NEC X clauses are optional add-ons that adjust the standard contract for a particular job: they deal with subjects such as inflation, delay damages, retention and liability caps. A clause applies only if the Contract Data selects it, so two NEC contracts with the same main Option can allocate risk very differently.
The wider family has four groups: W for dispute resolution, X for general secondary Options, Y(UK) for UK legislation and Z for additional conditions. This page explains each group and links to a guide on every Option. Clause numbers are for the NEC4 Engineering and Construction Contract (ECC) unless stated. For the contract as a whole, start with our NEC contracts guide.
How secondary Options work
When a Client sets up an ECC, it selects one main Option (A to F), one dispute Option (W) and any secondary Options. The Contract Data part one records these choices. The clause text sits in the contract document, but most Options also need a figure, a date or a form in the Contract Data or the Scope. Selecting one without completing its entries leaves it with nothing to apply to.
They aren't a free list of extras. Each moves risk or adds work, and tenderers will reflect that in their prices. Some are also limited to certain main Options, and two are mutually exclusive. Our guide to choosing secondary Options gives a decision process and starting points by project type.
The X Options: time, money and security
These Options change the price mechanism, or add incentives, deductions and security.
- X1, price adjustment for inflation, moves the Prices with published indices on Options A to D, so the Client carries inflation risk.
- X2, changes in the law, makes a change in the law of the Site's country after the Contract Date a compensation event, which can go either way.
- X3, multiple currencies, pays listed items in other currencies on Options A and B, up to stated maximums.
- X4, ultimate holding company guarantee, requires a guarantee from the top company in the Contractor's group. NEC3 called it a parent company guarantee.
- X5, Sectional Completion, gives parts of the works their own Completion Dates.
- X6, bonus for early Completion, pays a daily sum for finishing before the Completion Date.
- X7, delay damages, sets a daily sum for finishing late, with repayment if the date later moves.
- X13, performance bond, requires a bond from an accepted bank or insurer.
- X14, advanced payment, pays the Contractor a sum up front that it repays in instalments.
- X16, retention, holds back a percentage above a free amount, and in NEC4 it allows a retention bond instead.
- X17, low performance damages, sets sums payable if the finished work falls short of a stated level.
- X20, Key Performance Indicators, pays stated sums for reaching targets. It isn't used with X12.
The X Options: rights, design and working together
This second group deals with who can do what, who owns what and how the parties work with each other.
- X8, undertakings to the Client or Others, is NEC4's route to what the industry usually calls collateral warranties.
- X9, transfer of rights, gives the Client ownership of rights in design material, rather than a right to use it.
- X10, information modelling, is the NEC4 BIM Option, built around an Information Execution Plan.
- X11, termination by the Client, lets the Client end the contract for a reason of its own. In NEC3 that right was part of the core clauses.
- X12, multiparty collaboration, links several contracts under a Core Group. NEC3 called it Partnering.
- X15, the Contractor's design, limits design liability to professional skill and care, with insurance and record-keeping duties in NEC4.
- X18, limitation of liability, caps liability in four ways and adds an end of liability date.
- X19 is the Task Order Option in the NEC3 Term Service Contract, and termination by either Party in the NEC4 version, where Task Orders became core clause 19.
- X21, whole life cost, lets the Contractor propose changes that reduce the cost of running the asset.
- X22, Early Contractor Involvement, splits the contract into design-and-price and build stages, on Options C and E only.
If you are working out how to bring a contractor in early, our broader guide to early contractor involvement under NEC compares X22 with the NEC3 route and two separate contracts.
Which X numbers exist in which edition
| Option | NEC3 ECC | NEC4 ECC | Note |
|---|---|---|---|
| X4 | Parent company guarantee | Ultimate holding company guarantee | Renamed |
| X8 | None (PSC: collateral warranty agreements) | Undertakings to the Client or Others | New to the ECC |
| X9 | None (PSC only) | Transfer of rights | New to the ECC |
| X10 | None (PSC: Employer's Agent) | Information modelling | Number reused |
| X11 | None (PSC: termination by the Employer) | Termination by the Client | New to the ECC |
| X12 | Partnering | Multiparty collaboration | Renamed |
| X15 | Design liability limited to a skill and care standard | The Contractor's design | Expanded |
| X19 | None (TSC: Task Order) | None (TSC: termination by either Party) | Number reused |
| X21 | None | Whole life cost | New |
| X22 | None | Early Contractor Involvement | New |
NEC4 also has Options outside this site's Option-by-Option guides: X23 and X24 for term contracts, and X29 on climate change, which NEC renamed "Nature and climate" in June 2026. Check your form's contents page for the current list. The NEC3 and NEC4 comparison covers these moves more widely.
