Activity schedules in construction contracts
The term ‘activity schedule’ appears in contracts such as the NEC (New Engineering Contract) option A contract and in a number of standard lump sum contracts. In FIDIC contracts (Fédération Internationale des Ingénieurs-Conseils), it could be interpreted as fulfilling the requirements of the schedule of payments in a lump sum contract.
In essence it relates to a programme where each activity is allocated a price and interim payments are made against completion of each activity. Its advantage is that it simplifies the administration of the interim payment process.
The activity schedule on these types of project is submitted together with a contract programme as part of the tender. It is important that all the activities priced add up to the tender sum and that major sub-contractors participate in the allocation of prices against their programmed activities. This may include payments for off-site goods and materials.
The simplest way to prepare an activity schedule is to draw up a bar chart (gantt chart) which covers all the main activities required, separating each element of work that is sub-contracted. Some preliminaries such as site offices need a separate price bar for set up, operational use and dismantling activities. Other preliminaries such as staff and electrical consumption will be part of a constant bar.
The bars longer than a month then have their bar line split by defining more accurately the piece of work completed in that period. A time-defined period is acceptable in the case of preliminaries. The price allocated to each total element of work is then proportionately split to match the more defined elements.
The contract conditions normally allow the contractor a short period of time after appointment to re-visit the activity schedule to expand its detail. In addition, during the course of the project the activity schedule can be adjusted to accommodate variations, extensions of time and compensation events.
The preparation of a monthly submission for interim payment is best achieved by the contractor's project manager walking the site with the client’s representative to agree progress in respect of completed activities. Here some judgement needs to be exercised by the client’s representative as to what is ‘complete’, otherwise, strictly speaking, on a 100% basis the contractor would suffer massive cash flow problems due to the withholding of payment.
NB Within the NEC3 Engineering and Construction Contract (ECC), The 'accepted programme' shows how the activities on the activity schedule are programmed. The accepted programme and the activity schedule need not show exactly the same activities, but there should be correlation between them, and they should be kept up to date. See accepted programme for more information.
 Related articles on Designing Buildings Wiki
- Acceleration of construction works.
- Accepted programme.
- Conditions of contract.
- Construction contract.
- Contractor's working schedule.
- Gantt chart.
- How progress is agreed in construction.
- Interim payment.
- Line of balance (LOB).
- Off-site goods and materials.
- Procurement route.
- Programme consultant.
- Progress in construction.
- Resource management.
- Schedule performance index (SPI).
- Short period programme.
- Tender works programme.
- Time-location chart.
- Time management of construction projects.
- Topping out.
Featured articles and news
High quality and high density homes - is it what we need or is it storing up trouble?
Government announces its intention to strengthen planning rules to protect music venues and neighbours.
National Audit Office reports that there is little evidence that PFI offers better value than other forms of contracting.
What is liquidation and how does it apply to contractors in the construction industry?
Scrutiny is placed on Carillion's controversial 2013 decision to extend subcontractor payment terms to 120 days.
RSHP unveil their involvement in a boundary crossing which will provide a new entry point into Hong Kong.
With PFI currently under the spotlight due to Carillion, this introductory article explains what they are.
Estimates suggest that up to 30,000 small firms could be at risk of non-payment as a result of Carillion's collapse.
Sir Oliver Letwin to lead an independent review into the delays in the delivery of housing.
As Carillion collapses, read our article explaining insolvency in the construction industry.
43,000 jobs at risk as Carillion declares insolvency.