JCT or NEC: what the difference means for a subcontractor
JCT and NEC both get you paid, but they go wrong in different ways. Here is how each treats your money, your notices and your time limits.
Updated: . By Jack Butler-Kettle, Construction Claims Consultant.
The short answer
JCT sets out rights and obligations, and you claim when something changes. NEC is a procedure: it expects both sides to warn, notify and agree as the job goes.
For a subcontractor, the biggest difference is the time limit on claims. Under NEC, a compensation event not notified within 8 weeks is usually lost. Under an unamended JCT subcontract, a late notice does not usually end a claim, though amendments often change that.
JCT and NEC side by side
The table sets the two families side by side, as published. Your subcontract's amendments can change any row.
| JCT | NEC4 | |
|---|---|---|
| Published by | The Joint Contracts Tribunal | The Institution of Civil Engineers |
| Used most on | Building work | Infrastructure and public sector work |
| Subcontract forms | A subcontract for each main contract, such as the Design and Build Sub-Contract | The Engineering and Construction Subcontract and the Short Subcontract |
| How the price works | A lump sum or measured price, adjusted for variations | One of main Options A to E, from a priced contract to cost reimbursable |
| A change | A Variation, valued under the valuation rules | A compensation event, assessed on Defined Cost plus the Fee |
| Delay | Time and money are separate: Relevant Events and Relevant Matters | One compensation event deals with both time and money |
| Notice time limits | Prompt notice required, and late notice not usually fatal unless amended | 8 weeks to notify a compensation event, or the right is usually lost |
| Payment | Monthly valuation dates | Assessment dates, with Option Y(UK)2 for the payment law |
| Risk added by | A schedule of amendments | Z clauses |
Why NEC time limits matter most
Under NEC, the procedure is the claim. Miss the 8-week notice and the facts may never be heard. Miss an early warning and the event can be valued as if you had given one.
So on an NEC job, a register of every event and its deadlines is not just paperwork, because it is your money. See What if I miss the 8 week compensation event deadline?
Under JCT, notices still matter. A late notice can weaken a claim for time or loss and expense, even where it does not end it. See Can I lose a variation claim by notifying it late?
Payment and cash flow
Both families give you the payment rights of the Housing Grants, Construction and Regeneration Act 1996. Those are a due date, a final date, payment notices and the notified sum.
Under JCT you are paid on a valuation of work done at your rates. Under NEC it depends on the main option. Under Option A you are paid the price of each completed activity. Under Options C to E you are paid your Defined Cost plus the Fee. On a cost-based option, weak cost records mean a weak payment.
Is one better for a subcontractor?
Neither is better on its own. What decides your risk is how each has been amended: the schedule of amendments on JCT, and the Z clauses on NEC.
Whichever form you are sent, ask the same three questions. When will you be paid? What notices must you give, and by when? What can be deducted from you?
For more on each, read JCT contracts explained for subcontractors and NEC contracts explained for subcontractors. If an amendment's meaning in law is unclear, ask your solicitor.
Sources
If this is happening to you
Find the claim that fits, and the services that deal with it.
I don't know what my subcontract commits me to. We explain contract risks before signing and turn signed terms into clear actions. See Pre-Signing Contract Review and Post-Signing Contract Review.
My compensation events are being refused. We challenge refused or undervalued NEC compensation events. See Compensation Event Claim.
My variations aren't being paid. We value instructed changes and pursue unpaid variations. See Variation Claim.