the Contractor to correct a failure to comply with the quality plan (40.3). This instruction is not a compensation event.
24. Accept the Contractor’s insurance certificates before the starting date and at each renewal until the defects date (84.1).
25. Submit certificates for the insurances the Client provides to the Contractor for acceptance, before the starting date and afterwards as the Contractor instructs (86.1).

3. Time: programme, stoppages, acceleration, Completion and take over (Section 3)

26. Accept or reject the first programme and every revised programme within two weeks of submission (31.3). Reasons allowed: the plans are not practicable, required information is missing, it does not show the Contractor’s plans realistically, or it does not comply with the Scope.
27. Instruct the Contractor to submit a revised programme (32.2).
28. Instruct the Contractor to stop or not start work, and later to restart it (34.1). If no restart instruction is given within 13 weeks on substantial work, either Party can move towards termination (91.6).
29. Instruct a quotation for acceleration, then accept or reject it within 3 weeks. If accepted, change the Prices, Completion Date and Key Dates and accept the revised programme (36.1 to 36.3).
30. Decide the date of Completion and certify it within one week of Completion (30.2). Completion is defined at 11.2(2).
31. Certify take over of the works or any part, and its extent, within one week of the date of take over (35.3).

4. Defects (Section 4)

Most testing and Defect work sits with the Supervisor, not the PM. The PM’s own decisions are:

32. Assess the Client’s cost of repeating a test or inspection after a Defect is found (41.6).
33. Propose, or consider the Contractor’s proposal, to accept a Defect instead of having it corrected (45.1).
34. Accept or reject the quotation for accepting a Defect, and if accepted change the Scope, the Prices and the Completion Date and accept the revised programme (45.2).
35. Assess the cost of having an uncorrected Defect put right by others, where the Contractor had access but did not correct it in time (46.1).
36. Assess what it would have cost the Contractor to correct a Defect where the Contractor was not given access (46.2).
37. Arrange for the Client to give the Contractor access to and use of a taken-over part of the works where it is needed to correct a Defect (44.4).

5. Payment (Section 5 and Option Y(UK)2)

38. Decide the first assessment date to suit the procedures of the Parties, no later than the assessment interval after the starting date (50.1).
39. Assess the amount due at every assessment date, considering the Contractor’s application (50.1, 50.2).
40. Retain a quarter of the Price for Work Done to Date where no programme is identified in the Contract Data and the Contractor has not yet submitted a compliant first programme (50.5).
41. Correct any wrongly assessed amount in a later certificate (50.6).
42. Certify payment within one week of each assessment date (51.1). Payment is due within three weeks of the assessment date unless the Contract Data says otherwise (51.2).
43. Under Y(UK)2, the PM’s certificate acts as the Client’s payment notice. The pay less notice must go no later than seven days before the final date for payment.
44. Make the final assessment of the amount due and certify it no later than four weeks after the Supervisor issues the Defects Certificate, or 13 weeks after a termination certificate (53.1). If the PM does not, the Contractor can issue its own assessment (53.2), and the final assessment becomes conclusive unless referred to the dispute resolution procedure in time (53.3).

6. Compensation events (Section 6)

This is where most of the weekly volume comes from on a live job.

45. Notify a compensation event at the time of giving an instruction, changing a decision, or issuing a certificate that is itself a compensation event, and instruct a quotation (61.1 and 61.2).
46. Instruct quotations for a proposed instruction before deciding whether to give it (65.1 to 65.3). Not going ahead after the quotation is itself a compensation event (60.1(20)).
47. Decide whether a Contractor’s notified event is a compensation event, and reply within one week (61.4). Grounds for saying no: it arises from the Contractor’s fault, has not happened and is not expected to, was not notified within the contractual timescales, has no effect on Defined Cost, Completion or a Key Date, or is not a listed event.
48. Decide whether the Contractor failed to give an early warning it should have given, and say so in the instruction to quote (61.5). The event is then assessed as if the warning had been given (63.7).
49. Decide whether the effects are too uncertain to forecast, and if so state the assumptions to be used (61.6). Correcting an assumption later is itself a compensation event (60.1(17)).
50. Instruct alternative quotations for different ways of dealing with the event (62.1).
51. Reply to each quotation within two weeks: accept it, instruct a revised quotation (with reasons), or notify that the PM will make its own assessment (62.3, 62.4).
52. Agree extensions to the time for quoting and replying, before the deadline passes (62.5).
53. Make the PM’s own assessment where the Contractor has not quoted in time, has assessed it wrongly, has not submitted a required programme, or there is no accepted programme for a stated reason (64.1, 64.2).
54. Notify that assessment within the same period the Contractor would have had for its quotation (64.3).
55. Correct the description of the Condition for a Key Date where a change to the Scope makes it incorrect (63.11).
56. Implement the compensation event by notifying acceptance or the PM’s own assessment, which changes the Prices, Completion Date and Key Dates (66.1 and 66.2).
57. Option B only: correct mistakes in the Bill of Quantities, each correction being a compensation event (60.6).

7. Things found on Site (Section 7)

58. Instruct how to deal with an object of value or historical interest found on the Site (73.1).
59. Give permission for Plant and Materials to be removed from the Working Areas, after which title passes back to the Contractor (70.2).
60. Decide whether to allow Equipment to be left in the works (72.1).

8. Termination (Section 9)

61. Notify a Contractor default. For R11 to R13 (substantially failing to comply with its obligations, not providing a required bond or guarantee, or appointing a Subcontractor for substantial work before acceptance) the Client may terminate if the default is not put right within four weeks (91.2). For R14 and R15 (substantially hindering the Client or Others, or substantially breaking a health or safety regulation) the Client may terminate if the default has not stopped within four weeks (91.3).
62. Decide whether a Party’s stated reason for terminating complies with the contract, and if so issue the termination certificate promptly (90.1).
63. Assess and certify the final amount due on termination no later than 13 weeks after the termination certificate is issued (53.1), with the amounts due set by clause 93.
64. Where the Client uses the Contractor’s Equipment to complete the works after termination, tell the Contractor when it is no longer required (92.2, P3).

9. Main Option and secondary Option decisions

65. Option A: accept or reject a revised activity schedule (reasons: it does not match the Accepted Programme, the changed Prices are not reasonably distributed, or the total of the Prices has changed) (55.3, 55.4).
66. Options C, D, E and F: decide what is Disallowed Cost (11.2(26), or 11.2(27) under Option F), which is a judgement call every single month.
67. Options C, D, E and F: review records of finalised Defined Cost and within 13 weeks accept them, ask for further records or notify errors, then decide within four weeks of any further records; otherwise the Contractor’s assessment is treated as correct (50.9).
68. Options C and D: assess the Contractor’s share of the pain/gain at Completion and in the final assessment (54.3, 54.4 under Option C; 54.7, 54.8 under Option D), and on termination (93.4, 93.5).
69. X5 Sectional Completion: decide and certify Completion for each section.
70. X21 Whole life cost / X22 Early Contractor Involvement: reply to a quotation within the period for reply, giving any reason for not accepting (X21.3); under X22, accept or reject Stage One forecasts within one week (X22.2(2)), accept or reject the Stage Two submission (X22.3(3)), issue the notice to proceed to Stage Two (X22.5) and assess Budget changes not agreed within four weeks (X22.6(2)).
71. X4 Ultimate holding company guarantee: accept or reject a proposed alternative guarantor. Reason allowed: its commercial position is not strong enough to carry the guarantee (X4.2).