Book 1

NEC Training
NEC4: ECC Project Manager Accreditation

Hong Kong
Book One: Course Notes

L46350
neccontract.com
©NEC 2023
Delivering
real value
Day 1 ‐ Project Start up
Introduction and housekeeping
 Breaks and lunch

 Who am I?
 Who are you?
 Experiences of being a Project
Manager under the ECC
L46350 NEC4 ECC Project Manager Accreditation v7.0 Jan 2023 [HK] ©NEC 2023 2
Welcome and programme overview

• This programme focuses on the role of the Project
Manager under the NEC4 ECC
• This programme takes a different perspective from other
training courses
• focuses on you as the Project Manager; what you should do,
your timescales and how you should fulfil the role effectively ‐
as per the contract
• is designed to support your practice as an NEC4 ECC Project
Manager and your route to the accreditation assessment
L46350 NEC4 ECC Project Manager

Accreditation v7.0 Jan 2023 [HK] 1
©NEC 2023
Objectives
• Attendees should be confident in fulfilling the role of the
Project Manager under the ECC (clause 10.1….act as
stated in the contract……)
• How to engage the team and help build a 'spirit of
mutual trust and co‐operation’ (clause 10.2)
• Understand what needs to be implemented at the
commencement, during and at the end of a successful
project
• How to deal with typical problems that may occur
• How to be an effective ECC Project Manager
Four session programme

1. 2. 3. 4.
Project Start Up Programme and Commercial Contract
Risk Management Management Management and
Project Closure
Role of the Project Programme Compensation
events part 2 Reporting
Manager requirements
Payment
Managing the
ECC documents Other matters
programme
Defined Cost and the
Fee
Initial duties Risk management Project closure
Defined Cost ‐ SCC
ECC contract
Establishing key Compensation Defined Cost – management in
procedures events part 1 Disallowed Cost action
Assessment
On completion of the classroom training, you will need to
complete an online assessment in two parts, multiple‐
choice and long answer questions.
It can be accessed through the NEC website
(www.neccontract.com), via the My NEC area. You must
complete the assessment within 30‐days of receiving
notification of the assessment after the end of this course.
You will receive all necessary information via email once
we have confirmation of your attendance on this course.

©NEC 2023
Assessment
Please note
• You must attend all 4 classroom training days
consecutively to be granted access to take the final
assessment.
• Reasonable adjustments may only be considered in
exceptional circumstances (see your delegate guide).
Applications with evidence must be submitted by email
for approval to the NEC
(accreditations@neccontract.com)
Session 1
PROJECT START UP
Session 1 programme
1.1 Role of the Project Manager
1.2 ECC documents
1.3 Initial duties
1.4 Establishing key procedures


©NEC 2023
Different NEC4 ECC versions

• There have been four versions of the NEC4 ECC
• first version – June 2017 Engineering and Construction Contract
This contract should be used for the
• second version – January 2019 appointment of a contractor for engineering
and construction work, including any level of
• third version – October 2020 design responsibility
• fourth version – January 2023 An NEC document
June 2017
• Course considers latest version (with amendments January 2023)
• Version is stated on inside title page

• Summary of changes are on page “x” of contract
• Details of changes can be found on NEC contracts website
• Changes indicated on pages This page has been updated
since initial publication
10
1.1 ROLE OF THE PROJECT MANAGER
11
Role of the Project Manager
10.1 …..act as stated…..
What does this mean?

• Follow what the contract requires you to do
12

©NEC 2023
10.2 …..mutual trust and co-operation…..
What does this mean?

• Work with the Contractor for the good of the project
• Some clauses specifically express consultation; for example
C,D,E and F clause 20.4, clause 62.1
• Other provisions within the ECC are greatly enhanced by
joint discussion; for example, agreement of compensation
events and the programme
13
10.2 …..mutual trust and co-operation…..
To be a truly effective Project Manager, good

interpersonal skills are required
These appear in lots of guises within the contract
• Facilitation: early warnings: clause 15.3
• Collaborative skills: clauses 10.2, C,D,E and F 20.4, 62.1
• Problem resolution: early warnings: clause 15.3
• Leadership: clause 10.1
14
• Exercise 1.1
15

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Overall role of the Project Manager

The role of the Project Manager is delineated from the Supervisor
The two roles interact with each

other; for example accepting
Time Defects, marking of Equipment,
Plant and Materials outside the
Working Areas
Project
Manager
Supervisor
Cost Quality
16
Principles of project management

Problem
resolution
Quality control Change control
Communication Risk
protocol management
Programme
management
The principles of good project management are generic

17
Project management principles in the ECC

Problem resolution Clause 15.3
Change control Section 6
Risk management Section 1, clause 15

Programme
Section 3
management
Communication protocol Clause 13

Section 4, clause 24,
Quality control
clause 26
Following the contract ensures that these principles are implemented

18

©NEC 2023
Role of the Project Manager:

let's start at the beginning…clause 10.1
1 …..shall act as stated in the contract…..
• What does this mean?
• it means do exactly as the contract states!!
• Comply with the timescales
• comply with the stated reply period (for all communications)
– 13.3
• respond to notified compensations within 1 week – 61.4
• respond to quoted compensation events within 2 weeks – 62.3
• respond to a submitted programme within 2 weeks – 31.3
19
Role of the Project Manager:

let's start at the beginning…clause 10.1
1 …..shall act as stated in the contract…..
• Work within the boundaries of the objective decisions
31.3 Within two weeks of the Contractor submitting a programme for

acceptance, the Project Manager notifies the Contractor of the
acceptance of the programme or the reasons for not accepting it. A
reason for not accepting a programme is that
 the Contractor's plans which it shows are not practicable,

 it does not show the information which the contract requires,
 it does not represent the Contractor’s plans realistically or
 it does not comply with the Scope.
20
Following the contract is good….

not following creates problems!
10.1 …..act as stated in the contract…..
Obligations:
21.2 The Contractor submits the particulars of its design as the Scope requires to the
Project Manager for acceptance. A reason for not accepting the Contractor’s design
is that it does not comply with either the Scope or the applicable law.
The Contractor does not proceed with the relevant work until the Project Manager
has accepted its design.
Impact if not adhered to: clause 60.1:
(6) The Project Manager or the Supervisor does not reply to a communication
from the Contractor within the period required by the contract.
21

©NEC 2023

Obligations:
31.3 Within two weeks of the Contractor submitting a programme for acceptance, the Project
Manager notifies the Contractor of the acceptance of the programme or the reasons for
not accepting it. A reason for not accepting a programme is that
 the Contractor’s plans which it shows are not practicable,

 it does not show the information which the contract requires,
 it does not represent the Contractor’s plans realistically or
 it does not comply with the Scope.
Impact if not adhered to: clause 60.1:

(9) The Project Manager withholds an acceptance (other than an
acceptance of a quotation for acceleration or for not correcting a
Defect) for a reason not stated in the contract.
22

Failure to respond to a notified compensation event (clause 61.4):
61.4 The Project Manager replies to the Contractor’s notification of a compensation event within
 one week after the Contractor’s notification or
 a longer period to which the Contractor has agreed.
If the Project Manager fails to reply to the Contractor’s notification of a compensation event
within the time allowed, the Contractor may notify the Project Manager of that failure. If the
failure continues for a further two weeks after the Contractor’s notification it is treated as
acceptance by the Project Manager that the event is a compensation event …
Failure to respond to a quoted compensation event: Impact if not adhered to: clause 60.1:
62.6 If the Project Manager does not reply to a quotation within the (6) The Project Manager or the
time allowed, the Contractor may notify the Project Manager of Supervisor does not reply to a
that failure….. If the failure continues for a further two weeks communication from the
after the Contractor’s notification it is treated as acceptance by Contractor within the period
the Project Manager of the quotation. required by the contract.
23
L46350 NEC4 ECC Project Manager Accreditation v7.0 Jan 2023 [HK] ©NEC 2023
23
Successful projects are based on

people and process
Good
process
Project
success
Effective
people
The ECC defines the process. People make the difference

The Project Manager plays a key role in generating a
collaborative culture and engaging the team
24

©NEC 2023
1.2 ECC DOCUMENTS
25
Form of agreement
ECC documents
Contract Data
part one
part two
conditions of contract consisting of

core clauses
main Option clause
clause for resolving and avoiding disputes
secondary Option clauses
Schedule of Cost Components or
Short Schedule of Cost Components
identifies
requires information Prices
to be stated in
activity schedule or bill of quantities
Client’s Scope
Scope provided by the Contractor for
its design
© NEC Contracts
Site Information
26
Key documents
• The effective management of the contract by the Project
Manager requires a thorough understanding of the key
documents which form the contract. Two of the key
documents are the
• CONTRACT DATA
• SCOPE
• The objective of this next group exercise is help you to
familiarise yourselves with the structure and content of
the Contract Data
27

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• Exercise 1.2
28
28
Contract Data part one (example)

• 1 General The conditions of contract are the core clauses and the clauses for
the following main Option, the Option for resolving and avoiding
disputes and secondary Options of the NEC4 Engineering
and Construction Contract June 2017 (with amendments October
2020)
Main Option C Option for resolving and avoiding disputes W2
Secondary Options X1, X5, X6, X7, X8, X10, X12, X13, X14, X15, X16,
X18, X22, Y(UK)1, Y(UK)2, Y(UK)3 and Z
• If Option Z is used
• the additional conditions of contract are “…………………”
29
Main Option Choices

Main Option Explained……..
A – Priced contract with activity schedule Lump sum/ payment against complete activities
B – Priced contract with bill of quantities Bill of quantities/ admeasurement
C – Target contract with activity schedule Lump sum with agreed pain/ gain share – 'share
ranges’
D – Target contract with bill of quantities Bill of quantities/ admeasurement with agreed pain/
gain share – 'share ranges’
E – Cost reimbursable contract Cost reimbursable (however, some costs may be
disallowed)
F – Management contract Management Contractor appointed – Client takes the
risk of subcontract cost
30

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Core clauses and main Option clauses

• The ‘core clauses’ (first 30 pages of the ECC) are generic/ standard
protocols for managing an ECC contract
• These standard procedures cover the likes of communication, early
warnings, programme management, and compensation events
• The main Options contain additional clauses. These primarily cover
how the Contractor gets paid and how compensation events are
assessed
• For example: in the ‘black’ book the Option A additional clauses are
contained on pages 31 and 32
• The ‘green’ books contain the clauses in the correct numerical
order. The main Option clauses are in bold to highlight which
clauses are additional
31
Secondary Options
Ref Option Objective > Risk to the > Risk to the Commercial Legal Time
Client Contractor related
X1 Price Client takes the risk of inflation

adjustment (as defined by the selected
for inflation indices)
X2 Changes in Client takes the risk of changes in

the law the law after the Contract Date
X3 Multiple Client takes the risk of exchange

currencies rates exceeding the parameters
stated in the Contract Data
X4 Ultimate Obtain a guarantee from the

holding subsidiary’s ultimate holding
company company or alternative subsidiary
guarantee company
X5 Sectional Requires the Contractor to
Completion complete part of the works in
advance of the rest (X6 & X7 may
be included)
32
Secondary Options
X6 Bonus for Provide incentive to the

early Contractor for early Completion
Completion
X7 Delay (Opposite of the above), monies

damages deducted if the Contractor is in
delay
X8 Undertakings Contractor and / or

to the Client Subcontractors give an
and Others undertaking (collateral warranty)
to the Client or Others
X9 Transfer of Transfers the rights to materials
rights prepared for design of the works
to the Client
X10 Information Deals with the creation of an

modelling Information Model (BIM) and
covers contractual issues over
ownership and liability
33

