The Complete Guide to NEC Compensation Events

By Sheldon Wright MCICES. Last reviewed September 2026. Covers the NEC3 and NEC4 Engineering and Construction Contract (ECC), main Options A to E.

I have spent about twenty years on NEC contracts, on both sides of the table, and the compensation event process generates more work, more money and more arguments than any other part of the contract. It is also the part that people tend to learn on the job.

This guide explains what a compensation event is, walks through every event in clause 60.1, and then follows an event through its life: notification, the Project Manager's decision, the quotation, the assessment and implementation. It covers the deadlines on both parties, how the mechanism behaves under each main Option, and the mistakes that cost the most money. Where NEC3 and NEC4 differ, I say so.

Two notes before starting. First, I paraphrase the contract throughout and never quote it, so have your own copy open for the exact wording. Second, the contract you are working under is almost certainly not the standard form. Most projects of any size carry Z-clauses that amend the events, the periods or the assessment rules. Everything below describes the unamended ECC. Check what your contract has done to it.

1. What a compensation event is

A compensation event is something the contract lists as the Client's risk (the Employer's, in NEC3 language). If one happens, and it does not arise from the Contractor's fault, the Contractor is entitled to have the Prices, the Completion Date and any Key Dates adjusted for its effect.

Four features of that definition matter in practice.

The list is closed. If the event is not in clause 60.1, in a main or secondary Option clause, or added in Contract Data part one, it is not a compensation event, however unfair the situation feels. Anything that is not a compensation event is the Contractor's risk. This is the contract's central allocation of risk, and it is why the first question in any assessment is which numbered event is being relied on.

One mechanism covers time and money. Under traditional forms, a variation account, an extension of time and a loss and expense claim are three separate things. Under NEC there is one notification, one quotation covering both the change to the Prices and any delay, and one assessment.

The assessment. A compensation event price is assessed in line with clause 63.1 calculating the impact on prices for the actual Defined Cost of work already done and a forecast of Defined Cost yet to be completed plus the resulting fee. Once implemented, it is not reopened because the forecast turned out wrong. The Contractor carries the risk that the work costs more than forecast and keeps the benefit if it costs less.

It works in both directions. Some events reduce the Prices, most obviously an instruction that removes work from the Scope. The process is the same.

People coming from other forms call compensation events "claims" or "variations". They are neither, and the vocabulary shapes behaviour: a team that thinks in claims saves its arguments for the final account, and under NEC that is too late.

2. NEC3 and NEC4: the vocabulary

Both editions are in live use, and the differences are mostly in terminology and clause numbering. These are the ones that touch compensation events.

I use NEC4 terms and clause numbers in this guide and flag NEC3 where the substance differs.

3. The compensation events in clause 60.1

NEC4 lists twenty-one events in clause 60.1 and NEC3 lists nineteen. I find it easier to think of them in four groups, according to what triggers them. The grouping also tells you who is supposed to notify, which matters for the time bar.

Group A: things the Project Manager or Supervisor does

These start with a communication, so there is usually a dated document to point to.

• 60.1(1): an instruction changing the Scope. This is the largest event by volume on most projects. There are two exceptions: a change made to accept a Defect, and a change to the Contractor's own design made at the Contractor's request or to make it comply with the Client's Scope. The recurring argument is whether something is a change at all or a clarification of what the Scope already required.
• 60.1(4): an instruction to stop or not to start work, or to change a Key Date.
• 60.1(7): an instruction about what to do with something of value or historical interest discovered on the Site.
• 60.1(8): the Project Manager or Supervisor changes a decision previously communicated.
• 60.1(9): the Project Manager withholds an acceptance for a reason the contract does not give. A refusal on grounds the contract lists is not a compensation event. A refusal on any other ground is.
• 60.1(10): the Supervisor instructs a search for a Defect and none is found, unless the search was needed only because the Contractor gave too little notice of covering up the work.
• 60.1(11): a test or inspection by the Supervisor causes unnecessary delay.
• 60.1(15): the Project Manager certifies take over of part of the works before both Completion and the Completion Date.
• 60.1(17): the Project Manager notifies a correction to an assumption stated for an earlier compensation event.
• 60.1(20) (NEC4 only): the Project Manager notifies that a quotation for a proposed instruction is not accepted.

