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

Hi and welcome back to a special episode of the Gather podcast. So special, we've actually splashed out on a studio today. So my name is Will Doyle. I'm the founder and CEO of Gather, formerly Rail Diary. In a past life I was a Chartered COIN surveyor building construction projects here in the UK and in Southeast Asia. One of my common challenges is around how we manage the contracts, how 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. First we've got Nick Woodrow. Nick Woodrow is Operations Director at Gather. Previously a civil engineer before working at Seamar. Together with our second guest, Ben Walker. Ben founded CMAR and 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 how to best use site records to get the most out of your NEC contract. I'd like you to introduce yourself and tell our audience a little bit about yourself and how you got into this role with the NEC and with semar.

Thanks Will. Yeah, and great to be here. Yes. So my background I started SEMAR from a real pain as sometimes the good ideas do begin and I know you've first hand experience of that. So I've been site based for several years and really loved nec. I've always thought it was a great contract and it's very focused in good project management practices. Turns out that needs a lot of administration and so finding myself in a site hut Saturdays and Sundays doing admin didn't seem very satisfactory and 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 clipboard hanging up with the next available early warning number on it. I just couldn't see it close enough to actually see what the number would be so I couldn't send a notification. So real first hand frustrations that used to prevent sort of slick admin. So yeah, in setting CMAR up and starting to prototype it and pilot it, I started to realize how much I needed to really understand the fundamentals of NEC and how they work. So training seemed like a good thing to get involved with and having spoken to thousands of delegates over the years and listening to their practical challenges 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. And that kind of led. Led into the examining you mentioned and then the drafting, which was really good fun as well. So yeah, I've got. Still got a passion for. For making NEC work in practice.

Excellent. Okay, well, let's get straight into our first question. So the kind of what you learn on your first day on any construction project feels like records, records, records. That's the old adage, isn't it? So why are site records important for construction projects and why are they important for neck.

They're incredibly important for all projects, aren't they? Not just NEC contracts. And I think historically they would be used for health and safety records, for audit trails, for quality assurance, engineering assurance. I know we're going to talk today more about sort of commercial assurance use of records, but I know from my time working on site as a project engineer, I would have a. A four desk diary to record exactly what's happened on every shift because that's the way that engineers and qss have been trained because those records are so important for all those elements. What should be in your experience?

Yeah, I can become quite attached to my carbon triplicate A four pad. I'm not. Yeah, so the same really. And I think I'd agree with you. I don't think there's any specific thing that makes NEC sort of 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.

Absolutely. So what does the contracts and when we talk about the contract say? We mean the NEC contract. What does the NEC contract say specifically about site records?

I don't think it explicitly distinguishes site records from any other record. It does on occasions refer to specific records. For instance, where the data and weather records, sorry, weather measurements, and that's in one of the compensation events, number 13, I think 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 4 or the 40 series of clauses. So yeah, there's more. Generally that obligation to keep records and keep them organized in a useful way perhaps will enable us to walk through the NEC procedures effectively and bring each other along. Right. So we're not surprising each other and hopefully we've got a common set of records that we both recognize as the.

Single truth as a stimulus for good project management, which is a lot of what the processes in the contract have been written to provide. In certain areas it's quite prescriptive about what needs to be done, say in program, in section three, it's quite prescriptive about the level of detail needs to be provided in a program for acceptance, submitting for acceptance, but there isn't any detail 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?

I'm not sure I totally agree with that. I think you're right. So in the the programming clauses under time, there's a fairly extensive list of bullet points. And the important thing to remember there, of course, is that I think it's the last bullet point says and anything the scope requires and we're still talking about what, right, what we must capture or what we must achieve in that document, in that tool. And I think when we start getting into scope, it's natural for people to start moving into how we do that. So it might be. And we would like it in a certain format or kept in a certain way and. 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. I think there's more so 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 read the scope and 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. So although the definition of defined cost is fairly brief, it does point you to certainly when you get into the price for work done to date, it points 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 options and in there is an extensive list of tests which you have to satisfy. And again, these are what it is rather than how to capture it. But I think that's intentional. I think certainly pretty much everything I do from a business point of view, 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 contracts, the clauses of the contract very much tell you what you must achieve and what's expected. The why is I think, in the guidance notes. So 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 in use. But really guidance is about why we're doing something, the contract is setting out the what, the how is kind of left to the user.

To what extent would you think that the is beneficial? When that can be set out 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, I think in those records.