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Secondary Options
X11 Termination by Allows the Client to terminate

the Client the Contractor's obligation to
Provide the Works for any
reason
X12 Multiparty Multi‐party agreement
collaboration
X13 Performance Performance bond required by

bond the Client
X14 Advanced Allows advanced payment to be

payment to the made to the Contractor e.g.
Contractor long lead in items, pure
advanced payment
X15 The Limits the Contractor's liability
Contractor's for design to a stated skill and
design care and includes retention of
documents, use of materials
and requirements for PII
34
Secondary Options
X16 Retention Retention deducted from the

Contractor. This could be a
percentage or a retention free
amount
X17 Low Monies deducted if
performance performance standards are
damages not achieved e.g. output of a
power plant
X18 Limitation of This limits the overall liability
liability of the Contractor except for
excluded matters
X20 Key Performance Provide incentive to the

Indicators Contractor as defined in the
incentive schedule
35
Secondary Options
Secondary Options
X21 Whole life cost Allows the Contractor to

propose changes to the
Client's Scope to reduce the
cost of operating or
maintain the asset
X22 Early Contractor Allows the Contractor to be
involvement engaged under an
incentivised two stage
process with a break point
at the end of Stage One
X29 Climate change Reduces the impact of the
works on climate change
and includes a Performance
Table
36

©NEC 2023
‘Z clauses’
• Additional conditions of contract (Z clauses)
• are incorporated through the Contract Data
• Z clauses are an important part of the flexibility of NEC

• but they need to be used in the right way
37
What is the purpose of a Z clause?

• Should be used, with care and only when necessary, where the Client wishes to
include additional conditions to reflect the special circumstances of its project
• Use for example to accommodate special needs such as those peculiar to the
country in which the work is being undertaken
• Should be carefully drafted in the same style as the core and optional clauses,
using the same defined terms and other terminology
• Should be checked for consistency with other conditions and Contract Data (for
example, compensation events could be added in either)
• The flexibility of the ECC main and secondary Options minimises the need for
additional conditions
• Should NEVER be used to limit how the Contractor is to do the work in the
contract as this is part of the function of the Scope
38
Well drafted – poorly drafted
Poorly drafted Z clauses can Well drafted Z clauses can

detract contribute to the
from the management of the management of the contract
contract
39

©NEC 2023
Drafting principles and notation
Identified Identified in the

Presented in italics
e.g. period for reply,
Contract Data
Terms boundaries of the site
Start with capital

Defined Defined in the
letters
e.g. Accepted
Contract clauses
Terms Programme,
Completion, Defect
These drafting principles make it easier to understand the contract
They should be adhered to when drafting documents and communicating

40
Understanding the key terms

• Response period unless otherwise stated in this contract (for example, compensation
period for event procedure, Scope)
reply (13.3)
• Runs from Completion of the whole of the works

defects date
• Period post Completion in which the Contractor has to correct notified Defects
defect • The Contract Data provides for different periods to be stated for different types of notified
correction
period
Defects
• Not willing to take over before the Completion Date

• If no programme identified in part two of the Contract Data, the Contractor is to submit a
Contract Data ‐
Optional
first programme for acceptance within ….. weeks of the Contract Date
statements • key dates and conditions to be met
41
Understanding the key terms

• There are 20 defined terms relevant to the core clauses.
They are presented in alphabetic order
• Additional defined terms exist dependent upon the
• main Options
• secondary Options
42

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Some defined terms and basic

linkages within the contract
Clause Defined term and comment Linkage
11.2(1) Accepted Programme – latest Accepted 31‐32, 50.5 (remedy)
Programme supersedes previous. Vital to
have an Accepted Programme in place for
the good of the project
11.2(2) Completion – the second bullet serves as a 30.1, X7.1 (remedy)
basic filter, the first bullet allows the Client
to be very precise
11.2(6) Defect – two bullets – one relates to the 41‐45, 46.1 and 46.2
Scope, the other to applicable law and (remedy)
accepted design
11.2(8) Early Warning Register – consists of Contract Data, 15.2‐15.4
matters identified in the Contract Data plus
early warnings
43
Some defined terms and basic

linkages within the contract
Clause Defined term and comment Linkage
11.2(11) Key Date – critical milestone from the 30.3, 14.3 (alter), 25.3
Client's perspective, often reflects interface (remedy)
between the Contractor and Others
11.2(12) Others – e.g. other contractors, Local 25.1, 60.1(5) (remedy)
Authorities, Archaeologist
11.2(16) Scope – information which specifies and 14.3, 20.1, 60.1(1) (remedy)
describes the works or any constraints
11.2(18) Site Information – factual information 60.1(12) (remedy), 60.2,
about the Site 60.3
11.2(20) Working Areas – necessary for Providing 16.3, SCC, SSCC
the Works and used only for work on this
contract
44
• Exercise 1.3
45

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Scope
The Contract Data ‘refers’ to the documents

which contain the Scope
Contract Data part two

Contract Data part one
identifies the Scope
identifies the Scope
provided by the
provided by the Client
Contractor for its design
46
User guides
• For all contracts
• volume 1 Establishing a procurement and
contract strategy
• volume 3 Selecting a supplier
• For the ECC
• volume 2 Preparing an engineering and
construction contract
• volume 4 Managing an engineering and
construction contract
• Flow charts for the ECC ‐ electronic only
47
User guides
Preparing an engineering and construction contract
•the documents in the contract
•drafting Contract Data, Scope, Site Information and pricing documents
•worked example of Contract Data
Managing an engineering and construction contract

•explanation of Core Clauses and Options
•example communication forms
•contract start‐up and close down checklists
Flowcharts
•show the procedural logic
•electronic only
48

©NEC 2023
Proposed structure of Scope
The User Guide volume 2 is extremely

useful. It explains the contractual
significance, how to draft Scope and has a
suggested structure
49
Contractor’s design
Clause 21.1 states
“The Contractor designs the parts of the works which the Scope states the
Contractor is to design”
If the Client carries out most of the design, a list of items designed by the Contractor
may be stated
“The Contractor designs the following …..”
If, conversely, the Contractor carries out most of the design, a list of items designed by
the Client may be stated
“The Contractor designs all of the works with the exception of the following ….”
50
Role of the Scope: some key principles

• The Scope provided by the
Client fully describes the
performance requirements
which the Contractor is
required to meet (20.1)
• …….the Contractor
proposes a system which
does not meet those
This is a key principle requirements! (21.2)
Caveats and/or qualifications in the Contractor's tender

are irrelevant
51

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Inconsistent Scope
• What happens if there are inconsistencies between the Scope
provided by the Contractor (for its design) and the
Scope provided by the Client?
Clause 60.1(1) – it
Clause 17.1, is not a
Clause 14.3, ability to change
notify (13.7) compensation
event
Changing the Scope provided by the Contractor for its design to

comply with the Scope provided by the Client is not a compensation
event (60.1(1))
In that respect, the Scope provided by the Client takes precedence
52
Inconsistent or ambiguous Scope

• What happens if the Scope provided by the Client
contains inconsistencies in drafting and/or is ambiguous?
Clause 14.3, Clause 61.1,

Clause 17.1, ability to notify a 60.1(1) Clause 63.10
notify (13.7) change compensation
event?
The Client compensates the Contractor for any inconsistency or

ambiguity in the Client’s Scope
53
• Exercise 1.4
54

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1.3 INITIAL DUTIES
55
Initial duties
• The Project Manager will need to start up the contract
and implement key procedures
• These will vary dependent on the project and the options
selected by the Client
• The ECC requires these to be recorded (refer to clause
13.1)
• Discretion is required as to which require attention first
• The ‘procedures’ are covered in the next module (for
example, communication, early warnings). This module
covers the likes of design acceptance and insurances
56
Start up procedures
Clause Issue Action / to note
‐ Contract signature Ensure there is evidence of contract agreement
13.2 Communication address Need to notify the address for communication
14.2 Delegations Notify any relevant Project Manager (and Supervisor)
delegations
15 Early Warning Register Compile the initial Early Warning Register. Set up the first
and early warnings early warning meeting to implement the early warnings
process (covered in next module)
21.2 Design acceptance The Contractor submits particulars of its design as
required by the Scope provided by the Client. The
Contractor does not proceed before acceptance. Clause
14.1 clarifies the status of any such ‘acceptance’
23.1 Design of Equipment Equipment (11.2(9)) covers items provided by the
Contractor and used by it to Provide the Works and
which the Scope does not require the Contractor to
include in the works; for example temporary footbridges,
hoardings and temporary sheet piling
57
57

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Start up procedures
24.1 People Perhaps unlikely at the outset but any new ‘key person’
needs to be accepted by the Project Manager
26.2 Subcontracting The ECC requires each Subcontractor to be accepted by
the Project Manager before being appointed. Note that
failure to gain acceptance is potentially a reason for
termination (clause 91.2, R13!)
31.3 Programme acceptance (Covered in next module) the acceptance of the
programme is key to managing the contract
33.1 Access to and use of the Need to confirm access arrangements and use of the
Site Site
40.2 Quality management The Contractor must provide the Project Manager with a
system quality policy statement and a quality plan, within time
stated in the Contract Data
41.1 and Tests and inspections Although arguably not the direct role of the Project
42.1 Manager, it is important that adequate resource is in
place and timescales/ procedures are understood
58
Start up procedures
50.1 and Payment Payment procedures and contact details will need to be
50.2 established within the first month. Ensure requirements
for applications for payment are understood
Section 6 Compensation events This is covered in the next module. A clear and practical
method of managing compensation events will need to
be implemented.
84.1 Contractor insurances These need to be accepted before the starting date and
whenever renewed
86.1 Client insurances These need to be accepted before the starting date and
whenever renewed
Options C‐F, Cost forecasts This clause requires ‘consultation’ with the Project
clause 20.4 Manager. These arrangements will need to be
discussed and put in the diary
C, D, E and F Open‐book inspections Arrangements around open‐book inspections will need
to be discussed and organised
59
59
Start up procedures
Clause Issue Action/ to note
X4 Ultimate holding company If not already supplied, this needs to be provided within 4
guarantee weeks of the Contract Date. This needs to be checked.
X10 Information modelling The Information Model needs to be identified and the
process for creating it made clear to all those involved.
If not already supplied, the Contractor must supply a first
Information Execution Plan as stated in the Contract Data.
X12 Multiparty collaboration This potentially will need to be developed and completed
X13 Performance bond If not already supplied, this needs to be provided within 4
weeks of the Contract Date. This needs to be checked.
X14 Advanced payment Advanced payments will need to be organised. A bond
may be needed from the Contractor
X29 Climate Change Plan If not already supplied, the Contractor must supply a first
Climate Change Plan as stated in the Contract Data.
Y(UK)1 Project Bank Account This will need to be set up if incorporated
60