Group B: things the Client fails to do

These start with something not happening, which makes them easy to miss.

• 60.1(2): the Client does not allow access to a part of the Site in time. The test is whichever is later: the access date in the Contract Data, or the date the Accepted Programme shows access being needed.
• 60.1(3): the Client does not provide something it is to provide by the date shown on the Accepted Programme. If the programme does not show when the Contractor needs free-issue materials or information, this event is hard to prove.
• 60.1(5): the Client or Others do not work within the times on the Accepted Programme or the conditions in the Scope, or carry out work on the Site that the Scope does not mention. Interfaces with statutory undertakers and other contractors land here.
• 60.1(6): the Project Manager or Supervisor does not reply to a communication within the period the contract requires.
• 60.1(16): the Client does not supply the materials, facilities or samples for testing that the Scope says it will.
• 60.1(18): a breach of contract by the Client that is not one of the other events. This keeps Client breaches inside the compensation event mechanism and its time limits.

Group C: external events at the Client's risk

• 60.1(12): physical conditions. The Contractor meets physical conditions on the Site, other than weather, that were so unlikely that an experienced contractor, judging the position at the Contract Date, would not reasonably have allowed for them. Only the difference between what was found and what it would have been reasonable to allow for is compensated. Clause 60.2 lists the information the Contractor is taken to have considered: the Site Information, publicly available information it refers to, what a visual inspection would show, and other information an experienced contractor could reasonably be expected to have or obtain. Under clause 60.3, an inconsistency within the Site Information is resolved in the Contractor's favour. This is the most heavily argued event in the contract, and the argument is nearly always about what the tender information showed.
• 60.1(13): weather. A weather measurement recorded within a calendar month, before the Completion Date, at the place named in the Contract Data, whose value is shown by comparison with the weather data to occur on average less often than once in ten years. Only the excess over the ten-year value counts. The test is statistical: a wet week that stops the job is not a compensation event unless the monthly measurement crosses the threshold.
• 60.1(14): an event that is a Client's liability under the contract (an Employer's risk in NEC3). These are listed in section 8.
• 60.1(19): prevention. An event that stops the Contractor completing the works, or completing by the date on the Accepted Programme, which neither Party could prevent, which was so unlikely that an experienced contractor would not reasonably have allowed for it, and which is not covered by any other event. Many Clients amend or delete it because of its breadth.

Group D: events specific to your contract

• 60.1(21) (NEC4 only): additional events written into Contract Data part one. Always check. This one has a history worth knowing. NEC3 as first published had a space in Contract Data part one for additional compensation events, but no clause in the contract that made anything written there a compensation event, and commentators questioned whether those events were incorporated at all. The June 2006 amendments removed the space. NEC4 solved it properly by adding this event. So if you are working on an unamended NEC3 from June 2005 with extra events typed into Contract Data, whether they bite is a real question rather than a pedantic one.
• Options B and D add events for differences between the final quantities and the bill of quantities, subject to conditions, and for correcting mistakes in the bill.
• Secondary Options add their own, most commonly X2 (a change in the law after the Contract Date). On UK contracts subject to the Construction Act, Option Y(UK)2 makes a valid suspension for non-payment a compensation event.

What is not on the list

Two things people expect to find are not there, and knowing where they land instead saves an argument.

The Project Manager or Supervisor failing to act as the contract requires is not a listed event. Not replying in time is, at 60.1(6), but the wider failure is not. The route to it is 60.1(18): if the Client carries responsibility for how its Project Manager and Supervisor perform, then a failure by them to act as the contract requires is a breach by the Client, and 60.1(18) catches breaches that are not one of the other events.

Late supply of information is not a listed event either. It usually arrives as 60.1(3), the Client not providing something it is to provide by the date on the Accepted Programme, or as 60.1(1) if what turns up changes the Scope. Which of the two you rely on matters, because 60.1(3) depends entirely on the Accepted Programme showing when you needed the thing. If the programme is silent, the event is hard to prove and the argument moves to whether the Scope changed.

The practical lesson is the same in both cases. When something has plainly gone wrong and no numbered event fits, look at 60.1(18) and at what your Accepted Programme shows, before concluding there is no compensation event.

