Common NEC Payment Mistakes

Most NEC payment mistakes come down to a missed date, a misread defined term or a record nobody kept. They're easy to avoid, but they can be expensive because each NEC date has a specific consequence attached.

The list below follows the order of a payment cycle, using NEC4 ECC unless stated. For the background on any item, start with the NEC payment and Defined Cost guide.

Before the first payment

Mistake	Why it hurts	Fix
No first programme submitted when none is identified in the Contract Data	A quarter of the value of work done is held back under 50.5	Plan the first programme before the first assessment date
First assessment date never confirmed	The Contractor doesn't know when to apply	Ask for it in writing, and see assessment date
Contract Data periods not read	The team works to printed periods when the data says something else	Put actual dates in a calendar from day one
Ambiguous Activity Schedule	Nobody can agree when an activity is complete	Define each activity with a clear end point at tender

During the cycle

Mistake	Why it hurts	Fix
Applying on or after the assessment date under NEC4	Clause 50.4 applies and the amount due can't rise	Set an internal deadline several days earlier
Assuming the certificate is an invoice, or the reverse	Payment stalls because no one has sent what the Client's finance team needs	Agree the paperwork route at the start
Measuring payment from the wrong date	A late-paid sum isn't spotted and interest goes uncollected	Clause 51.2 counts from the assessment date, not the certificate
Forgetting a certificate that shows a negative	Contractor ends up owing a payment without noticing	Check the direction as well as the figure
Writing "we deduct £X" in a pay less notice	It doesn't state the sum considered due and could be challenged	State the replacement figure and how it was calculated
Missing the pay less deadline	The notified sum generally has to be paid	Check certificates in the first week, not the third
Correcting next month, instead of giving notice this month	The current payment isn't reduced	Use both tools for what they're for

On cost Options

Mistake	Why it hurts	Fix
Treating an internal cost report as Defined Cost	Fee costs get claimed, and the application fails	Keep a separate view by schedule section. See what Defined Cost is
No proof of payment on file	Cost can be removed as not justified by records, along with the Fee on it	Link bank records to the ledger automatically
Charging group plant at internal rates	The schedule looks at open market rates instead	Collect market evidence when plant arrives
Charging all of a shared manager's time	The people section allows only a proportion	Keep time records for those not based in the Working Areas
Ignoring rebates	Clause 52.1 takes them off, sometimes after the amount has been paid	Ask finance for a rebate list each quarter
Letting forecasts drift upward	It damages trust, and may be reversed with a negative later	Reconcile each forecast against what actually happened

At the end

Mistake	Why it hurts	Fix
Leaving compensation events open until the end	Agreement gets harder, and the deadline doesn't move	Run batches during the defects period. See final account
Missing the 53.3 challenge period	The assessment can become conclusive	Diarise four weeks from the day the final assessment is issued
Forgetting half of the retention	The X16 release after the Defects Certificate period isn't automatic in practice	Check each later assessment shows it. See retention
Delay damages not reconciled after a Completion Date change	Overpayments are due back with interest under X7.2	Recalculate after every implemented event that moves the date

A quick monthly check

Three questions take five minutes and catch most of the above:

1. When's the next application, certificate, pay less deadline and final date, by actual date?
2. Does the amount in the certificate reconcile to the application, line by line?
3. Has anything in the last month changed the Prices, the Completion Date or the retention position?

A register or shared tracker, like the one discussed in NEC registers, makes these questions easy to answer. Contract Status records assessment dates and payment certificates for this reason, but a clear spreadsheet does the job if someone keeps it up to date.

Related guides

• NEC Payment and Defined Cost: The Complete Guide
• Payment for NEC Subcontractors
• Retention Under NEC
• Delay Damages
• Open Book and Cost Records
• Auditing Defined Cost

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.