Compensation event: definition and example
An NEC event assessed under the contract for effects on price, time or both; entitlement depends on its rules and facts.
By Jack Butler-Kettle · Updated
Guidance for England and Wales. Check the contract, amendments and facts that apply to your job.
What it means in practice
Read this alongside the NEC Dictionary of Terms.
Under NEC, a compensation event is assessed through the contract's change machinery. Notification, quotation and assessment have separate roles. An early warning does not necessarily notify a compensation event, and entitlement to time or money depends on the event and the applicable terms.
Preserve the instruction, notice and assessment assumptions. Compensation event recovery can help organise the event and its supporting calculation.
Worked example
The facts
An instruction changes a subcontractor's agreed installation route under an NEC subcontract.
What happens
The subcontractor checks the event and notification provisions in its own subcontract.
Its quotation explains the affected work, forecast resources and any programme effect.
What this shows
The quotation connects the event to its effects instead of treating every extra cost as automatically recoverable.
Sources
- NEC Dictionary of Terms. NEC Contracts.