How to Notify a Compensation Event Under NEC4

Notifying a compensation event correctly is the single most important procedural step in NEC contract administration. Get it wrong — or get it late — and you lose your entitlement entirely, regardless of the merits of your claim. There is no discretion available to the project manager, no equitable override, and no argument based on the fact that the event genuinely happened and genuinely cost you money. The NEC4 notification procedure is a condition precedent: follow it or forfeit the right.

This guide explains the full process for notifying a compensation event under NEC4 — who notifies, when, how to structure the notification, what happens once it is submitted, and the mistakes that consistently cost subcontractors their entitlement.

Who Notifies, and When

There are two routes by which a compensation event enters the process. Understanding which applies determines what action you need to take and when.

PM-initiated compensation events arise under clause 61.1. When the project manager gives an instruction, notifies a change to Works Information, or takes another action that constitutes a compensation event, the PM is required to notify the event at the same time. The PM then instructs you to submit a quotation directly — no separate notification from you is required. Even in this scenario, track the event on your CE register and confirm in writing that you have received the PM's instruction and are treating it as a compensation event. Do not leave this implicit.

Contractor-initiated compensation events arise under clause 61.3. Where an event listed in clause 60.1 has occurred and the PM has not already notified it, the obligation to notify passes to you. This is the more commercially sensitive of the two routes, because failure to notify — or late notification — gives the PM the right to decide that the event is not treated as a compensation event. That decision extinguishes your claim entirely. The 8-week clock starts running from the point you become aware of the event, not when you choose to act on it.

Do not assume that because the PM is aware of a problem they will notify it as a compensation event. PMs regularly fail to do so, sometimes inadvertently, sometimes deliberately. If you are waiting for the PM to act while your notification window is running, you are taking a commercial risk with no contractual justification. Assume the PM will not notify and protect yourself accordingly.

The 8-Week Time Bar

Under clause 61.3, you must notify a compensation event within 8 weeks of becoming aware of it. Miss that deadline and the PM can — and typically will — reject your notification on the ground that it is late. At that point your right to compensation for that event is lost.

"Becoming aware" is an objective test. It means the point at which a reasonable contractor in your position, exercising reasonable diligence, would have had knowledge of the event. It is not the date your commercial team received information from site, not the date you quantified the impact, and not the date the event concluded. Slow-burn events — site access restrictions, prolonged design failures, continued exceptionally adverse weather — must be notified as soon as you identify them, even if their full impact is still unfolding.

The 8-week period is the NEC4 default and can be amended in Contract Data Part 1. Some contracts reduce it to 4 weeks. Always check your specific contract before assuming the standard period applies. For the full analysis of how the time bar operates — including what happens if you notify late and how "awareness" is assessed in disputed cases — see the 8-week time bar explained guide.

How to Write a CE Notification

A compensation event notification does not need to be lengthy, but it must contain specific elements. Missing any of them gives the PM grounds to reject it or treat it as deficient.

The notification must be in writing. A verbal mention in a site meeting, a phone call to the PM, or an off-hand reference in a general email does not constitute notice under the contract. NEC4 requires communications to be in a form capable of being retained. Write it as a formal CE notification — not as part of a broader correspondence, and not buried in a meeting minutes thread.

Identify the specific clause 60.1 sub-paragraph. State which limb of clause 60.1 the event falls under. A PM instruction changing the Works Information is clause 60.1(1). A failure to provide access by the date shown on the Accepted Programme is clause 60.1(2). An instruction to stop or not start work is clause 60.1(4). Exceptionally adverse weather conditions fall under clause 60.1(13). A breach of contract by the employer falls under clause 60.1(18). Referencing "clause 60.1" without a sub-paragraph is imprecise and leaves the notification open to challenge.

Do not attempt to quantify financial impact or programme delay in the notification. The notification is not the quotation. Keep it factual and brief — two or three sentences describing what happened, when it happened, and which works were affected. Mixing a cost schedule into the notification creates confusion about whether you have submitted a notification under clause 61.3 or a quotation under clause 62.1, and can compromise both.

A well-structured notification contains these elements in order:

1. Heading: Compensation Event Notification — [Project Name] — [CE Reference Number]
2. Reference to clause 61.3 NEC4 ECC (or NEC4 ECS for subcontracts)
3. The specific clause 60.1 sub-paragraph
4. A factual description of the event (two to four sentences)
5. The date of occurrence (or commencement, for ongoing events)
6. The date you became aware
7. A statement that you are notifying this as a compensation event

Send it directly to the PM by email and request acknowledgement of receipt. Keep a copy in your CE register with the date sent and the PM's response deadline noted.

What Happens After You Notify

Once you have submitted a CE notification under clause 61.3, the PM has one week to respond. Under clause 61.4, the response must be one of three things.