Yeah, sure. I think if there's a range of possibilities and some might be better than others or an expectation might be clearer in some areas, then yes, saying what you want in the scope is a good move, I think, to explain perhaps why the contract doesn't do that. Briefly my understanding would be, well if that was explicit in the contract, then it would perhaps only be valid for a narrow type of works or service. You'd have to make an assumption about what was appropriate and what was applicable for a given environment or given project. So take an example, you know the core clause test for market open market rates, competitively tended prices, tender prices that would be difficult to prescribe. How you achieve that? You know, 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, different plant material providers. If you were building a multi million pound infrastructure project, then you would need a fair bit more than that. So I think you're right that that kind of how lives more in the scope and, and an ongoing conversation between the parties. I mean the best projects will be run. You know, these sorts of things won't be decided all up front and 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 A on a range of issues and records is one of them.

And that's interesting, isn't it? Because 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. Saying I'm going to give you these records and I'm going to give you them at these timescales every day, every week.

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

Yeah, because it's not something that's set out and say contract data like you're going to get a program at these intervals. I want them at these intervals. It's not Like I'm so something to agree on maybe before you start work is.

Yeah, well, contractors will set an interval for the minimum interval for program submissions. But yes, and of course, you know, we talked about program a fair bit. The other thing that listening to Glen Hyde and others on program, you know, again, it's. It's a pragmatic. Even the presentation of. It's got to be pragmatic to a degree. You won't have full high granularity on absolutely everything on day one. And I've always thought of it as being a bit of a bowel 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. And that bowel wave perhaps serves that next assessment for the application for payment or the next payment assessment.

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

I think there's always that risk. I don't think the drafter should do much more. I think the contract has probably got it about right. Although community feedback's always useful, I think it's over to the rich community of NEC practitioners the fantastic tools and systems that spring up. We mentioned a few already and let them help us configure the contracts. And in the same way that we're cautious with clients, as clients, we're told not to overspecify the how 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 of 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. Yes. So leave the how at large a little bit. Opens up some more possibilities and some opportunities for innovation and collaboration with the.

Supply chain makes a lot of sense. Okay, so the next kind of key question for me then is how does our records affect how we administer contracts? So how are site records affecting those different functions within the. The typical contract arrangement?

And maybe we can break this down into the yeah, it's a big area, isn't it? Payment, which obviously one area that's very important to have good site records and the administration of change. And then maybe there's a third area around program and long term learning and the use of that data to support better contract management going forward. Should we start with payment?

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

Okay, well, payment in NEC for ECC engineering construction contract, there's six main options. If we perhaps deal with the priced ones versus the cost ones then. So from a payment point of view, if we look at the price for work done to date for each of those in turn. So for option A, which is a price contract with an activity schedule, 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 it's still important to record that the work in the activity is done and that it's free of any defects that might stop it being used or progressing onto the next one. So from that point of view, maybe it's fairly limited, but the rest of.

The it would smooth the process of agreeing that because Activity, correct me if I'm wrong, needs to be 100% complete to get paid any of that activity. So it would smooth that process to say this is complete and free of defects to get paid.

Sure. And hopefully the resolution of the program should have synergy with the activity schedule. You should be able to look out the window ideally and see it's done. And it shouldn't be too challenging, which is why that mechanism's good. It's got its benefits for B, option B price contract with better quantities. Obviously the nature of it suggests we've got quantities, so we've got rates for things. And so the records would be useful in accordance with the method of measurement in terms of observing 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, perhaps if we're talking about the salaries of certain people. But a lot of it won't be, a lot of it will be through observation on site. And it might not just be quantities and materials, of course, it could be quantities of or hours of equipment that are used in site. And and so I think, yeah, from an option B point of view, this records are useful even, even from a payment point of view before we think about Compensation events.

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

Yeah, and I guess this is where we were saying before we started the podcast about some of the. Probably come on to that later perhaps where we, where we'd look at what's the benefits of digitizing it because there's, 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. So certainly indexation or tagging against the activity that work relates to ideally right up to the BIM model. And then in the other direction, what commercial events and matters does it relate to? I think, I think that takes record keeping as a, as an activity, it takes its benefits beyond just being evidential. It then starts to make it really useful from a perspective thing. I think we probably.

Yeah, let's get into that and further on. But in terms of the cost base cost ones.

Yeah.

So the other options. So well, defined cost as we mentioned earlier, has an extensive set of tests against it. The, you know, then there's a lot of quantum in it. So we, we're measuring directly in accordance with the scheduled cost components how many of things we're using. How many of. I can use the word things that's in nec. It is things is a word trying.

