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Notify NEC compensation events early and by the book

On an NEC job, a compensation event you do not notify in time can be lost entirely, unless your main contractor should have notified it. Put the notification period in the diary, use the contract's forms and channels, and raise an early warning the moment a change looks likely.

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

Why it matters

On an NEC job nothing moves until something is notified, and the periods are short. Site teams treat a compensation event like a variation on any other job. They wait until the cost is clear and raise it at the month end, and by then the period has closed. If your main contractor was not bound to notify the event itself, the money is lost outright. Late early warnings hurt too: they give the other side an argument to cut the assessment. A diary entry and a form cost far less than the argument.

How to do it

  1. Put the notification period from your subcontract in the project calendar on day one. Set a prompt a third of the way through the period for every logged event.
  2. Use the contract's own notification form and channel, not an email that mentions the event in passing.
  3. Raise an early warning the moment a change looks likely, before anyone knows what it will cost.
  4. Log every notification and early warning with its date, and check the log against the calendar every week.

Example

Illustrative example. The scenario and figures are invented.

The facts

A mechanical subcontractor on an NEC subcontract, with the unamended 8-week period, arrives on a Monday to start in the plant room. It has not been handed over, 3 weeks after the access date on the Accepted Programme. The fitters are moved to other work while they wait, at an extra cost of about £21,000.

What happens

  1. The commercial manager logs the missed access date that day, with the diary entry and the email chasing the handover. The calendar prompt is set for week three.
  2. An early warning goes out on the Tuesday. The compensation event notification follows on the Thursday through the contract's communication system, naming the event.
  3. The main contractor accepts the event and instructs a quotation, which goes in within its period.

The outcome

The £21,000 is assessed and paid. Raised at the month end in a general email, the event would have been open to argument on form. Raised in week nine, it could have been lost, because nobody but the subcontractor was going to notify it.

To have this set up for you, see our Compensation Event Loss Prevention service.