NEC clause 66 gives three points at which a compensation event becomes implemented: acceptance of the Contractor's quotation, notification of the Project Manager's own assessment, or a quotation being treated as accepted. The Prices and the dates change at that moment. In NEC3 ECC the same stage is clause 65.
Implementation is the end of the road for that event. The effect is immediate, and it's normally final. See the compensation events guide for the stages before it.
The clauses
| What it says | NEC4 ECC | NEC3 ECC |
|---|---|---|
| The three trigger points | 66.1 | 65.1 |
| The Prices and dates change on implementation | 66.2 | Option clauses, 65.3 and 65.4 (changes included in the notification) |
| The assessment isn't revised | 66.3, except where the conditions say otherwise | 65.2, if a forecast is later shown to have been wrong |
What changes, and where it shows up
| Item | Effect |
|---|---|
| The Prices | Changed in the form your Option requires: Activity Schedule, Bill of Quantities or a new forecast |
| Payment | Flows through the next assessment, on whatever basis the Option uses for the Price for Work Done to Date |
| Completion Date | Moves by the assessed delay, and the date in force is the new one for delay damages if Option X7 applies |
| Key Dates | Move likewise. Any Key Date Condition corrected under 63.11 also takes effect |
| Accepted Programme | Not automatically replaced. The next programme shows the effects, and the Contractor sends it for acceptance |
That last row is often overlooked. An accepted quotation with programme alterations in it doesn't by itself produce a new Accepted Programme. Keep the two aligned, or later assessments will rest on an out-of-date baseline. See revising the programme under clause 32.
Why the assessment stays closed
The contract settles each event on a forecast, in return for an early answer. A worked example shows what that means.
On a fictional bridge scheme, the Contractor's accepted quotation forecasts £180,000 for a change, with four weeks' delay. The work ends up costing £215,000 and the delay is three weeks.
| Option | What happens to the £35,000 overrun |
|---|---|
| A | Contractor carries it. The price paid is the assessed one |
| C | Contractor is paid its cost, but the target stays at the assessed level, so the overrun goes through the share |
| E | Client pays the cost, subject to Disallowed Cost. The forecast of the Prices is simply out of date |
The time doesn't get taken back either. The Completion Date stays at the assessed four weeks. The Contractor has effectively gained a week, just as it would have lost one if the delay had run to five.
The routes that do reopen something
- A corrected assumption. If the Project Manager stated an assumption under 61.6 and it proved wrong, its correction is a new event, 60.1(17). It can lower the Prices as well as raise them.
- A dispute. The contract's dispute route can change an assessment. Time limits may apply: see time limits for disputes.
- Express provisions. NEC4's 66.3 allows revision where the conditions say so. Read those and any Z clauses, and don't assume there are more.
- A new event. A later instruction may be a separate compensation event, and it doesn't reopen this one.
A closing checklist
- Issue a clear notification saying the event is implemented, and how. NEC3 states that the changes go in that notification.
- Update the Activity Schedule, Bill or forecast.
- Update the Completion Date and Key Dates in your records, especially if delay damages depend on them.
- Close the event in your compensation event register, with the date, value and days.
- Add the value to the next payment application, on the basis your Option requires.
Related guides
- NEC Compensation Events: The Complete Guide
- Compensation Events Under Option A
- Compensation Events Under Option C
- Compensation Events Under Option E
- Assessing a Compensation Event: Clause 63
- Assessing Delay to Completion
How this looks in Contract Status
The quotation date has passed, and the record offers the Project Manager's assessment. See the worked example.
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.
Take the guided tour Book a demo
Take the NEC4 ECC quiz, use the free NEC tools or download free NEC templates.
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.