An activity schedule is more than a breakdown of the tender price. Under NEC4 ECC Option A, its structure affects when work becomes payable and therefore the cash the Contractor needs during delivery.
Consider payment when pricing the activities
A Contractor can make substantial progress under NEC4 ECC Option A without completing the activities that support its next payment. The labour and suppliers still need paying. If the activity schedule has been prepared only as a convenient way to add up the tender price, the problem may not become apparent until work is under way.
Option A links the Price for Work Done to Date to completed activities or groups of activities. It does not ordinarily value each unfinished activity by its percentage complete. The way the Contractor divides and describes the work therefore matters to cash flow.
Define activities that can be completed and evidenced
Consider a project replacing lighting across several occupied buildings. One item for the entire installation could leave the Contractor funding completed work in the first buildings while it waits for access to the last. At tender, a breakdown reflecting the planned release and completion of each building may be more workable.
The breakdown must still describe genuine work and satisfy the contractual requirements. Identify what completes each activity and the records that demonstrate it. Check any grouping of activities and the contract’s treatment of Defects when deciding whether an activity is complete.
Involve the planner and site manager before finalising the schedule. They can identify where an apparently simple item depends on a later test, a specialist visit or access controlled by someone else. Those dependencies belong in the cash-flow forecast.
Keep the schedule connected to the programme
Under Option A, the programme needs to show how activity-schedule items relate to its operations. The two documents serve different purposes, but the commercial team should be able to trace the payment activities to the work being planned.
Use consistent references and reconcile material changes in sequence. In the lighting example, the commercial report should show which buildings are expected to support the next assessment and what could prevent their activities from being completed.
A forecast based on expenditure alone may overstate the payment expected. Distinguish money spent, work completed and the amount becoming due under the contract. The commercial reporting article discusses the wider forecast.
Use the contractual grounds for revision
NEC4 Option A allows proposed revisions in specified circumstances, including relevant changes to the planned method of working and correcting activities so they relate to the Scope. Acceptance involves checks on their relationship to the Accepted Programme, the total of the Prices and the distribution of Prices between unfinished activities.
Poor cash flow alone should not be treated as an automatic entitlement to rewrite the schedule. Establish the contractual basis for a proposed revision and explain the actual change in the work or its organisation. If a different arrangement needs agreement, identify who has authority to make it.
For example, a changed installation method may replace building-by-building delivery with separate floor releases. Explain the method, map the old activities to the proposed ones and reconcile their values. That gives the Project Manager something specific to assess rather than a new spreadsheet with unexplained movements.
Record compensation events separately
Reallocating existing activity prices is different from changing the Prices through a compensation event. Keep a record of both so that a schedule revision does not conceal a disputed increase or omit an implemented change.
When preparing a quotation, describe how the proposed change will be represented in the activity schedule. On implementation, reconcile the agreed change with the current schedule and the payment records. Keep the supporting decision with the revised version.
Do not assume the same payment approach applies under Option C merely because it also uses an activity schedule. Its interim payment mechanism is based on Defined Cost and Fee, not completion of priced activities.
Check the next assessment before month end
Review the activities expected to complete before the assessment date with the site team. Check outstanding tests, access and evidence early enough to deal with genuine delivery issues. Do not manufacture completion to meet a cash target.
The monthly application should be traceable to the current activity schedule and the work actually completed. Resolve differences over item status while the relevant people and records are available, rather than carrying an unexplained balance into the next application.