Why the list being closed actually bites

The closed list would not mean much on its own. What gives it force is a separate clause: NEC3 clause 63.4, and NEC4 clause 63.6, which say that the rights of the Parties to changes to the Prices, the Completion Date and the Key Dates are their only rights in respect of a compensation event. Read with the entire agreement clause at 12.4, the intention is plain: the compensation event procedure is meant to be the whole of the remedy, and to see off the end-of-contract global claim.

Whether it fully succeeds in shutting out a claim for damages at common law has been doubted since the form was written, and it is not a question a commercial manager should answer alone. What matters on site is the working assumption it creates. Treat the compensation event as the only route, notify everything through it, and do not let an entitlement sit outside the mechanism on the theory that it can be recovered some other way at the end.

4. Early warning and how it connects

Early warning (clause 15 in NEC4, clause 16 in NEC3) and compensation events are separate processes, and people confuse them constantly. An early warning is a notice of something that could increase the Prices, delay Completion or a Key Date, or impair the performance or quality of the works. Either party has a responsibility to issue an Early Warning as soon as they become aware. It goes on the Early Warning Register, and the aim of the early warning meeting is to avoid or reduce the problem.

An early warning is not a compensation event notification, and giving one does not protect the Contractor against the eight-week time bar. The two processes are linked in one important way. If the Contractor did not give an early warning that an experienced contractor could have given, the Project Manager can say so when instructing the quotation (clause 61.5). The event is then assessed as if the warning had been given, which removes any cost and delay that earlier action would have avoided.

The practical rule is to do both: give the early warning when the risk appears, and notify the compensation event, separately, when it happens.

Check the Z clauses in your own contract before you rely on any of this. I have worked on one where a Z clause required an early warning to have been given before a compensation event could be notified, and removed the right to the compensation event if it had not been. Under the standard form a missed early warning costs you the part of the assessment you could have avoided; under that amendment it cost the lot.

5. Step 1: notification

Who notifies depends on which group the event falls into.

Events from the Project Manager's or Supervisor's own communications. Where the event arises from the Project Manager or Supervisor giving an instruction or notification, issuing a certificate or changing an earlier decision, clause 61.1 puts the duty on the Project Manager. They notify the compensation event at the time of that communication and instruct a quotation with it. Under NEC4 (clause 61.2) no quotation is instructed if the event arises from a fault of the Contractor or has no effect on Defined Cost, Completion or a Key Date. Under NEC3 the exceptions are the Contractor's fault and quotations having already been submitted. NEC3's clause 61.1 is also narrower, referring only to instructions and changed decisions.

Everything else. For Groups B and C, the Contractor notifies under clause 61.3, if it believes the event is a compensation event and the Project Manager has not already notified it. This is where the eight-week time bar sits. If the Contractor does not notify within eight weeks of becoming aware that the event has happened, the Prices, the Completion Date and the Key Dates are not changed. The bar does not apply to events the Project Manager should have notified under clause 61.1. NEC3 reaches the same result in different words. I have written a separate article on the time bar, because people get caught by the detail.

Three practical points:

• Project Managers frequently issue instructions without the clause 61.1 notification. My advice to contractors is always to notify a compensation event anyway. It costs an email and removes any argument about which category the event is in.
• A notification has to be communicated separately from other communications (clause 13.7) and through whatever system the Scope specifies.
• A notification needs only the event, the clause relied on, and the dates. It commits the Contractor to nothing on value. Waiting for the numbers before notifying is the most common route to a time-barred event.

There is also a long-stop. Under NEC4, no compensation event can be notified after the Defects Certificate has been issued (clause 61.7). In NEC3 the cut-off is the defects date.

Proposed instructions. The Project Manager can ask for a quotation for an instruction they are only considering (clause 65 in NEC4). If the instruction is then issued, it becomes a compensation event in the normal way. If it is declined, NEC4 compensates the Contractor for the cost of quoting; NEC3 does not.

6. Step 2: the Project Manager's decision

When the Contractor notifies, the Project Manager has one week to reply, or longer if the Contractor agrees. Clause 61.4 sets the tests. The Project Manager decides whether the event:

• arises from a fault of the Contractor
• has happened, or is expected to happen
• has any effect on Defined Cost, Completion or meeting a Key Date
• is one of the compensation events stated in the contract.

NEC4 adds a further test: whether the event was notified within the timescales the contract sets.

