NEC Defects and Quality: The Full Process

NEC defects follow a fixed path: both sides notify a Defect as soon as they know of it, the Contractor corrects it within the defect correction period, and the Supervisor closes everything out with the Defects Certificate. If the work is not corrected, or the Parties decide it can stay, the contract says who pays and how the Scope changes.

This guide gives an overview of quality and Defects under the NEC4 Engineering and Construction Contract (ECC), with the NEC3 clause numbers alongside. It is part of our wider guide to NEC contracts, and each topic below has its own page.

Where the rules are

NEC4 added a clause on quality management at the start of Section 4, so most of the clause numbers went up by one from NEC3. Anyone moving between editions gets caught out by this.

Topic	NEC4 ECC	NEC3 ECC
Quality management system, policy statement and plan	40	No equivalent clause
Tests and inspections	41	40
Testing before delivery	42.1	41.1
Searching for a Defect	43.1	42.1
Notifying a Defect	43.2	42.2
Correcting a Defect	44.1 and 44.2	43.1 and 43.2
Defects Certificate	44.3	43.3
Access to parts already taken over	44.4	43.4
Accepting a Defect	45	44
Uncorrected Defects	46	45

What counts as a Defect

A Defect has a narrow contractual meaning. Broadly, it is part of the works that does not meet the Scope (the Works Information in NEC3), or part of the Contractor's design that does not meet the applicable law or the design the Project Manager accepted.

That has three practical results:

The yardstick is the contract, not opinion. Work that looks poor but meets the Scope isn't a Defect. Work that looks fine but departs from the Scope is one.
The Scope needs to say what is wanted. A vague specification gives the Supervisor little to measure against. If a standard matters to the Client, write it down.
Snagging isn't a separate category. The contract has no list of "snags" with its own rules. An incomplete item may stop Completion being certified, while a part that is built wrongly is a Defect. They can overlap.

The life of a Defect, step by step

Tests and inspections. The Scope and the law decide which are done and by whom. Each side tells the other beforehand, and shares the results afterwards.
A search, if there is a suspicion. The Supervisor can instruct the Contractor to look for a Defect, giving a reason.
Notification. Up to the defects date, the Supervisor and the Contractor each report any Defect to the other as soon as they know of it.
Correction. The Contractor has to correct a Defect, notified or not. A notified Defect has to be corrected before its defect correction period ends.
A choice, if correcting makes little sense. Either side can propose changing the Scope so the Defect stays, and the Contractor quotes for doing that.
A consequence, if nobody corrects it. The Project Manager assesses a cost and the Contractor pays it. The Scope is treated as changed to accept the Defect.
Close-out. The Supervisor issues the Defects Certificate, which then sets off the final assessment of what is owed.

Who does what

Role	Main jobs in this section
Supervisor	Carries out its own tests, watches the Contractor's, instructs searches, notifies Defects, marks items outside the Working Areas and issues the Defects Certificate
Project Manager	Accepts the quality plan, instructs correction of a failure to follow it, considers proposals to accept a Defect, assesses the cost of repeat tests and uncorrected Defects
Contractor	Runs the quality system, gives notice of tests, notifies Defects it finds, corrects Defects and quotes for accepting one
Client	Provides anything the Scope says it will for tests, and gives access to parts it has taken over so a Defect can be corrected

Who pays for what

Quality disputes usually turn into money disputes. These are the rules to remember:

Situation	Result	NEC4 ECC
A search instructed by the Supervisor finds no Defect	A compensation event, unless the search was needed only because the Contractor gave too little notice of covering work up	60.1(10)
The Supervisor's test or inspection causes unnecessary delay	A compensation event	60.1(11)
The Client doesn't provide what the Scope says it will for a test	A compensation event	60.1(16)
A test has to be repeated after finding a Defect	The Project Manager assesses the Client's cost of the repeat, and the Contractor pays it	41.6
A notified Defect is left uncorrected although the Contractor had access	The Contractor pays the assessed cost to the Client of having others correct it	46.1
The Contractor doesn't get access before the defects date	The Contractor pays the assessed cost it would have had in correcting the Defect	46.2

Correcting a Defect is not itself a compensation event. How the cost lands depends on the main Option. Under Options A and B the Prices don't move, so the cost comes straight off the Contractor's margin. Under the cost-based Options, Disallowed Cost removes the cost of correcting Defects after Completion. It also removes the cost of correcting Defects caused by ignoring a constraint stated in the Scope. Correction before Completion that doesn't fall under that second heading stays as Defined Cost, and flows into the target outturn.

A worked timeline

A fictional Option C highway scheme, with illustrative periods from its Contract Data: defects date 52 weeks after Completion, defect correction period 4 weeks.

Date	Event	Effect
Week 0	Completion certified with a drainage Defect already notified	Its 4-week correction period starts now
Week 3	Drainage Defect corrected	The cost is Defined Cost only if the correction happened before Completion, so here it is Disallowed
Week 51	Supervisor notifies a surfacing Defect	A 4-week period starts on notification, running past the defects date
Week 52	Defects date	The duty to notify ends and no more searches can be instructed
Week 54	Surfacing corrected	Nothing is outstanding, so the Defects Certificate can follow

The certificate then starts the clock on the final assessment. See the NEC4 final assessment for what happens next.

What people get wrong

Treating notification as one-way. The Contractor has the same duty as the Supervisor to report what it finds. Keeping quiet doesn't stop the correction duty applying.
Losing track of when periods began. A Defect notified before Completion doesn't get its clock until Completion. Registers that count from the notification date give the wrong answer.
Using old clause numbers in letters. A letter citing clause 43.1 for a duty to correct is wrong under NEC4, where 43.1 is about searches.
Leaving a Defect to drift. Accepting a Defect takes a quotation. An informal "we'll live with it" leaves the Scope unchanged and the Contractor still liable.
Assuming the certificate is a clean bill of health. It lists what has been notified and not corrected. It doesn't remove the Client's rights over Defects nobody has yet found.

How Defects connect to the rest of the contract

The Defects clauses don't work alone. Each revised programme has to show the plan for dealing with notified Defects, so correction work competes with everything else for time and access. On payment, the amounts the Project Manager assesses for repeat tests and uncorrected Defects come through the normal assessment of the amount due. On risk, some of the Contractor's responsibility for loss or damage to parts taken over runs up to the Defects Certificate, and the required insurance cover lasts until then too.

Other NEC contracts run a similar process with different numbers and roles. The NEC4 Engineering and Construction Subcontract uses the same clause numbers as the ECC, with the Contractor taking most of the roles the Project Manager and Supervisor have above it. Service contracts such as the Professional Service Contract use their own, shorter numbering, so don't carry these clause references across without checking the form in front of you.

The guides in this section

Tests and inspections covers clause 41, who provides what, and the cost of a repeat test.
Searching for Defects explains the Supervisor's instruction and who pays when nothing is found.
Notifying Defects sets out who has to notify, when, and what a useful notice says.
Correcting Defects works through the defect correction period and when it starts.
Uncorrected Defects shows how the two cost assessments work, with figures.
Accepting a Defect walks through the quotation route for leaving work as it is.
The defects date explained puts the dates at the end of the job in sequence.
The Defects Certificate explained says what the certificate does, and what it leaves untouched.
Keeping a Defects register gives the fields worth recording on each item.
Quality management under NEC4 explains the quality policy statement, plan and system.
Contractor's design covers acceptance, liability and how design Defects arise.
Equipment, Plant and Materials deals with marking, title and items held off site.

All guides in this section

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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.

Quality and Defects Under NEC