Skip to content
Book a demo

NEC accepting Defects means changing the Scope so a Defect no longer has to be corrected, in return for reduced Prices, an earlier Completion Date, or both. Either the Contractor or the Project Manager can propose it, and neither has to agree.

It is at clause 45 of the NEC4 ECC and clause 44 of NEC3. It is often the most sensible answer in the wider NEC Defects process when correction would cost far more than the benefit it brings.

The route, step by step

  1. Proposal. The Contractor or the Project Manager proposes changing the Scope so the Defect can stay (45.1). A short written note will do.
  2. Willingness. Both sides need to be prepared to consider it. If either isn't, the Defect simply gets corrected.
  3. Quotation. The Contractor quotes for lower Prices, an earlier Completion Date, or both (45.2).
  4. Decision. If the Project Manager accepts the quotation, an instruction changes the Scope, and the Prices and Completion Date move to match.
  5. If not accepted. The Scope stays as it was and the Contractor still corrects the Defect.

How this differs from a compensation event

PointAccepting a DefectCompensation event
Is it an entitlement?No. It's optional for bothYes, if the event happened
Prices move which way?Down, or the Completion Date comes earlierUsually up, or the date goes later
Assessed from Defined Cost?Not by the clause: it's a negotiated offerYes, by the rules in clause 63
Can the Project Manager assess it instead?No. Without an accepted quotation, nothing changesYes, in the listed situations

The list of compensation events reflects this: a Scope change made to accept a Defect is carved out of 60.1(1), and a withheld acceptance of such a quotation is carved out of 60.1(9). So refusing a quotation for a Defect, for any reason, doesn't give the Contractor an event.

A worked example

A fictional distribution warehouse on Option A, with illustrative figures. A section of yard paving has been laid to the correct strength but finishes 8 mm outside its level tolerance. Water still drains. Breaking it out and relaying would cost the Contractor £48,000 and would close a loading bay for two weeks after the Client has moved in.

OptionContractor's costClient's position
Correct the Defect£48,000Paving to Scope, but two weeks with one bay closed
Accept, quote £15,000 reduction£15,000Price cut, no disruption, a small and permanent tolerance departure

Both Parties gain compared with correcting. The Project Manager's concerns are whether the departure affects durability or maintenance, and whether £15,000 fairly reflects the reduced value to the Client.

What the Project Manager should check

  • Authority. The Scope is the Client's document. Check your internal authority before accepting a permanent change, especially where a funder or end user is involved.
  • Long-term cost. Consider maintenance, warranty and asset life, not only today's cost.
  • Compliance. A quotation can't make something legal. If a Defect breaches building regulations or a safety standard, acceptance doesn't fix that.
  • Precise wording. Describe the exact Defect and the changed Scope, so that it doesn't later cover anything wider.
  • Target contracts. On Options C and D, a change to the Prices flows into the total of the Prices and so into the share. Our guide to the pain/gain share has more on this.
  • Others affected. A subcontractor's work may be involved. The main contract's acceptance doesn't by itself change the subcontract.

No time limit, so set one

The main thing to note is that a proposal doesn't stop the defect correction period. If the Parties are talking and the period runs out, the Contractor could be exposed to the uncorrected Defect assessment. Agree a date for the decision, and if you need longer, record the plan in writing. Don't assume that talks have paused anything.

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

Try the Supervisor role-play, 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.