To get a defined term.

Trying to get. No, it's not defined. It's not got capital T. But yeah, so whatever things or, or you know, we, we, we're measuring in terms of how many we've used or how many hours. Site records can't hurt, can they? And I know that, you know, over time we'll get more telemetry around things like how long is a, is a piece of equipment, not planned 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 and also you know, again, ability to tag it against a commercial event if one does arise.

So in assessing the price for work done to date in the, in what would be described as the cost reimbursable options.

Yeah.

You've got defined cost which is made up of the schedule of cost components.

Yeah.

And I think almost all of those are probably going to work better if you've got some good records behind the subcontracted work.

Absolutely.

The people cost, you know, the activities.

And ideally you'd structure a 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 labor and materials, but you're actually talking about, you know, whatever, however you've.

And you can aggregate that data from all of your collective records. Yeah.

Which.

Into that one application.

Yeah. Which starts to be where you perhaps. I know you have a later question on how does digitization improve that? And it takes it way, way beyond just the evidential. But I think 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. So. And there's a few interesting tests on that. Nick, I think you've got a contract to hand. So we're not.

I do.

But do you want to have a look? So we're not guessing. A big fan of having the contract on the desk rather than in the drawer. So all those listeners who. Who know the NEC philosophy will have theirs on the table. I'm sure to have a quick look at. I think it's in. In any of the price main options. Sorry, in any of the cost based main options. So cde, there'll be the definition of disallowed cost. And in there we talk about. I think the first bullet bullet is. Is not justified by the contractors, accounts and records.

So what better way you could potentially argue that the site records may be even more important for dealing with this element of dislodged cost, as they are for just assessing the total amount of the defined cost. Because you're measuring that on the difference between the last application. This application and you've probably got a recurring way of doing that that's starting to work for you.

Yeah.

And that's how we capture these dislodged costs now is really important.

Yeah. And that's just if it's got as far as being in the formal submission of. Of the application for payment. I mean, you know, 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 really the contract is a formality.

It's an admin process.

You shouldn't 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 that then follows. But then in the. I think it's the sixth and seventh bullet points 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.

Yeah. So for plant materials, not. Not used to provide the works in parenthesis after allowing for reasonable wastage. Yeah. And then in relation to the resources, after allowing for reasonable availability and utilization.

So which again could be people or equipment. And in case of equipment, you know, one such test might be and is subjective. Well, you know, should we have demobilized that crane over the weekend and brought it back to site or was it appropriate to leave it there? You know, under not being utilized. But and actually if we've got good records, it should be a calculation, Right?

Yeah. 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. Yeah. That 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 don't read them all should have been paid to a subcontractor. Every one of them would benefit from having exceptional records. And if you're a contractor, I would argue that's a very important thing to do so that you try and mitigate and just smooth this process over.

Yeah. And you've made me think about something else. I mean, and let's be really clear, wouldn't it be great if it was.

One set as opposed to what, double handling?

What I've perhaps been used to in practice in the past where I'd go out with my triplicate pad and someone else would have another triplicate pad and.

Then the supplier would have their own and then across the supply chain pattern.

Would say across the supply chain. Absolutely. So, yeah, it strikes me that a single source of truth on this that we can agree with, a small A as we go. Yeah, it makes sense, doesn't it? Why would we do anything else?

That's what we're doing in practice. But yeah, so let's hope we can change that. So we've covered payment. How about compensation events?

So for compensation events, again, the default position is to use defined cost. And this is true even in the priced. Yes, even in the priced payment mechanisms. In A and B we use the short scheduler cost components and much of what we've just explained in terms of assessing defined cost or establishing defined cost for the assessment of payment is true in assessing compensation events. I would like to sort of hijack the podcast just for a second to get on my soapbox about something which is clause 63.1.

Feel free.

This is still. Thank you. This is still. I was going to. So I guess you could edit it out but hopefully you won't.

It's fine, go for it.

I still think people fall into the trap of not reading this and understanding it. There's still pockets of people who read that and think what clause 63.1 means is to take the kind of forecast defined 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.

Do you mean the interplay between 63.1 that says that we'll assess the change to the price as the effect the conversation event upon defined cost?

Yeah.

And the following clause that says we can agree.

No, you don't need to get to the following clause. No, no.

I think it's all within that same.

Self is misunderstood so. And 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 would have actually happened and you do an assessment on that and 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 a with and without.

