Ben Walker: Decoding NEC Contracts and the Value of Site Records

Will
Hi and welcome back to a special episode of the Gather podcast. So special we've actually splashed out on a studio today.

My name is Will Doyle. I'm the founder and CEO of Gather, formerly Raildiary. In a past life, I was a chartered quantity surveyor building construction projects here in the UK and in Southeast Asia. One of my common challenges is around how we manage contracts. How do we deal with our supply chain and with our client as a contractor?

Today, I'm joined by two experts in this field, specifically in NEC contracts. First, we've got Nick Woodrow. Nick Woodrow is Operations Director at Gather, previously a civil engineer before. He worked at CEMAR together with our second guest, Ben Walker.

Ben Walker founded CEMAR, a contract management system you're probably all familiar with. Prior to that, Ben started working with the NEC in 2008 as a trainer, assessor and more recently, as a drafter.

Today, I'm going to be talking through with Ben and Nick on how to best use site records to get the most out of your NEC contracts. I'd like you to introduce yourself and tell our audience about yourself and how you got into this role with NEC and with CEMAR. Thanks.

Ben
Great to be here. I started CEMAR from a real pain. I know you have first-hand experience of that. I've been site based for several years and really loved NEC. I've always thought it's a great contract. It's very focused in good project management practices.

Turns out that needs a lot of administration. So I found myself in a site hut Saturdays and Sundays doing admin. It didn't seem very satisfactory. So I thought there might be a better way of approaching it.

One example springs to mind is looking through the window of one of the site offices. I could see the note. I could see the clipboard hanging up with the next available early warning number on it. I just couldn't, couldn't see it close enough to actually see what the number would be. I couldn't send a notification. So, that’s the real first-hand frustrations used to prevent sort of slick admin.

When I was setting CEMAR up and starting to prototype it and pilot it, I started to realise how much I needed to really understand the fundamentals of NEC contracts and how they work. Training seemed like a good thing to get involved with.

I have spoken to thousands of delegates over the years and listened to their practical challenges. It really starts to help you understand how you might solve some of those pain points between the theory and philosophy and actually doing things in practice.

It led into the examining and, as you mentioned, the drafting of NEC4, which was really good fun as well. I've got, still until this day, a passion for making NEC work in practice.

02:36

Records keep NEC contracts healthy

Will
Excellent. Okay, well, let's get straight into our first question. What you learn on your first day on NEConstruction project is records, records, records. That's an old adage, isn't it? Why site records important for construction projects? Why are records important for for NEC contracts?

Nick
Records are incredibly important for all projects, aren't they? Not just NEC contracts. Historically, they would be used for health and safety records, for audit trails, for quality assurance, engineering assurance.

We're going to talk today more about the commercial assurance use of records. But from my time working on site as a project engineer, I would have a A4 desk diary to record exactly what's happened on every shift. That's the way that engineers and QS’s have been trained. Those records are so important for all those elements. What was your experience, Ben?

Ben
I become quite attached to my carbon triplicate A4 pad. I'm not. It’s the same, really. I'd agree with you. I don't think there's any specific thing that makes NEC more deserving of good record keeping. But certainly we can explore where NEC perhaps either explicitly requires it or relies upon good, robust record keeping.

Will
What does the NEC contract say specifically about site records?

Ben
I don't think the NEC explicitly distinguishes site records from any other record. It does on occasions refer to specific records, for instance, weather measurements. And that's in one of the compensation events, number 13, in the core clauses.

Then there’s, more broadly, records around defined cost that the contractor must keep. There's no doubt records relating to test inspection under clause four or 40 series of clauses.

There's more generally, that obligation to keep records and keep them organised in a useful way will enable us to walk through the NEC procedures effectively and and bring each other along, so we're not surprising each other. Hopefully we've got a common set of records that we both recognise as the single truth.

Nick
Record is a stimulus for good project management. Lot of what the process is in the NEC contract have been written to provide in certain areas. It's quite prescriptive about what needs to be done.

Same in programme in section three. It's quite prescriptive about the level of detail needs to be provided in a programme for acceptance. But there isn't any detail in NEC around the collection of wider site records.

In general, is there a specific reason for that? Or is that an observation that's maybe unfounded?

Does NEC prescribe record standards?

Ben
I totally agree with that. You're right. In the programming clauses, under time, there's a fairly extensive list of bullet points. The last bullet point says, and anything the scope requires and and we're still talking about what’s right, what we must capture, or what we must achieve in that document.

When you start scoping programme, it's natural for people to move into how we do that. We would like it in a certain format or kept in a certain way and so a massive point actually make sure you read the scope.

I can remember in NEC3 there were 28 touch points between the scope and the conditions. In programme there's more, somewhere in the mid 30s, of places in the contract where the conditions talk about the scope and rely on statements in that. So, this is a really important area. Make sure you've read the scope.

If you're drafting scope, make sure you're putting those extra requirements in there. But to your point about it being perhaps weaker in other areas, I'm not sure that's true.

Although the definition of defined cost is fairlym brief, it does point you in the direction of the schedule of cost components, or the short schedule of cost components, if you're on one of the priced auctions. In there is an extensive list of tests which you have to satisfy. Again, these are what it is, rather than how to capture it.

