UK: Complex Projects Contract 2013 – A Complex Solution For A Complex Problem

Last Updated: 17 December 2013
Article by Rebecca Prigg

Summary and implications

In April the Chartered Institute of Building (CIOB) launched its CIOB Contract for use with Complex Projects, First Edition 2013 (the Complex Projects Contract). The CIOB heralded the Complex Projects Contract as "the world's first contract specifically aimed at the management of time in complex construction and engineering projects".

The Complex Projects Contract aims to improve procedures to manage time, cost and risks by:

  • creation of new roles and responsibilities – project time manager, auditor and data security manager;
  • use of a dynamic time model; and
  • use of a risk event management schedule.

However, as with any new form of contract, its success (or otherwise) can only be determined once it has been used and tested by the industry, and there are a number of complexities and features of the Complex Projects Contract that may dissuade parties from choosing the Complex Projects Contract above other well-established forms of contract in the near future.

Background

CIOB research found that less than 20 per cent of complex building projects (such as airports and prisons) were completed on time, 60 per cent were completed more than four months late and 55 per cent were completed more than six months late. The Complex Projects Contract is designed to provide more effective procedures for employers and contractors to manage time, cost and risks in a more proactive fashion than the procedures available under other industry standard forms, with the aim of reducing the number of delays on complex projects.

Key features

Areas of use

The Complex Projects Contract is designed (as might be deduced from its name) for use on complex projects both in the UK and abroad, and to be used for a variety of procurement routes so can accommodate both a traditional approach (where the contractor is only responsible for workmanship or specific identified areas of design) and design and build (where full design responsibility is passed to the contractor).

Contract Documents

The Complex Projects Contract comprises three key documents: the Contract Agreement, Conditions of Contract and Appendices. These can be supplemented by Special Conditions, Federated Model, Drawings, Specification, Bills of Quantities, Contractor's Pricing Document, Contractor's Design and other documents relevant to the project, together referred to as the "Contract Documents".

Roles and responsibilities

Whilst a number of the Contract Documents will have similar counterparts in other industry standard form contracts such as the JCT Contracts, the Complex Projects Contract introduces new construction roles which are necessary for the functioning of the Contract and which are unique to this form of Contract. Some of these new roles will require specialist training and consequently the number of parties who are qualified to perform such roles may be limited for the time-being preventing the wide-spread use of the contract in the near future.

Project TimeManager

The first new such role is that of the "Project Time Manager" who is to advise the contract administrator on time-related matters. Although he is employed by the employer, the Project Time Manager must act independently and fairly when giving his advice and assessing the time-related information provided by the contractor in accordance with its reporting obligations under the contract (see "The Dynamic Time Model" below).

Auditor

The Project Time Manager in turn appoints an "Auditor" who examines the documents produced by the contractor in accordance with the progress reporting requirements of the contract to ensure they are in accordance with the contract and form a suitable basis for the management of time risks. These documents are to be examined before the works commence, and then again at the intervals specified in the contract.

Data SecurityManager

Another new role is the role of "Data Security Manager" who is responsible for managing the "Common Data Environment", "File Transfer Protocol" and who can access and edit the data shared between the parties electronically (including through BIM) during the course of the project. The Data Security Manager has to balance the need to protect sensitive information with facilitating the levels of transparency the contract requires.

These new parties are to work with the more familiar roles of contract administrators, cost consultants and design coordinators, and there is likely to be a level of uncertainty at the outset as to where the lines of responsibility are to be drawn between the numerous parties involved over the course of the project. As well as facing issues over demarcation of responsibility between the various consultants, employers may not wish to take on the additional administrative burden these roles entail (and additional cost) until any teething issues associated with the new roles have been resolved and there's a good choice of suitably qualified and experienced candidates available in the market for each such new role.

"The Dynamic TimeModel"

The Complex Projects Contract claims to take a more proactive approach to time management than other forms of collaborative contract. The contractor is required to prepare a critical path network schedule (the Working Schedule) setting out the contractor's intentions for the future conduct of the works. This Working Schedule, together with the "Planning Method Statement" (which explains the assumptions and calculations on which the Working Schedule is based) together form the contractor's time and cost model for the works. The Working Schedule is to be updated at regular intervals in conjunction with the "Progress Records" which again the contractor is required to maintain.

The Complex Projects Contract sets out how each of these documents is to be prepared and updated, as well as shared with the other participants in the project. Consequently there is a greater administrative reporting burden on the contractor than under most other industry standard form contracts. Even though it may be in the contractor's (as well as the employer's) interests to comply with the reporting procedures when it comes to the calculation of time and money under the contract, whether contractors do so in practice remains to be seen. If the detailed reporting provisions are not complied with it is difficult to see how "The Dynamic Time Model" will function as intended, and consequently ensuring compliance with the contract's reporting requirements is likely to be key to the effective functioning of the contract.

Risk management

Appendix F to the Complex Projects Contract sets out which risks are "Employer's Time Risk Events" and "Employer's Cost Risk Events". If such events occur the contractor will be entitled to an extension of time and/or compensation under the contract.

The first section of events listed in Appendix F comprises items which are deemed to be within the employer's control and are therefore fixed as "Employer's Time Risk Events" and "Employer's Cost Risk Events". The second section lists a series of events which are essentially "up for grabs" and the employer and contractor are free to decide who should take the risk on these events. The third section of Appendix F enables the parties to enter their own project-specific events and allocate them to either the employer or the contractor as they see fit.

Where risk events occur that are at the employer's risk a "Time Impact" analysis is to be used to measure the effect of such events on the Working Schedule, and the employer is then to consider whether it would rather pay to accelerate the works to avoid delay, or suffer a delay to the completion date.

Where the Working Schedule shows that an employer's risk event has adversely impacted the works, loss and/or expense may be due to the contractor and the valuer is responsible for assessing the loss and/or expense incurred.

Whilst listing risk events in this way may be helpful in terms of how to address the issues of time and money when such an event occurs, this process is unlikely to provide substantive assistance in achieving the overall aim of projects being delivered on time in the sense of a project being delivered by the date the parties target at the outset of the project (as opposed to achieving a completion date which has been amended in accordance with the terms of the relevant contract).

Comments

It is difficult to judge the value of any contract until it has been tried and tested on actual projects. It may therefore take some time before the effectiveness of the Complex Projects Contract in avoiding and managing delays on complex projects can be assessed as various new roles need to be filled and new and administratively burdensome reporting procedures complied with which there may be reluctance to do before the value of undertaking such exercises has been proven. A number of employers may wish to wait for others to "test the water" before attempting a project on such unfamiliar grounds and whether willing volunteers come forward will need to be seen over the coming months.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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