Or without that's the same across all the payment options because it's exactly the same clause because it's in the core of the contract.

And that's why.

So the importance of those site records for either A, B, C, D, E.

F. And I think you can go a step further and maybe just touch on this briefly. I think then that really good records, they have two roles. So the first one is in isolation, you pull a record back to as a form of evidence to justify an accountant record. But I think actually if we digitally capture them, particularly if we link them to a tool like CMAR or an asset management platform, we can start to do clever things that we can start to inform and perhaps agree with a small A rates of productivity that help us perform prospective assessments and forecasts. So in a way we're taking the empirical contemporary adjacent activity and saying, well, that was a productivity, you know 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, with, with the, the rates and percentages and contract data we can start to get quite close to.

And this feeds into that third area of benefit and application, the contract, we've got this, these elements of long term learning that we can use to help us assess completely, you know, as we go through a long project, say HS2 is like, yeah, it could be 15 years long and in year six we could be doing a lot better assessments in year three because we've captured all this, 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 and the same for the program. You know, it's got to be realistic. So if we've got realistic productivity, which can be unlocked through scrutinizing a collection of an aggregate of records rather than just looking at individual ones, then that can inform a program revision. So it becomes more realistic because we've got realistic run rates in there. And don't forget, when you submit a compensation event back to the question we need to update program where it's, where it's got an impact on remaining activities. So it's all kind of related. That's just slightly different to your other point, what you said. Does that kind of bleed into the next clause? The next clause.

I've got another observation on that next course as well, but you go on and then I'll come back to it.

Well, that's slightly different. So that is more about the project manager contractor having a pragmatic view there 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 with a basis of assessing a compensation event.

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

Right.

We've got the same activity and they'll just go straight to it because that was how the job was priced, especially maybe on the client side. But this is. That's not the intention of these clauses, is it? But I think that's maybe the interpretation by some people going back to point about confusion.

It depends what it is. I mean, 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 and a specification, 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, you know, time and motion study on looking at defined costs. It might be that the cost of doing that is more than just agreeing.

It's a similar size and shape.

So this gives the project manager and the contractor acting appropriately for their, you know, to come up with something that's sensible and, and so, you know, I think it's a really useful, really useful provision and it absolutely should be there. But each of those. So both the contractor and the project manager have in the back of their mind got this ability to say, well actually I think there was a loss leader perhaps in the contract or we were losing money hand over fist and therefore we don't want to compound that problem, we'll go to defined cost.

Yeah. My experience 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.

Well, the problems aren't imposed, are they? Because it's only by agreement. And I think the second thing to say is if you are in an option A or B, certainly 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 defined cost because you don't do it for payment. So and indeed the short schedule, you know it 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. So I think horses for courses and.

I think in my personal experience, a bit like with dislodged costs, where you're receiving or you're 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.

Yeah. And ideally, if you've established the open market competitively tender rate for a 30 tonne excavator and nothing too much has changed in the last few months, then if that's what you used for defined cost in previous assessment, then you've got a starting point, haven't you, for the next one? So I think 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. And you know, for all payment mechanisms, robust records of defined cost, they can't hurt, can they?

You could argue from a contractor's perspective, you could make the argument that they're more important on the fixed price contracts so they can do cost value reconciliation, understand exactly where they're at than on the cost reversible ones where that's being tracked on a monthly basis, naturally, through the application for payment and assessment, the target might be adjusted or the pain gain share might be being eroded or increased. You could have a problem that goes on that you don't recognize if you're not capturing those productivity metrics.

Okay, yeah, well 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 were on a cost contract, I guess.

Yep.

Okay, that's quite a good discussion. So I'm just going to get into it, really. The next point, and I've got a very strong opinion on this for obvious reasons, is what are best practices in the industry for capturing records? I set up Gather formerly Rail Diary 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 the front of people's vans, they're even in a skip because we closed down the project office and someone didn't think they were important anymore. So records are important. We all get that. We've just described why they're important for payment, for conversation events and a whole host of other reasons. But what do we believe as kind of people within this industry is best practice? What should we view that as?

Should we just reflect a bit more on what's actually happening or we understand to be happening before we move on to that? Because I think you've touched on one area of it. But I mean I started on site nearly 25 years ago and I think that most of the practices happening now are identical, almost identical to then. You know, we've got first hand anecdotal evidence or we've heard this evidence of people having bin bags of allocation sheets from suppliers under their desk that they're then having to wade through and transpose into a spreadsheet.

