Question 1

What are NEC compensation events?

Accepted Answer

Compensation events (CEs) under NEC4 clause 60.1 are the 21 defined circumstances under which a contractor is entitled to claim additional time and money. They range from changes to scope (60.1(1)) to unforeseen ground conditions (60.1(12)) and weather events (60.1(13)). CEs must be notified within the time limits set out in the contract.

Question 2

What is the difference between NEC main options A, B, C, D, E and F?

Accepted Answer

NEC main options define the payment mechanism. Option A is a lump sum with an Activity Schedule; Option B is remeasurable with a Bill of Quantities; Options C and D are target cost contracts (with Activity Schedule and BoQ respectively); Option E is cost reimbursable; Option F is a management contract. The choice of option determines how payment is calculated and how risk is shared.

Question 3

What are NEC X clauses?

Accepted Answer

X clauses are secondary options that are added to an NEC contract. Common examples include X7 (delay damages/liquidated damages), X5 (sectional completion), X1 (price adjustment for inflation), and X13 (performance bond). Not all X clauses apply to every NEC contract — check Contract Data to see which are included.

Question 4

How long do I have to notify a compensation event under NEC?

Accepted Answer

Under NEC4, you must notify a compensation event within 8 weeks of becoming aware of it, unless the contract states a different period. Failure to notify in time can bar your entitlement to additional time and money. This time-bar is strictly enforced, so prompt notification is critical.

Question 5

Do NEC compensation events apply to subcontracts?

Accepted Answer

NEC subcontracts have their own compensation event clauses that mirror (or should mirror) the main contract. The Contractor takes on the role of the Client under the subcontract. The same principles apply — subcontractors must notify CEs promptly and within the required time limits to protect their entitlement.

Compensation Events (Clause 60.1)

Client instruction to change the Scope

Client does not allow access by a date in the Accepted Programme

Client does not provide something by a date in the Accepted Programme

Client gives instruction to stop or not to start work

Client or Others do not work within the conditions stated in the Scope

PM or Supervisor does not reply within the period required

PM gives instruction changing a decision previously communicated

PM changes an earlier decision on accepting a Contractor communication

Client notifies correction of a Defect that existed at Completion

Client notification to search for a Defect not caused by the Contractor

A test or inspection causes unnecessary delay

Physical conditions within the Site not weather

Weather measurements exceed stated limits

Event in Client's risk as stated in the Risk Register

PM certifies take over of part of the works before Completion date

Client does not provide materials, facilities, or samples as stated in Scope

PM notifies a correction to an assumption about a compensation event

A breach of contract by the Client

Event that stops Contractor completing by the planned Completion date

Additional compensation events stated in Contract Data

Client instructs the Contractor to prepare a revised programme

Main Options A–F

Priced contract with Activity Schedule

Priced contract with Bill of Quantities

Target contract with Activity Schedule

Target contract with Bill of Quantities

Cost reimbursable contract

Management contract

X Clauses (Secondary Options)

Price adjustment for inflation

Changes in the law

Multiple currencies

Parent company guarantee

Sectional completion

Bonus for early Completion

Delay damages

Undertakings to the Client or Others

Transfer of rights

Information modelling (BIM)

Termination by the Client on notice

Multi-party collaboration

Performance bond

Not sure how a clause affects your current bid?