Y(UK) Options: UK legislation
These three deal with UK law, and they are numbered separately from the X Options.
- Y(UK)1, Project Bank Account, pays the Contractor and Named Suppliers from one ring-fenced account.
- Y(UK)2, the Construction Act, sets payment dates, the certificate as the payment notice, pay less notices and the treatment of suspension.
- Y(UK)3, third party rights, says who outside the contract can enforce its terms under the 1999 Act.
W Options: resolving and avoiding disputes
A contract uses one W Option. It's a required choice, and the right one depends mainly on whether the UK Construction Act applies.
- W1 is for contracts the Act doesn't cover. In NEC4 it goes through Senior Representatives, then the Adjudicator, with firm time limits.
- W2 is for contracts the Act does cover, so a Party can adjudicate at any time.
- W3 is NEC4's Dispute Avoidance Board. It has no adjudication stage, so it's generally unsuitable for contracts under the Act without amendment.
Read more about how these fit together under NEC disputes and termination.
Z clauses: additional conditions
Option Z brings in whatever additional conditions the Contract Data lists. It's powerful, and it's where an otherwise well-balanced contract can go wrong.
- Writing Z clauses gives a set of drafting rules and a review checklist.
- Common Z clause mistakes shows risky illustrative wording and why it causes trouble.
A worked example of Options together
Here's how a selection affects the job in practice, on a fictional £8m Option C flood defence with illustrative figures. The Client selects W2, Y(UK)2, X1, X5, X7, X16 and X18.
| Event | Option that responds | Result |
|---|---|---|
| Steel index rises by 8% | X1 | The total of the Prices rises at each assessment, so the target moves |
| The first flood gate is late by six days | X5 and X7 | Delay damages at the rate for that section, for the six days |
| Value reaches the free amount of £400,000 | X16 | Retention starts on the excess |
| The Client wants to deduct damages from a certified sum | Y(UK)2 | A pay less notice is needed before the deadline |
| A dispute over a compensation event | W2 | The Contractor can adjudicate at any time |
| A design Defect is found after the Defects Certificate | X18 | Liability is limited to the stated figure |
None of these results would be the same without the Option. Without X7, for example, there's no daily rate to apply, and without X16 there's no retention to hold.
What to do when reading a contract
- Find the list of Options in Contract Data part one, and note the main, W, X, Y and Z selections.
- Read only the Option clauses selected, in your edition of the contract.
- Check the matching data and Scope entries are complete, and flag any that aren't.
- Read the Z clauses next, because they may amend what you've just read.
- Summarise it on one page for the project team, so nobody relies on memory of the previous job.
Subcontracts need their own review. The Engineering and Construction Subcontract has its own selections, and it has no X22 or W3.
All guides in this section
- X1: Price Adjustment for Inflation
- X2: Changes in the Law
- X3: Multiple Currencies
- X4: Ultimate Holding Company Guarantee
- X5: Sectional Completion
- X6: Bonus for Early Completion
- X7: Delay Damages
- X8: Undertakings to the Client or Others
- X9: Transfer of Rights
- X10: Information Modelling
- X11: Termination by the Client
- X12: Multiparty Collaboration
- X13: Performance Bond
- X14: Advanced Payment to the Contractor
- X15: The Contractor's Design
- X16: Retention
- X17: Low Performance Damages
- X18: Limitation of Liability
- X19: Task Order (NEC3) and Termination by Either Party (NEC4)
- X20: Key Performance Indicators
- X21: Whole Life Cost
- X22: Early Contractor Involvement
- Early Contractor Involvement Under NEC
- Y(UK)1: Project Bank Account
- Y(UK)2: The Construction Act
- Y(UK)3: Third Party Rights
- W1: Dispute Resolution Where the Act Does Not Apply
- W2: Dispute Resolution Under the Construction Act
- W3: Dispute Avoidance Board
- Z Clauses: Writing Additional Conditions
- Common Z Clause Mistakes
- Choosing Secondary Options
Related guides
- NEC Contracts Explained: The Complete Guide
- NEC4 Contracts: A Complete Guide
- NEC Contract Types: Which Form Do You Need?
- NEC Compensation Events: The Complete Guide
- NEC Early Warnings: The Complete Guide
- The NEC Programme: A Complete Guide
Free NEC tools, quizzes and downloads
- Start here: NEC help by role
- Clause finder and clause index
- Deadline calculator and time periods by contract
- Who does what, by when
- Contract picker and main Option picker
- Glossary and abbreviations
- NEC quizzes and role-play scenarios
- Free NEC templates and clause sheets
- Worked examples and all guides, A to Z
See how this works in practice
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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.