I think you're right and I think it's easy to mistake digitization as Being putting it in a spreadsheet. It reminds me, you used to criticize me. I used to Nick, say, you really need to digitize your note taking and meetings. So I would write my minutes in a pad and then take a digital picture of it. Just scan the notes, you suggest.

Slightly better than paper, isn't it?

You've got to do it in the right way, haven't you? So when I started Rail Diary, as it was, and I met Paul, who's our CTO and run a digital agency called Gather Digital at the time, the first thing I learned that was the best way to enter data is not in a table. That's not how you enter data. That's my how you interpret it or read it. But when you're asking someone to capture data on site, it's not just about going, take this fancy spreadsheet that QS has built and put it on an iPad or put on a tablet. It's about giving it structured workflow, making it easy for that person in orange in the pouring rain to capture that data correctly. So, yeah, the digitization is not just making it electronic, to use your example.

It's got to be digital.

But also, I was only going to say that we need to be very careful about throwing stones and preaching about what's not happening. You know, saying that things are done this way and they have been for so many years. But part of the reason for that is that 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 digitized, which does all the things that we wanted to do. But, but it's simple. It's not disrupting what they're doing. It fits with the things that they've got to comply with. And we're not making their lives more difficult because we, we've got less people now probably trying to deliver more construction work than we did 25 years ago, and we're asking more of them all the time.

You're right. And the catalyst for change isn't just having a good digital solution, right?

That, that, that's great.

That's required, that's a requirement. But actually you've got to unstick the current practice in a, in a, in a less painful way. So, you know, I think sometimes when you, when you're rolling out a new IT product, you think, oh, well, let's add up the training costs. Let's add up the, you know, the learning of that new system and its capital outlay or whatever. That, that's that's part of it, but there's a big bit of mobilization of actually demobilizing what's currently being done. And I think 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 just on that.

Ben, how did you do that? Seyma, how did you unstake that problem?

I think that's a good question. I think we did it in two ways. Firstly, we were always as good as paper and tried very hard not to lose anything because certain people still want to write. People still want to write margins. Yeah, I don't mean data, I mean the ability to function. So, you know, if you're like me, still want to write in the margins of your contracts. And so we made sure you could still annotate things and add notes and attachments, whatever else. And then I think you've got to add genuine value and 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. There's a great I forgot what I was watching a podcast. Can't remember what it was now, but it was a simple chart. It must apply to everything. The progress you make by making small changes every day rather than waiting for something to be perfect. Those marginal gains, marginal gains, marginal gains.

And I think we always talked about trying to preserve the benefit. There's benefits to paper systems. We've been managing projects for 200 years this way. So everyone's processes are ingrained in. Our way of understanding how we do work is ingrained in those paper processes. So I think with SEMAR and other good systems that I've seen that do similar work is that you're preserving the benefits of paper. You're creating digital folder structures so that it's familiar to people. So you're not just harnessing the latest crazy bit of tech and saying, right, we're going to do it now with goggles on. And you know, you're trying to create a world that feels familiar, but just move it slowly forward in the right direction in terms of then collaboratively having access to that data, having it in.

Real time and keep it as fuss less as possible. So unfussy, simple, easy to use. All these things are crucial if we're going to have a catalyst to changing this. But I think just to draw out the really big points here, I think what would be best practice capturing those records as a single truth.

Okay.

I think making sure that if you've got six, six to eight, one, two won't be more than one minute, but two to ten organizations in the supply.

Chain, parts of the contract say that's what happened on site.

Let's try and have a single truth for the records. So I think that's really important.

Single source of truth.

Yeah, I think configuring those records so that they meet the expectation and they're usable in a value way, in a valuable way to each of those parties and also having ways of presenting them or tagging them or flagging them against the different events and works activities, again speaks to that second point. And thirdly, configuring them in a way that actually talks to the records and how they're used. So let's not call it labour plant material if we're using an NEC contract.

No, we need to look at that.

It's good feedback, isn't it? Because traditionally as a qs, I got labour plant materials, but that's not what the contract says.

I know what you mean.

Yeah, but that's not what it says. And when we were preparing for this, I learned a few things about equipment and plant, how it's different. But yeah, we need to capture one source of truth. We need to make sure it's in a usable format. We're capturing everything for everyone and not leaving out something that would be useful for another party. And then we are making it so it lines up with our contract.

The quote that your colleague Robert Gerrard says is we shouldn't be arguing about facts.

Yes.