But for programme that's intentional, I try and think about why, the how and the what, and if we were to map that to NEC. I suppose you could say the conditions of contract, the clauses of the contract very much tell you what you must achieve and what's expected. The why is in the in the guidance notes.

There's a good philosophy and explanation as to how the drafters are approaching these clauses in a narrative. Perhaps in volume four and in volume two, there's some good material there to explain how it might be used.

But really, guidance is about why we're doing something. The contract is setting out the what. The how is left to the user.

Nick
To what extent would you think that is beneficial? That can be set out in in the scope to a certain degree so you get some level of consistency, for instance, in getting site records with a certain level of detail, you'd expect to see that as part of the scope. To define what the client wants to receive, if they're citing those records.

Ben
Sure. It’s programme if there's a range of possibilities. Some might be better than others, or an expectation might be clearer in some areas. Saying what you want in the scope is a good move to explain perhaps why the contract doesn't do that briefly.

My understanding would be if that was explicit in the contract, then it would perhaps only be valid for a narrow type of works or services. You'd have to make an assumption about what was appropriate and what was applicable for a given environment or given project.

Take an example: the core clause test for market, open market, rates, competitively tended prices, tender prices. That would be difficult to prescribe. How you achieve that?

If you're building an extension on your house, you might be comfortable with a with a couple of conversations over the phone with different plant material providers. If you were building a multi million pound infrastructure project, you would need a fair bit more than that.

So for programme you're right that how lives more in the scope and an ongoing conversation between the parties. The best projects will be run, and these sorts of things won't be decided all up front. They won't happen just in the correspondence required in the contract. They'll happen in a collaborative conversation that seeks to get closer to agreement with a small range of issues. Records is one of them.

Nick
That's interesting, is it? Actually agreeing what you provide, when you provide it, into what detail is probably a good thing to do before you start, especially if it's not actually prescribed in the scope? It’s like saying I’m going to give you these records, and I'm going to give you them at these timescales, every day, every week.

Ben
The project manager can always instruct a change to the scope to introduce a new requirement if the parties really can't agree on how to administer things and present things.

Nick
That’s because it's not something that's set out in contract data. Say you're going to get a programme at these intervals. But I want them at these intervals. It's not like something to agree on maybe before you start work.

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Ben
Contrary to what will set an interval for the minimum interval for programme submissions. The other thing that listening to Glenn Hyde and other NEC experts on programme, it's a pragmatic even the presentation of it's got to be a pragmatic, to a degree you won't have full, high granularity on absolutely everything on day one.

I've always thought of it as being a bit of a bow wave that moves a couple of months in front of you, where you turn up the resolution and the details, and certainly around early warnings and compensation events perhaps that you're aware of. You might turn up the vigilance on your record keeping, so that you've got the tools to do those assessments. Our wave perhaps serves that next assessment for the application for payment, or the next, the next payment assessment.

Prescription vs innovation

Will
That makes a lot of sense in terms of the how. Do you think we'll ever get to that point where we could prescribe it? Or is there a risk to ruin something quite good if we start to do too much on the how?

Ben
There's always that risk. I don't think the drafters should do much more. The contract should probably got it about right, although the community feedback was useful. It's over to the rich community of NEC practitioners, the fantastic tools and systems that spring up.

We mentioned a few already. Let them help us configure the contracts. And in the same way that we're cautious with clients, we as clients, we're told not to over specify the how. This is because by doing so, you start to stifle innovation and shut down opportunities that you might not have unlocked through future collaboration. So be careful of that.

In my training, I always used to give the example: if you want a chocolate cake, you specify a chocolate cake constrain in terms of “I don't want nuts in it.” But you wouldn't go so far if Gordon Ramsay was your contractor to tell him what temperature to set the oven. So no, you will leave the how at large, a little bit opens up some more possibilities and some opportunities for innovation and collaboration with the supply chain.

12:08

Record and payment options

Will
a lot of sense. Okay, so the next kind of key question for me is how does our records affect how we administer contracts? How are site records affecting those different functions within the typical contracted arrangement.

Nick
Maybe we can break this down into the a big area payment, which obviously one area that's very important to have good site records, and the administration of change. Then maybe there's a third area around programme and long term learning and the use of that data to support better contract management. Should we start with the payment?

Will
Yeah, let's start with how it affects payment. How do site records affect payment?

Ben
Payment in NEC, for ECC, engineering construction contract has six main options if we perhaps deal with the priced ones versus the cost ones. From a payment point of view, if we look at the price for work done to date, for each of those in turn.

Option A

Ben
For option A which is a price contract with an activity schedule. The the payment, if you like, is rooted in the prices on the schedule. So if we're assuming we're going to leave compensation events or other methods of change to one side for a minute, just think purely about payment. I guess you it's still important to record that the act of the work in the activities done, and that it's it's free of any defects that might stop it being used or progressed, progressing onto the next one. So from that point of view, maybe it's fairly limited.

Nick
It would smooth the process of agreeing. Because activity, correct me if I'm wrong, needs to be 100% complete to get paid any of that activity. So records would smooth that process to say this is complete and free of defects to get paid. Surely and hopefully.

Ben
The resolution of the programme should have synergy with the activity schedule. You should be able to look out the window ideally and see it's done. Ot shouldn't be too challenging. This why that mechanisms is good.

