What should an NEC compensation event quotation contain?
Three things: the change to your price built from Defined Cost plus the Fee, any delay shown on a revised programme, and your assumptions.
Updated: . By Jack Butler-Kettle, Construction Claims Consultant.
For the clause timetable, revised quotations and deemed acceptance, see how NEC4 clause 62 works.
If this is your first quotation and the period is running, see what to do when the compensation event quotation has to go in and you've never built one.
The answer
The contract names all three. First, the change to the price. Under NEC4 that is the event's effect on Defined Cost plus the Fee. Defined Cost is the contract's own measure of cost, and the Fee is its percentage for overheads and profit. Forecast the work still to do, and use actual cost for work already done. Build it from the Schedule of Cost Components, not bill rates, unless both sides agree to use rates. Second, any delay to the completion date or a key date. Show it on a revised programme, rather than just stating it. Third, the assumptions. Where the other side stated assumptions when it asked you to quote, base the quotation on them and say so. Where you had to make your own, list them. A quotation on stated assumptions can be corrected later, and one on unstated assumptions cannot. Add a cover sheet with the event, the notification date, the instruction date and the total, so the reader sees the shape before the detail.
Example
Illustrative example. The scenario and figures are invented.
The facts
An instruction to move a duct run is notified as a compensation event. The quotation covers the extra week the move takes, with its programme effect and assumptions stated.
What happens
- People and equipment are priced from the Schedule of Cost Components at the contract's rates for the extra week.
- Extra materials go in at cost, and the Fee is added.
- A revised programme extract shows 2 days' effect on the next activity and none on completion.
- One assumption is stated: the existing duct can be reused.
- The total, the event reference and the dates sit on the first page.
The outcome
The quotation carries its cost from the Schedule of Cost Components, its Fee, its programme effect and its one stated assumption. The total, reference and dates are on page one.
Compensation Event Loss Prevention builds the quotation routine around those three parts, so each quotation goes in complete.