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Launch workshops
• A ‘pre‐start meeting’ or project launch is advisable in
order for the procedures to be implemented
• A pre‐start meet may be appropriate on smaller projects
• A launch event should be considered on larger/ more
complex projects. This is a blend of ECC training and
group working in order that the appropriate procedures
and systems are implemented
• We suggest that the Project Manager should instigate
this
61
1.4 ESTABLISHING KEY PROCEDURES
62
Implementing key procedures

• The last session covered a ‘check list’ of actions that need
to be covered at the outset of any project (for example,
insurance)
• This session focuses on the key procedures that need to
be implemented – those that rely heavily on a
collaborative culture
• It covers the three 'stimuli to good management’
• early warnings  programme  compensation events
• Also covered are
• the communication protocol  Scope
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Stimuli to good management

• The programme needs to be
accepted as a priority
• Early warnings (time related)
will be difficult to identify
without a programme
• Compensation events will be
very difficult to assess
objectively without an
Accepted Programme and
active early warnings process
64
Implementing key procedures: programme

Procedures in contract Practical suggestions
• Contract programme either • Meet to review the programme in
accepted as part of tender or draft before the Contractor
submitted a stated period after formally submits
the Contract Date • Agree any changes informally
• It is critical to gain joint • This joint development will
agreement of the first enhance understanding of the key
programme risks
• Repeat this process before each
submission
Consider sharing the programme online and updating in real‐time
65
Implementing key procedures: early warnings

• Early Warning Register to be • Ensure the ethos is right within
compiled by the Project Manager the team – early warnings are not
a pre‐empt to a claim!
• Each early warning to be notified
and recorded in the Early Warning • Develop the Early Warning
Register Register from the tender process
• Mitigation and risk reduction to • ALWAYS notify early warnings.
be undertaken as per clause 15.3 This is good management practice
Consider a categorisation system

For example: category 1 = critical (meet in the next 24 hours),
category 2 = non‐critical (record and discuss at the next early warning meeting)
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Implementing key procedures:

compensation events
• Clear timescales and procedures • Meet to discuss appropriate

detailed in core clause 6 compensation events before final
submission
• Both parties may ultimately be
time barred if they fail to follow • Discuss any issues – the aim is to
the timescales agree informally before formal
submission
Agree to meet regularly and maintain dialogue
67
Communication protocol: clause 13.1

• Clause 13.1 clearly states the methods of communication
which the contract requires in a form that can be read,
copied and recorded
• The contract requires professional record keeping
• The Project Manager should discuss and agree with the
Contractor which method(s) of communication will be
used at commencement of the contract
• Clause 13.2 describes when a communication has effect
68

• Communication protocols are best stated in the Client's
Scope issued at the tender stage
Media Pros Cons
Letter/ email • Easy to implement • Need to log each communication
• They may be ambiguous about what is being
drafted
ECC4 pro‐forma • Clear communication • Need to log each communication
(as per User Guide
volume 4)
Collaborative • Clear communication • Cost involved
software • Automatically logs • Requires buy‐in from the team
communication
(systems do vary)
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Communication protocol
• NEC published guidance on communication
in User Guide Volume 4
• example forms are contained within the Guide
• As a minimum, the ECC forms are
recommended as the means of
communicating
• they state the relevant clause
• communications are structured
• This is following what the contract requires
(‘acting as stated’) rather than being
adversarial
70

• ‘Notified’ matters and ‘certificates’ need to be Time
communicated separately! EWs

• Each early warning should be notified separately
• Each Defect should be notified separately Cost Quality
• Each compensation event should be notified

separately
Compensation
Early Warning
event
This needs to be
understood and Poor
ground
followed by the team conditions
71
Full list of notifications: clause 13.7

Clause Issue
14.2 Delegation
14.4 Replacement of the Project Manager or Supervisor
15.1, X10.3, X29 Early warning
17.1 Ambiguities and inconsistencies
17.2 Illegal or impossible requirements
28.1 Assignment
31.3 Programmes and failure to respond to notification
36.1 Acceleration
42.1 Tests and inspections
43.2 Defects
50.9 Finalising Defined Cost (Options C to F)
61.1, 61.3, 61.4 Compensation events
72

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Full list of notifications: clause 13.7 ‐ continued

Clause Issue
61.6 Assumptions on compensation events
62.6 Quotations for compensation events
64.3 Assessment of compensation events
64.4 Late assessment of compensation events
65.2, 65.3 Proposed instructions
66.1 Implementation of compensation events
90.1 Reasons for termination
73
Full list of notifications: clause 13.7 ‐ continued

Clause Issue
W1.1, W2.1 Referring disputes to, or changing Senior Representatives
W3.2 Referring disputes to the Dispute Avoidance Board
W1.4, W2.4, W3.3 Referring dispute to tribunal
X10.4 Information Execution Plan
X11.1 Client termination
X22.2 Forecast of Defined Cost
X22.6 Changes to the Budget
X29.4 Climate Change Plan
Y1.9 Change of amount due to a Named Supplier
Y2.3 Paying less than notified sum
Y3.3 Beneficiaries
74
Implementing key procedures: Scope

• There are numerous references • Go through the Scope jointly as a
to the Scope within the contract team
• The Scope needs to be absorbed, • Consider highlighting all the
understood and implemented by programme related items (this
the project team will form a checklist when
• This can sometimes be ignored reviewing the programme)
and people do what they think is
right or they did on the last
project
Go through in detail as a joint team

75

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The Project Manager plays a key role

in setting up these procedures
• Successful projects are based on good procedures and a team
ethos
• The programme, early warnings and compensation event
processes are clear within the contract. However, form filling
is not what the contract is about – for every process there
typically needs to be some dialogue and interaction. Ensure
your procedures maintain a healthy balance
• The Project Manager is crucial to engendering the right ethos
and understanding at this stage
• Agreeing the communication protocol and implementing the
Scope are key – these can often get overlooked in practice
76
• Exercise 1.5
77
Summary of session 1
• The principles of good project management are embedded
within the ECC
• A competent Project Manager addresses the implementation
of procedures and ensure a team understanding/ ethos
• The ECC provides good management data and controls to
ensure projects are successfully administered
• The Contract Data and Scope need to be well written and
managed carefully
78

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• A number of technical duties/actions were detailed in
chronological order (for example, ultimate holding
company guarantee, insurances, acceptance of the design
and subcontractors)
• Management procedures need to be implemented (for

example, early warnings, programme)
79

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Delivering
real value
Day 2 – Programme and Risk Management

1. 2. 3. 4.
Project Closure
Payment
Managing the
programme
Fee
Defined Cost – SCC
ECC contract
Session 2
PROGRAMME AND RISK MANAGEMENT

©NEC 2023
Session 2 Programme
2.1 Programme requirements
2.2 Managing the programme
2.3 Risk management
2.4 Compensation events part 1

2.1 PROGRAMME REQUIREMENTS
The programme is key

Compensation
Obligation Programme
event
Scope
Core clauses

©NEC 2023
Some examples
Obligation Programme Compensation
Event
21.2: submit design 31.2, bullet 13 60.1(6)
23.1: submit details of Equipment 31.2, bullet 13 60.1(6)

design
25.1: co‐operate with Others 31.2, bullet 4 60.1(5)
25.2: compliance with the Scope 31.2, bullet 17 60.1(3)
33.1: access 31.2, bullet 1 60.1(2)
41.1: tests and inspections 31.2, bullet 17 60.1(11)
The programme is key

Compensation
Obligation Programme
event
Scope
Core clauses
??
The absence of an Accepted
Programme will make it difficult
to assess compensation events!
What does the contract say?

•Clause 31.2 (17 bullets)
• planned Completion (bullet 2)
• describes what everyone does
(bullet 4)
• Key Dates (bullet 5)
• float (bullet 7)
• time risk allowance (bullet 8)
• link back to the Scope (bullet 17)

©NEC 2023
Who owns the float?

Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8 Week 9
operation 1
Critical operations:
operation 2
operation 3
operation 4
operation 5
2 weeks float
Non-critical operations:
planned
Completion
Completion 10
Date L46350 NEC4 ECC Project Manager Accreditation v7.0 Jan 2023 [HK] ©NEC 2023
10
Who owns the float? Client compensation event

operation 1
operation 2
operation 3
CE001
‘Operation 4’ has to start after CE001
operation 4
operation 5
2 weeks float
planned
Completion
Completion
11
11

operation 1 Clause 63.5
operation 2 A delay to the Completion Date is assessed as

the length of time that, due to a compensation
operation 3 event, planned Completion is later than planned
Completion as shown on the Accepted
CE001 Programme current at the dividing date
operation 4
1 week float
operation 5
planned
Completion planned Completion is unaffected, the
Client takes advantage of the float
Completion 12
12

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Who owns the float?

operation 1
operation 2
operation 3
operation 4
operation 5
Non‐critical operations: 2 weeks float
planned
Completion
Completion 13
13
Who owns the float? Contractor delay

operation 1
operation 2
operation 3
Contractor This affects the start date of ‘Operation 4’

delay
operation 4
operation 5
2 weeks float
planned
Completion
Completion 14
14

operation 1
operation 2
operation 3
Contractor But……..what happens if both occur?

delay
operation 4
No float
operation 5 remains
planned
Completion
The Contractor takes advantage of the float
Completion 15
15

©NEC 2023
Who owns the float?

operation 1
operation 2
operation 3
operation 4
operation 5
Non‐critical operations: 2 weeks float
planned
Completion
Completion 16
16

operation 1
operation 2
operation 3
‘Operation 4’ has to start after CE001

CE001
operation 4
operation 5
2 weeks float
planned
Completion
Completion 17
17
Who owns the float? It’s who gets there first!

operation 1
operation 2
operation 3
CE001
operation 4
operation 5
1 week float
planned
Completion
Completion 18
18

©NEC 2023


operation 2 A delay to the Completion Date is
assessed as the length of time that, due
operation 3
to a compensation event, planned
Completion is later than planned
CE001
Programme current at the dividing date
operation 4
1 week float
operation 5
planned Completion is unaffected, the Client

planned
Completion
Completion
takes advantage of the float
19
19

operation 1
operation 2
operation 3
CE001
This affects the start date of ‘Operation 4’

Contractor
delay
operation 4
operation 5
1 week float
planned
Completion
Completion 20
20

operation 1
operation 2
operation 3
CE001
Contractor
delay
operation 4
operation 5
planned
Completion
Completion 21
21

©NEC 2023

operation 1
operation 2
operation 3
CE001
Contractor
delay
operation 4
operation 5
planned
Completion
Delay, no
compensation
Completion
event 22
22

operation 1
operation 2
operation 3

Contractor
delay
operation 4
operation 5
2 weeks float
planned
Completion
Completion 23
23

operation 1
operation 2
operation 3
Contractor
delay
operation 4
No float
operation 5 remains
planned
Completion
Completion 24
The Contractor takes advantage of the float
24

