How to Respond to a CE Quotation Under NEC4

Once a compensation event has been notified and accepted, the next step is preparing and submitting a quotation. Notification preserves your entitlement — it is the procedural gateway that keeps the claim alive. But the quotation is where that entitlement is converted into actual money. Get it wrong, get it late, or let the PM make their own assessment in your place, and you will almost certainly recover less than you are owed.

This guide covers everything a subcontractor or quantity surveyor needs to know about preparing, submitting, and defending a CE quotation under NEC4. It covers the time limits, what to include, how the PM responds, and what to do when the process goes off-track.

How the Quotation Process Works

Under clause 62.1, once a compensation event has been notified and the PM has accepted it, the PM instructs the Contractor to submit a quotation. The instruction specifies a submission period — the default is three weeks from the date of the instruction, though this can be extended by agreement. In a subcontract chain, the main contractor steps into the role of PM and instructs the subcontractor accordingly.

The quotation must do two things: set out the proposed change to the Prices, and — where the CE affects planned Completion — include a revised programme showing the impact on the programme. The change to the Prices is assessed on the basis of Defined Cost plus the Fee. This is not a lump sum estimate or a commercial negotiation. NEC4 requires you to assess and demonstrate the actual effect of the event on your costs, using the rates and methods of assessment set out in the contract.

The PM can also instruct alternative quotations under clause 62.1. This might happen where there are different possible ways of dealing with the CE — for example, different sequencing options or alternative scopes of mitigation. Each alternative must be fully priced and must include its own programme impact. You can also propose alternatives yourself without being instructed to, which can be useful where you have identified a cost-effective solution that the PM might not have considered.

Time Limits for Submission

Clause 62.3 sets out the timetable. You have three weeks from the PM's instruction to submit your quotation, unless a longer period has been agreed in writing before the deadline. If you need more time — because the CE is complex, because records are still being compiled, or because the programme analysis requires more work than anticipated — you must request the extension before the original deadline expires. A request made after the deadline is too late.

The PM then has two weeks from receipt of your quotation to respond. These deadlines are not soft targets. They are contractual obligations, and the consequences of missing them flow in both directions. If you miss the three-week deadline, the PM can make their own assessment under clause 64.1 — and their assessment will almost never be more favourable than yours would have been. If the PM fails to respond within two weeks, that failure is itself a potential compensation event under clause 60.1(6).

Managing these deadlines is part of the job. A CE register that tracks every CE, its instruction date, the submission deadline, and the PM's response deadline is not optional on an NEC contract — it is a basic requirement of competent administration. If you are not keeping one, you will miss deadlines.

What to Include in Your Quotation

A CE quotation is not a commercial estimate. It is a structured assessment of the effect of the event on Defined Cost, and it must be capable of being verified against your project records. Vague or unsupported quotations will either be rejected with a request for revision or, worse, used as the basis for a PM assessment that differs materially from your actual costs.

Defined Cost breakdown. Defined Cost under NEC4 is the cost of components in the Schedule of Cost Components. For most subcontractors, this means people costs (people rates multiplied by the time they spent on the CE), plant and equipment (hired plant at actual rates, owned plant at schedule rates), materials (actual cost of materials supplied), and subcontracted work (actual subcontract amounts). Each element must be broken down and tied to contemporaneous records — timesheets, plant records, delivery notes, subcontract purchase orders. If your records do not support the number, the number will not stand up.

Fee percentage. Once you have established the Defined Cost, you apply the fee percentage set out in Contract Data Part 2. The fee covers your overhead and profit. It is applied to the total Defined Cost of the compensation event and is not negotiable once the contract is formed. Do not forget it — and do not inflate Defined Cost to compensate for a low fee percentage. That approach creates inconsistencies that undermine the credibility of the whole quotation.

Programme impact. If the CE has caused or will cause a delay to planned Completion, the quotation must include a revised programme showing the impact. This is not a narrative statement that the event "caused delay." It is a programme extract or a revised critical path showing how the CE interacts with the Accepted Programme, which activities have been pushed back, and by how many days the planned Completion date has moved. The programme is your evidence for a time entitlement. Without it, a time claim is unsubstantiated.