If the event fails a test, the Project Manager notifies the Contractor that the Prices, the Completion Date and the Key Dates are not to be changed. NEC4 requires the notification to state the reasons. NEC3 does not say so, but a notification should always say which test failed and why, because that is the decision an adjudicator would review. If the event passes, the Project Manager notifies that it is a compensation event and instructs a quotation.

Two further tools are available at this stage. The first is the early warning statement under clause 61.5, described above. The second is clause 61.6. Where the effects of the event are too uncertain to forecast reasonably, the Project Manager states assumptions on which the quotation is to be based. If an assumption later proves wrong, the Project Manager notifies a correction, and that correction is a compensation event under 60.1(17). Assumptions are underused. They are the sensible way to deal with an event whose extent nobody can yet know, such as contamination of unknown depth. Only the Project Manager's stated assumptions have this effect. An assumption the Contractor writes into its own quotation does not.

7. Step 3: the quotation

The Contractor has three weeks from the instruction to submit a quotation (clause 62.3). Under clause 62.2 a quotation is a package with three parts:

1. the proposed changes to the Prices
2. any delay to the Completion Date and Key Dates
3. the details of the assessment: how both figures were arrived at.

If the accepted programme is impacted by the change event the Impacetd programme in included within the quotation. The Project Manager can also instruct alternative quotations, based on different ways of dealing with the event, after discussing them with the Contractor. Where an event could be absorbed by resequencing at one cost, or left to delay Completion at another, asking for both lets the Client choose.

The Project Manager has two weeks to reply. The reply is one of the following:

• acceptance of the quotation
• an instruction to submit a revised quotation, with the reasons explained
• a notification that the Project Manager will make their own assessment.

NEC3 lists a fourth reply, for proposed instructions that will not be given, which NEC4 moved to clause 65. A revised quotation is due within three weeks. Any of these periods can be extended, but only if the Project Manager and the Contractor agree before the submission or reply falls due (clause 62.5).

Most of the money is won or lost at this step. A quotation that asserts a figure and a delay, without a build-up that follows the Schedule of Cost Components and a programme that shows the logic, invites the Project Manager to make their own assessment, and that assessment rarely comes out higher than the Contractor's. I have written a full guide on how to substantiate a compensation event, so I will not repeat it here.

8. Step 4: assessing the money

Clause 63.1 sets the rule. The change to the Prices is assessed as the effect of the compensation event on:

• the actual Defined Cost of work done by the dividing date
• the forecast Defined Cost of work not done by the dividing date
• the resulting Fee.

The dividing date. NEC4 fixes the boundary between actual and forecast. For an event arising from a Project Manager's or Supervisor's communication, it is the date of that communication. For every other event, it is the date the compensation event was notified. NEC3 draws the line at the date the Project Manager instructed, or should have instructed, the quotation. Either way, the date is fixed by the event and does not move because the parties were slow. Where an event is assessed long after the work is finished, the contract still calls for a forecast as at the dividing date, and how strictly to apply that when actual cost records exist is one of the most argued points in NEC practice.

Agree the assessment while it is still a forecast. That is my view on almost every event, and the more complex the work the more it matters. Let the pricing drag and the work is finished before the event is agreed, whatever the contract says about forecasts. At that point the records exist, the Client can see what the work actually cost, and the assessment gets argued in hindsight rather than on the forecast you were entitled to. The risk allowances are usually the first thing to go, because by then everyone can see which risks did not happen.

Defined Cost, not rates. Tendered rates and prices are not the default basis of assessment, even under the priced Options A and B. Rates and lump sums can be used only if the Project Manager and Contractor agree. Defined Cost is built from the Schedule of Cost Components: people, Equipment, Plant and Materials, subcontractors, charges, manufacture and fabrication, design and insurance. Under NEC4, Options A and B use the Shorter Schedule of Cost Components, and Options C, D and E use the full Schedule. NEC3 is slightly different here under the SSCC Options A, B, C, D and E can be used. The Fee is then added, using the fee percentage stated in Contract Data part two under NEC4, or the direct and subcontracted fee percentages under NEC3. Note that NEC3 still produces a single Fee: clause 11.2(8) makes it the sum of the two, the subcontracted percentage applied to the Defined Cost of subcontracted work and the direct percentage to the rest.