©NEC 2023

operation 1
operation 2
operation 3
CE001 CE001 must complete before

‘Operation 4’ can start
Contractor
delay
operation 4
operation 5
planned
Completion
Completion 25
25

operation 1
operation 2
operation 3
CE001
Contractor
delay
operation 4
operation 5
planned
Completion
Completion 26
26

operation 1
operation 2
operation 3
CE001
planned Completion is now 1

Contractor
delay week later
operation 4
operation 5
planned
Completion
Completion 27
27

©NEC 2023


operation 2
A delay to the Completion Date is
operation 3
CE001
Contractor
delay
operation 4
operation 5
planned
Completion
Completion 28
The compensation event will cover the one week effect
28

operation 1 The critical path has

now changed to
operation 2
operations 4 and 5
operation 3
What happens if the

Contractor is already in
Contractor
delay and we notify a
delay compensation event?
operation 4
operation 5
i.e. planned Completion

planned
Completion is after the Completion Delay
Completion
Date
29
29

operation 1
operation 2
operation 3
CE001
CE001 must complete before
Contractor
delay
operation 4
operation 5
planned
Completion
Completion 30
30

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operation 2
operation 3
CE001
Contractor
Programme current a the dividing date
delay
operation 4
operation 5
planned
Completion 1 further week delay
Completion 31
The compensation event will cover the one week effect
31
Who owns the terminal float?

operation 1
How do we know?
operation 2
Which clause states this?
operation 3
operation 4
This belongs to
the Contractor
operation 5
planned
Completion
Terminal float
Completion
32
32

operation 1
operation 2
operation 3
CE001
operation 4
operation 5
planned
Completion
Completion 33
Terminal float
33

©NEC 2023

operation 1
operation 2
operation 3
CE001
operation 4
operation 5
planned
Completion
Completion 34
Terminal float
34


operation 2
operation 3
CE001
operation 4
operation 5
planned
Completion
The compensation event will cover
Completion the one week effect 35
Terminal float
35
• Exercise 2.1
36

©NEC 2023
The Contractor is delayed by the Subcontractor’s poor performance (their risk) during
weeks 4, 5 and 6 (add 2 weeks in total). This impacts on the start of operation 5 (in‐situ
lab).
Question 1 What are the revised planned Completion and Completion Dates?
operation 1
operation 2
operation 3
operation 4
operation 5
planned
Completion
Completion 37
37
Planned Completion is now week 8.
The Completion Date is unaffected: week 7
Answer 1
operation 1
operation 2
operation 3
Contractor
delay
operation 4
operation 5
planned
Completion
Completion 38
38
The Project Manager instructs PMI 001 and notifies CE001: a sauna and relaxation
room. The work will take place in weeks 5, 6 and 7.
Operation 5 is dependent on the compensation event being completed.
operation 1
operation 2
operation 3
operation 4
operation 5
planned
Completion
Completion 39
39

©NEC 2023
Clause 63.5, planned Completion is delayed by two weeks and therefore so too is the
Completion Date
Answer 2
operation 1
operation 2
operation 3
CE001
operation 4
operation 5
planned
Completion
Completion 40
40
The Project Manager instructs PMI 001 and notifies CE001: 2 weeks of work starting in
week 5. Operation 5 is dependent on this.
The Contractor is then subsequently delayed further due to a Subcontractor letting
Question 3 them down on operation 5. This delays them by 1 week.
What are the revised planned Completion and Completion Dates?

operation 1
operation 2
operation 3
operation 4
operation 5
planned
Completion
Completion 41
41
The revised planned Completion is week 9.
However the revised Completion Date is week 8.
Answer 3
operation 1
operation 2
operation 3
Contractor
delay
CE001
operation 4
operation 5
planned
Completion
Completion 42
42

©NEC 2023
The Contractor is in delay on activity 4 by 1 week (operation 5 is dependent on this).
The Project Manager then issues a PMI 001 and notifies CE001 which is a compensation
event to extend operation 5 by 1 week.
operation 1
operation 2
operation 3
operation 4
operation 5
planned
Completion
Completion 43
43
Planned Completion was delayed by 1 week as a result of the CE. The Completion Date
therefore moves out by 1 week (week 8).
Answer 4
operation 1
operation 2
operation 3
Contractor
delay
operation 4
operation 5
CE001
planned
Completion
Completion 44
44
The Project Manager instructs PMI 001 and notifies CE001. This is for 3 weeks
additional work to Operation 5.
What are the revised planned Completion and Completion Dates?
Question 5
operation 1
operation 2
operation 3
operation 4
operation 5
planned
Completion
Completion 45
45

©NEC 2023
Planned Completion was delayed by 1 week as a result of the CE, the Completion Date
therefore moves out by 1 week (week 9).
Answer 5
operation 1
operation 2
operation 3
Contractor
delay
operation 4
operation 5
CE001
planned
Completion
Completion 46
46
Time risk allowance belongs to the Contractor

operation 1
operation 2
operation 3
Time risk allowance is required to be

shown on the programme.
operation 4 If not used by the Contractor the

updated programme will reflect what
operation 5 was actually used.
planned
Completion
Completion 47
Terminal float
47
Example of how to show time risk allowance
Checklist:
• Risk allowances relate to risks that are the Contractor's within the contract (refer to any additional
compensation events stated in the Contract Data part one, Z clauses and additional Client's liabilities)
• Separate references to 'float' and to 'time risk allowances' are included in clause 31.2. It is important
that they are each clearly identifiable on the programme
• The duration of the risk allowance is reasonable, that they have a significant chance of occurring
48

©NEC 2023
Time risk allowance: physical conditions

• Physical conditions (clause 60.1(12)) are a compensation
event if they are over and above the defined risk:
• …….an experienced Contractor………such a small chance of
occurring……..unreasonable to have allowed for them
• When ‘judging’ if it is a compensation event – clause 60.2
lists what the Contractor is assumed to have taken account of
The Contractor needs to take account of the risks which are within
the parameters of this definition
On most projects this represents a significant risk
Example: A new housing development on a disused hospital site: Discovery of a
redundant drain and telephone cables is unlikely to be a compensation event (?)
49
Time risk allowance: weather

• Clause 60.1(13) – weather measurement as defined by
Contract Data part 1
• Risk to the Contractor is that within a 1 in 10 year return
This represents a significant risk to the Contractor

Unless specifically added, wind is entirely the risk of the Contractor
50
2.2 MANAGING THE PROGRAMME
51

©NEC 2023
Contract Data • The programme becomes the Accepted

Programme because it is included in Contract
part two Data part two OR
Contract Data • An optional statement has been included

stating that ‘The period after the Contract
Date within which the Contractor is to submit
part one a first programme for acceptance is …..’
If using the latter and, if the first programme does not comply,
clause 50.5 would take effect!!
There is also no discretion.
Avoid at all costs – hardly a good start to the project
52
Suggestion
• Meet to agree each programme before submission
• agree changes in the meeting
• the programme shows input from all
• this can be submitted by the Contractor following / at the
meeting
• an acceptance is then required
• this is a much more collaborative way of working
• we also develop our understanding and what the project
pressures are – this will aid the identification of early warnings
53
Easy things to check for

• planned (lower case) Completion and Completion Date
are separate
• Time risk allowances are included (likes of weather and
physical conditions)
• Does the Scope
• specify a format / software package?
• require the Contractor to show the critical path?
• show time risk allowances in a separate column?
planned Completion is important to assess compensation events

54

©NEC 2023
Accepting the programme

• Response from the Project Manager
There is no…. ‘I accept but…..’

You EITHER accept (if fully compliant) OR not accept (if not)
It’s easy to find one thing wrong. Suggest meeting for all programme submissions to
agree verbally and then formalise
This is a much more collaborative way of working
55
Accepting the programme

• If Project Manager does not notify acceptance or non‐
acceptance
• Contractor may notify Project Manager of failure
• if no action by Project Manager within a further week,
programme is treated as accepted
• If not accepted after two weeks, the next revised
programme will likely soon be due
56
Revising the programme

• Clause 32.1
• lists what should be included
• this is viewed as the minimal information that requires to be
shown
• the programme should reflect all the operations required to
achieve Completion and all events that will affect Completion
including any compensation events, whether implemented or
not
• the Contractor may also choose to show early warnings, but this
should be done in discussion with the Project Manager
57

©NEC 2023
Revising the programme

• Clause 32.2
• after instructed by the Project Manager (within the period for
reply)
• when the Contractor chooses
• no longer than the interval stated in the Contract Data
The interval stated in the Contract Data is the maximum interval
Careful consideration should be given to the frequency of programme

submissions inserted in the Contract Data
58
Assessment
• A delay to the Completion Date is assessed as the length
of time that, due to a compensation event, planned
Completion is later than planned Completion as shown
on the Accepted Programme current at the dividing date
(63.5)
• The dividing date is date of the Project Manager’s or
Supervisor’s instruction, notification etc. or the date of
the notification of the compensation event (63.1)
59
Assessment
• Does the programme change in any way to assess the
compensation event? See clause 63.5:
“The assessment takes into account
• any delay caused by the compensation event already in the
Accepted Programme and
• events which have happened between the date of the
Accepted Programme and the dividing date.”
60

©NEC 2023
Assessment
• The key requirements for assessing delays to the
Completion Date due to a compensation event are to
• determine the effect that the compensation event has
upon planned Completion and
• use the Accepted Programme current at the dividing
date to do so
• The objective is to assess the effect due only to the
compensation event and not due to other events
61
Assessment
• 4 basic steps
1. 2. 3. 4.
‐ Decide the ‐ Use the ‐ Update (for ‐ Impact the
dividing date Accepted progress, compensation
(63.1) Programme other events, event (63.5)
current at the etc.) (62.2 and
dividing date 63.5)
(63.5)
• If numerous changes occur, it may require weekly updates in

the programme
62
Managing updates.
Example 1 use latest Accepted Programme
operation 1
operation 2
operation 3
operation 4
operation 5 2 weeks float

planned
Completion
Completion 63
63

©NEC 2023
Managing updates.
Example 1 impact of compensation event
operation 1
operation 2
operation 3
‘Operation 5’ must
PMI
001/CE001 complete before new
operation CE001 can start
operation 4
operation 5
planned Completion is
planned
Completion
unaffected, the Completion
Date therefore remains
Completion
unchanged
Date L46350 NEC4 ECC Project Manager Accreditation v7.0 Jan 2023 [HK] ©NEC 2023 64
64
Managing updates.
operation 1
operation 2
operation 3
operation 4
operation 5 2 weeks float

planned
Completion
Completion 65
65
Managing updates. Example 2

take into account progress against activities
operation 1
operation 2
operation 3
1 week delay on Operation 4

operation 4
operation 5
1 week float
planned
Completion
Completion 66
66

©NEC 2023
Managing updates.
Example 2 add the compensation event
operation 1
operation 2
operation 3
Operation CE001 must complete

