The Contractor Did Not Submit an Application: Do They Still Get Paid?

Yes, the process still runs, but under NEC4 the Contractor usually gets nothing new that cycle. With no payment application under the NEC4 Engineering and Construction Contract (ECC), the Project Manager still assesses and certifies, and the amount due is the lesser of its assessment and the previous amount due (clause 50.4).

The edition decides this. Under NEC3 ECC, an application is simply something the Project Manager considers if one is sent, so the Contractor can be paid in full without one. Either way, the Project Manager can't treat silence as a reason to skip the assessment. For other situations, see NEC questions answered.

NEC4 and NEC3 compared

Question	NEC4 ECC	NEC3 ECC
Is the Contractor told to apply?	Yes, before each assessment date (50.2)	No. Considered if submitted on or before the date (50.4)
Does the Project Manager still assess?	Yes (50.1)	Yes (50.1)
Amount due with no application	The lesser of its assessment and the previous amount due (50.4)	The normal amount (50.2)
Certificate still due?	Yes, within one week (51.1)	Yes, within one week (51.1)

What the Project Manager and Client should do now

1. Note the assessment date has passed with no application, and keep a record of the date.
2. Carry out the assessment anyway, as if an application had come in. Under NEC4, you need this figure to work out which is lower.
3. Issue the certificate on time, within one week. A missing certificate brings interest on any resulting late payment (51.2) and, where Option Y(UK)2 applies, leaves the Contractor with no payment notice from you. That can cause bigger problems than the original slip.
4. Explain the result in the certificate in one line, so nobody thinks it is a dispute.
5. Tell the Contractor when the next assessment date falls. A short prompt costs nothing.

Worked through with figures

A fictional NEC4 contract. The previous amount due was £1,200,000. All figures are illustrative.

Scenario	Project Manager's assessment	Amount due (lesser figure)	Certified payment
Work has gone ahead normally	£1,310,000	£1,200,000	Nil
Little has happened, and a retention rule has kicked in	£1,190,000	£1,190,000	£10,000 payable by the Contractor
The month after the first scenario, an application goes in on time	£1,430,000	£1,430,000 (50.3)	£230,000

So the £110,000 in the first row isn't lost. It is delayed by one interval, and catches up as soon as the Contractor applies in time. The cost to the Contractor is cash flow. Under NEC3, the first row's certificate would simply have been £110,000.

A nil certificate is still a certificate. Under Y(UK)2 it is the notice of payment, and the notified sum can be zero. No pay less notice is needed in that case, because you aren't paying less than it states.

What the Contractor might say, and the answers

• "We sent it on the day." NEC4 says before the assessment date. So on its wording, sending it on the date itself is too late. Under NEC3, on the date was fine. A Project Manager with no intention of relying on this should say so in writing, but be careful: a pattern of accepting late applications may lead to an argument that you can't suddenly insist on it.
• "You had all our figures anyway." Monthly cost reports aren't necessarily an application. On NEC4, it should set out the amount considered due and how that was assessed, in any form the Scope states.
• "Then we'll suspend." There is no unpaid notified sum for a certificate that says nil, so the suspension right shouldn't be triggered by this alone. The Contractor's real route is to apply next time.

Keeping it from recurring

Publish all the assessment dates at the start of the job, in a list both sides hold, and set a reminder a week ahead. If repeat failures are affecting the Contractor's subcontractors, raise it early. A Contractor short of cash causes trouble for the whole job, and the contract's rule isn't a reason to let it drift. The payment application guide sets out what a good one contains, and the assessment date guide shows how the cycle is set.

Related guides

• NEC Questions Answered: Real Situations on Site
• The Client Missed the Pay Less Notice: What Happens?
• The PM Disallowed Our Costs: How Should We Respond?
• We Do Not Have Records for Our Defined Cost
• The Client Has Not Paid on Time: What Are Our Rights?
• The PM Certified Far Less Than We Applied For

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.