Assumptions. Where you cannot price an element of the CE definitively — because work is ongoing, because the PM has not yet confirmed the scope of the change, or because a dependent third-party cost is uncertain — you should state your assumptions clearly in the quotation. Under clause 60.1(17), if the PM has stated an assumption in notifying the CE and that assumption later proves incorrect, the correction of that assumption is itself a compensation event. The same logic applies to assumptions you state in your quotation. If you do not state them, you carry the risk of the assumption being wrong without any contractual mechanism to recover the difference later.

Risk allowance. You are entitled to include a reasonable allowance for risk in your quotation. This is not a contingency or a buffer — it is a priced assessment of the risk that the Defined Cost of the CE may turn out to be higher than the most likely estimate. Clause 63.6 makes clear that the assessment of a CE includes a risk allowance for cost and time that is at the Contractor's risk. Price this explicitly and be prepared to explain it. An unexplained lump sum addition will be challenged; a reasoned risk allowance is harder to attack.

How the PM Responds

Clause 62.3 provides for four possible PM responses to your quotation, though in practice many contractors treat only two of them as real options.

The first is acceptance. The PM notifies acceptance of your quotation, and it becomes the implemented compensation event — the change to the Prices and, where applicable, to the Completion Date. Once accepted, the assessment is fixed. This is why getting it right first time matters: there is no mechanism to go back and improve an accepted quotation if your costs turn out to be higher than you priced.

The second response is that the PM notifies reasons for not accepting the quotation and instructs you to submit a revised quotation. The PM must give reasons — not just a bare rejection. If the reasons identify specific deficiencies in your assessment, address them directly in the revised quotation. If the reasons are vague or unjustified, push back. A revised quotation is not an invitation to reduce your price — it is an opportunity to provide the evidence or explanation that the PM says is missing.

The third response is that the PM makes their own assessment under clause 64.1. This is only permitted in defined circumstances: where you did not submit the quotation within the required period, where the PM decides that the quotation has not been assessed in accordance with the contract, or where the CE was notified by the PM rather than the Contractor. The PM's assessment must itself be based on Defined Cost and the contract rules — it is not a free hand to impose whatever number the PM considers appropriate.

The fourth outcome — the one that is easily overlooked — is that the PM does nothing. If the PM fails to respond within two weeks of receiving your quotation, you should treat that failure as a compensation event under clause 60.1(6) and notify it accordingly. The compensation event notification process guide covers how to notify a CE correctly, including events arising from PM inaction.

When the PM Makes Their Own Assessment

Clause 64.1 sets out the circumstances in which the PM can assess a CE without relying on your quotation. The triggers are specific: you did not submit a quotation within the required period; the PM decides that your quotation was not assessed in accordance with the contract; or the PM notified the CE themselves under clause 61.1.

The PM's assessment is carried out under clause 64.3 using the same rules that apply to your quotation — Defined Cost plus Fee, with a programme impact if applicable. In theory, the PM's assessment should reach the same number yours would have reached if both are done correctly. In practice, PM assessments tend to be lower, either because the PM does not have access to the same level of cost detail that you hold, or because there is a commercial pressure to minimise the CE value.

If you receive a PM assessment and disagree with it, your options are to accept it, to raise a dispute with the Senior Representatives under the contract's dispute resolution procedure, or to refer it to adjudication. Adjudication is available at any time under the Housing Grants, Construction and Regeneration Act 1996, and it is the most effective lever available to a subcontractor when a PM assessment is demonstrably wrong. The threshold for referring a CE assessment dispute to adjudication is low — you need to show that the PM's figure does not reflect what the contract requires.

The most effective way to challenge a PM assessment is to compare it line by line against your own Defined Cost records. If the PM's number is lower than your actual cost, and you can evidence that difference with contemporaneous records, you have a strong basis for adjudication. If your records are incomplete, the PM's assessment is harder to displace.

Subcontractor-Specific Considerations

Under NEC subcontracts — including the NEC4 Subcontract — the main contractor takes on the role of the Client and the Contractor's Representative acts as the PM equivalent. The same principles apply, but the commercial dynamics are different.

Subcontractors face tighter turnaround expectations than main contractors. Where the main contract allows three weeks for a quotation, the subcontract may impose a shorter period in order to give the main contractor time to consolidate before submitting to the employer. Check your subcontract carefully for modified timeframes — any reduction from the NEC4 standard should have been flagged at tender stage, and if it was not, you should be aware of it now.