PM1001/
CE001 before ‘Operation 5’ can start
operation 4
operation 5
planned
Completion
Completion
67
67
Managing updates.
operation 1
operation 2
operation 3
CE001
operation 4
operation 5
planned Completion is affected
planned
Completion
by 1 week
Completion 68
68
Managing updates.
operation 1
operation 2
operation 3
CE001
operation 4
operation 5
since planned Completion is
planned
Completion
affected by 1 week, the
Completion Date therefore
Completion
moves out by 1 week
69
69

©NEC 2023
Managing updates.
operation 1
operation 2
operation 3
operation 4
operation 5
2 weeks float
planned
Completion
Completion 70
70

operation 1
operation 2
operation 3
1 week ahead on Operation 4
operation 4
operation 5
3 weeks float
planned
Completion
Completion 71
71

operation 1
operation 2
Operation CE001 must

operation 3 complete before
CE001
operation 4
operation 5
3 weeks float
planned
Completion
Completion 72
72

©NEC 2023
Managing updates.
Example 3 Impact of the compensation event
operation 1
operation 2
operation 3
CE001
operation 4
operation 5
planned
Completion
planned Completion is not affected, the
Completion Completion Date therefore remains the same 73
73
• Exercise 2.2
74
The Project Manager issues PMI 001 and notifies CE001. This is for 3 weeks
additional work to Operation 5. However, at the dividing date the Contractor is
ahead on Operation 5 (instead of taking 2 weeks it looks like they will take 1 week).
Exercise 2.2 What are the revised planned Completion and Completion Dates?
operation 1
operation 2
operation 3
operation 4
operation 5
planned
Completion
Completion 75
75

©NEC 2023
The programme is initially updated.
The compensation event is then impacted to reveal no effect on planned Completion

and thus no impact on the Completion Date.
Answer
operation 1
operation 2
operation 3
operation 4
operation 5
CE001
planned
Completion
Completion 76
Date
76
Sectional Completion
• Clause X5.1
• each reference to Completion, unless stated as the whole of the
works (e.g. defects date), is relevant to any section
• so the principles we have been through also apply for each
section (for example, terminal float, effect on planned sectional
Completion)
77
Key Dates
• Clause 63.5
• exactly the same principles apply for Key Dates too
• “A delay to a Key Date is assessed as the length of time that, due
to the compensation event, the planned date when the
Condition stated for a Key Date will be met is later than the date
shown on the Accepted Programme current at the dividing
date.”
• in essence, what was the net effect on the date the Contractor
planned to meet the Condition stated? This could be before or
after the Key Date itself
78

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2.3 RISK MANAGEMENT
79
Risk management
• Where risk management begins (or should begin)
• Client's liabilities and additional compensation events
• Role of the Early Warning Register
• Early warning process and links in the contract
• Practical suggestions to ensure this is managed
collaboratively
Many project management methodologies (Prince2, Six Sigma etc) include
a risk management process
The ECC defines this process within the contract and makes
‘good practice’ the norm
80
Liabilities and insurance

• Clause 80.1 identifies Client's liabilities
• Clause 81.1 lists the Contractor’s liabilities unless any of
them are stated as being the Client’s
• Clause 83.3 states insurances to be provided by
Contractor unless any are provided by the Client
• Contractor required to provide professional indemnity
insurance in X10 and X15 if selected
81

©NEC 2023
Risk allocation
• Risk allocation can be changed by the Client by
• including additional Client’s liabilities in Contract Data part one
• including additional compensation events in Contract Data part
one
• through Option Z clauses
82
Additional compensation events or Client's liabilities?

Why include additional In order to get better value for money from the Contractor by defining what
compensation events or Client's could be a grey area (e.g. physical conditions) or simply taking on board a
liabilities risk. This could be defined up‐front or perhaps as a result of tender
negotiations
Examples of additional • Pandemic
compensation events or Client's • Clay stones over x 1m3 encountered during tunnel excavations
liabilities • Planning approval
• Late running trains/flights, etc
What is the consequence? If an additional compensation event If an additional Client's liability
If they occur then they would If they occur then they would
become a compensation event become a compensation event
(clause 60.1(21)) (clause 60.1(14))
The Client will be liable for any costs
which the Contractor has paid or will
pay to Others as a result of the event
(clause 82.2)
The Contractor does not have to
insure against a Client's liability
(clauses 80.1 and 83.3)
83
• Exercise 2.3
84

©NEC 2023
Contract Data parts one and two –

matters for the Early Warning Register
• In Contract Data parts one and two both Parties list the
matters to be included in the Early Warning Register
• It provides the initial building blocks of the post‐contract
Early Warning Register which is then supplemented by
early warnings
Items identified in Contract Data parts one and two (headed ‘matters to be
included in the Early Warning Register’) do not change the risk allocation
– their purpose is to support post‐contract risk management
85
Definition of the Early Warning Register

• Definition of the Early Warning Register (11.2(8))
• register of matters listed in the Contract Data and
• matters notified by the Project Manager or the Contractor as
early warning matters
• It includes
• a description of the matter and
• the way in which the effects of the matter are to be avoided or
reduced
• Project Manager prepares and issues first Early Warning
Register within one week of starting date (15.2)
86
The early warning process

• ‘Notify’ – separately • How to avoid or
(13.7) reduce
• 4 reasons (+1 in 15.2 Instruct a • Seek solutions 15.4 Update
X10.3, X12.3, X29.3) meeting and issue
• Decide on
• 5th reason is actions • Revise
• May instruct
discretionary • Update • Issue to
Subcontractor
• Protecting time, s or others to • Review the
quality and cost attend Contractor
15.3 Mitigate
15.1 Notify
Time
EWs
Cost Quality
87

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Early warning meetings

• Project Manager instructs first early warning meeting
within two weeks of starting date
• Either party may at any time instruct the other to attend
later early warning meeting
• Further early warning meetings occur
• when instructed by the Project Manager or Contractor and
• no longer than intervals stated in Contract Data
• Project Manager issues revised Early Warning Register
within one week of early warning meeting
88
• Exercise 2.4
89
The early warning process
Recognise that
both Parties
The Project
will encounter
Manager
Not about problems and
facilitates and
casting blame working to
trouble shoots
overcome
the process
them
collaboratively
You could go through the group working exercise with your team!
90

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The early warning process – links within the contract

Where the Project Manager fails to notify an early warning
1. Client agreed to an action in the programme

• Clause 31.2, bullet 4
• Order and timing of the work of the Client
2. Fail to notify "as soon as they became

aware" (15.1) of a problem
3. Contractor compensated under 60.1 (5)

• Client or Others do not work within the times shown on
the Accepted Programme
91
The early warning process – links within the contract

Where the Contractor fails to notify an early warning
1. Contractor notifies a compensation event for a matter

which should have been notified as an early warning
• e.g. re‐plaster entire wall when the Project Manager would have decided on a
patch repair if the early warning had been given
2. The Project Manager notifies that an early warning

should have been given (clause 61.5)
3. Compensation event assessed as if the early warning had

been given (63.7). Clause 61.5 is a condition precedent
• e.g. Compensation event assessed to the value of the patch repair. Also a
Disallowed Cost under C, D and E 11.2(26) and F 11.2(27)
92
Collaborative working: top tips

Ensure that the team understand the early warning process
The Project Manager and Contractor’s representative are identified as the

individuals that can notify an early warning. However, the wider team may
need to instigate the process and make this happen
Agree how the early warnings will be managed. As a minimum use the
communication forms in the User Guide
Immediately issue communications and meet / discuss as soon as possible
Consider a categorisation system e.g. category 1 = critical (meet in the next

24 hours), category 2 = non‐critical (record and discuss at the next early
warning meeting)
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• Exercise 2.5
94
2.4 COMPENSATION EVENTS PART 1
95
Compensation events overview

• What is a compensation event?
• Understand the process
• Timescales and the importance of following them
• Practical suggestions to ensure successful management
The compensation event section is relatively detailed in the ECC.

There are a number of links to other sections (e.g. early warnings, programme)
96

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What is a compensation event?

• Events which entitle the Contractor to be compensated
for their effect on the Prices, Key Dates and Completion
Date
• So they are events for which
• the Client has defined its risk and
• the Contractor has made no allowance in time or cost or pricing
97
What is a compensation event? ‐ continued

• Both time and cost are assessed in a single quotation, for any
compensation event
• Some compensation events may be negative e.g. omit work
from the Scope (this will have a negative impact on the Prices
but will not bring forward the Completion Date)
• Clearly defined timescales are in place
• Failure to comply with these timescales can result in the
Contractor being time barred
98
Where are they listed?

Four sources of compensation events
2. A further 3 stated in
1. Clause 60.1 (21
clauses 60.4, 60.5 and
reasons)
60.6 (Options B and D)
3. Also secondary 4. Potentially additional

Options X2.1, X12.3(6) compensation events in
and (7), X14.2, X15.2 Contract Data part one
and Y2.5 and / or Option Z
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Reasons for a compensation event

There are three main reasons
2. Failure to do
1. A change of mind/ something (many
decision relate back to the
programme)
3. Something has
happened that is
beyond a specified
reasonable risk level
100
Summary of compensation event clauses

Clause Description Relevant clause
60.1(1) Change to the Scope 14.3, 27.3 and 45

60.1(2) Access and use of the Site 33.1
60.1(3) Client providing something 31.2
60.1(4) Stop or not start any work 34.1
60.1(5) Client and Others working times and conditions 31.2
60.1(6) Replying to communications 13.3
60.1(7) Object of value 73.1
60.1(8) Changing decisions ‐
60.1(9) Withholding acceptance 13.4, 13.8, 16.3, 21.2, 23.1, 24.1, 26.2,
26.3, 31.3, 40.2, 84.1, X4.2, X10.4(2), X13.1,
X14.2, X16.3, X22.2(2), Y1.4, Y1.6
60.1(10) Instructions to search 43.1
60.1(11) Test or inspection causing delay 41.5
60.1(12) Physical conditions 60.2 and 60.3
60.1(13) Weather ‐
60.1(14) Client's liability 80.1
60.1(15) Take over 35.2
60.1(16) Client provides materials, facilities and samples 41.2
60.1(17) Correction to an assumption 61.6
60.1(18) Breach of contract ‐
60.1(19) Unforeseen events 19.1
L46350 NEC4 ECC Project Manager Accreditation v6 Dec 2021 © NEC 2021
101
Summary of compensation event clauses

Clause Description Relevant clause
60.1(20) A quotation for a proposed instruction is not given 65
60.1(21) Additional compensation events stated in Contract Data part one Contract Data
Main Options B and D

A difference in the final quantity of work done and the quantity stated in
60.4 ‐
the Bill of Quantities
A difference in the final quantity of work done and the quantity of work
60.5 ‐
done which delays Completion
Correction of mistakes in the Bills of Quantities which are departures from
60.6 the rules for item descriptions and / or divisions of the work into items in 60.7
the method of measurement or due to an ambiguity or inconsistency
Secondary Options
X2.1 Changes in the law after the Contract Date ‐
X12.3 (6) Changes to the Partnering Information ‐