Option B

Ben
It's got its benefits for option B, price contract with better quantities. Obviously, the nature of it suggests we've got quantities. So we've got rates for things. So the records will be useful in accordance with the method of measurement, in terms of observing what's been what's been done.

Now, some of those things might be repetitive and therefore not something we need records for necessarily. It might come directly from a payroll tool. If they're if we're talking about the salaries of certain people.

A lot of it won't be. A lot of it will be through observation on site. It might not just be quantities and materials, of course. It could be quantities of or hours of equipment that are used in site. From an option B point of view, records are useful even from a payment point of view, before we think about compensation events.

Nick
Is that where resource allocation be useful to to match up to that bill in terms of payment?

Ben
Yeah. This is where we were saying before we start the podcast. What's the benefits of digitising site record? There's a lot from that single set of data. There's actually a lot of perspectives that we might want to orientate that through and present it in different ways for different purposes.

Certainly, indexation or tagging against the activity that work relates to right up to the BIM model, and then in the other direction. What commercial events and matters does it relate to? That takes record keeping as an activity. It takes its benefits beyond just being evidential. It then starts to make it really useful from an absolutely prospective thing.

Will
Let's get into that further on, in terms of the cost based payment options.

Cost-based options

Ben
The other options, defined cost ones, as we mentioned earlier, has an extensive set of tests against it. There's a lot of quantum in it. We're measuring directly in accordance with scheduled cost components. How many of things we're using?

I can use the word things that's in NEC. It is things as a way trying to get a defined term. No, it's not defined. It's not got capital T whatever things. Or we're measuring in terms of how many we've used? Or how many hours? Site records can't hurt, can they?

I know that, over time, we'll get more telemetry around things like, how long is a piece of equipment, not cloud equipment with a capital E running? Then maybe some of that can be automated, but it still needs pulling together. It still needs indexing against what work activity. Perhaps it relates to the ability to tag it against a commercial event, if one does arise.

Nick
So in assessing the price for work done to date, in what would be described as the cost reimbursable options, you've got defined costs, which is made up of the schedule of cost components and programme almost all of those are probably going to work better if you've got some good records. Absolutely subcontracted work, absolutely the people cost, and the activities.

Ben
Ideally you'd structure your record sheet. You configure it so it speaks to those components as identified in the schedule. So that you're not, you're not talking about plant, labour and materials.

Nick
You can aggregate that data from all of your collective records, which is that one application.

Ben
Perhaps, I know you have a later question on, how does digitisation improve that? And it takes way, way beyond just the evidential.

But the other point to make, actually, on whilst we're just talking about costs briefly, is we talk about establishing something that's defined cost. Once it is, of course, we then need to, we need to then establish whether it is or is not a disallowed cost.

There's a few interesting tests on that, Nick. You've got a contract at hand. We're not busy, but you'll have a look. We're not guessing a big fan of having the contract on the desk rather than in the drawer.

All those listeners who know the NEC philosophy will have theirs on the table. I'm sure to have a quick look at in any of cost-based main options, options C, D and E. There'll be the definition of disallowed cost. In there, the first bullet point is not justified by the contractors, accounts and records.

Nick
So you could potentially argue that the site records may be even more important for dealing with this element of disallowed cost. They are for just assessing the total amount of the defined cost, because you're measuring that on the difference between the last application and this application.

You've probably got a recurring way of doing that. That's starting to work for you. How we capture these costs now is really important.

Ben
That's as if it's got as far as being in this formal submission of the application for payment. I mean, if teams are collaborating and putting the application to payment together in the same way that they might be collaborating on forming the next programme revision, then hopefully the contract is a formality.

It's an admin process. Shouldn't it find hundreds of compensation event quotations that need to be struck out? Or hundreds of applications for payment that are radically different from the assessment? It's the sixth and seventh bullet point of that same definition. We talk about, actually, one of the rare occasions where NEC introduces some subjectivity. It talks about, is it reasonable wastage?

Nick
So for plant and materials not used to provide the works, in parenthesis, after allowing for reasonable wastage. In relation to the resources, after allowing for reasonable availability and utilisation.

Ben
Again, could be people or equipment, and in case of equipment, one such test might be and is subjective. Should we have demobilised that crane over the weekend and brought it back to site? Or was it appropriate to leave it there under or not utilised? But actually, if we've got good records, it should be. That’s the calculation, right?

Nick
I would like to think that good records would render the bit that's in brackets here that introduces some subjectivity, diminishing it to the point where, hopefully this is an objective assessment, you remove that subjectivity from these assessments.

In fact, every single bullet point here, when I read down them not justified by contractors, accounts, records. I read them all. Shouldn't it have been paid to a subcontractor? Every one of them would benefit from having exceptional records. And if you're a contractor, that's a very important thing to do so that you try and mitigate and just smooth this process over.

Ben
You've made me think about something else. Let's be really clear: wouldn't it be great if it was one —

Nick
As opposed to what?

Ben
What I've perhaps been used to in practice in the past, where I'd go out with my triplicate pad. Someone else would have another triplicate pad. Then the supplier would have their own. Then the subcontractors across the supply chain…

It strikes me that a single source of truth on this. We can agree with a small a as we go. It makes sense, doesn't it? Why would we do anything else?

