How does NEC4 clause 66 work?
An event is implemented when a quotation is accepted, an own assessment is notified, or a quotation is treated as accepted, and after that it is not revised.
Updated: . By Jack Butler-Kettle, Construction Claims Consultant.
The answer
Clause 66 ends the compensation event procedure, and it is why the earlier stages matter so much. Implemented means the change is settled into the contract. Under clause 66.1 that happens when acceptance of your quotation is notified, or when the other side's own assessment is notified. It also happens when a quotation is treated as accepted because no reply came. Under clause 66.2, an implemented assessment is not revised except as the contract states, and it states very little. The main way back is where an assumption was stated when the quotation was asked for, and a correction is later notified. That correction is itself a new compensation event under clause 60.1(17). Otherwise a forecast that proves too low is not topped up, and one that proves too high is not clawed back. That cuts both ways in every option. Once implemented, the change to the Prices goes into the activity schedule or bill of quantities under Options A and B. Under Options C and D it goes into the total of the Prices that the target is measured against. Clause 65 sits alongside, for changes still only being considered. In the NEC4 main contract, the Project Manager can ask for a quotation for a proposed instruction. The Contractor submits it within 3 weeks, and the reply comes within 3 weeks. The reply instructs the change, says it will not be instructed, or says the quotation is not accepted. What goes wrong is that parties do not respect the finality. Contractors put in their actual cost at the final account. Project Managers try to cut an implemented figure because the work cost less. Both are outside the contract. The opposite failure is worse: nothing is ever implemented, because no acceptance and no failure is notified. Dozens of events then reach the final account unpriced. Keep a register of the implementation date and figure for each event.
Example
Illustrative example. The scenario and figures are invented.
The facts
A quotation is accepted at £33,000, built on a forecast of 2 weeks of plant and labour. The work in fact takes 3 weeks and costs £41,000, and the event is already implemented.
What happens
- Under Option A, £33,000 is paid through the activity schedule, and the £8,000 shortfall stays with the subcontractor.
- Had the work taken 1 week and cost £25,000, the subcontractor would still be paid £33,000, and nobody could reduce it.
- Under Option C, the subcontractor is still paid its Defined Cost plus the Fee through the Price for Work Done to Date, so the £41,000 is paid.
- But the target moved by only £33,000, so the £8,000 difference shows up in the subcontractor's share, not as a revision to the event.
The implemented event under each Option
| Item | Option A | Option C |
|---|---|---|
| Accepted quotation | £33,000 | £33,000 |
| Actual cost | £41,000 | £41,000 |
| Paid to the subcontractor | £33,000 | £41,000 |
| Where the £8,000 difference lands | With the subcontractor | In the subcontractor's share |
The outcome
The implemented event is not revised either way. Under Option A the £8,000 shortfall stays with the subcontractor, and under Option C it moves the subcontractor's share.
Our Compensation Event Loss Prevention keeps the implemented figure for each event on the register, separate from what the work later cost.