And we'll steal that from him when we keep repeating it back to people. Because we feel. Yeah. In this day and age, with the technology available to us.

Yeah.

We shouldn't be arguing about facts. That should be a simple part of the process.

Yeah, I think what we're guilty as in construction technology as a whole. And I was speaking to Jason Lansini, who's the CEO of Aphex recently, and 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. So let's try and make it easy to capture those records and not this onerous task and not just think about what's best for someone who needs a fancy chart or dashboard and let's think about how we capture that data.

I think we Cover this a bit when we come to talk about disputes.

Yeah, so that's my next question. You've hit the nail on the head. So, yeah, there'll be a lot of people who'd be watching this who are involved in disputes. So my question for you, mainly yourself, Ben, is how does the NEC deal with disputes and why are records important for that process?

So how does NEC deal with disputes? Well, there's a few dispute resolution options, but typically adjudication is the first port of call, which is a private affair before you go to tribunal. If you decide that that's not enough, which could be litigation or arbitration, but an adjudicator is an expert, appointed, doesn't have to be a lawyer, might be. If the nature of the dispute is in quantum or engineering or whatever else, it would be perhaps an expert in the. But you know, before we get that far, if disputes typically are either about quantum or about point of principle or a mixture of the two. Right. I mean, typically I think that's a fair summary of them. And it strikes me that with really good records we'd have fewer disputes or certainly there would be less to debate in the quantum side. Not in every case, but. But you'd like to think that that would hopefully avoid them and those that were remaining, simplify them a little bit. So perhaps they were more about points of principle. And I think again, the ability to link site records to the activities of work and to the commercial events makes their recall, their presentation, their orientation for those different uses, whether it's a cost engineer or a QS or, or somebody looking at productivity when it comes to programming. I think the other thing with having good records is that we're less likely to get into dispute because. Particularly if it's a single truth, because the teams, when putting their applications to payment together or their assessment of payment, when they're putting quotations together for compensation events, if they're dealing with a trusted source of truth, then they're able to collaborate more easily and it becomes familiar. We, we trust that, that, that that's.

Something we just taking things off the table.

I mean, taking more off the table. Yeah, you're, you're with a small A. I said before, you're kind of agreeing big sways of it. And then you've got more time then, right, to think about and more certainty to think about perhaps some points of principle.

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

Yeah.

That if you were in a place where you had a completely. You probably would have worked it out amongst yourselves, I suspect. I don't know. It'd be interesting to know. It would be really good whether any adjudication has a completely defined set records that everyone agrees on.

Well, we could ask. You mentioned Robert Chad. 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 costs, say the cost of it.

Because I bet that in aggregate is far more than it would be to implement something from the beginning that.

That you both agree had this.

Yeah, I mean why would we do anything else?

Yeah, 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 want to add onto that point, Nick, around dispute?

No, I think it goes back to the other point about having these site records just to smooth the process to make the administration easier. I mean I think it's very unlikely that adjudicators are being presented with an agreed set of records. If they are, then I'm sure their jobs far easier to support people and get into an amicable outcome.

Yeah, and you just made me think about something else as well. You know, we've got lots of proactive mechanisms in the contract. Early warning is the obvious one to actually head off some of those problems. And if you've 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 know, you're even better armed to maybe come up with a solution, 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 program to an early warning meeting so that you could really see how the different activities interplayed and where the opportunities might be to save a bit of time or switch things up. So it just becomes another tool then, doesn't it Nick?

If you start on this point, I think we can.

There's an interesting area to ask you Ben, at the other end of the spectrum to disputes is how do you see, you know, collecting good site records contributing to the effective, you know, meeting the obligations of clause 10 being able to meet those?

Okay, well in NEC 4, clause 10 is now split into 10.1 and 10.2. So 10.1 is, is about doing as stated in a contract. I guess for all the reasons we've discussed it will make that smoother and therefore perhaps if something's easier to do, it's more likely to be done. So there's that 10.2 mutual trust and cooperation. Well, I guess in setting the culture, the ethos around achieving that, you know, trust is perhaps grown from behaviors, among other things. And there's an excellent podcast on the NEC Spotlight.

It is brilliant. Yeah.

Which will perhaps put a link in on the kind of behaviors and unpacking what trust is. So we'll put a link to that. But, you know, 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. And 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 because it's inherent in how we've established ourselves. And that goes for writing the appropriate things that meet our expectations.

