NEC3 & 4 What Is A Compensation Event?
If you’ve ever worked on an NEC Contract you would have heard the term Compensation Event (CE). If you haven’t heard the term, you may have heard of Relevant Events, used on other contracts like JCT. This article will aim to provide clarity on Compensation Events and provide you with some practical examples. Please click here for our selection of NEC tailored excel templates for download. “Compensation Events are events which are usually not the fault of the contractor and change the cost of the work, or the time needed to complete it. As a result, the prices, key dates or the completion date may be reassessed, and in many cases the contractor will be entitled to more time or money” – Fenwick Elliot. The purpose of a CE is to place the contractor into the position he was in before the event occurred. In other words, if an event caused a contractor to lose £2,000, the CE would aim to reimburse the loss incurred. Alternatively, an event may cause a delay to the Completion Dateor Key Date. A CE will aim to alter these dates, so the effect of the event has no impact how early or late a project or key date completion is met. Disclaimer: The assumptions within this article are based on a non-amended NEC3 Engineering and Construction Contract. The clauses and project stakeholders will vary on different projects. Examples of Compensation Events (NEC3) This list gives examples of specific CEs from clause 60.1 of NEC3: · The Employer does not allow access to the site by the access date shown on the Accepted Programme
