NEC Accepted Programmes: A Practical Guide

• Published date: 08 August 2022
• Subject Matter: Corporate/Commercial Law, Real Estate and Construction, Contracts and Commercial Law, Construction & Planning
• Law Firm: Fenwick Elliott LLP
• Author: Ms Claire King

By Claire King¹

The Accepted Programme sits right at the heart of the NEC form of contract. Its aim is to encourage good project management by not only ensuring that all parties to the project know what they have to do and when, but also by facilitating the prompt and prospective assessment of compensation events as and when they occur on the project. In order to achieve these aims, numerous prescriptive procedures governing Accepted Programmes are provided for.

All too often, however, these procedures break down, sometimes right from the beginning of the project. This can be for a wide variety of reasons, but all too often it is because parties do not fully understand what an Accepted Programme should contain or the processes for updating it.

In this Insight, we set out a practical guide to all things related to NEC Accepted Programmes, focusing on the NEC4 Engineering and Construction Contract form (the "NEC4"). In particular, we examine:

1. How the Accepted Programme fits into the NEC4 as a whole;
2. What the requirements for an Accepted Programme are;
3. The processes for agreeing an Accepted Programme;
4. How parties can keep the processes for updating and agreeing the Accepted Programme going through the lifespan of a project and, finally
5. How can the disputes and game playing seen all too often in relation to Accepted Programmes be avoided and/or their consequences mitigated?

NEC Objectives and the role of the Accepted Programme

The NEC's objectives are to "facilitate and encourage good management of risks and uncertainties, using clear and simple language".² To achieve that goal, the NEC encourages the early identification of problems and a proactive approach to addressing those problems. The idea is firmly that issues are resolved as work progresses so that there is no final account process (or associated dispute) at the end of the job. These goals are supported by prescriptive contractual procedures. All parties also have a duty to act in a "spirit of mutual trust and cooperation".³

The Accepted Programme is a key project management tool in the NEC form and is crucial for achieving the NEC's objectives. Broadly, it has two roles:

1. To ensure that all parties know what they have to do, and when and
2. To provide a tool to enable the prompt and (hopefully) prospective assessment of compensation events and, specifically the extensions of time claimed pursuant to them.

A tool for assessing compensation events contemporaneously

The Accepted Programme is intended to encourage collaborative working and dispute avoidance. In particular, it provides a tool to allow the assessment of extensions of time (via compensation events) contemporaneously, and without the need for a complex and expensive delay analysis.

Under clause 63.5, the Accepted Programme is the tool the Project Manager should use for assessing compensation events.⁴ The Accepted Programme used for assessing an extension of time (compensation event) is the one current at the dividing date. The dividing date is set out in clause 63.1:

"For a compensation event that arises from the Project Manager or the Supervisor giving an instruction or notification, issuing the certificate or changing an earlier decision, the dividing date is the date of that communication.

For other compensation events, the dividing date is the date of the notification of the compensation event." [Emphasis added]

Sometimes amendments are made to the definition of the dividing date. For example, stating that the dividing date is the date a quotation is requested. In the author's view, this is to be discouraged. The logic of the dividing date in the definitions is that this is as close as possible to when the event itself occurred (assuming there is prompt notification of a compensation event). If the date is anything else, assessment can become much more difficult and theoretical (i.e. removed from the reality of what is happening on the ground), thus building in more room for unnecessary disputes.

Obviously, the closer the Accepted Programme is prepared to the dividing date, the easier it should be for the Project Manager to assess the impact of any compensation event (and for a Contractor to update the Accepted Programme to show the impact of any compensation event).

A hook for compensation events

Incorporating crucial dates into the Accepted Programme is encouraged by the fact that there are a number of specific compensation events which cross reference to the Accepted Programme. These include:

• Clause 60.1 (2): Failure to allow access by the date shown in the Accepted Programme;
• Clause 60.1 (3): The Client does not provide something by the date shown in the Accepted Programme; and
• Clause 60.1 (5): The Client or others do not work within the times shown on the Accepted Programme.

Clause 60.1 (19), the NEC equivalent to a force majeure provision, also expressly cross references to the Accepted Programme and, more specifically, the date shown for planned Completion shown in the Accepted Programme, as part of the test as to whether there is a compensation event or not. Obviously, in order to claim these compensation events, the Accepted Programme must have been prepared properly and contain the relevant dates as hooks for any claim.

Carrots and sticks to encourage the production of an Accepted Programme

Given the central importance of the Accepted Programme, the NEC4 also contains both carrots and sticks to encourage their production and updating. Clause 50.5, for example, provides that if there is no programme in the Contract Data, one quarter of the Price of Work Done to Date is retained in assessments of the amount due until the Contractor has submitted a first programme (showing the information which the contract requires) to the Project Manager for acceptance.

Clauses...