June 2009

IN THIS EDITION OF THE MDA REPORT:

Proper programming planned

The old adage “fail to plan and you plan to fail” has never been truer than it is in the modern contracting environment we operate in today. Certainly, a common factor on many of the contracts we are involved with and where claims have arisen is that there is a problem with the programme. It may not have been compiled competently in the first place; not agreed to by the engineer or simply not kept up to date.
It is also surprising how often the programme is not referenced properly in contract progress meetings. Notes like “the programme has been submitted” are meaningless when assessing the status of a project. Contractors should insist the actual programme position is discussed and correctly recorded in the meeting minutes. This is a vital part of the communication process. How else would design office personnel, for example, be aware when construction information is required?
All modern forms of contract, as they are recommended by the Construction Industry Development Board, have a programming requirement, including the Joint Building Contracts Committee (JBCC) 5th edition now – a late arrival in this respect! Clause 15.6.1 of the JBCC 5th edition requires the contractor to compile a programme that enables construction information to be provided timeously by the principle agent and subcontractors’ activities can be coordinated. Access to the site, works commencement and completion are, however, still required in accordance with the contract data. Remedies are provided in the contract for
• late access (Clause 29.2.1) and
• failure to give construction information timeously (Clause 29.2.4)
Each of these entitlements, however, is cross-referenced to other clauses in the contract, specifically:
• late access (Clause 15.2.1) and
• late construction information (Clause 15.6).

Obligation established
The principle behind this requirement is that the contract either establishes an obligation to provide access or the programme creates an obligation to provide construction information by a given time.
Our law requires the employer or the employer’s agent (in this case, the principle agent) is placed in mora to perform. This is the finding of the well-known “McAlpine case” – Alfred McAlpine & Son (Pty) Ltd v Transvaal Provincial Administration 1974 (3) SA, (A), 1977 (4) SA 310 (T). Unless this obligation is created and accepted, the contractor has no recourse against the employer in the event he is delayed or incurs additional expense.
Different contracts deal with this requirement in different ways; sometimes the result is, at first, slightly illogical and unfair. The situation can arise under some forms of contract where the requirement that, for example, a drawing required by a given date is shown on the programme but the contract still requires a notice to be given. If the contractor fails to comply with the condition precedent (to his being entitled to make a claim), he will still have no right to make his claim. A clear understanding of the contract is, therefore, essential.

Requirements and rights
The General Conditions of Contract for Construction Works (GCC) 2004 (first edition) requires the contractor to submit his programme in accordance with Clause 12.2. The requirements of this clause and the supporting documents called for by Clause 12.3 are, relatively speaking, minimal.
Access to the site is a requirement of Clause 11.1 and is required by the commencement date when the contract agreement comes into effect. If the contractor is delayed or incurs additional expense as a result of not being given access, he can claim in accordance with Clause 11.2. This clause requires the contractor to comply with the provisions of Clause 48 (claims procedure), which is an administrative clause by which the contractor preserves his right to make his claim. Failure to adhere to the requirements of this clause can result in the contractor losing the right to make his claim (Sub-clause 48.4).
Instructions and drawings are dealt with under Clause 13. Here we see an example of the condition precedent discussed above. If the contractor requires a particular drawing, he has to give notice in accordance with Clause 13.3. His right to claim delay and additional cost as a result of not receiving construction information timeously under Clause 13.6 is conditional on this notice having been given. Reference is made in these clauses to the requirements of the programme but this does not override the requirement that further notice should be given.

According to the ‘red book’
Under the International Federation of Consulting Engineers/Fédération Internationale des Ingénieurs-Conseils (FIDIC) 1999 first edition, Conditions of Contract for Construction (the new “red book”), the requirement to programme the work is contained in Clause 8.3. If anything, the requirements of this clause are even more abridged than those that apply under the GCC 2004 contract referred to above.
Access to the site for the contractor is a requirement of Clause 2.1. This is required by the dates stipulated in the appendix to tender or, if there are no stipulations, access must be given in way that allows the work to proceed in accordance with the programme submitted under Sub-clause 8.3. Where a delay occurs as a result of late access, the contractor is entitled to claim but must comply with the requirements of Clause 20.1 (contractors’ claims), which is an administrative clause similar to that applicable under the GCC 2004 (Clause 48). Again this clause contains a time-barring provision should the contractor fail to comply with the requirements of this clause. The requirement to provide construction information by a given time, ideally, needs to be stated in the programme. However, should the contractor consider the potential late provision of construction information could delay the work or increase the contract price, he is required to give prompt notice to this effect under Clause 8.3, un-numbered paragraph 4. He then has recourse to Clause 13.3 (variations) for recovery of cost and Clause 8.4 for extensions of time. This latter clause (8.4) again requires compliance with Clause 20.1.

Nine bullet points
It can be seen, under each of these contract forms, reliance is only partially placed on the requirements of the programme. Provided the contractor gives notices, he is still in with a chance to claim.
The same cannot be said for the New Engineering Contract (NEC). Contractors who do not follow, to the letter, the requirements of the programme clause are cutting their legs off at the knees!
The NEC requirement for the contractors programme (Core-clause 3) has nine bullet points to be complied with when drawing up the contract, including access dates and when information is to be supplied. The requirements are far more rigorous than any of the other contract forms discussed above.
The NEC also requires the programme to be updated at regular intervals stipulated in the contract data or when either the project manager or the contractor deems it necessary.
There are no other clauses dealing with issues such as late information or access to the site as provided for in the JBCC, GCC 2004 or the FIDIC 1999 forms. Accordingly, if the programme requirements are not met, the contractor cannot rely on Clause 6, which is the compensation-events clause, for either extensions of time or additional compensation. In conclusion, programming clauses are vital under any form of contract but the contractor can survive by relying on the other rights conferred on him in terms of the contract. Under the NEC forms, however, failure to carry out the programming function required by the contract is fatal to the contractor’s position.