Here's an NEC contract explained in one sentence: the parties agree the deal, then follow set procedures to warn each other of problems, price any change and keep a programme up to date until the job is finished. If you are new to NEC, those procedures are what you need to learn first, because the contract expects you to use them in your day-to-day work.
This page uses the NEC4 Engineering and Construction Contract (ECC), the form that newcomers most often meet. NEC3 uses the same ideas with some different names and numbers. When you've finished, the comparisons section sets NEC against other forms, and the main NEC guide takes you deeper.
Who's who
| Role | In plain terms |
|---|---|
| Client | Pays for the work, and provides what it promised, such as access |
| Contractor | Provides the works according to the Scope, including the programme and quotations |
| Project Manager | Runs the contract for the Client: instructions, compensation events, payment certificates |
| Supervisor | Looks after quality: tests, inspections and notifying Defects |
| Subcontractors | Work for the Contractor, often under their own NEC subcontract |
What happens first
- The Contract Data is completed. It holds the job's details: dates, periods, Options and rates. It tells you which periods apply to your job, so keep a copy to hand.
- The programme goes in. Where the Contract Data doesn't already name one, it's the Contractor's job to send one in for acceptance, in the time the Contract Data allows. Failing to do so has a payment effect: the Project Manager holds back a quarter of the value of work done from each assessment until it's provided (50.5).
- The Early Warning Register opens. It records matters that could affect cost, time or quality, and the first early warning meeting follows soon after the starting date.
- The routine begins. Assessments, programme revisions and early warning meetings all recur from here.
One problem, followed all the way through
A fictional school extension is running on Option A, with illustrative figures. In week 9, the Contractor's groundworkers find an old brick culvert that's not on any drawing. It needs a redesign of one foundation.
- Day one: early warning. The site manager tells the commercial team, who notify the Project Manager (15.1). The matter goes on the register.
- That week: the meeting. The team discusses options. Bridging the culvert costs less than moving it, so they choose the bridge.
- Instruction. The Project Manager instructs the change to the Scope. It's a compensation event under 60.1(1) and the instruction asks for a quotation.
- Within three weeks: the quotation. The Contractor works out the effect on Defined Cost and the resulting Fee, £22,000 here, and the programme shows planned Completion moving by five days (62.2, 63.1, 63.5).
- Within two weeks: the reply. The Project Manager checks it against the records and accepts it (62.3).
- Implementation. The Prices rise by £22,000, and the Completion Date moves by five days (66.1). The next programme shows the change.
On many contracts, this sort of thing might be argued about months later. Under NEC, the aim is to have it dealt with within a few weeks, while people can still remember what happened.
Five habits to learn first
- Read your own contract. Find the Contract Data and look for the Z clauses, which may change what you're being taught.
- Know the main dates. A Contractor has eight weeks from becoming aware of an event to notify it, with limited exceptions (61.3). See the NEC time periods for others.
- Put things in writing. Every contractual communication has to be readable, copyable and capable of being kept on record (13.1). A conversation on site doesn't count.
- Use the right person. Instructions generally come from the Project Manager, and Defects are notified to and by the Supervisor. A request from someone else may not be an instruction at all.
- Look forward. Quotations and early warnings ask you what will probably happen, not just what has already happened.
What newcomers get wrong
People often think an early warning is an admission of fault, or an entitlement to money. It's neither. It just tells the other side there's a problem while there's still time to do something about it. Another common mistake is thinking that the Accepted Programme is just the plan on the wall. Its dates are used to measure delay, so if it's out of date, you may be assessed against the wrong starting point.
Next, learn how the contract is structured, then go through the compensation event process in detail.
Related guides
- NEC vs Other Construction Contracts
- How an NEC Contract Is Structured
- NEC Core Clauses Explained
- NEC ECC Contract Overview
- NEC Contract Meaning
- What Does NEC Stand For?
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This guide is general information in our own words, not legal advice. Your contract and its Contract Data always govern. NEC, NEC3 and NEC4 are trade marks of Thomas Telford Ltd; Contract Status is not affiliated with or endorsed by NEC.