Will
That’s what we did in practice. Let's hope we can change that. So, we've covered payment. How about compensation events?

Ben
For compensation events, again, the default position is to use defined cost. This is true even in the priced payment mechanisms in option A and B. We use the shorter schedule of cost components.

21:52

NEC4 Clause 63.1

Ben
Much of what we've just explained in terms of assessing defined cost, or establishing defined cost for the assessment payment is true in assessing compensation events. I would like to hijack the podcast just for a second to get on my soapbox about clause 63.1.

People fall into the trap and not reading this and understanding it. There's still pockets of of people who read that and think what clause 63 means. 63.1 means is to take the kind of forecast to find cost of the new work not yet done in the compensation event, and compare that cost with the price that's in the activity schedule or the sum of the items.

Nick
Do you mean the interplay between 63.1 that says that we'll assess the change the prices that affect the conversation, event upon the fine cost? The following clause that says we can agree? No, you don't need to get some following clause.

Ben
No, no. It's within that same itself is misunderstood. What it really is saying is you need to almost do a mini-estimating piece. If it's prospective, which most of them are, I guess, in weather events and physical conditions, for example, you might have a bit of retrospective assessment. Where you take the costs that have actually happened, and you do an assessment on that, then you do an assessment of, ideally, a forecast.

But sometimes retrospective on what that cost was with the compensation event. So you're doing with and without. Or without.

Nick
That's the same across all the payment options, because of exactly the same clause in the core the contract. That's why. So the importance of those site records for either A, C, D, E, yeah, and F.

Ben
You can go a step further. Maybe just touch on this briefly then really good records. They have two roles.

The first one is in isolation. You pull a record back to as a form of evidence to justify an accountant record. But actually, if we digitally capture them, particularly if we link them to a tool like CEMAR or an asset management platform, we can start to do clever things.

We can start to inform and perhaps agree with a small a rates of productivity that help us perform prospective assessments and forecasts. In a way, we're taking the empirical, contemporary, adjacent activity and saying: “Well, that was a productivity.” That week where it's the same week. It's a very similar activity.

So it gives us that productivity bit that quite often is a source of discussion. Together with the rates and percentages in contract data, we can start to get quite close to it. This feeds into that third area of benefit and application.

Nick
Yeah, we've got this. These elements of long-term learning that we can use to help us assess completely. As we go through a long project like HS2, it could be 15 years long. In year six, we could be doing a lot better assessments than year three, because we've captured all these productivity metrics. We've got this knowledge about what's happened. So it's much easier for us to forecast what might happen in the future, in the same conditions. It’s the same for the programme.

Ben
It's got to be realistic. If we've got realistic productivity route, which can be unlocked through scrutinising an aggregate of records, rather than just looking at individual ones, then that can inform a programme revision. It becomes more realistic, because we've got realistic run rates in there.

And don't forget, when you submit a compensation back to the question, we need to update programme where it's got an impact on remaining activities. It's all related. That's just slightly different. To your other point, what you said does bleed into the next clause.

Nick
I’ve got yet another observation on that next clause as well. You go on. I'll come back to it.

Ben
Well, that's slightly different. So that is more about the project manager, contractor having a pragmatic view, then, in their opinion, and only through agreement. Otherwise the default is defined cost, as we just discussed. Then they might use rates and prices in the contract to come up, as with the basis of assessing the compensation event.

Nick
My feeling is, in the industry that, especially where fixed price contracts are being used, that people will move straight to 63.2 on the assumption that they'll just go to either the rate the bill and agreed bill in option B or in option A. Right?

We've got the same activity. They'll just go straight to it because that was how the job was priced, especially maybe on the client side. But that's not the intention of these clauses, is it? That's maybe the interpretation by some people infusion, which depends what it is.

Ben
If we're talking about one of the questions, I seem to remember one of the case studies from training courses I did a long time ago, something about cherry trees. If we're planting cherry trees, a change to the what was works information and NEC3 comes down and specifies a slightly different species of cherry tree, we're probably not going to get too excited about doing a full blown, time of motion study on looking at defined cost.

It might be that the cost of doing that is more than just agreeing it's similar size and shape. So this gives the project manager and the contractor acting appropriately to come up with something that's sensible. It's a really useful provision. It absolutely should be there. But both the contractor and the project manager have in the back of their mind got this ability to say, well, actually, there was a loss leader or we were losing money hand over fist. Therefore we don't want to compound that problem. We'll go to define cost.

Will
My experience, some from projects we've been involved with recently, is people reverting to rates. It's almost the easy option, because they don't have the time or the detail to be able to do that actual assessment. They don't have the detailed record. So they're just reverting back to the rates, regardless if it's a loss leader or not, and it's actually causing quite a few problems, usually for the supplier.

Ben
Well, the problems aren't imposed, are they? It's only by agreement. The second thing to say is, if you are in an option A contract, you might simply have not set up the mechanisms and the machinery in terms of people and what have you to have extensive capture of defined cost, because you don't do it for payment. Indeed, the shortlist for equipment, for example, it points to a published list with a with a percentage adjustment in contract data, rather than going back to first principles. Horses for courses.

Nick
In my personal experience, a bit like with disallowed costs, where you're receiving or contributing to having a really clear set of single records that you've all agreed is what has happened on site, then it just smooths out any of these processes and just makes them quicker to administer.