The PM accepts the notification. This means the PM agrees that the event is a compensation event. Following acceptance, the PM will instruct you to submit a quotation under clause 62.1. The quotation is where the financial and programme impact of the event is assessed — it is a separate step with its own time limits and content requirements. For guidance on that stage, see the how to respond to a CE quotation guide.

The PM rejects the notification with reasons. The PM can notify you that the event is not a compensation event, giving reasons. Common grounds include: the event was already notified by the PM; the event does not fall within clause 60.1; the notification was submitted outside the 8-week period. A rejection does not extinguish your right to dispute the PM's decision — you can refer it to adjudication — but you cannot simply proceed as if the CE has been accepted. Respond promptly if you intend to challenge it.

The PM fails to respond within one week. This is the deemed acceptance rule. If the PM does not reply within the one-week period, the notification is treated as accepted. If the response window expires without a reply, write to the PM noting that the one-week period has elapsed, that you are treating the notification as accepted under clause 61.4, and that you will proceed to submit a quotation. Create a clear documentary record of the timeline.

Clause 61.4 also gives the PM the option of deciding that the event has no effect on Prices, Completion Date, or Key Dates. This is not a rejection of the event as a CE — it is a finding that the CE has no compensation consequence. If you disagree with that finding, it can be challenged as a disputed PM assessment.

Subcontractor-Specific Considerations

Under NEC4 Engineering and Construction Subcontracts (ECS), the main contractor steps into the role of the project manager. Every reference in the ECC to the PM maps to the main contractor in your subcontract relationship. The same notification obligations apply, but you are dealing with a counterparty that has its own commercial interests and no obligation to act in yours.

Main contractors are frequently slow to respond to CE notifications. The one-week response window still runs from the date your written notification was delivered, regardless of whether the main contractor has acknowledged it. Keep proof of delivery — a sent email with a clear timestamp is usually sufficient.

Notifications can become lost in project email chains where multiple people are copying in on day-to-day site correspondence. Send CE notifications as a standalone communication with a clear subject line: "Compensation Event Notification — [Project Reference] — CE-[Number]". This makes it identifiable and harder to claim was overlooked.

There is also a chain-of-CEs issue on projects where the main contractor holds an NEC contract with the employer. If the main contractor's CE against the employer is time-barred or rejected, they may attempt to pass that outcome down to you. Your CE entitlement depends on the provisions of your subcontract, not the result of the main contractor's claim upstream. Notify your own CEs independently and on time.

Common Mistakes to Avoid

Waiting until the impact is quantified before notifying. Notification and quotation are separate steps. The obligation to notify arises when you become aware of the event, not when you can price it. Notify first. Price later.

Using informal communications as a substitute for formal notification. Mentioning a problem in a site meeting, raising it in a WhatsApp message, or referencing it in a general email does not constitute a clause 61.3 notification. Courts and adjudicators consistently hold that informal communications, however detailed, do not satisfy NEC notification requirements. Write a formal notification every time.

Referencing clause 60.1 without the sub-paragraph. A vague reference gives the PM grounds to argue the notification is deficient. Identify the specific sub-paragraph. If uncertain, state the most likely one and note that you reserve the right to identify further applicable sub-paragraphs.

Assuming the PM will notify because they already know about the problem. PM awareness of a problem does not create a PM obligation to notify it as a CE. Do not wait. Notify yourself under clause 61.3 within 8 weeks of becoming aware, regardless of what the PM does or does not do.

Treating weather CEs as an end-of-project exercise. Exceptionally adverse weather events under clause 60.1(13) must be notified as they occur. Accumulating records and submitting a consolidated notification at practical completion — months after each event — puts every one of those notifications outside the 8-week window. Notify weather CEs contemporaneously.

Practical Tips for Getting It Right

Keep a CE register from day one. A running log of potential compensation events — tracking the event, clause 60.1 reference, date of occurrence, date of awareness, notification deadline, date notified, and PM response — is the most effective tool for protecting your entitlement. Review it weekly.

Diarise the 8-week deadline the moment you identify an event. When something happens on site that might be a CE, set a calendar reminder eight weeks from the date of awareness. If the event turns out not to be a CE, cancel it. If it is, you have the deadline visible before it becomes urgent.

Confirm receipt in writing. After sending a notification, follow up to confirm it was received. If the PM does not acknowledge within a day or two, send a brief follow-up noting the notification date and CE reference. This makes it difficult for anyone to claim later that it was not received.

Keep notification and quotation as separate documents. A notification that includes a cost schedule creates ambiguity about which step in the process it represents and can compromise both. Notify the event. Wait for acceptance. Then submit your quotation separately in accordance with the process set out in the CE quotation guide.

The NEC4 compensation event process rewards subcontractors who are commercially aware and procedurally disciplined. Notification is where entitlement is won or lost. For a broader review of the terms worth scrutinising before signing any subcontract — NEC or otherwise — the subcontractor contract review checklist is a good starting point.