1. Background
The element of time is a central, essential and sometimes critical factor in a construction project.
The agreed end date is daymulched and other, daymulched partial deadlines may be agreed.
This applies both in the relationship between the main/general contractor and the builder, and in the relationship between the individual subcontractor and the main/general contractor.
Today, it is unusual to see construction projects organized as divided builder-led subcontracts. The builder mostly wants to release the risk with the coordination of juxtaposed contractors, and everything is collected with a contract counterparty.
This means that the main contractor has the main responsibility for coordinating all the subjects involved in a construction project.
A consequence of this is that the rules on progress management and coordination obligations are central to subcontracting contracts, and they are at least as relevant as in the standard contracts that apply up to the builder.
In addition, the subcontracting standards contain a separate provision for intervention. The main/general contractor, if the conditions are met, has the right to intervene in the subcontractor's work. This is a very intrusive right that can have major consequences for subcontractors, and consequently the provision is also intended to be used only in very special situations.
In this we deal with the more general rules on deadlines, progress plan, progress status and notification, while we deal with the rules on coordination and intervention in a separate article.
2. Overview of the rules
As in other articles, we start from the turnkey contract since it is the one that is most often used.
3. Progress plan as a management tool
When referring to the progress plan as a management tool, it is in the concept of “management” that one thinks first of all about the needs of the general contractor. Nor can there be any doubt that the one who really needs a progress plan is the one who has the responsibility - and not least the risk - to coordinate all subcontractors. This is in order to be as organized as possible in order to comply with its own deadline against the builder.
While the general contractor must have a progress plan for its own management, it is important that those who are managed, namely the subcontractors, know what is expected of them. This includes not only the time period for when they themselves will perform their tasks (and where), but also how this will be coordinated with the work of others.
In addition, the progress plan will often form the basis of the billing schedules agreed upon.
A realistic and operational progress plan thus becomes a management tool that gains importance in several relationships.
4. Provisions relating to progress plans
In the larger and complex projects, there will always be a need for a progress plan, and the starting point is for the subcontractors to draw up a plan for their works unless otherwise agreed, cf. NS 8415 paragraph 18.1 and NS 8417 paragraph 21.2.
NS 8416 also has propulsion plan provisions.
In this standard contract, the main rule is that the subcontractor draws up a plan only if the main contractor requires it, cf. NS 8416 paragraph 17.1, second paragraph.
Different if the subcontractor is subject to such special duties regarding site management and progress control of other ancillary contractors as set out in NS 8416, paragraph 16.
In this case, the main rule is that the subcontractor should draw up an overall progress plan for his own works and for the works of the subordinate subcontractors that he will manage.
5. What should the progress plan contain?
The rules on this can be found in NS 8417 paragraph 21.2, and in NS 8415 paragraph 18.1 and NS 8416 paragraph 17.1.
First, there is a condition that the plan stays within the scope of the contract. In other words, a progress must be agreed that relates to the deadlines agreed for the start up and not least the final deadline. The closing deadline is always daymulched, but it may also be agreed that other deadlines that need to be taken into account when creating a progress plan. It is not decisive whether the deadline is covered by day for it to appear in the progress plan.
In addition, all significant activities necessary to produce the agreed subject of the contract must be included. Examples of this type of activity can be found in NS 8417, paragraph 21.2, second paragraph, which mentions, among other things, engineering, rigging, demolition, execution, testing, trial operation and takeover.
From NS 8417 paragraph 21.2, first paragraph, it is also stated that benefits from the general contractor on which the subcontractor is dependent must be stated in the plan. These can be benefits that come from the general contractor itself, but most often it will be benefits from some of the general contractor's other contract assistants.
It is also important to be aware of the clarification in NS 8417 paragraph 21.2, first paragraph where it is stated that the plan must be specified so well that it is possible to control the progress of the subcontractor. This is, of course, connected with the general contractor's need to be in control, in order to be able to facilitate that a subcontractor who is delayed — for whatever reason — has the opportunity to recover the delay.