Ben
Ideally, if you've established the open market competitively tended rate for a 3010 excavator, and nothing too much has changed in the last few months, then if that's what you use for defined cost. In previous assessment you've got a starting point for the next one. In terms of C, D and E, of course, records play a big role in compensation events. They do in A and B as well. For all payment mechanisms, robust records of defined cost can't hurt, can they?

Nick
You could argue from a contractor's perspective that records are more important on the fixed price contracts so the contractor can do cost value reconciliation, understand exactly where they're at.

On the cost reversible ones, where that's being tracked on a monthly basis, naturally through the the application for payment and assessment, the target might be adjusted, or the the pain, gain share might be being eroded or increased. You could you think spice. You could have a problem that goes on that you don't recognise, if you're not catching that product, those productivity metrics.

Ben
That goes back to the point about there perhaps just being less set up and machinery around, looking closely at what's happening in terms of open cost accounting, which you would have if you want a cost contract.

30:01

Best practice in record keeping

Will
That's quite good discussion. I’m just going to get into the next point. I've got a very strong opinion on this for obvious reasons. What are best practices in the industry for capturing records?

I set up Gather, formerly Raildiary, because of a personal pain. I was sick and tired of dealing with horrible paper records that were done on triplicate pads. I couldn't read them. They weren't available when I needed that information. They were everywhere. I famously tell a story that records were in dusty lever arch files. They were stuffed down in front of people's vans. They were even in a skip because we closed down the project office and someone didn't think they're important anymore…

Records are important. We all get that. We've just described why they're important — for payment, for compensation events, and a whole host of other reasons. But what do we believe as people within this industry is best practice? What should we view that as?

Nick
Should we just reflect a bit more on what's actually happening? Or do we understand before we move on to that? You've touched on one area of it. I started on site nearly 25 years ago. Most of the practices happening now are identical or almost identical to back then. We've got first hand anecdotal evidence. We've heard this evidence of people having in bags of allocation sheets from suppliers under their desk that they're then having to wade through and transpose into a spreadsheet.

Digitisation versus structured workflow

Ben
You're right. It's easy to mistake digitisation as being putting it in a spreadsheet. It reminds me you used to criticise me. I used to mix them up. You really need to digitise your note taking and meetings. I would write my minutes in a pad and then take a digital picture of it.

Nick
Scanned notes are slightly better than paper. You've got to do it in the right way for you.

Will
When I started Raildiary, I met Paul, who's our CTO and run a digital agency called Gather digital at the time. The first thing I learned was the best way to enter data is not in a table. That's not how you enter data. That's why how you interpret it or read it.

When you're asking someone to capture your data on site, it's not just about going take this fancy spreadsheet that QS has built, put it on an iPad or tablet. It's about giving it structured workflow and making it easy for that person in orange in the pouring rain to capture that data correctly. So, yes, digitisation is not just making it electronic.

Nick
We need to be very careful about throwing stones and preaching about what's not happening, saying that things are done this way and they have been for so many years. We do need to do what you're saying and make it really simple for people to then bring into their day job a process, which is digitised, which does all the things that we wanted to do, but is still simple.

It's not about disrupting what they're doing. It fits with the things that they've got to comply with. We're not making their lives more difficult, because we've got less people now, probably trying to deliver more construction work than we did 25 years ago. We're asking more of them all the time.

Ben
You're right. The catalyst for change isn't just having a good digital solution. That's a requirement.

Actually you've got to unstick the current practice in a less painful way. Sometimes when you're rolling out a new IT product, you think, oh, let's add up the training costs. Let's add up the learning of that new system and its capital outlay. There's a big bit in mobilisation of actually demobilising what's currently being done. And if you can do that in a way that doesn't overly disrupt or isn't too painful, and actually puts the delivery of the project and the customers at the end of that in front of mind, then you've got more of a roadmap to introducing digital solutions.

Will
How did you do that with CEMAR? How did you understate that problem?

Ben
That's a good question. We did it in two ways. Firstly, we were always as good as paper. I tried very hard not to lose anything, because certain people still want to write. People still want to write in margins of your contracts. So we made sure you could still annotate things and add notes and attachments whatever else.

Then you've got to add genuine value. You've got to do it in a way that doesn't mean you have to throw everything out all at once. So make a first step and slowly grow into it. I was watching a podcast. It was a simple chart. It must apply to everything. The progress you make by making small changes every day.

Nick
Rather than waiting for something to be perfect. Those marginal gains, marginal gains, marginal gains. We always talked about trying to preserve the better. There are benefits to paper systems. We've been managing projects 200 years this way. Everyone's processes are ingrained in those paper processes.

We've seen our another good system start. I've seen that. Similar work is that you're preserving the benefits of paper. You're creating digital folder structures so that it's familiar to people. You're not just harnessing the latest crazy bit of tech and say, right, we're going to do it now with goggles on.

You're trying to create a world that feels familiar. We are just move it slowly, forward in the right direction collaboratively, having access to that data, having it in real time,

Ben
While keeping it uncomplicated as fuss-less as possible! Unfussy, simple, easy to use. All these things are crucial to if we're going to have a catalyst to changing this.