X12.3 (7) Changes to the timetable for Core Group contributions of the Partners ‐
X14.2 Delay in making an advanced payment ‐
X15.2 Contractor corrects a Defect for which it was not liable under the contract 44
Y2.5 Contractor exercises its right under the Act to suspend performance ‐
Z Additional conditions of contract ‐
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Clause 60.1(1)
The Project Manager gives an instruction changing the Scope except
• a change made in order to accept a Defect or
• a change to the Scope provided by the Contractor for its design which is made
at the Contractor’s request or in order to comply with Scope provided by the
Client
Explanation: Mitigation: Examples:

• Clause 14.3 allows the • Ensure that the Scope is • Walls now to have 3
Project Manager (not robust coats of paint instead
Supervisor) to change • Ensure Client sign‐off of 2
the Scope • Write in a manner • Clause 63.10, the Scope
• A change in mind which is clear and has been corrected as
• A correction to consistent one document states 2
ambiguous or coats of paint and
inconsistent Scope another states 3 coats
103
Clause 60.1(1)
Exceptions ……
‘Except’ (1): ‘Except’ (2):

• In order to accept a Defect under • The Contractor has changed its Scope
clause 45.2 for its design:
• This is not a compensation event • made at its request
• or in order to comply with the
Client's Scope
104
Clause 60.1(1)
Scope provided by the Client (part 1): ‘Except’ (2):

• “Install a central heating system with • The Contractor’s Scope for its design is
the following performance” wrong and needs to be changed
• In effect, the Client's Scope takes
precedence
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• Exercise 2.6
106
Clause 60.1(2)
The Client does not allow access to and use of each part of the Site by the
later of its access date and the date for access shown on the Accepted
Programme

• Failed to provide access • This reinforces the • The Contractor was
as agreed / stated importance of the promised access on the
programme 14th August but could
• Ensure access is given not gain access on the
and liaise with the Client day as a result of the
on a regular basis access road being
resurfaced by the Client
107
Clause 60.1(3)
The Client does not provide something which it is to provide by the date shown
on the Accepted Programme

• Failure to deliver against • Ensure delivery against • The Contactor was
the programme the programme promised free issue
• Raise the profile / bricks by a certain date
importance of the but these were not
programme within the provided by the Client
team
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Clause 60.1(4)
The Project Manager gives an instruction to stop or not to start any work or to
change a Key Date

• The Project • Ensure the programme • The Key Date for the
Manager alters a Key is understood and blockwork wall must be
Date, clause 14.3 followed brought forward a week
• The Project Manager • Ensure coordination as the specialist supplier
gives an instruction to with other work on the fixing electrical
stop /not start any site equipment (employed
work, clause 34.1 by the Client) to that
wall is now coming a
week earlier 109
109
Clause 60.1(5)
The Client or Others
• do not work within the times shown on the Accepted Programme
• do not work within the conditions stated in the Scope or
• carry out work on the Site that is not stated in the Scope

• Failure to deliver against • Ensure the programme • One of the Other
the programme / Scope is understood and contractors undertakes
respected more work, this delays
• Ensure that the Scope is the Contractor under
robust and adhered to the ECC
• Liaise with the Others
110
Clause 60.1(6)
The Project Manager or Supervisor does not reply to a communication from the
Contractor within the period required by the contract

• Failure to comply with • Ensure timely response • The Project Manager
timescales • Ensure that the fails to respond to a
• This could be a stated Supervisor is aware of submitted design under
timescale or a period for these timescales clause 21.2, this then
reply delays the Contractor
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Clause 60.1(7)
The Project Manager gives an instruction for dealing with an object of value or
of historical or other interest found within the Site

• This is quite a broad • Difficult to mitigate • Discovery of Roman
definition – an object of against remains
‘value’, clause 73.1 • Discovery of an ancient
burial ground
112
Clause 60.1(8)
The Project Manager or Supervisor changes a decision which either has
previously communicated to the Contractor

• A change in decision • Make well founded • A specific decision
which has been made decisions making process for
• Entitled to do so where • Ensure the buy‐in of the accepting Plant and
the contract permits, wider team Materials by the
but it would be a Supervisor, with a
compensation event change of decision
mechanism built it
113
Clause 60.1(9)
The Project Manager withholds an acceptance (other than acceptance of a
quotation for acceleration or for not correcting a Defect) for a reason not stated
in the contract

• Acceptance is not given • Comply with the • The Project Manager
by the Project Manager contract and conform to does not accept the
and the reason is not the reasons for not Contractor’s programme
one of the reasons accepting (clause 31.3) because
stated in the contract, planned Completion is
clause 13.8 after the Completion
Date
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Clause 60.1(10)
The Supervisor instructs the Contractor to search for a Defect and no Defect is
found unless the search is needed only because the Contractor gave insufficient
notice of doing work obstructing a required test or inspection

• A Defect is suspected • Ensure that all relevant • The Supervisor
but upon inspection a tests and inspections questions whether the
Defect does not exist, are included in the drainage has the
clause 43.1 Scope and the requisite level of pea
subsequent programme gravel backfill, a search
• Ensure the Supervisor is is instructed and the
aware of these correct depth was in
fact adhered to
115
Clause 60.1(11)
A test or inspection done by the Supervisor causes unnecessary delay

• The Supervisor delays • State the durations of • An inspection of the
the Contractor as a tests and inspections in reinforcement takes two
result of a test or the Scope days as opposed to the
inspection taking longer • Ensure these appear on stated one day, this
the programme delays the Contractor
• Ensure the Supervisor is
aware of the current
programme
116
Clause 60.1(12)
The Contractor encounters physical conditions which
• are within the Site,
• are not weather conditions and
• an experienced contractor would have judged at the Contract Date to have such a small
chance of occurring that it would be unreasonable to have allowed for them
Only the difference between the physical conditions encountered and those for which it
would have been reasonable to have allowed is taken into account in assessing the
compensation event
• Something physical is • Ensure thorough site • Asbestos is found but
encountered which is investigations and that there was no mention
beyond the threshold the Site Information is of this in the Site
stated for an robust Information and it was
experienced contractor not anticipated
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Clause 60.1(12) ‐ continued
Needs to be read in conjunction with Link to the list of early warning matters in
clause 60.2: Contract Data part two:
• ‘Other information which an • It would be illogical for the Contractor
experienced contractor could to identify a matter in Contract Data
reasonably be expected to have or to part two and then to subsequently
obtain’ is quite broad notify a compensation event under
60.1(12)
118
Clause 60.1(13)
A weather measurement is recorded
• within a calendar month,
• before the Completion Date for the whole of the works and
• at the place stated in the Contract Data
the value of which, by comparison with the weather data, is shown to occur on
average less frequently than once in ten years.
Only the difference between weather measurement and the weather which the
weather data show to occur on average less frequently than once in ten years is
taken into account in assessing a compensation event
119

A weather measurement is recorded
• within a calendar month,
• before the Completion Date for the whole of the works and
• at the place stated in the Contract Data
…….

• Weather (as listed in • Difficult to mitigate • The number of days of
Contract Data part one) against other than rain over 5mm in
is encountered and this avoiding doing work at February was 12, the 1
is over and above a 1 in times when it is likely to in 10 year return stated
ten year return be affected by the 9 days
• Weather within a 1 in weather and reviewing
10 year return is the the forecast
Contractor's risk
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• ‘The place where the weather should be recorded’ is advised to be as close to the
Site as possible
• The contract compiler is invited to add in additional weather measurements
• ‘wind’ is missing from the list, this is worthwhile considering for inclusion but 1
in 10 for wind?
• although not a weather measurement, wave height may also need to be
considered on coastal projects
• The 1 in 10 year return period should be included in the programme as a time risk
allowance
• The Contractor takes all weather risk after the Completion Date as there cannot be
a compensation event for this
121
• Each month is viewed in isolation

• 15 days of snow lying on the ground which spans November and December
would be classed as two separate compensation events – one for November
and one for December
• The number of days is not necessarily used as the quantified effect. It could be
that the Contractor did not plan to do work on those days and therefore would not
have entitlement
122

• Weather data is available from
organisations such as The Met Office,
Weather Net, etc
• The Met Office calculate the 1 in 10
year as the averaged worst 3
measurements from year 10 to year 40
looking back through historical records
(the first 10 years are ignored as these
are statistically erroneous)
• In this example the ‘extra over’ (final
paragraph) is 1 day (i.e. 4 days
encountered minus the 3 – one in ten
year return)
• This provides an objective assessment
which can be readily quantified as
opposed to a view of what is 123
exceptionally adverse
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Options if the weather data cannot be
obtained
• The Client should state the weather

measurements (in the Contract Data) to be
included in the Contractor’s allowance
• Client can state assumed weather data in
Contract Data if no recorded data is available
• The Project Manager needs to ensure that the
weather measurements stated in the Contract
Data or any additional conditions are available
and appropriate; and resolve any possible
problems in advance
124
Clause 60.1(14)
An event which is a Client's liability stated in these conditions of contract

• Liabilities detailed in • This would depend on • Claims,
clause 80.1 the liability proceedings………
• One of the liabilities • If stated as a Client
stated in the Contract liability
Data • discovery of birds
nesting
• discovery of
asbestos
125
Clause 60.1(15)
The Project Manager certifies take over of a part of the works before both
Completion and the Completion Date

• The Project Manager • Perhaps via an early • A room is taken over to
certifies ‘take over’ warning as soon as it store computers
before both Completion became apparent? • A building is taken over
and the Completion before the car park is
Date, clause 35.3 finished
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• Take over if the Contractor has not achieved Completion and it is now after the
Completion Date. This could have a significant impact on the Contractor
• X7.3 – If the Client takes over a part of the works before Completion and it is after
the Completion Date, the delay damages are reduced from the date on which the
part is taken over. The Project Manager assesses the benefit to the Client of taking
over the part of the works.
• Insurances might be an issue here so the Project Manager would need to check
Client has organised this
127
Clause 60.1(16)
The Client does not provide materials, facilities and samples for tests and
inspections as stated in the Scope

• Clause 41.2 requires the • Perhaps via an early • The Client fails to
Client to provide what warning as soon as it provide scaffolding to
was stated in the Scope. became apparent? enable the Contractor
This clause provides • Follow the Scope – to inspect the flat roof
relief if it is not ensure this is adhered on a building
to
128
Clause 60.1(17)
The Project Manager notifies the Contractor of a correction to an assumption
which the Project Manager stated about a compensation event

• If under clause 61.6 the • Not really relevant as it • Dig a hole and assume
Project Manager has is about comparing the no rock but water below
stated assumptions but reality with 500mm. If rock was
what has been found is assumption(s) found the assumption
different then this would be corrected
clause would apply (positive), if no water
• This could affect time was found this would be
and have a positive or a negative correction
negative impact on the
Prices
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Clause 60.1(17)
• This is an excellent way of getting better value for money from compensation event
quotations
• Assumptions made by the Contractor have no status. Compensation events are an
extension of their risk profile in the contract (clause 63.8)
• The assumptions are stated by the Project Manager (61.6)
• Although the contract does not specifically state such, it would be sensible to
discuss this before notifying the compensation event
• The Project Manager should recognise that the assumptions transfer risk to the
Client, and should only give those assumptions needed to enable Contractor to give
a sensible quotation
130
Clause 60.1(18)
A breach of contract by the Client which is not one of the other compensation
events in the contract

