What is the Activity Schedule?
The Activity Schedule is used only in Main Options A and C and is defined at clause 11.2(20) as:
The Activity Schedule is the activity schedule unless later changed in accordance with this contract.
The reference to ‘activity schedule’ in italics leads us to the Contract Data, specifically Part 2 which simply states:
The activity schedule is ……………………………..
permitting the Contractor to include a reference to another document, the contents of which would, on execution of the contract, be the activity schedule.
So far this tells us very little; the NEC3 ECC Guidance Notes offers some help by providing the following explanation for Main Option A:
An activity schedule is a list of activities prepared by the Contractor which he expects to carry out in Providing the Works. When it has been priced by the Contractor, the lump sum for each activity is the Price to be paid by the Employer for that activity. The total of the Prices is the Contractor’s price for providing the whole of the works, including for all matters which are at the Contractor’s risk.
For Main Option C, the Guidance Notes are not so helpful, but in simple terms, and borrowing some of the terminology above:
An activity schedule is a list of activities prepared by the Contractor which he expects to carry out in Providing the Works. When it has been priced by the Contractor, the total of the lump sum Prices is compared to the final Price for Work Done to Date in order to ascertain the Contractor’s share.
In summary, the activity schedule is a list of items of work which, either directly (under Option A) or indirectly (under Option C) effect the amount paid to the Contractor. More on this later.
Before moving on, clause 54.1 of the Contract assists us further in seeking a definition by telling us what the Activity Schedule is not:
Information in the Activity Schedule is not Works Information or Site Information
Who prepares the list of activities?
The contract is silent as to who prepares the list, but it is the Contractor that prices it, it is, after all, his tender.
However, as mentioned above, the Guidance Notes prescribe, for Option A at least, that the list of activities is prepared by the Contractor. The Guidance Notes are silent on this point for Option C. It must be remembered, of course, that the Guidance Notes, while helpful, do not form part of the Contract and so the Parties are free to decide who prepares the list amongst themselves.
What should be included in the schedule?
Referring again to the Guidance Notes definition above, “the activity schedule is a list of activities prepared by the Contractor which he expects to carry out in Providing the Works”.
There is no limit to the number of activities which can be as few or as many as the drafter of the schedule wishes; however, as will be seen later in this article, it is much more important to get the activities correct under Option A than Option C.
In addition, there should be correlation of the activities with the Accepted Programme.
Relationship to the Accepted Programme
Clause 31.4 states:
The Contractor provides information which shows how each activity on the Activity Schedule relates to the operations on each programme which he submits for acceptance.
It is not necessary for the items in the programme to mimic exactly the items in the Activity Schedule; there may be more activities on the Activity Schedule than on the programme or vice versa.
What is important (and by way of 31.4 is a contract obligation), in order to make assessment of compensation events and financial forecasting easier, is there should be correlation between the programme and the Activity Schedule and that this should be kept up to date.
Changes to the Activity Schedule.
So far in this article we have used two types of terminology, activity schedule and Activity Schedule. The former is the original tendered activity schedule (as included in the Contract Data Part 2), the latter is that original schedule “changed in accordance with this contract” (see clause 11.2(20)).
The Activity Schedule can change either:
- By acceptance of a quotation for acceleration (clause 36.3):
When the Project Manager accepts a quotation for an acceleration, he changes the Prices, the Completion Date and the Key Dates accordingly and accepts the revised programme.
- By a change in the sequence of working (clause 54.2):
If the Contractor changes a planned method of working at his discretion so that the activities on the Activity Schedule do not relate to the operations on the Accepted Programme, he submits a revision of the Activity Schedule to the Project Manager for acceptance.
- By the implementation of a compensation event (clause 63.12)
Assessments for changed Prices for compensation events are in the form of changes to the Activity Schedule.
Use under Option A
The Activity Schedule is a much more important document under Option A than Option C as, under Option A, it directly effects the timing and amount of payment to the Contractor, having a significant effect on his cash flow.
The sum due to the Contractor in each assessment period is the Price for Work Done to Date which under Option A is defined at 11.2 (27):
The Price for Work Done to Date is the total of the Prices for
• each group of completed activities and
• each completed activity which is not in a group.
A completed activity is one which is without Defects which would either delay or be covered by immediately following work.
As can be seen, payment to the Contractor for work under an activity only becomes due when the whole of that activity is complete. There is no provision for part payment.
Accordingly, the more activities included within the schedule, the better for the Contractor’s cash flow.
Use under Option C
Under Option C, only the total of the Activity Schedule, (the total of the Prices as defined at 11.2(30)) is relevant.
The Price for Work Done to Date is defined at 11.2(29) as:
The Price for Work Done to Date is the total Defined Cost which the Project Manager forecasts will have been paid by the Contractor before the next assessment date plus the Fee.
As can be seen, this has no relation to the Activity Schedule.
The Activity Schedule is instead used to assess the Contractor’s share (pursuant to clause 53) by comparing the finally adjusted Activity Schedule (the target) to the final Price for Work Done to Date.
Errors in the Activity Schedule
It goes without saying that as the Activity Schedule is a list of activities which the Contractor expects to carry out in Providing the Works, that it should corralate with the works included in the Works Information.
But it may not; it may contain an activity which is not in the Works Information or it may fail to include an activity which is in the Works Information. The consequences depends on whether the contract is Option A or Option C.
Taking the former situation first, under Option A as the Price for Work Done to Date includes only those completed activities (and if an activity on the Activity Schedule is not in the Works Information then it can never be completed), the Contractor has no entitlement to be paid for that errant activity.
Under Option C, as we are only concerned with the total of the Prices, the errant activity will serve to increase the ‘target’ cost changing the Contractor’s share to his benefit.
Of course, it would also serve to increase the Contractor’s tender so that he may not be competitive.
Taking the latter situation, Under Option A the only method by which the Prices can be changed (save for acceleration) is by way of a compensation event. None of the listed compensation events permit the addition of an item to the Activity Schedule simply because it has been missed. The price for it is assumed to be included in other activities.
Under Option C, as we are only concerned with the total of the Prices, the omission will serve to decrease the ‘target’ cost changing the Contractor’s share to his detriment.
For further information, please contact us.