Comprehensive single source of truth

Ben
Just to draw out the really big points here: what would be best practice capturing those records as a single truth? Making sure that if you've got two to ten organisation in the supply chain. So the contract say that's what happened on the slide. Let's try and have a single truth for the records. That's really important.

Configuring those records so that they meet the expectation, so that they're usable in a value way to each of those parties. Have a contemporary way of presenting them: or tagging them or flagging them against the different events and works activities. Again, this speaks to that second point. Thirdly, configuring them in way that actually talks to the records and how they're used. Let's not call it labour, plant, material.

Nick
If we're using NEC contracts, no need to look at that.

Will
It’s good feedback. Is it? Because traditionally, as a QS, I got labour, materials, but that's not what the contract says. I know what you mean. But that's not what it says. When we were preparing for this, I learned a few things about equipment and plant and how it's different.

We need to capture one source of the truth. We need to make sure it's in a usable format, but recapturing everything for everyone, and not leaving out something that would be useful for another party. Comprehensive single source of truth. We are making it so it lines up with our contract.

Nick
The quote that your colleague, Robert Gerrard, is “we shouldn't be arguing about facts.” We'll steal that from him when we keep repeating it back to people. In this day and age with the technology available to us, we shouldn't be arguing about facts. That should be a simple part of the process.

Will
That’s what we're guilty as in construction technology as a whole. I was speaking to Jason Lansing, CEO of Aphex, recently. He was saying construction industry is guilty for making the person on site responsible for everything. We put so much pressure on that individual to capture all this information, when really we want them to be delivering.

Let's try and make it easy to capture those records. Not this onerous task. Not just think about what's best for somebody who's needs a fancy chart or dashboard. Let's think about how we capture that data.

Ben
Let’s cover this in a bit when we come to talk about disputes.

37:51

Mitigate disputes with robust records

Will
That's my next question. You've hit the nail on the head. There'll be a lot of people who've been watching this who involved in disputes. So my good question for you, Ben, is: how does the NEC deal with disputes? Why are records important for that process?

Ben
How does NEC deal with disputes? There's a few dispute resolution options.

Typically, adjudication is the first port of call. This is a private affair before you go to tribunal if you decide that's not enough, which could be litigation or arbitration, but an adjudicator is a is an expert appointed. It doesn't have to be a lawyer.

If it's the nature of the dispute is in quantum or engineering, perhaps an expert in the field is what you need. Before we get that far, disputes typically are either about quantum or about point of principle or a mixture of quantum and engineering. Right? Typically, that's a fair summary of them.

It strikes me that with really good records, we'd have fewer disputes. Certainly there would be less to debate in the quantum side. Perhaps not in every case, but, you'd like to think that would hopefully avoid them and those that were remaining make simplify them a little bit.

Perhaps they were more about points of principle. Again, the ability to link site records to the activities of work and to the commercial events, makes their recall, presentation, orientation for those different uses, whether it's a cost engineer or or a QS or or somebody looking at productivity when it comes to programming.

The other thing with having good records is that, we're less likely to get into dispute Particularly if it's a single truth, the teams, when putting together their applications to payment or assessment of payment, when they're putting quotations together for compensation events, they're able to collaborate more easily. It becomes familiar. We trust the records and each other. You just take things off the table, taking more off the table. Then you've got more time and certainty to think about some points of principle.

Nick
I'd like to test this by getting some feedback, I wonder how many times someone's gone to adjudication with a completely agreed set of site records. My feeling is that probably never happens.

If you're in a place where you had a completely agreed set of records you probably would have worked it out amongst yourselves, I suspect. I don't know it'd be interesting to would be really good. Whether any adjudication has a completely defined set records that everyone agrees on.

Ben
We could ask Robert Chad, whom you mentioned. I'm sure he would tell us how long he typically spends establishing the records on something. I'd be interested to know how much that cost. I bet that in aggregate, is far more than it would be to implement something from the beginning that meant you both agree I had this. I mean, why would we do anything else?

Will
Prevention is better than cure, isn't it? Really, we need to get ahead of it and not just wait for it to go wrong. Anything else you're not add on to that point, Nick, around dispute?

Nick
It goes back to the other point about having these site records just to smooth the process, to make the administration easier. It's very unlikely that adjudicators are being presented with an agreed set of records. If they are, then I'm sure their job's far easier to support people and get into an amicable outcome.

Ben
You just made me think about something else as well. We've got lots of proactive mechanisms in the contract. Early warning is the obvious one to actually head off some of those problems. If you got good records, good productivity, run rates, things like that, at your fingertips, lessons learned, probably more from the big data, rather than one record against one item, then you're even better armed to maybe come up with a solution. You’d agree in action to head off an issue under the early warning meetings mechanism, in the same way that I'd hope you take a contemporary programme to an early warning meeting so that you could really see how the different activities interplayed. Where the opportunities might be to save a bit of time or switch things up. It just becomes another tool then, doesn't it, Nick?

Will
Anything else to add on?

Nick
There's an interesting area to ask you, Ben. The other end of the spectrum to disputes is collecting good site records, contributing to the effective meeting the obligations of clause 10 been able to meet those. Is that okay?

Ben
Well, in NEC4, clause 10 is now split into 10.1 and 10.2. 10.1 is about doing, as stated in the contract. I guess for all the reasons we've discussed, it will make that smoother, and therefore, if something is easier to do, it's more likely to be done.