• This covers any breach • Perhaps via an early • Failure to pay an
of contract by the Client warning as soon as it amount due under the
became apparent contract within thirteen
weeks of the date that it
should have been paid
(91.4, R16)
131
Clause 60.1(19)
An event which
• stops the Contractor completing the whole of the works or
• stops the Contractor completing the whole of the works by the date for planned Completion
shown on the Accepted Programme
and which
• neither Party could prevent,
• an experienced contractor would have judged at the Contract Date to have such a small chance
of occurring that it would have been unreasonable to have allowed for it and
• is not one of the other compensation events stated in the contract
• The ‘prevention’ clause • Perhaps via an early • Covid‐19 prevents the
does not attempt to list warning as soon as it works being completed
the events – it describes became apparent
a scenario, clause 19.1
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Clause 60.1(20)
The Project Manager notifies the Contractor that a quotation for a proposed
instruction is not accepted

• The Contractor can • Only ask for quotations • An instruction to
recover the costs that are likely to provide a quotation for
incurred in producing a proceed a different floor finish to
quotation for a • Agree with the that in the Scope
proposed instruction Contractor the time and • An instruction to
under clause 65 that resources to be spent in construct an additional
does not go ahead preparing the quotation junction on a new
motorway
133
Clause 60.1(21)
Additional compensation events stated in the Contract Data

• The Client can alter the • This would depend on • Security lock down
risk allocation in the the additional • Clay stones over 1m3
contract and take on compensation event encountered during
further risk by including stated tunnel excavations
additional
compensation events in
Contract Data part one
134
Option B and D, clause 60.4

A difference between the final total quantity of work done and the quantity stated for an item in the
Bill of Quantities is a compensation event if
• the difference does not result from a change in Scope,
• the difference causes the Defined Cost per unit of quantity to change and
• the rate in the Bill of Quantities for the item multiplied by the final total quantity of work done is
more than 0.5% of the total of the Prices at the Contract Date.
If the Defined Cost per unit of quantity is reduced, the affected rate is reduced

• Options B and D are • The approximate • Excavation decreases
subject to quantities in the Bill of from 10,000m3 to
remeasurement Quantities are close to 3,000m3 resulting in a
• If there is a substantial the final quantities of greater cost per m3 for
change in quantity – up work expected the Contractor in
or down – the cost of undertaking the work
doing the work may
change
135

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A difference between the final total quantity of work done and the quantity for an item
stated in the Bill of Quantities which delays Completion or the meeting of the Condition
stated for a Key Date is a compensation event

• If a quantity increases it • The approximate • The approximate
may lead to delay to quantities in the Bill of quantities in the Bill of
Completion due the Quantities are close to Quantities are
additional work the final quantities of significantly less than
required work expected the final quantities of
work
136

The Project Manager gives an instruction to correct a mistake in the Bill of Quantities
which is
• a departure from the rules for item descriptions or division of the work into items in
the method of measurement or
• due to an ambiguity or inconsistency.
Each such correction is a compensation event which may lead to reduced Prices
• The Client will generally • Ensure the bill of • The drainage should
produce the bill of quantities is produced have been divided into
quantities and take the correctly different classifications
risk of errors within it of depth in accordance
with the method of
measurement, but was
not
137
• Exercise 2.7
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• Exercise 2.8
139
• The programme is key ‐ it’s the ‘beating heart’ of the ECC
• The ECC programme is a joint programme which provides
critical management data
• If the programme is not compliant / accepted it becomes very
difficult to assess compensation events objectively
• In order to ensure acceptance of the programme it is
worthwhile considering a joint review before final submission
140
Summary of session 2 ‐ continued

• The Early Warning Register should be generated from the
tender process
• Early warnings are added to the Early Warning Register and it
is reviewed and updated in early warning meetings – it
becomes a dynamic management tool
• The Project Manager is custodian of the Early Warning
Register and should facilitate the early warning process
• Both parties are incentivised to notify early warnings
• What are compensation events? And the compensation event
process needs to be understood and implemented
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Delivering
real value
Day 3 – Commercial Management

1. 2. 3. 4.
Project Closure
Payment
Managing the
programme
Fee
ECC contract
Session 3
COMMERCIAL MANAGEMENT

©NEC 2023
Session 3 programme
3.1 Compensation events part 2
3.2 Payment
3.3 Defined Cost and the Fee
3.4 Defined Cost ‐ Schedule of Cost Components
3.5 Defined Cost ‐ Disallowed Cost

Commercial management
• The main commercial core clauses are contained in the
following ECC Sections
• section 5 – Payment
• section 6 – Compensation events
• We will in fact look at these in the reverse order
Commercial management
• The ECC contains further clauses which have a
commercial impact, examples include
Clause Description Clause Description
16.1 & 2 Contractor’s proposals 54 Contractor’s share (Options C & D)
20.4 Forecasts of the total Defined Cost 71 Equipment, Plant and Materials
(Options C, D, E & F) marked for payment
25.2 Not complying with the Scope 82 Recovery of costs
25.3 Not meeting a Key Date 85 & 86 Insurance
36 Acceleration
41.6 & 7 Repeating a test or inspection Note: Depending on the secondary
Options selected these may also have a
45 Accepting Defects
commercial impact i.e. X1, X6, X7 etc
46 Uncorrected Defects

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3.1 COMPENSATION EVENTS PART 2
The compensation event process – overview

• The compensation event process is clearly defined
• Section 6 of the ECC is divided into 4 main sections
• notify (clause 61)
• quote (clause 62)
• assess (clauses 63 and 64)
• implement (clause 66)
• There is also a specific section dealing with proposed
instructions (clause 65)
• Timescales are in place with sanctions for either party if
they are not followed
• The timescales are about agreeing the impact not when the
work is done
• Both time and cost are assessed simultaneously
The compensation event process – notify

• Clause 61.1 states the Project Manager is
required to notify CEs under clauses 60.1(1), (4),
(7), (8), (10), (15), (17), (20)
• Note the ‘notify’ in these clauses
– clause 13.7 requires these to be
undertaken ‘separately’
• This requires good project management, rigour
and record keeping
• The Project Manager includes in the notification
an instruction to the Contractor to submit a
quotation unless
• the event arises from a fault of the
Contractor or
• the event has no effect upon Defined Cost,
Completion or meeting a Key Date (61.2)

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• Clause 61.3 introduces the Contractor's time
bar – entitlement will be lost if it does not
notify within 8 weeks of becoming aware of
the following: clauses 60.1(2), (3), (5), (6),
(9), (11), (12), (13), (14), (16), (18), (19)
• Compensation events under clauses 60.1(1),
(4), (7), (8), (10), (15), (17), (20) will not be
time barred as these should be notified by
the Project Manager
• In a spirit of mutual trust and co‐operation it
is hoped that both would notify all
compensation events as soon as they
became aware
10

• The Project Manager has 1 week to decide whether it
passes the five tests of clause 61.4
• arises from the fault of the Contractor
• has not happened and is not expected to happen
• has not been notified within the timescales set
out in these conditions of contract,
• has no effect on Defined Cost, Completion or
meeting a Key Date or
• is not one of the compensation events stated in
this contract
• The timescale may be extended by agreement (61.4)
• It is at this stage (under 61.5) that the Project
Manager may state that an early warning could have
been given if it was not
• Also, assumptions may be stated (61.6)
11

• If no response from the Project Manager
the Contractor may (its discretion) invoke Contractor
the time bar under clause 61.4 notifies
(that it had no
• Failure to respond within 2 further weeks response)
is treated as acceptance that the event is
a compensation event and an instruction
to submit a quote (61.4)
• It is important to agree a system for
logging the compensation event process
and managing adherence to timescales
jointly
12

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The compensation event process – quote

• Alternative quotes may be sought for
different ways of dealing with the 1 Week (In principle)
compensation event (62.1)

• 63.5 and 62.2 require the latest Accepted
Project Manager Contractor
Programme current at the dividing date to
be used and for this to be updated for
progress up to the dividing date
• Assessments are made on the basis of the
Contractor acting ‘competently’ and
‘promptly’ and that time and cost are
‘reasonably incurred’ (63.9)
• Clause 63.8 also allows the Contractor time
and cost risk allowances for events which
are not compensation events and have a
‘significant chance of occurring’
13
The compensation event process – quote

• If the Contractor does not quote within the
3 weeks then the Project Manager is 1 Week (In principle)
required to step in and make its own

assessment (64.1 and 64.3)
• Clause 63.1 defines how cost is assessed –
this will be typically a forecast
• Change to the Prices are assessed as the
effect the compensation has on Defined Cost
(which has different definitions across the
Options and we will deal with later)
• If both the Project Manager and Contractor
agree rates or lump sums can be used to
assess the change to the Prices (63.2)
14
Compensation events – how to assess

Period of the time before
Instruction to
the instruction / Within 3 weeks
provide quotation
notification of CE
Work already done Work not yet done
Forecast from here
Actual Defined Cost plus Forecast Defined Cost Compensation event

Fee =£ 10k plus Fee = £20k total = £30k
dividing date
15

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The compensation event process – assess

• The Project Manager can make one of three
responses (62.3)
• an acceptance of a quotation (this is the 1 Week (In principle)
ideal and indicative of a team working

collaboratively)
• an instruction to submit a revised
3 Weeks (to quote)
quotation (62.4 requires the reasons to
be stated)
• a notification that it will be making its 2 Weeks (to decide)
own assessment
16

• The Project Manager HAS to assess a
compensation event (64.1)
• if the Contractor does not submit a 1 Week (In principle)
quotation in time
• if it decides that the Contractor has not Project Manager Contractor
assessed the compensation event correctly
and has not instructed the Contractor to 3 Weeks (to quote)
submit a revised quotation

• the Contractor does not submit a 2 Weeks (to decide)
programme or alterations to a programme
which the contract requires
• if when the Contractor submits the
quotation the Project Manager has not
accepted the Contractor's latest programme
for one of the reasons stated in the contract
17

• The Project Manager assess the compensation
event in the same way as the Contractor
should have (caution: it is recommended that a 1 Week (In principle)
clear audit trail is recorded to demonstrate
why and how the assessment has been made)
3 Weeks (to quote)
2 Weeks (to decide)
18

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The compensation event process – implement

• If the Project Manager does not reply, or if 1 Week (In principle)
the Project Manager fails to make its own
assessment within the time allowed, the
Contractor may invoke the time bar (62.6 Project Manager Contractor
and 64.4)
3 Weeks (to quote)
• The process is the same as for failing to
reply to a notification of a compensation
event in clause 61.4 2 Weeks (to decide)
• Under clause 66.1 the Contractor’s

original quotation will be treated as being Further
accepted by the Project Manager 2 weeks
Contractor
A well documented system and adherence notifies
to timescales is paramount Automatic (that it had
acceptance no response)
19
The compensation event process – implement

