NEC Guidance Notes
NEC ECC Section 63 Assessing Compensation Events NEC Guidance Note

ECC Section 63 – Assessing Compensation Events

The Contractor has to submit their quotation within three weeks of the quotation request. It is important that they present the quotation in a format that is going to be understood and as convincing/justified as possible. It should include risk which has a significant chance of occurring and is the Contractor’s risk under the contract (63.8). That would clearly be subjective, so the Contractor just has to make it as clear and justifiable as possible within their quotation to avoid a lower Project Manager assessment. If the Contractor does not submit their quotation within three weeks then the Project Manager under clause 64.1 will make their own assessment of that compensation event (which is unlikely to be higher than the Contractor would have wanted!)

Clause 62.2 also states that if the remaining works have been affected then the affect of this event is demonstrated against the last Accepted Programme. The clearest way to comply with this would be to submit a programme showing the effect that the event has had upon any Key Dates, Sectional Completions and/or planned Completion. To be clear, this is not a programme issued for acceptance, it is a programme to explain/justify the time affect that is being claimed within the quotation. The next programme issued for acceptance will include the effects of that and any other compensation events that have cumulatively happened within the period since the last programme was accepted.

Project Manager responds with either acceptance of the quotation, or their non-acceptance. If non-acceptance, they should state what happens next i.e. the Contractor is asked to resubmit the quotation (taking into account the reasons for non-acceptance) or a statement that the Project Manager will assess the quotation themselves. They then have the same period that the Contractor had to make their own assessment.

In the event the Project Manager does not respond to a compensation event quotation, or did not make their own assessment for a compensation event that they had rejected, the Contractor can notify them of this non-response. If the Project Manager did not respond within a further two weeks of that reminder, then the original Contractor quotation in both cases would be deemed accepted. This is to ensure that both Parties keep the compensation event process moving forward and neither party should be allowed to let this process stall. Both Parties would want to understand where they are in terms of liability for both cost and time during the project rather than waiting to see at the end.