Clause 10.2 and good records

Ben
There's that 10.2 mutual trust and cooperation. Well, I guess in setting the culture, the ethos around achieving that. Trust is perhaps grown from behaviours, among other things. There's an excellent podcast on the NEC Spotlight series. It is brilliant. It will put a link on the behaviors and unpacking what trust is, so we'll put a link to that.

But in demonstrating that trust, I guess it's a bit like risk, isn't it? If we can just avoid the risk altogether, then that's better than attempting to mitigate it. If we've got really good records that we've both signed up to as a single truth, then maybe we don't have to actually dabble in too much trust in that. It's inherent in how we've established ourselves. That goes for writing the appropriate things that meet our expectations.

Nick
Are you suggesting if they're authentic, factual and reliable, then I don't have to trust you when you tell me that X happened, because we both agreed that those? Those are the facts. We can avoid having to build trust.

Ben
So we trust in the solution. We trust that the solutions operated well. It’s got integrity to it’s robust. In a way that makes us both more comfortable. The three things in that podcast were capability, reliability and intimacy. Go and watch that podcast. It is brilliant. Having good records and something that we both agree on and we're in the groove with, will build trust.

Changing culture in UK construction

Nick
You're reliable stakeholder, if you're consistently providing that information. That makes you feel reliable, and therefore is going to contribute to a better culture.

Ben
I also think perhaps there's a lot of accessibility benefits as well. Work from home. Now we tend to fit work around our private lives a lot more than we used to. Having immediate access to a set of records will make working from home easier.

One of the clauses for defined cost is that the contractor makes available to the project manager records of defined cost for inspection during working hours.If we do it properly and in the way we're suggesting, well, then the records will always be available.

Nick
Organisations have much thinner management teams now. Even if you want to go on site once a week, especially in some assets where they're under possession, chances are that it's very difficult for you to get amongst them where the work is. So having access to contemporaneous records that are of high quality can make your job much easier. Doesn’t it? Absolutely.

Digital tools and digitisation

Will
That probably leads me very nice on to my next question around digital tools. We've all seen the amazing impacts that CEMAR has had on how people manage NEC contracts. Thinking about site records, how can we leverage digital technology to have that same positive impact on NEC contracts and site records.

Ben
How do we understand the catalyst and being mindful that a good solution isn't the whole of the answer? We need to think about. How we do unstick people from their current practices without too much pain?

In terms of why is it important to do it and what the role digital has in it, it’s really far reaching. I'm not going to attempt to talk about AI, machine learning and things like that. Before we even get that far, probably three things spring to mind, depending on whether you're a client or a contractor.

Firstly, digitalisation takes the role of records beyond just evidential. Taking a record and justifying it as an accountant record, it goes way, way beyond that. In aggregate, this is a powerful productivity analysis tool. It's enables us to, perhaps more easily achieve some of the philosophy that you see around forecasting and prospective assessments. There's a really big bit there, as well as lessons learned, estimators, and scheduling.

Rethinking the role of records

Nick
Your first point reminds me of what we used to talk about at CEMAR. We were managing events, not documents. Traditionally, the management of the contract was about exchanging documents. You're managing documents. We’re like, well, what you're actually doing is trying to manage these events. Documents are an output or a reporting function.

It's really about the event. We need to probably move the industry slowly forward to see that this data that we're getting back from site is not about a single site diary. It's about getting data in these chunks that relate to parts of the contract and then using them in workflow and reporting for where their benefits are. Records are not just about having this page that goes in the leverage file and then collects dust until we have our big, limited use.

Ben
It’s that all that effort in recording it isn't being leveraged on a day to day basis. It's there in case we might want to look at that in isolation. It's a real lost opportunity.

You remind me, actually, of something that the great, late Dr Martin Barnes said in a conference: project management is about influencing what hasn't yet happened. Everything else is just administration Are we administering the records for the sake of doing records in case we have a problem? How miserable is that?

How about we capture them all in a really good way and then actually feed that back into our project management processes for the better?

Nick
Going back for the very start of the conversation about why records have always been done, they’ve been done for either health and safety, quality assurance, or engineering insurance. It's been very important to have a robust audit trail. That shows we built this thing safely. We built it to the required quality and specification.You've got that. But that has a limited value, doesn't it?

Ben
We map records back to a to a BIM model, or an asset management tool or a commercial tool. Then you can really leverage some lessons learned. One plus one is not two. That would be one of my other sort of top three things.

First, we've got the elevation of it beyond just the evidential record into something that's prospectively useful. We’ve got the integration with other data from other sources that is becoming absolutely day to day what people do now. So integrating that data with things like contract management tools, asset management tools.

Secondly, just from convenience, we said that might speak to acting and state in the contract, just having that at your fingertips, but also being able to orientate it. One dataset that can be orientated many ways. Here's the report that's useful to the cost controller. Here's the report that's useful to the QS. Here's the report that's useful to the inspector, who's looking after the shift patterns. I think here are so many different ways that we can leverage that data digitally, can't we?