It is the effect that is assessed. The quotation is the difference between the cost with the event and the cost without it. Where an instruction replaces one piece of work with another, that means the Defined Cost of the new work less the Defined Cost of the work no longer required. It does not mean the new work less the tendered price of the old.

Risk allowances. The assessment includes cost and time risk allowances for matters that have a significant chance of occurring and are not themselves compensation events. Because the assessment is a fixed forecast, the Contractor is pricing risk and is entitled to be paid for carrying it.

Reasonableness. The assessment assumes the Contractor reacts competently and promptly to the event, that additional cost and time are reasonably incurred, and that the Accepted Programme can be changed.

Reductions. Where the effect of an event is to reduce total Defined Cost, the Prices are reduced only in the situations the contract names, which are chiefly a change to the Scope and a corrected assumption. The Option clauses contain the detail.

9. Step 5: assessing the time

Clause 63.5 sets the rule for delay (clause 63.3 in NEC3). A delay to the Completion Date is assessed as the length of time that, due to the compensation event, planned Completion is later than planned Completion as shown on the Accepted Programme current at the dividing date. Delay to a Key Date is assessed the same way. NEC4 adds that the assessment takes account of any delay from the event that is already in the Accepted Programme, and of events that happened between the date of that programme and the dividing date. In practice that means updating the programme for progress before adding the event.

Several things follow.

The Accepted Programme is the measuring stick. A narrative of what went wrong does not meet the test. Delay has to be demonstrated: the right Accepted Programme, updated for progress, with the event inserted as activities linked by logic, and the resulting movement in planned Completion.

Float. Total float on activities is available to absorb the effects of a compensation event. If the event uses float and planned Completion does not move, there is no delay to the Completion Date, although there may still be cost. Terminal float, which is the gap between planned Completion and the Completion Date, belongs to the Contractor, because delay is measured by the movement of planned Completion and the same number of days is added to the Completion Date. Time risk allowances within activity durations are also the Contractor's.

Keeping the programme accepted is a commercial task. If there is no Accepted Programme, or the Contractor has not submitted a revised programme as the contract requires, the Project Manager is entitled to assess the event themselves using their own assessment of the programme. A contractor in that position has lost control of the time half of every event. A Project Manager who rejects programmes for reasons the contract does not give creates a compensation event in doing so.

10. When the Project Manager makes the assessment

Clause 64.1 gives four situations in which the Project Manager assesses the event:

• the Contractor has not submitted a quotation and its details within the time allowed
• the Project Manager decides the Contractor has not assessed the event correctly and does not instruct a revised quotation
• the Contractor has not submitted a programme, or alterations to one, that the contract required with the quotation
• the Project Manager has not accepted the Contractor's latest programme for one of the reasons the contract gives.

The Project Manager then has the same period the Contractor was allowed for its quotation, which is three weeks as standard, to notify the assessment with its details (clause 64.3). Where there is no usable programme, the Project Manager uses their own view of the programme for the work still to be done (clause 64.2).

A Project Manager's assessment is made under the same rules as a quotation: Defined Cost plus Fee, delay against the programme, risk allowances included. An assessment that ignores clause 63 is as open to challenge as a quotation that does.

11. Implementation, and why it is final

A compensation event is implemented when the Project Manager notifies acceptance of a quotation, notifies their own assessment, or a quotation is treated as accepted (clause 66 in NEC4, clause 65 in NEC3). The Prices, the Completion Date and the Key Dates change accordingly.

After that, the assessment stays as it is. NEC3 (clause 65.2) says it is not revised when later records show that one of its forecasts was wrong. NEC4 (clause 66.3) puts it more widely: an implemented assessment is not revised except as the contract itself provides. Apart from the stated-assumptions route, only an adjudicator or the tribunal can change it.

The contract deliberately trades accuracy in hindsight for certainty now. For the Contractor, the quotation is the one chance to get it right. For the Project Manager, an accepted quotation cannot be clawed back because actual cost came in lower.

12. When the Project Manager stays silent

NEC puts deadlines on the Project Manager as well as the Contractor, and backs them with consequences. There are three mechanisms, and each follows the same pattern. The Project Manager misses a period, the Contractor notifies that failure, and if the failure continues for a further two weeks, the contract treats the silence as acceptance.