Pressure to reduce CE pricing is more acute in the subcontract chain. The main contractor is simultaneously managing their own CE position with the employer. A subcontractor's CE has to fit within the envelope of what the main contractor is recovering from the employer — and main contractors are sometimes reluctant to pass on the full value of a subcontractor CE if they are not confident of recovering it themselves. This is not a legitimate basis for reducing your quotation. Your entitlement is determined by the contract, not by the main contractor's upstream recovery position.

You also have less visibility of what is happening above you in the chain. You may not know how the main contractor has characterised your CE to the employer, or what the employer has accepted. Document everything independently. Your CE register, your quotation supporting records, your programme analysis — all of these should be maintained as if you will need to defend them in adjudication, because on some projects you will.

Underpricing a CE to maintain a working relationship with the main contractor is a commercial mistake. The money you leave on the table in a quotation is gone permanently once the CE is implemented. A good working relationship is built on competent contract administration, not on accepting undervalue for legitimate entitlements.

Common Mistakes

Submitting without programme analysis. If the CE caused delay, you must show it. A quotation that claims a number of days without a supporting programme analysis will be challenged and is likely to result in a reduced or rejected time entitlement. The programme is not a formality — it is the evidence.

Not supporting Defined Cost with contemporaneous records. A CE quotation prepared weeks after the event from memory and guesswork will not hold up. If you are notifying CEs promptly under the process set out in the time bar guide, your records should be current. If they are not, the fault lies in how the event was managed on site.

Accepting a PM assessment without checking it. When the PM issues an assessment under clause 64.1, it is not automatically correct. It may be lower than your actual cost, it may miss elements of Defined Cost, and it may understate the programme impact. Check it against your own records before accepting it.

Failing to include disruption. A CE may directly add cost, but it may also disrupt the sequencing or productivity of other work that was not directly affected by the event itself. Disruption is recoverable as part of the CE — but only if you can demonstrate it. This typically requires a before-and-after productivity analysis or programme comparison. It is one of the most commonly undervalued elements of a CE quotation.

Not stating assumptions. If you price on the basis of assumptions — about scope, about the duration of impact, about third-party costs — state them. If you do not, and those assumptions prove wrong, you have no route to recovery under clause 60.1(17). Stated assumptions are contractual protection; unstated assumptions are unpriced risk.

Missing the three-week deadline. The consequences of a late submission are severe. The PM's right to make their own assessment under clause 64.1 is triggered immediately when you miss the deadline. There is no grace period and no right of revision. If you need more time, request it in writing before the deadline — not after.

Practical Tips

Keep contemporaneous records from the day a CE event occurs. Timesheets, plant logs, photographs, delivery notes, emails — all of it. The CE quotation is built from these records. If the records do not exist, the quotation rests on estimation, and estimations are challenged.

Separate direct cost from disruption in your quotation. Price the direct additional Defined Cost of the CE itself in one section, and the disruption effect on other activities in another. This structure makes the quotation easier to interrogate and, critically, harder to attack as a single undifferentiated lump sum.

Use the programme as evidence, not decoration. A revised programme submitted with the quotation should demonstrate the relationship between the CE and the delay — which activities were affected, how the logic links changed, and what the net effect on planned Completion is. A programme produced in arrears without reference to the Accepted Programme at the time of the event is much weaker evidence.

Challenge PM assessments that do not reflect your actual cost. The assessment procedure in NEC4 is designed to produce a fair reflection of the real effect of the event. If the PM's number is wrong, you have the right — and in most cases the commercial obligation — to dispute it. Adjudication is accessible and relatively quick; a genuine cost-of-assessment dispute, properly evidenced, is a strong adjudication case.

Do not conflate notification with quotation. Notifying a CE preserves your right; submitting a quotation realises it. The time bar guide explains the notification obligation in detail. The quotation is a separate and subsequent step, governed by its own timetable. Managing both procedures in parallel, for multiple CEs on a live project, requires discipline and a reliable tracking system.

Finally, remember that a CE quotation is not a negotiating position — it is a contractual assessment. Price it accurately, support it with evidence, and submit it on time. Everything else follows from that.