So you're suggesting if they're authentically, if they are reliable and they are the facts, then I don't have to trust you when you tell me that X happened. Because we both agree that those are the facts.

Yeah.

So we can avoid having to.

Yeah, it's sort of built in, isn't it? So we trust in the solution. We trust that the solution's operated well and it's, you know, it's got integrity to. It's robust and, you know, in a way that makes us both more comfortable. And then what were the three things in that podcast? Capability, reliability and intimacy.

Intimacy.

So, you know, go watch that podcast. It's brilliant. But, but I think, you know, having good records and something that we both agree on and we're in the groove with will make. Will make trust a little.

I think you're reliable, a reliable stakeholder. If you're doing consistently providing that information, I think that makes you feel reliable and therefore is going to contribute to a better culture.

I also think, perhaps not quite in the question, but I also think it's, you know, there's a lot of accessibility benefits as well. You know, we all work from home now. We tend to fit around our private lives a lot more than we used to. And so having immediate access to a set of records, you know, one of the clauses for defined cost is that the. A contractor makes available to the project manager records of defined cost for inspection during working hours. I mean, you know, we can, if we do it properly and in the way we're suggesting, well then it will always be available.

So organizations have much thinner management teams now. So the chances, even if you wanted to go on site once a week, especially in some assets where they're under possession, so it's very difficult for you to get to get amongst them where the work is, having access to contemporary records that are of high quality, it's going to make your job much easier, isn't it?

Yep.

Yeah, absolutely. I think that probably leads me very nicely onto my next question around digital tools. We've all seen the amazing impacts that CMAR has had on how people manage NEC contracts thinking about site records and obviously I've got a huge interest in this. How can we leverage digital technology to have that same positive impact on and AC contracts and set records?

Well, how. I think we go back to that, understanding the catalyst and being mindful that a good solution isn't the whole of the answer. We need to think about, you know, how we do, how we unstick people from their current practices without too much pain.

Absolutely.

So there's that. But in terms of, you know, why is it important to do it and what the role digital has in it, I think it's. I think it's really far reaching, not. And I'm not going to attempt to talk about AI and machine learning and things like that. So before we even get that far, probably three things spring to mind, whether you're a client or a contractor. I think firstly it takes the role of records. So the digitization of them takes the role of records beyond just the point evidential. So taking a record and justifying it as an accountant record, I think it goes way, way beyond that because in aggregate this is a powerful productivity analysis tool. It's, you know, enables us to perhaps more easily achieve some of the philosophy of NEC around forecasting and prospective assessments. So I think there's a really big bit there and lessons learned and estimators help. Estimators and scheduling.

Your first point there reminds me of what we used to talk about at cmal, which was that we were managing events, not documents.

Not documents.

So traditionally the management of the contract was about exchanging documents and you're managing documents and we're like, well, what you're actually doing is trying to manage these events and documents are an output, they're a report. Yeah, but it's about the event and I think 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 and not just having this. All the page that goes in the lever arch file and then collects dust until we have our big bump.

Such limited use and 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. And it's a real lost opportunity. You remind me actually of something the great late Dr. Martin Barnes said at a conference, which is project management is about influencing what hasn't yet happened. Everything else is just administration. So, you know, are we, are we administering the records for the sake of doing records in case we have a problem? How miserable is that? You know, how about we, 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?

Going back to the very start of the conversation about why it's always been done, I think for a lot of those reasons it's been done for either health and safety, for quality assurance, for engineering insurance. It's been very important to have an audit, a robust audit trail. Yeah, that shows we built this thing safely, we built it to the required quality and specification and you've got that. But that has a limited value, doesn't it?

But heat map back to a BIM model or an asset management tool or a commercial tool, then you can really leverage some lessons learned. And one plus one is not two. And so I think that would be one of my other. So top three things. So 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, you know, absolutely day to day what people do now. So integrating that data with things like contract management tools, asset management tools. And then secondly, I think just from convenience and we said that might speak to acting as stated in the contract, just having that at your fingertips, but also being able to orientate it. So one data set orientated many ways. So 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, so who's looking after the shift patterns. So I think here's one for handover. I think there's so many different ways and we can leverage that digitally, can't we?

Massively, I think at the Moment, those individual paper records on Triplica Banter are individual bits of a jigsaw, aren't they? And when you, when you use a digital tool, you can put them all together and that same bit of data can be used in 5, 6, 7 ways for different parties within your project management organization. So we can use that data proactively for all those different functions, rather than reactively, as Nick alluded to, when the inevitable bonfire happens at the end of a project, which is what it was traditionally used for. So it's about moving away from that.

