The Contract Program and Demonstrating Delay

What is the Contract Program?

The term “Contract Program” is often used in reference to the Construction or Contractor’s Program.

The Construction (or Contractor’s) Program is basically the execution plan and timeline of how the works under the Contract will be carried out and measured. It should consider the key sequences of work and resource dependencies. It should also, depending on the Contract, identify the critical path and the relationships between the planned activities and interfaces.

The Construction Program is a vital tool in managing change and demonstrating the impact of a delay event.

Is the Contract Program a document?

In short, it depends on the Contract.

For example, Australian Standard forms of Contract AS2124 and AS4300 provide that a Construction Program or Contractor’s Program (as in AS4300) may be volunteered, directed or included in the Contract.

AS4000 and AS4902 provide that the superintendent may direct the provision of a Construction Program, and the program is defined as a Contract document.

“A construction program is a written statement showing the dates by which, or the times within which, the various stages or portions of WUC are to be carried out or completed. It shall be deemed a Contract document.” AS4000-1997 Clause 32.

Is the Contract Program static?

Contractors often hold the view that the “Contract Program” i.e., the Construction Program, accepted at the time of tender is “static”. This is understandable, given the following excerpts from Australian Standard Forms.

“The Contractor must not depart from the Contractor’s Program without the prior written approval of the Principal or the Superintendent. “The furnishing of a Contractor’s Program or of a further Contractor’s Program shall not relieve the Contractor of any obligations under the Contract including the obligation not to depart, without reasonable cause, from an earlier Contractor’s Program.” AS4300-1995.

“The Contractor shall not, without reasonable cause, depart from a construction program.” AS4300-1995 AS4000-1997.

But...

As is invariably the case, the Construction Program almost always deviates from the originally planned sequence.

Unfortunately, the Superintendent rarely approves the revised Construction Program. The approved (baseline) Construction Program becomes obsolete because it does not represent the revised plan.

This is why Contractor’s often seek to maintain a Target Program, which better reflects the revised, or “real” plan.

The Target Program may be maintained in parallel with the Contract Program. The premise being that the Target Program betters the Date for Completion by removing built-in contingencies, whilst the Contract Program maintains them.

The common misnomer that a contingency may be considered float is likely the primary reason for this, whilst also reinforcing the Contractors terminal float ownership i.e., is the Contractor entitled to an Extension of Time to the Date of Completion?

What does this mean in terms of demonstrating delay entitlement?

Generally, the Australian Standard Forms of Contract do not provide for how an entitlement to an Extension of Time should be demonstrated.

However, it is generally accepted that the impact of a delay event (to the Date for/of Completion) be demonstrated on the current (approved) Construction Program, which has been updated contemporaneously with progress data at regular intervals prior to the proximate commencement of the delay event.

The analysis should demonstrate the extent to which the delay event (the cause) impacted the critical path to completion (the effect), whilst having regard to the Contractor’s planned intent and progress.

If the Contractor has been adhering to a different program (target, or otherwise), it may encounter difficulty in demonstrating an entitlement to an Extension of Time, given its obligation to follow the approved Construction Program, as in the Australian Standard Forms.

1. The Contractor should ensure that the Construction Program is as robust as possible, and mirrors the construction methodology. This can be difficult given the relatively short time-frames at/post tender to fully understand the scope and liaise with subcontractors and consultants.
2. Early, typically high-risk elements should be given the greatest attention, such as: procurement, access, ground conditions, and resources. Risk profile-based contingencies should be allocated to the “uncertainties” accordingly. An Employer risk event is most likely to occur at an early stage in the project. The contractor is obliged to mitigate (as far as reasonably practicable) the delay. This will involve re-planning the works, thus enabling the contractor to depart (reasonable cause) from the (approved) construction program.
3. If a more detailed program is required, the respective "drilled-down" work elements should mirror the approved Construction Program i.e., the “master program”.
4. If a material change impacts the intended sequence, but does not give rise to an Extension of Time, the Contractor must revise the construction program and seek its approval. A clear and detailed justification of the necessary changes should accompany the program for the Superintendents approval.
5. Contingencies, “buffers” and delay allowances should be properly considered. Planning to work a 5-day week, with the option to work a 6-day week, or increasing activity durations by 10% is not proper consideration. A considered delay allowance is not “float”. It will likely be needed, if considered properly.
6. Regular communication with the Superintendent is key. Issuing a revised program that has slipped 3 months in a month is unlikely to be approved.

Thanks to Andrew McKenna for his insights on this article.

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Paul