Benefits and risks of requiring method statements in NEC contracts

Key Points

• In addition to the required ‘statements of how’ in NEC programmes and plans, clients can add a requirement in the scope for contractors to provide detailed method statements.
• Method statements provide all parties with deeper insight into the contractor’s plans, giving a better understanding of the programme and potential risks.
• However, the acceptance process may impact programmes and put additional workloads and liabilities on project managers (ECC), clients (ECSC) and service managers (TSC and FMC).

The UK Management of Health and Safety at Work (Amendment) Regulations 2006 (Management Regulations) require contractors to carry out a risk assessment and design a safe method of working. However, neither the Management Regulation or the Construction (Design and Management) Regulations 2015 (CDM) explicitly require a ‘method statement’. Similarly, the Lifting Operations and Lifting Equipment Regulations 1998 (LOLER) require lifting operations to be planned by a competent person, but again do not explicitly require a ‘lifting plan’.

However, it has become standard practice in the UK for contractors to a prepare method statement (or lifting plan) for their operations showing how they will be carried out safely. This article explains how such statements fit within NEC contracts.

‘Statement of how’ required in programme

In the NEC4 Engineering and Construction Contract (ECC) (but not the Engineering and Construction Short Contract (ESCS)) there are detailed requirements of things to be included in the programme (clause 31.2 and 32.1).

ECC clause 31.2 requires the programme to include, ‘for each operation, a statement of how the Contractor plans to do the work identifying the principal Equipment and other resources which will be used’. The NEC4 Professional Service Contract (PSC) and NEC4 Alliance Contract (ALC) have a similar requirement of the programme. The NEC4 Term Service Contract (TSC) has the same requirement relating to the plan and any task order programme, while the NEC4 Facilities Management Contract (FMC) has the same requirement relating to the plan and any project order programme under option X27, project orders.

The ‘statement of how’ required in the programme or plan is not intended to be a full method statement of how the contractor plans to carry out the works. But it should be sufficiently detailed for the project manager to understand the programme, and for the service manager to understand the plan or programmes in the case of the TSC and the FMC.

Scope can also require a method statement

If the client requires detailed method statements in addition to the statements provided as part of the programme (or plan in the case of the TSC and FMC), then the scope must include:

• What method statements are required to be submitted by the contractor
• Any minimum requirements of those method statements
• Whether method statements are to cover technical, environmental, and health and safety issues
• Whether the contractor is to be required to comply with its own method statements
  whether such documents should be approved by the contractor’s temporary works coordinator (see below) prior to submission to the project manager (the client in the case of the ECSC)
• Whether method statements are to be submitted to the project manager
• If so, whether that is for information or for acceptance
• If for acceptance then whether the contractor has to obtain acceptance from the project manager prior to doing the relevant work
• If for acceptance, then to follow the standard procedure in the ECC, what would be acceptable reasons for the project manager to not accept a method statement.

The reasons for non-acceptance might include: that the method statement does not show how the work is to be carried out safely and without negatively impacting on health and safety; that the method statement does not show how environmental risks are to be managed; or that the method statement does not comply with the applicable law.

The method statement is clearly the responsibility of the contractor, which may pass on that responsibility to its subcontractor. Compliance with a method statement should also be required by the scope. Non-compliance would not lead to a defect as defects only apply to the works. But, if the contractor was not complying with its method statement, the project manager could stop the works under clause 34.1. This would be a compensation event under clause 60.1(4). However, because the instruction to stop the works was caused by a ‘fault’ of the contractor, there would be no increase to the prices or delay to the completion date (clause 61.2).

Role of temporary works coordinator

It is considered good practice in the UK to require the contractor to name (as a key person in the case of the ECC) a temporary works coordinator and, in the scope, to require all method statements to be approved by that temporary works coordinator prior to their submission to the project manager.

The UK Health and Safety Executive’s (HSE’s) guidance on temporary works states:

‘Temporary works coordinator

An effective way of managing temporary works is to appoint a Temporary Works Coordinator (TWC) to ensure suitable designs are prepared, checked and correctly erected on site.

The TWC should be formally appointed and have adequate authority to carry out the role, including stopping the work if it is not satisfactory. The TWC may also need to advise on build sequence, systems of work and equipment so that other activity does not damage or compromise the temporary works.

On a complex project this person is often a chartered civil or structural engineer with relevant experience and training and based on site. On a simpler job the main contractor may take on this role and seek advice as needed from an engineer.’

Acceptance of method statements

The client may decide that the contractor is or should be capable of preparing appropriate method statements and that there is no need and no benefit in them being submitted to the project manager (or client under the ECSC). The acceptance by the project manager of a method statement will not change the contractor’s liability (clause 14.1) but it will bring additional liability on the project manager. Clause 14.1 states, ‘The Project Manager’s or the Supervisor’s acceptance of a communication from the Contractor or acceptance of the work does not change the Contractor’s responsibility to Provide the Works or liability for its design.’

The authors are aware of a situation where the ECC project manager accepted a method statement. In carrying out the work, an operative was injured. The method statement was prepared by the specialist subcontractor and approved by the TWC of the subcontractor and that of the main contractor. HSE decided the method statement was inappropriate and imposed ‘fees for intervention’, which is a fine levied without HSE needing to take organisations to court. These were imposed on the subcontractor, the main contractor and on the company employing the project manager.

Clearly HSE decided the project manager had taken on non-contractual liability through the acceptance of the flawed method statement. The project manager was not protected against this by clause 14.1. Note that if the project manager is to be required to accept such method statements, they must have – or have access to – the required competence to do such review and acceptance. It is also important to consider whether any comments made by the project manager might lead to them taking on any responsibility. This may be an unintended consequence of the acceptance procedure. Project managers would be well advised not to make suggestions relating to contractors’ method statements.

Project managers should also be wary of commenting on method statements if they are not required by the scope to review them. Consideration should also be given as to whether the project manager is best placed to undertake the acceptance procedure in the first place. The supervisor may be more knowledgeable with regards to construction methodology and would most likely be checking compliance with method statements. As such they may be best suited to this activity.

In preparing the tender documents, the client must decide if there is merit in requiring the project manager (ECC), client (ECSC) or service manager (TSC and FMC) to review and accept any or all method statements. They may want to be selective of the method statements requiring review and acceptance.

Summary

The provision of method statements in NEC contracts provides deeper insight as to a contractor’s plans. This will have broad benefits including a better understanding of the programme and provide an opportunity for identifying risks and engaging the early warning procedure.

Since contractors routinely produce method statements when planning their works, submitting them for acceptance will be unlikely to add significantly to their workload. However, if method statements are subject to acceptance and the contractor is not allowed to proceed before acceptance, that will clearly have programme implications.

Any acceptance procedure needs to be included

in the NEC contract scope and the contractor should be required to comply with its method statements. The implications on the project manager (ECC), client (ECSC) or service manager (TSC and FMC) with regards to their workload liability needs consideration by the client. Adding another acceptance procedure to their responsibilities will increase their workload and they may not have the technical and health and safety knowledge to undertake it themselves. The supervisor may be better placed to undertake this task.

Method statements clearly need some thought when any NEC tender document is being prepared.