Plain English Explanation
This is the most commonly used compensation event. It arises when the Project Manager (PM) gives an instruction that changes the Scope — the document that defines what you must do. The Scope includes drawings, specifications, and any other technical requirements. If the PM instructs something that wasn't in the original Scope, it is a compensation event.
The change could be an addition, an omission, or a substitution. It does not need to be a formal 'variation order' — any PM instruction that alters the defined Scope triggers a CE. Under NEC4, this is the primary mechanism for managing design changes, specification changes, and scope creep.
Critically, you must assess the impact on both cost (Defined Cost) and time (planned Completion). You should never just accept a CE instruction without pricing it — even if the PM implies it is minor.
Key Takeaway
If the PM instructs something not in the Scope — even if they call it a 'clarification' — it is a CE. Notify within 8 weeks or lose your entitlement entirely.
What This Means for Subcontractors
As a subcontractor working under an NEC subcontract, the equivalent clause refers to Contractor instructions that change your Scope. Ensure your subcontract clearly defines your Scope — vague or poorly drafted Scope documents can make it harder to demonstrate that something is new or different. Always notify a CE (clause 61) promptly after receiving an instruction.
Common Risks & Disputes
- 1Failing to notify a CE within the required time (8 weeks under NEC4 unless stated otherwise), which can bar your entitlement
- 2Accepting verbal scope changes without a written PM instruction — this makes the CE harder to substantiate later
- 3Underestimating programme impact — scope changes often affect sequence or resource, not just direct cost
- 4The PM disputing that an instruction changed the Scope, particularly where the original Scope was ambiguous
- 5Scope creep — multiple small 60.1(1) CEs that individually seem minor but cumulatively are significant
Sources
Related Clauses
PM gives instruction changing a decision previously communicated
Changed PM decisions that modify the Scope
PM notifies a correction to an assumption about a compensation event
Corrections to assumptions made when quoting the CE
Additional compensation events stated in Contract Data
Additional bespoke CEs that may expand the scope change trigger
Continue Learning
Not sure how 60.1(1) affects your current bid?
Upload your NEC contract to LazyQS and get a clause-by-clause risk report with plain English explanations and recommended actions.
Upload Your Contract