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

Well, that's exactly what I was just thinking of, because when we started looking at reports in CMAR 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 the shape of how many compensation events and the value of them in different chunks. So how many conversations do I get across my whole portfolio that are between this amount and this amount? So where was the level of effort required to manage the contract for their teams? Because obviously they had a finite resource to manage the contract. And through the insights they could gain from a platform where you capture in every single conversation event and the quantum of it, you can say, well, actually, I need the team to go into this area because we've got, you know, we can let the project managers look after this, because the total impact of all these small conversation events, the actual aggregated impact is, yeah, is a small amount of my risk contingency budget, whereas I've got these four huge events here that crop up. No one had those insights today.

You made me think of something else as well, like 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 perhaps, if the quality of the ingredients going into it.

We did that. We did do that specific exercise on that data.

But I think it's similar.

Imagine the questions that we don't yet know to ask of the data that we're starting to capture from site records.

The insights is when you start to bring different data sets together and take them off that triplicate pad that I keep referring to, and you can start to now understand how weather at certain times of the year affect productivity plan and use that data more proactively. We can achieve so many more meters 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 programs and assessment of change as well. So I think, yeah, 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 that lever arch file and we're actually doing something with that data every single day. Whether that be at home, whether that be on site, wherever we need to be, we can access that information.

The thing is, I quite like making spreadsheets.

Don't we all?

What am I going to do with my spreadsheet?

You still have a spreadsheet.

Amateur interest. I have to make something else.

But you can still have your spreadsheet, haven't you? Because once you've got structured data your spreadsheet will be even better. Ben.

And actually interestingly, although being a little bit flippant, it's true because the other thing with digital is, and products which are multi tenanted software as a service is that the community then starts to innovate so they'll then take your data and they'll do something else to it and where it's useful to more than one person that ends up being chucked in the roadmap and then you end up with a fantastic report or analytics pack that you hadn't thought of before. And then, and you get community kind of owns that and then that best practice, maybe it becomes sector specific. Going back to what we said. Well, why don't we prescribe the how a bit more? Well that's the opposite argument, isn't it? Well because the community start to think about the how and there becomes pockets of good practice that are mapped to a particular nature of works or services that then you know, flourish into something really helpful and it becomes more of a community. So there's, there's all sorts of things. Not sure what I'm going to do with all my A4 triplicate carbon pads, so I'm not sure where they are.

On the wood burner.

On the wood burner.

My, my final point on this really is how we bring the allocation of resource. They said labour plant materials, but I know 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, allow us to better manage the contract, substantiate conversation events, assess things proactively. That seems like a missing step here.

Well, we need to make that an integral part of capturing the data because it's traditionally been a separate thing, hasn't it?

Yes, I've.

I'm the project engineer. I've written down what we plan to do and what we actually did. And then over here I'm capturing who was there and how long they worked on the triplicate pad or the equivalent into a spreadsheet. And we've not linked the two things together so we're missing such a rich amount of this data that we can then ask questions of that we just. We need to. They need to be integrated and brought together.

Yeah, I'm aware, I'm aware. Gather captures. Captures the planned as well as the actuals. Is that so? Yeah, I guess what we wouldn't want is for the planned in Gather to be different from the resources identified in the program. For instance, that wouldn't be helpful. So there needs to be lots of connections between the different management tools that we've got to our disposal and having.

That ecosystem of tools that talks. Kerry. Contract management tools, planning tools, programming tools, resource management tools and relating that back to your site record. All those things play nicely together is how we get a better outcome for projects. Yeah, so that's where we need to head I think.

Absolutely. And as many sort of connections with what's happening in reality can only be a good thing. Right.

Okay. Thank you for joining me today. Personally I've got three key takeaways that I've learned from today's discussion. The way we capture records has changed but how important they are is not. They are more important than ever. Digitalisation has allowed us to do more with records. Move away from reactive paper based processes. Instead be proactive, Use it for 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 as built on that foundation of trust that the NEC is famous for and allow us to better collaborate as clients and contractors and suppliers. And my third key point is that we should combine this data. We should link our site records with other systems, contract management tools, program tools. Doing that is an incredibly powerful offering. Allows us to use that data in ways that we've not even thought about before. Thank you for joining me today Ben. Really enjoyed the discussion, really enjoyed your insights into nec. Thank you everyone for watching. Hopefully now understand how important shift records and site records are for NEC projects.