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How does NEC4 clause 15 work?

Both sides must give early warning of anything that could raise cost or cause delay, and a warning you failed to give can cut your later assessment.

Updated: . By Jack Butler-Kettle, Construction Claims Consultant.

For what an early warning notice is and when to give one, see what an NEC early warning notice is.

The answer

Clause 15 deals with problems before they become compensation events, and it puts a price on ignoring them. In the NEC4 main contract it binds the Contractor and the Project Manager. On an NEC subcontract it binds you and your main contractor. Under clause 15.1, each gives an early warning as soon as it becomes aware of any matter that could raise the total of the Prices. The same goes for anything that could delay Completion or a Key Date, or impair the works in use. Under clause 15.2, the Project Manager keeps the Early Warning Register, enters each matter on it, and calls the first early warning meeting. Under clause 15.3, those at the meeting work together on ways to avoid or reduce the effect. They look for solutions that help everyone affected, decide the actions and who takes them, and decide which matters can come off the register. Under clause 15.4, the register is revised and issued after each meeting. An early warning is not a compensation event notification and does not replace one. They are separate, with separate consequences. The cost of not warning sits in clauses 61.5 and 63. If it is decided you did not give a warning an experienced contractor could have given, the event is assessed as if you had. Cost a timely warning would have avoided is left out. Under Options C to F, cost incurred only because the warning was not given is also Disallowed Cost, cost the contract will not pay. Four things go wrong. Early warnings are seen as admissions or claims, so nobody gives them. People assume the compensation event notification does the same job. The register is never revised, so decisions are lost. And the clause 61.5 decision arrives with no record of what the warning would have changed.

Example

Illustrative example. The scenario and figures are invented.

The facts

The main contractor is to provide switchgear by a date on the Accepted Programme. On a coordination call, the subcontractor learns the supplier will miss that date by 6 weeks.

What happens

  1. If the subcontractor gives an early warning that week, the meeting can resequence second fix and move the electricians to other work. That leaves £3,000 of standing time when the switchgear arrives late.
  2. If it says nothing, keeps the electricians on site and records £15,000 of standing time, the late supply is still a compensation event.
  3. But it is then decided that an experienced contractor could have warned.
  4. Under clauses 61.5 and 63, the event is assessed as if the warning had been given.

The outcome

The change to the Prices is built on the £3,000 plus the Fee, not the £15,000.

To have an early warning register kept live alongside the notification routine, see our Compensation Event Loss Prevention service.