What is the NEC4 payment timeline?
On an unamended NEC4 ECC with Option Y(UK)2, payment is due 7 days after each assessment date, and the final date for payment is 14 days later.
Updated: . By Jack Butler-Kettle, Construction Claims Consultant.
The answer
NEC4 runs on assessment dates rather than applications. The first assessment date is set in the Contract Data, and the rest follow at the assessment interval. The Contractor can submit an application before each one. Option Y(UK)2 applies the Housing Grants, Construction and Regeneration Act 1996 to the contract. Under it, the Project Manager certifies payment within 1 week of the assessment date, and that certificate is the Payment Notice. A Pay Less Notice must be given not later than 7 days before the final date. If no certificate is issued in time, the Contractor's application stands as the notice. On an NEC subcontract, your main contractor does the certifying, and the subcontract form has its own periods. Z clauses, the amendments added to NEC contracts, often change the periods too. So, as with JCT, build your diary from the signed subcontract.
Example
Illustrative example. The scenario and figures are invented.
The facts
Your main contractor's unamended NEC4 ECC with Y(UK)2 has an assessment date on the 25th of the month. Your subcontract below it has Z clauses setting the final date for payment at 35 days after the due date.
What happens
- The certificate is due within a week of the assessment date.
- The due date is the 2nd of the next month.
- A Pay Less Notice must be given by the 9th, and the final date for payment is the 16th.
- Under your subcontract's Z clauses, the final date moves to the 6th of the month after, and the Pay Less Notice deadline to the 30th.
The outcome
Under the unamended ECC the money is due on the 16th, with a Pay Less Notice by the 9th. Under your subcontract those dates become the 6th of the month after and the 30th.
Late Payment Prevention derives the assessment dates and the payment periods from your executed subcontract.