Front-loading, and what to do about it

Front-loading is the practice of weighting value towards early work. The contract sum is unchanged; what changes is when the money arrives. On a job with tight margins it can be the difference between a contractor funding the works and the employer funding them.

It is worth being unsentimental about this. Contractors front-load because construction is financed on payment cycles and preliminaries are real costs incurred before much value is visible. The question for a client-side surveyor is not whether it is happening but whether the valuation is fair.

Where it appears at tender

In a bill of quantities

Rates loaded into early trades and thinned in later ones. Groundworks and substructure priced generously, finishes and external works priced lean. The total is competitive; the profile is not neutral.

This is visible at tender analysis if anyone compares rates across tenderers rather than only comparing totals. It is invisible afterwards.

In an activity schedule

Under a lump sum contract with activities, or NEC Option A, the schedule itself carries the profile. Coarse early activities that complete quickly, fine-grained later ones that take longer to tick off.

Activity schedules deserve more scrutiny at tender than they usually get, because once agreed they govern payment absolutely under Option A.

In preliminaries

Time-related preliminaries priced as fixed charges, so that they are recoverable early rather than spread across the programme. Where the contract distinguishes fixed and time-related charges, check which is which rather than accepting the split offered.

Where it appears in applications

Once the job is running, front-loading shows up as percentage complete claims that run ahead of the work:

• Trades claimed at 90 per cent for several months, moving slowly to 95, never reaching completion
• Materials on site claimed for items delivered well ahead of need
• Preliminaries claimed at a percentage matching the programme rather than the expenditure
• Variations valued optimistically and included in full before agreement
• A gross valuation that rises smoothly while site progress does not

What a client-side surveyor should do

Measure. The answer to an optimistic percentage is a measured assessment, not a negotiated one. Value what is properly executed at the valuation date, line by line, against the bill or the activity schedule.

Record the basis. Where you reduce a claimed percentage, record what you assessed and why, at the time. That note is what makes the reduction defensible when it is challenged three cycles later.

Watch the trend, not the month. A single valuation tells you very little. The percentage complete for each trade, plotted across cycles, tells you a great deal, and it is the plot that reveals a line stuck at 90.

Deal with materials properly. Prematurely delivered materials are not properly on site, and the contract usually says so. Applying that condition is not obstruction, it is the term.

The other side of the argument

Two things are worth holding on to.

First, systematic under-certification is its own problem, and a surveyor who treats every application as inflated ends up certifying unfairly in the opposite direction. The obligation is a fair assessment, and fairness is not achieved by countering optimism with pessimism.

Second, a contractor front-loading heavily may be signalling a cash flow problem worth understanding rather than merely resisting. A contractor that fails mid-job costs an employer far more than the timing of its payments.

The structural defence

• Analyse rates and activity schedules at tender, not only totals
• Value against the bill line by line rather than adjusting last month's figure
• Keep percentage complete per line visible across cycles
• Apply the materials conditions as written
• Record every assessment that differs from the application, with a reason

Do that and front-loading stops being something you suspect and becomes something you can see, which is a much better position to negotiate from.