Will
Massively! At the moment, those individual paper records on triplicabouts are individual bits of a jigsaw, aren't they? When you see when you use a digital tool, you can put them all together. That same bit of data can be used in five, six, seven ways for different parties within your project management organisation. So we can use that data proactively for all those different functions, rather than reactively. Traditionally, as Nick alluded to, records are mostly used in the inevitable bonfire that happens end of a project. It's about moving away from that.

Ben
I heard recently a really good little saying. It’s something along the lines of: by digitising it, you're preparing to answer questions you haven't thought of yet.

Nick
That's exactly what I was just thinking of. When we started looking at reports in CEMAR from the data that we were capturing, there was a particularly large client who owned a huge asset in the aviation industry. They didn't have any insight into how compensation events and the value of them in different chunks. How many compensations do I get across my whole portfolio that are between this amount and this amount? Where was the level of effort required to manage the contract for their teams?

Obviously they had a finite resource to manage the contract. Through the insights they could gain from a platform where you're capturing every single compensation event and the and the quantum of it, you can actually say I need the team to go into this area, because we've got the data showing it. We can let the project managers look after this, because the total impact of all these small compensation events, the actual aggregated impact is a small amount of my risk contingency budget, whereas I've got these four huge events here that crop up. But no one had those insights today.

Ben
You made me think of something else as well. It’s in terms of delegated authority to to take a certain action under the contract. Quite often, clients will put a financial limit to that. Arguably, that financial limit could increase, the quality of the quality of the ingredients going inside were better.

Investing in data is investing in future

Nick
We did that. We did do that specific exercise. Imagine the data. Imagine the questions that we don't yet know to ask of the data but we are starting. The same goes for site records.

Will
When you start to bring different datasets together and take them off a triplicate pad, you can start to now understand whether or not, and, if yes how do certain types of issues affect productivity. We can also start to plan and use that data more proactively. We can achieve so many more metres per day in the summer as opposed to winter. Seems obvious. But when you start to overlay that together, you can use that to influence productivity programmes and assessment of change as well.

The big thing I've just taken for this section of this conversation is, we're now making things proactive. Not reactive. We're taking out of that lever arch file. But we're actually doing something with that data every single day. At home or on site, wherever we need to be, we can access that information.

Ben
The thing is, I quite like making spreadsheets. Don't we all? What am I going to do with my spreadsheet? You can still have a general interest to make something else.

Will
You can still have your spreadsheet, can’t you? Once you've got structured data, your spreadsheet will be even better.

Ben
Actually, it's interesting. Although being a little bit flippant, it's true. The other thing with digital and multi tenanted software as a service product is that the community then starts to innovate. They'll then take your data and do something else to it.

Where it's useful to more than one person, that ends up being chucked in the roadmap. Then you end up with a fantastic report analytics pack that you hadn't thought of before. What happens next? Then community then owns that. The best practice becomes sector specific.

Going back to what we said, why don't we prescribe the how a bit more? That's the opposite argument, isn't it? The community start to think about the how. There becomes pockets of good practice that are mapped to a particular nature of works or services. This would then flourish into something really helpful. It becomes a stronger community. So there's all sorts of things I'm not sure I'm going to do with all my a full triplicate carbon pad. I’m not sure where they are on the wood burner.

Allocation of resource and records

Will
My final point on this really is how we bring the allocation of resource? They said labour is part materials. That's not quite right. The allocation of resource. How do we bring that together to allow us to do all the good things we just talked about? To allow us to better manage the contract, substantiate compensation events, and assess things proactively? That seems like the missing step here.

Nick
We need to make that an integral part of capturing the data. Resource allocation has traditionally been a separate thing, hasn't it? I'm the project engineer. I've written down what we plan to do and what we actually did. Then over here, I'm capturing who was there and how long they worked on the triplicate pad or into a spreadsheet.

With Gather, we've not linked the two things together. So we had been missing such a rich data. We can then ask questions like that. We just we need to do it. They need to be integrated and brought together.

Ben
I'm aware that Gather captures the planned as well as the actuals. Is that so? I guess what we wouldn't want is for the planned in Gather to be different from the resources identified in the programme. For instance, that wouldn't be helpful.

There needs to be lots of connections between the different management tools that we've got to our disposal.

We need to have that ecosystem of tools that talks, the ecosystem of contract management tools, planning tools, programming tools, resource management tools and record management tools. If all those things playing nicely together, what we get is a better outcome for projects.

Yes. that's where we need to head. Absolutely as many connections with what's happening in reality can only be a good thing, right?

Will
Thank you for joining me today. Personally, I've got three key takeaways that I've learned from today's discussion.

First, the way we capture records has changed. But how important are they? They are more important than ever. Digitisation has allowed us to do more with records. It moved us away from reactive, paper based processes. Instead, be proactive. Use it, be it forecasting, understanding risk and mitigating those risks to projects.

Secondly, records are important. Having one source of the truth is vital to all these projects Having proper site records and projects built on the foundation of trust that the NEC is famous for allows us to better collaborate as clients and contractors and suppliers.

My third key point is that we should combine this data. We should link our site records with other systems, such as contract management tools. Doing that is an incredibly powerful offering. It allows us to use that data in ways that we've not even thought about before.

Thank you for joining me today. Ben, I really enjoyed the discussion. I really enjoyed your insights into NEC. Thank you everyone for watching. Hopefully you now understand how important shift records and site records are for NEC projects.

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