Good governance and control is not only about the use of notification provisions, the rules on coordination and/ or intervention. A general contractor who works actively to facilitate his subcontractors and solve challenges before they become too large has a good opportunity to deliver a good product within agreed deadlines. However, such proactive management of a construction project presupposes clear, realistic and up-to-date plans that the general contractor can follow.
6. Progress status and notification
In addition to the fact that the progress plan must be used as a control tool, it follows from NS 8417 paragraph 21.3 that the subcontractor must inform the general contractor of the actual progress status.
Unless otherwise agreed, such a report shall be issued every four weeks.
The normal thing is that the subcontractor works in several areas at the same time. In some places he will be able to stay ahead assuming progress, while in other places he can lie “on plan” or according to the form.
Whether it holds with an average consideration in terms of how he stands in relation to the progress plan will probably depend on his relationship with other side contractors.
If no one else is bothered by the fact that the subcontractor is behind schedule in some areas then it is mostly okay, as long as he is ahead in other places.
The challenge arises if the subcontractor is behind schedule in areas where it is critical because other, side-ordered contractors are joined.
This type of information is absolutely necessary to be communicated to the general contractor, and preferably before he receives a notice demanding an extension of the deadline from the person who is being held.
7. Revision of progress plan
If there is too much discrepancy between actual and planned progress, there is a risk that “the plan no longer constitutes an appropriate basis to report against”.
In this case, the general contractor may require the subcontractor to revise the plan, cf. NS 8417 paragraph 21.3, last paragraph.
Often it will be enough for all subcontractors to adhere to the progress plan drawn up by the general contractor, and then the individual subcontractors have prepared production plans for their works within the framework of the progress plan.
A general contractor will probably preferably require the subcontractor to work into its delay (advance) rather than change its propulsion or production plan.
However, there may be too large discrepancies for enforcement to help, and there may also be situations where several subcontractors are so late in some areas that an audit is needed.
Regardless of the number of subcontractors delayed, it follows from NS 8417 paragraph 21.3, third paragraph that the person (s) who are so late that the progress plan no longer makes it a suitable tool to report against is obliged to revise the plan.
The same follows from NS 8415 point 18.2, third paragraph, and NS 8416 paragraph 17.1, second paragraph.
8. Revision of progress plan does not mean that daymulched deadlines are shifted
In some situations, progress plans are revised to such an extent that one pushes on day-mulched deadlines.
We have learned that contractors have believed that such a shift in deadlines means that daylight savings do not accrue until possible completion after the new deadline has expired.
This is a misunderstanding.
A shift in deadlines that is only a consequence of the revision of the progress plan does not imply the lapse of the original, day-covered deadline.
This is what is expressed in NS 8417 paragraph 21.3, the last paragraph of which it states that “plan revision only involves changing the basis for reporting and notification”.
The same provision can be found in NS 8415, paragraph 18.2, last paragraph.
It is only in cases where the subcontractor has a legitimate claim to an extension of the deadline and notifies in accordance with the provisions of the Standard, that the deadlines covered by the day are changed.
By the way, we refer to the rules on amendments, deadline extension and remuneration adjustment, which are discussed in other articles.
9. Relationship between progress plan and billing schedule
We find provisions on billing schedule in NS 8417 paragraph 27.2.1.
It is clear from this provision that the parties shall draw up a billing plan. In that plan, the contract sum should be divided into monthly installments.
How large the monthly installments may be depends again on how much the subcontractor plans to add to the construction site, etc., of works and materials in the individual period of time.
This is stated in the third paragraph of the provision, which states that the subcontractor shall: “draw up a production plan based on the progress plan”and that the production plan should be so detailed that it shows “the correlation between planned production and the size of the installments”.
Just as the progress schedule may be modified as a result of the discrepancies between actual and planned progress being excessive, the billing schedule may also be modified, cf. NS 8417 paragraph 27.2.1, fifth paragraph.
For all practical purposes, such revision of billing schedule is largely applicable when the actual progress lags behind the planned one. In a few cases it may be appropriate to pay more than originally agreed, but it is in situations where it is the general contractor who has required the subcontractor to proceed without it being the subcontractor who has the responsibility or risk of the forfeiture.
