NEC4 clause 61.5 lets the Project Manager state that the Contractor didn't give an early warning of an event that an experienced contractor could have given. If it does, clause 63.7 then has the event assessed as if the warning had been given. The event survives, but its value may be lower.
The same two-step rule is in NEC3 ECC at 61.5 and 63.5. This page looks at how the decision is made. The guide to missed early warnings has a costed example of the effect, and the compensation events guide shows where it fits in the process.
The three parts of the decision
| Question | What to look at |
|---|---|
| Was a warning given? | The early warning register, meeting notes and letters. A warning about the same matter under a different heading may still count |
| Could an experienced contractor have given it, and when? | What was visible at the time: programme, supplier information, trial holes, weather forecasts. It's an objective test, so this Contractor's actual knowledge isn't the limit |
| Would it have made a difference? | Not part of the 61.5 test, but it decides the result at 63.7. If an earlier warning wouldn't have changed anything, neither should the assessment |
The test talks about what an experienced contractor could have warned of, not what it should have foreseen with hindsight. A sudden pipe burst may not have been something to warn of beforehand. A pipe clearly shown in the wrong position on a survey, spotted weeks earlier, might be.
Timing of the statement
The contract places the statement in the instruction to submit quotations. In NEC3, the Project Manager notifies its decision when instructing quotations. That has some practical effects:
- Make the decision early. The Project Manager has to form a view within the time for replying under clause 61.4, or when it notifies the event itself.
- Don't add it later without thought. A statement first made after the quotation has arrived sits awkwardly with the wording, and a Contractor is likely to challenge it. If new facts emerge, set them out and take advice on whether you can still rely on them.
- Watch treated acceptance. If the Project Manager's silence leads to an instruction being treated as given under 61.4, there is no real instruction to carry the statement. You'd expect the Contractor to argue the opportunity has gone, so this is one more reason to reply on time.
What the Contractor does with it
The quotation should deal with the statement, not ignore it. A good approach is to set out two figures: the effect as things actually happened, and the effect if the warning had been given at the date the Project Manager has in mind. If the Contractor disagrees with the statement, say why, and quote on the required basis as well, so the Project Manager has what it needs.
If the Project Manager later makes its own assessment under clause 64, the same "as if" basis applies to that assessment.
What people get wrong
- Using it as a standard reduction. Some Project Managers include it in every reply. It needs facts, and a statement with no supporting detail is weak.
- Assuming the event is lost. Failing to warn doesn't stop the event being a compensation event. See whether you can notify without an early warning.
- Confusing it with Disallowed Cost. Under cost-based Options, a separate rule may disallow cost incurred only because a required warning wasn't given. That runs through payment, not through the assessment.
- Forgetting the Project Manager's own duty. Warnings aren't one-way: the Project Manager also gives them. If it knew and said nothing, expect the Contractor to point that out, even though the clause itself looks only at the Contractor.
A record to keep
Whichever side you are on, note the date anyone first knew of the matter, who knew, what options existed then and what those options would have cost. Those facts are hard to reconstruct months later, and they are what the "as if" assessment turns on. They also feed into the early warning register, which often becomes the main evidence.
Related guides
- NEC Compensation Events: The Complete Guide
- Quotations for Compensation Events
- Clause 62.3: Time to Submit and Reply
- Failure to Reply: Treated Acceptance
- Clause 61.3: The Eight-Week Time Bar
- Clause 61.4: Project Manager Decision
See how this works in practice
Click through Contract Status with sample contracts: raise the notice, reply to it, and watch both sides of one record.
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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.