• Under clause 61.4, silence on a notification is treated as acceptance that the event is a compensation event and as an instruction to submit a quotation.
• Under clause 62.6, silence on a quotation is treated as acceptance of that quotation.
• Under clause 64.4, silence where the Project Manager was due to make their own assessment is treated as acceptance of the Contractor's quotation.

Nothing happens automatically. The Contractor must send the reminder, and many never do. A treated acceptance can still be challenged, because the dispute Options give the adjudicator power to alter a quotation that was treated as accepted, but the Client has to start and win an adjudication to get there. For a Project Manager with sixty quotations in the queue, this is the largest unmanaged risk in the process. I have covered it fully in a separate article on deemed acceptance.

13. How compensation events work under each main Option

The procedure is identical across the Options. What changes is what "the Prices" means, and therefore how the money reaches the Contractor.

Option A (priced contract with activity schedule). The Prices are the lump sums on the Activity Schedule. An implemented event changes the Activity Schedule, by adding or amending activities, and the Contractor is paid as those activities are completed. The assessment uses the Short Schedule of Cost Components in NEC4.

Option B (priced contract with bill of quantities). The Prices come from the Bill of Quantities, and events change the bill. Option B adds the quantity-related compensation events mentioned above. Remeasurement of quantities at bill rates is the normal operation of the Contract.

Options C and D (target contracts). The Contractor is paid Defined Cost plus Fee as the work proceeds, less Disallowed Cost. Compensation events adjust the target, which is the total of the Prices, and they do not directly change what is paid. The adjustment matters at the share calculation. A target that has not been moved for legitimate events makes the Contractor look as though it has overspent, and the Contractor then pays a share of an overrun that is not real. Contractors who neglect compensation events on target contracts, because they are being paid cost anyway, regret it at Completion.

Option E (cost reimbursable). The Contractor is paid Defined Cost plus Fee in any event. Compensation events matter mainly for the Completion Date and for forecasting.

14. Every period on one page

These are the standard ECC periods. The subcontract forms shorten some of them, and Z-clauses often change them.

15. A worked example

This example is invented for illustration. It is not drawn from any project.

A contractor on an NEC4 Option A drainage scheme is excavating for a new carrier drain. On Monday of week 1, at a depth of about two metres, the gang uncovers a concrete-encased duct bank crossing the trench line. It is not shown in the Site Information, and nothing on the surface suggested it.

Week 1. The site agent gives an early warning the same day. At Wednesday's early warning meeting the parties agree to move the gang to another section and ask the utility owner to identify the asset. On Thursday the contractor notifies a compensation event under clause 61.3, citing clause 60.1(12), giving Monday as both the date of the event and the date of awareness. The notification is a separate communication and contains no figures.

Week 2. The Project Manager replies within the week. They accept that the condition is one an experienced contractor would not have allowed for, given the Site Information, and instruct a quotation. Because nobody yet knows whether the duct can be diverted or must be bridged, the Project Manager states an assumption under clause 61.6: the quotation is to assume the drain is re-routed under the duct in a sleeved crossing, with the utility owner attending for two days.

Weeks 2 to 5. The contractor builds the quotation. The dividing date is the notification date in week 1. Standing time for the gang and excavator on the Monday and Tuesday falls before the dividing date and is priced from allocation sheets and plant returns as actual Defined Cost. Everything afterwards is forecast: the sleeved crossing, built up from people, Equipment and materials under the Short Schedule of Cost Components, less the Defined Cost of the plain length of drain it replaces, with a stated risk allowance for hand-digging around a live asset, and the Fee. For time, the contractor updates the Accepted Programme for progress, inserts the crossing activities and links them. The drainage run had fifteen days of total float. The event uses nine of them, planned Completion does not move, and the quotation claims no delay to the Completion Date. The quotation goes in on day 20.

Weeks 6 and 7. The Project Manager's team checks the build-up against the Short Schedule and the records, queries one output, and accepts the quotation on day 12 of the reply period. The event is implemented, and the Activity Schedule gains a new activity.

Later. The utility owner's attendance runs to five days, not two. The assumption was the Project Manager's, so they notify a correction, which is a new compensation event under 60.1(17), and the additional cost is assessed. Had the contractor simply underestimated its own outputs, there would have been no route back.

