NEC4 Engineering and Construction Contract

Removal of compensation events as a Z clause


I have seen a run of different amendments recently where Employers are removing some of the reasons that the Contractor can claim a compensation event i.e. deleting some of the reasons in clause 60.1. The Employer is obviously “allowed” to make any changes they want accepting that it will alter the Contractors risk profile and arguably as long as the Contractor knows this at tender stage then that should be considered “fair game”. Some deletions I can understand a bit more easily than others such as deleting 12 & 13 which makes unforeseen ground conditions and all weather Contractor risk. I don’t like it – but I can understand it.

However, some others being deleting I have much more of an issue with in terms of “fair” risk transfer. The following are ones I have seen this year deleted in different contracts. How if I am a Contractor am I meant to deal with the following as a quantifiable risk – given that deleting items means the Contractor cannot claim for them:

  • 60.1(11) deleted meaning that Supervisors CAN cause unnecessary delay with regards to test and inspections
  • 60.1(7) deleted meaning that any items of value or historical interest will become the Contractors problem – whatever the extent of the outcome
  • 60.1(9) deleted meaning that the Project Manager could reject any submission for any reason and the result would not be anything the Contractor can claim for!
  • 60.1(16) deleted meaning that if the Employer does not provide materials, facilities and samples for tests and inspections as stated in the Works Information that this would become Contractor problem/risk.

I think Employers need to have a bit of a reality check as to whether this is what they really want in terms of risk allocation and hence value they will get at tender stage (or not). Contractors also need to make sure they understand what they are signing up to!