Out-Law Guide | 01 May 2014 | 3:00 pm | 7 min. read
Most construction contracts require the contractor to produce a programme of works. This can be a non-contractual reference point for how work will be carried out or it can impose obligations to deliver the works in a certain way and by certain dates.
If the programme of works is included in the list of contract documents it will become binding on the parties. There are benefits and risks associated with doing that.
There is no set form that a construction programme must take. As a minimum the programme should specify the commencement date, the order in which the contractor plans to carry out the contract works and the planned completion date. The contract may stipulate other information to be included in the programme.
The programme is not usually listed as a contract document and is therefore not considered binding on the parties. In this case the programme will be used as an indicative tool for the parties, suppliers and consultants for administering the progress of the works.
Where the contract lists the programme as a contract document, the programme will be binding on the parties. Any departure from it will constitute a breach of contract entitling the aggrieved party to compensation if they can prove they have incurred additional costs or delay.
Employers primarily concerned with completing stages of the works by precise dates may be tempted to include the programme in the list of contract documents. The advantage for the employer is that it will afford him greater control over the manner and order in which the contractor will carry out the works. It will allow him to specify the works that are a priority and oblige the contractor to prioritise the same matters.
The advantage for the contractor is that he will be aware of what is expected of him from the outset. The same applies to third parties, such as suppliers and consultants, who are often ignorant or left in limbo as to the timing of their own contributions to the works.
Where this approach is adopted, the contract should clearly set out which part or parts of the programme are binding. It could be that only the key milestone dates are binding. Conversely, it could be that all dates, the order of the works and the methods employed by the contractor are obligatory.
Including the programme in the list of contract documents is not without its pitfalls. It could mean:
If the programme is binding it is not just the contractor who assumes additional responsibilities. The employer will have to ensure he provides the contractor with the facilities to complete the works in accordance with the programme. In practice, this means providing the contractor with site access, design documents and decisions on time to allow the contractor to commence the next phase of the works.
If the employer fails to facilitate the progress of the works the contractor will be entitled to compensation for any resulting lost time and money. This could get particularly complicated in a multi-party project involving numerous contractors. For example, a failure by one contractor to complete a task or to vacate the site on time could mean that the employer is in breach of its obligations under all contracts associated with the project.
It is easy to see how a binding programme could increase the number of claims and counter-claims exchanged between the parties. Contractors faced with a binding programme should specify the timing and other details of the documents and access rights needed from the employer to meet the dates in the programme. Employers should also be clear on what needs to be provided by them and when to reduce this risk.
Being bound by the programme will reduce considerably the flexibility of the contractor's operations on site and will expose him to the risk of additional claims for breach of contract. Employers insisting on including the programme as a contract document should expect this additional risk to be reflected in the contractors' price. Contractors should clarify whether or not the programme is a contract document as early as possible during the tender stage and in any event before naming their price.
A good programme can be complicated and time-consuming to produce. Creating a contractually binding programme out of something that has traditionally been used as a project management tool will add to this complexity. Conceiving a programme that is to be contractually binding in isolation and before the project has commenced will raise additional challenges. Consequently, the parties should expect a prolonged pre-contract negotiation period and a potential delay to the commencement date.
An early issue that the parties will face is the question of who is best placed to draft the plan. Lawyers will need to be closely involved to ensure that the programme and any accompanying documents are consistent with the contract. However, lawyers may not have the technical expertise to compile many elements of the programme so it is advisable to allow those who do possess such expertise to own the document. Suppliers and any other interfacing third parties will also need to review the programme to ensure their input is compatible with the requirements of the programme. Again, this could delay the start of the works.
Programmes are usually treated as live documents that are continuously updated in response to events occurring on-site or elsewhere on the project. Amending a contractually binding programme will be an additional administrative burden and could further delay the progress of the works during the construction period.
Whilst the timely progress of the works is important, it does not guarantee the contractor will carry out the works with the requisite skill.
In a 1984 case between Greater London Council and Cleveland Bridge and Engineering Co Ltd the Court of Appeal unanimously held that where there was an obligation on the contractor to comply with dates it was not possible to imply an additional obligation on the contractor to proceed with due diligence to give business efficacy to the contract.
More recently a case involving Leander Construction and Mulalley & Co produced a similar ruling. The court held that provided the main contractual obligation was an obligation to complete by a certain date, it was unnecessary and unhelpful to impose other interim progress obligations upon the contractor such as carrying out the works regularly and diligently.
Employers, then, shouldensure that the contract expressly requires the contractor to complete the works with due diligence and not just by the dates in the programme.
The JCT contracts (2011) require the contractor to provide the architect/contract administrator with two copies of the 'master programme'. The master programme is not, however, included in the list of contract documents and JCT makes it clear that it does not add to the contractor's obligations. Accordingly, the only date which is binding on the contractor is the completion date and the contractor will have until the last moment of that day in which to complete the works.
The FIDIC contracts (Red and Yellow books) require the contractor to submit a well-thought-out programme within 28 days of the commencement date. It requires the programme to be accompanied by a supplementary report. This report describes the methods that the contractor intends to adopt and details of the personnel and equipment required on site for each stage.
The status of the programme under the FIDIC form of contracts is ambiguous. On one hand the employer is entitled to rely on the programme when planning his activities and the contractor is expressly required to proceed in accordance with the programme. Importantly, a failure by the contractor to comply with this entitles the employer to terminate the contract. On the other hand, the programme is not a document that the employer, through the engineer, needs to approve or agree to, it cannot alter any of the express obligations under the contract and those obligations take priority over any statements in the programme. Therefore it seems the contractor should follow the programme unless it conflicts with another term of the contract.
The programme is integral to the administration of the NEC3 contracts. The programme can be provided as part of the contract data or it can be provided by the contractor within the period specified in the contract data. The significance of providing the programme should not be underestimated since one quarter of the 'price for work done to date' is withheld from the contractor until the first programme is submitted.
Given that the information required in the programme 'specifies and describes' the works, the programme is arguably Works Information as defined in the NEC3 contract. Therefore the contractor has to provide the works in accordance with the programme. However, it seems that the programme does not take priority over other types of works information as the project manager can reject the programme if it fails to comply with the works information submitted .
The programme can be revised by the contractor to reflect actual progress. This revised programme is to be submitted to the project manager for acceptance, however acceptance of the programme is not a condition precedent to the contractor progressing the works. Though the wording is unclear, it seems unlikely that the contractor is bound by the programme or that a departure from the programme on site gives rise to a claim for breach of contract.