That is simply the contract operated as written, inside the periods, which is rarer than it should be.

16. The most common mistakes

On the Contractor's side

1. Waiting for the numbers before notifying. The notification needs no value, and the eight weeks time-bar run from awareness of the event.
2. Treating an early warning, a progress report or meeting minutes as a notification. None of them is one.
3. Pricing from tender rates. The basis is Defined Cost plus Fee unless rates are agreed.
4. Claiming delay without a programme demonstration, or against a programme that was never accepted.
5. Letting the Accepted Programme lapse, which hands the time assessment to the Project Manager.
6. Never using the reminder that turns the Project Manager's silence into acceptance.
7. Forgetting to price prelims in compensation events that have EOT
8. Formula errors and missing fee percentages such as WAOH under NEC3.

On the Project Manager's side

10. Issuing instructions without the clause 61.1 notification and quotation instruction. The time bar then does not protect the Client, and the event drifts.
11. Missing reply periods, or relying on holding replies that the contract does not recognise.
12. Assessing on hindsight and "fairness" in place of clause 63, which produces assessments that do not survive adjudication.
13. Not reading the Z-clauses. Both sides make this mistake. The amended contract is the contract.

Entitlement is rarely the real problem in any of these. They are failures of time and attention, which is why the same people get them right on a quiet project and wrong on a busy one.

17. If it ends in dispute

The contract provides a route for challenging a decision on a compensation event, and the route depends on the dispute resolution Option chosen. Option W2 applies to UK contracts subject to the Construction Act. Either party can refer a dispute to adjudication at any time, and NEC4 adds an optional step of referring it first to senior representatives. Option W1 applies where the Act does not. It sets time limits for raising a dispute, generally four weeks from becoming aware of the action complained of, and those limits operate as further time bars, so read them early. Under NEC4's Option W1 a dispute goes to the Senior Representatives before it can go to the Adjudicator. NEC4 also offers Option W3, a Dispute Avoidance Board, where the Act does not apply. Under all of them, the adjudicator's decision binds unless one party notifies dissatisfaction within four weeks and takes the matter to the tribunal.

An adjudicator looks at dates, notifications, the programme and the build-up, so the file that wins an assessment is the file that wins an adjudication. This section is a summary only. Take legal advice before starting or responding to a dispute.

18. Frequently asked questions

Is a compensation event the same as a variation? No. An instruction changing the Scope is one of the twenty-one events. The others cover Client failures, physical conditions, weather, prevention and more. All are dealt with through one process that covers time and money together.

Does the eight-week time bar apply to every event? No. It applies to events the Contractor has to notify. It does not apply to events arising from the Project Manager's or Supervisor's own instructions, notifications, certificates or changed decisions, which the Project Manager should have notified. Notify anyway.

Can I price a compensation event using my tender rates? Only if the Project Manager agrees. The default basis is Defined Cost plus Fee, even under Options A and B.

Can an implemented compensation event be reopened? Not because the forecast was wrong. The exceptions are a corrected Project Manager's assumption, adjudication and the tribunal.

What happens if the Project Manager does not reply? The Contractor can notify the failure. If it continues for two more weeks, the notification or quotation is treated as accepted.

Do compensation events matter on a target contract, where the Contractor is paid cost anyway? Yes. They move the target, and the target decides the share of any overrun or saving.

Where Clause 60 fits

I built Clause 60 because the careful first-pass review of a compensation event pack is the work that matters most and the work there is least time to do. It reads the quotation and cost build-up, the actual contract including Z-clauses, and the contractor's native Primavera P6 programme, and returns a structured first-pass review in about ten minutes. Each section is RAG-rated. Every finding is cited to its source document and labelled as Fact or Inference. Missing information is flagged and not assumed. It works the same way for a Project Manager assessing a quotation and for a contractor testing its own before submission.

It is assistive, not advisory. A qualified person checks the review and makes the call.

You can watch it review a sample NEC4 event, and download the complete 19-page report, without signing up or uploading anything, at clause60.com/demo.

This guide is general guidance on the standard NEC3 and NEC4 ECC forms, written from professional experience. It is not legal advice, and it does not account for the amendments in your contract. NEC is a registered trade mark of its owner; Clause 60 Limited is not affiliated with or endorsed by NEC.