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NEC / ECC Contractors Contingency

11 replies [Last post]
Mon, 2005-04-04 07:42
David Waddle
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Under the NEC Form it is a requirement for the contractor to show his risk contingency in the programme.

I wondered what experience PP’ers had of this and how they actually went about showing the risk on the programme.

David
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Replies

Sat, 2005-04-09 11:17
#1
Philip Jonker
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Hi David,

It is a question of education, and not using the big stick unless necessary. It is coming to the correct agreements, inter-personel relationalships, and understanding each others problems. Halfway engineer/psychologist and the rest

Regards

Philip
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Sat, 2005-04-09 05:50
#2
David Waddle
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Philip,
I don’t understand your comments. I am not criticising the NEC, I merely wonder how practicioners deal with contractors risk contingency in their programmes.

As an experienced individual - what do you do?

David
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Wed, 2005-04-06 17:15
#3
Andrew Flowerdew
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Phillip,

You haven’t answered the ABCP question yet!!!!!

Don’t need to read a book - just pandering to the clients wishes.
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Wed, 2005-04-06 13:36
#4
Philip Jonker
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Hi andrew,
Try reading a book, THe rule of four
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Wed, 2005-04-06 13:34
#5
Philip Jonker
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Hi David,

Stop stirring it, The NEC is good, works for most people
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Tue, 2005-04-05 18:32
#6
Andrew Flowerdew
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I agree with Andrew it that it should be added to the end of a programme however I have done it where each individually indentified risk activity had a buffer bar added. When the activity was complete the buffer bar was removed if the risk had not occurred or totally / partially used up as the case may be.

This method obviously has the effect of changing the programme duration each time a risk is assessed on completion of the activity (assuming it is on the critical path)

Thankfully the project went well with no claims - it would have been an interesting one to try and explain in court!!!

Stick to a bar at the end!
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Tue, 2005-04-05 15:25
#7
David Waddle
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Thats an interesting feature Andy, I’m not that familiar with PP. But it is certainly the correct way of dealing with contingency. Presumably if a compensation event is added the buffer at that point can be retained.

Of course the trick (experience) is to calculate the time contingency in the first place. And yes it is true that contingency carries cost and this must be monitored also.

David
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Tue, 2005-04-05 11:48
#8
Stephen Devaux
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In my humble opinion and experience, cost contingency should always be understood, and accepted, by the sponsor/customer on T&M and cost plus contracts; schedule contingency on ALL contracts.

As to the point of the previous post:

"It runs iterations of the results to generate a period of time over and above those durations that you have used on your programme that formulate the critical path. This period of time represents the additional time that would be incurred should the risks materialise. I would then show this additional time as a separate risk bar at the end of your programme."

I agree that this is a good way to handle schedule contingency, but it should also always be recognized that the contingency is on the critical path (usually the sink activity), and therefore has DRAG. If it has DRAG, chances are 99% that it also has DRAG Cost. That cost needs to be quantified and managed.
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Tue, 2005-04-05 11:43
#9
Andrew Pearce
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If using Asta power project it is possible to add Buffer bars to show risk elements at various stages of project.
As project progresses buffer period is reduced automatically if project slips.
Andy
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Tue, 2005-04-05 09:18
#10
David Waddle
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I agree with the risk bar at the end, or it could equally be at the end of a section of work, such as the envelope etc.

In progressing the programme during the course of the works, does the risk bar get used up or is this maintained till the end of the project?
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Tue, 2005-04-05 07:22
#11
Steve Taylor
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I think the best thing to do would be to run a Monte Carlo Risk Assessment (if your software has this facility). Monte Carlo requires you to assess every activity and enter a %age risk of your duration not being achieved.
It runs iterations of the results to generate a period of time over and above those durations that you have used on your programme that formulate the critical path. This period of time represents the additional time that would be incurred should the risks materialise. I would then show this additional time as a separate risk bar at the end of your programme.
Should you not have Monte Carlo I’m sure you could devise a spreadsheet based on the same sort of philosophy.
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