Clause 66.3 is fundamental 1 Week (In principle
• The assessment of an implemented compensation

event is not revised except as stated in these
conditions of contract Project Manager Contractor
• In other words, once agreed we do not go back 3 Weeks (to quote)
even if later recorded information shows the

forecast to have been wrong
2 weeks (to decide)
Example
• The assessment of additional stud walling was
implemented at £12k (clause 66.1)
• if the actual Defined Cost plus Fee amounted
to £10k we would not revise
• if conversely, the actual Defined Cost plus Fee
was £15k we would not revise
• There is no room for budgets or ‘say’ allowances
20
IS THERE A CE? PM notifies compensation C notifies CE

event (CE) (61.1) (61.3)
8 Week time bar ‐
Deemed acceptance after two PM decision for certain CEs (61.3)
weeks from Contractor advising <1 Week
Yes
no decision received (61.4)
PM states if any assumptions Should early warning have

Instruct quote
to be used (61.6) been given? (61.5 and 63.7)
(61.2/4)
PM can request alternative
INSTRUCT QUOTATION
quotes (62.1)
CONTRACTOR ASSESSMENT Contractor issues quote <3 Weeks
Deemed acceptance after two PM DECISION

weeks from Contractor advising PM reply (62.3) ‐ accept/not
<2 Weeks
no decision received (62.6) accept/self‐assess
Deemed acceptance after two PM ASSESSMENT

weeks from Contractor advising PM assessment (64.1) <3 Weeks
no decision received (64.4) (if required)
IMPLEMENTATION
Time/cost freeze as long as
New CE if assumptions change Implementation no further CE affects works
21
21

©NEC 2023
The compensation event process –

proposed instructions
• Project Manager may instruct for a quotation
Instruct quotation
for proposed instruction (65.1)
• Contractor submits quotation within three
weeks (65.2) Project Manager Contractor
• Quotation assessed as compensation event
3 Weeks (to quote)
• Project Manager
• accepts quotation and notifies instruction
• instructs a revised quotation or
Reply by the date the
• notifies quotation not accepted proposed instruction
• If not accepted may be given
• notification is a compensation event, so

Contractor gets paid for quotation No reply; the quotation
(60.1(20)) is not accepted
• Project Manager may still issue instruction

and normal compensation event
process is followed (65.3)
22
• Exercise 3.1
23
3.2 PAYMENT
24

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Payment overview
• Introduction to section 5 of the ECC
• What the ‘assessment intervals’ are
• Relevance of clause 50.5
• Explanation of the timescales
25
Assessment intervals
• The first assessment date is decided by the Project Manager to suit
the procedures of the Parties (but is no later than the assessment
interval after the starting date) – clause 50.1
• Normal assessments made at assessment interval until
• the Supervisor issues the Defects Certificate or
• the Project Manager issues a termination certificate
• Final assessment (this is covered in session 4) no later than
• four weeks after Defects Certificate or
• thirteen weeks after termination certificate (53.1)
• The assessment interval is typically calendar monthly
26
Payment
• Clause 50.1 requires the Project Manager to assess the
amount due at each assessment date
• Contractor submits an application for payment before
each assessment date
• Application includes details of how amount has been
assessed, in form stated in Scope
• Project Manager considers the application when
assessing the amount due (50.2)
27

©NEC 2023
Amount due (clause 50.3)

• If Contractor submits an application, amount due is
amount due
Price for Work Done plus / less other

to Date (PWDD) amounts
plus… to be paid to the less… to be paid by or retained

Contractor from the Contractor
… depends on main advance payment (X14) retention (X16)

Option delay damages (X7)
interest on late payment
¼ * PWDD if no first
Contractor's share (C or D) programme (50.5)
Contractor's share (C or D)
etc
etc
28
Payment
• If Contractor does not submit an application, amount due is
lesser of
• amount Project Manager assesses and
• amount due at the previous assessment date (50.4)
• Any wrongly assessed payments are corrected in subsequent
payment certificates (50.6)
Regular meetings and

Agree a process for
dialogue should
payment at the outset
ensure the process
of the project
runs smoothly
29
Payment certificate
• An example payment
certificate is provided in
User Guide Volume 4
30

©NEC 2023
Clause 50.5
• Clause 50.5 becomes relevant if no programme is included in the
Contract Data and
• a first programme is not submitted by the Contractor for acceptance to the
Project Manager or
• the submitted programme does not show the information which the contract
requires
• One quarter of the PWDD is retained in the assessments of the amount
due certificate on a cumulative basis until a first programme is submitted
which shows the information which the contract requires (it does not
state that is has to have been accepted)
• Once the Contractor has submitted a first programme showing the
information which the contract requires, the retained PWDD is included
in the assessment of the next amount due
Avoid at all costs by informally agreeing before first submission
31
Overview of timescales and process

(when Y(UK)2 does not apply)
certified
assessment Project Manager payment is
date certifies payment made
within 1 week
Timeline
3 weeks or other
period stated in
Contract Data interest 51.2
Note that for final assessment, the

Contractor may issue the assessment
32
Overview of timescales and process

(when Y(UK)2 does apply)
Y2.2 due Y2.2 final
assessment date for date for
date payment 14 days or other payment
period stated in
7 days Contract Data
Timeline
within 1 week 7 days

Project Manager
Y2.3 notice interest 51.2
certificate ‐ Y2.2
to pay less
notice of payment
than Project Y2.5 suspension of
Manager’s performance of all
Note that for final assessment, the assessment or part of works
Contractor may issue the assessment
33

©NEC 2023
• Exercise 3.2
34
3.3 DEFINED COST AND FEE
35
Identified and defined terms: Defined Cost

• This varies between the main Options:
the components in the Short
Options A and B Schedule of Cost Components
(SSCC) (11.2(23))
the components in the

Schedule of Cost Components
Options C to E
(SCC) less Disallowed Cost
11.2(24) and 11.2(26)
detailed definition of Defined

Option F Cost, less Disallowed Cost
11.2(25) and 11.2(27)
36

©NEC 2023
Identified and defined terms: the Fee

• 11.2 (10) The Fee is the amount calculated by applying
the fee percentage to the amount of Defined Cost
37
Relevance of Defined Cost, Disallowed

Cost and Fee for different main Options
• The main Option selected will impact on the interplay of
these three commercial terms
All main Options share

In turn, this effects the
the use of Defined Cost For main Options C, D, E
Price of Work Done to
and Fee in the and F the Defined Cost,
Date (PWDD) for main
assessment of Disallowed Cost and
Options A and B as the
compensation events Fee are also used to
Activity Schedule and
(Disallowed Cost assess the PWDD (i.e.
Bill of Quantities are
applies under Options payment)
updated accordingly
C to F)
38
Defined Cost and the Schedule of

Cost Components
Main Contract Use of Defined Cost SCC SSCC
Option Type
Payment CEs Disallowed Cost
A Priced Based
C Cost Based
Target
D
E Cost
reimbursable
F
39

©NEC 2023
Relevance of Defined Cost and Fee: Option A

PWDD: 11.2(29)
(i.e. payment) compensation events
CEs
Activity Schedule
11.2(21)
Defined Cost Fee

(SSCC) 11.2(23) 11.2(10)
40
Relevance of Defined Cost and Fee: Option B

PWDD: 11.2(30)
CEs
Bill of Quantities
11.2(22)
Defined Cost Fee

(SSCC) 11.2(23) 11.2(10)
41
Relevance of Defined Cost and Fee:

Options C and D
PWDD: 11.2(31) compensation events
(i.e. payment)
CEs
target (Options C & D)
plus Fee 11.2(10)
or Bill of Quantities
used to update the
Defined Cost
Activity Schedule
11.2(24)
Defined Cost Fee

(SCC) 11.2(24) 11.2(10)
Target
42

©NEC 2023
Relevance of Defined Cost and Fee: Option E

PWDD: 11.2(31)
Defined Cost 11.2(24)
plus Fee 11.2(10)
Defined Cost Fee

(SCC) 11.2(24) 11.2(10)
43
Relevance of Defined Cost and Fee: Option F

PWDD: 11.2(31)
Defined Cost 11.2(25)
plus Fee 11.2(10)
Defined Cost Fee

11.2(25) 11.2(10)
44
Defined Cost: clause 52.1

Defined Cost Fee
Only includes All the Contractor's costs not
• amounts calculated using rates and included in the Defined Cost are
percentages stated in the Contract treated as included in the Fee
Data, and
• other amounts at open market or
competitively tendered prices with
deductions for all discounts, rebates
and taxes which can be recovered
OR
45

©NEC 2023
Defined Cost: clause 52.1

• ………… rates and percentages stated in
the Contract Data ……..
• …………... and other amounts at open
market or competitively tendered …….
The Contractor needs to demonstrate
that competition has taken place or that
the rates are ‘open market’. This is
particularly relevant for internal
companies within the Contractor's group
• ……………… with deductions for all
discounts, rebates and taxes which can be
recovered
Cost must therefore be net of trade, cash
and volume discounts
46
Price for Work Done to Date (PWDD)

• The Price for Work Done to Date has varying definitions
dependent upon the main Option
• Defined Cost, Disallowed Cost and Fee are defined

differently between the six main Options
47
PWDD: Option A PWDD
compensation
events
Activity
Schedule
Fee
Defined Cost
11.2(10)
(SSCC):
11.2(23)
(29) The Price for Work Done to Date is the total of the Prices for
• each group of completed activities and
• each completed activity which is not in a group.
A completed activity is one without notified Defects the correction of
which will delay following work.
48

©NEC 2023
PWDD: Option A PWDD:

Month 1 Month 2
Activity Schedule: A1 £10
Activity Description Unit Price A2 £10 50%

nr (£)
A3 £10
1 Earthworks as Sum £10
per Scope 1.1 A4 £10 20%
2 Drainage as Sum £10

per Scope 2.1
Monthly summary:
3 Concrete as Sum £10
per Scope 3.1 Month 1 Month 2 And so
on….
4 Steelwork as Sum £10
PWDD 10 30
per Scope 5.1
Less previous ‐ 10
Total of the Prices £40
Net 10 20
49
PWDD: Option B PWDD
compensation
events
Bill of
Quantities
Defined Cost Fee
(SSCC): 11.2(10)
11.2(23)
(30) The Price for Work Done to Date is the total of

• the quantities of the work which the Contractor has completed
for each item in the Bill of Quantities multiplied by the rate and
• a proportion of each lump sum which is the proportion of the
work covered by the item which the Contractor has completed.
Completed work is work without notified Defects the correction of
which will delay following work.
50
PWDD: Option B
Bill of Quantities: PWDD: Month 2
Bill Description Nr Unit Price Bill Description Nr Unit Price
item (£) item (£)
1 M3 of 10 £1 £10 PWDD: Month 1 1 M3 of 10 £1 £10
excavation excavation
Bill Description Nr Unit Price
2 Metres of 10 £1 £10 item (£) 2 Metres of 10 £1 £10
drainage drainage
1 M3 of 10 £1 £10
3 M3 of 10 £1 £10 excavation 3 M3 of 10 £1 £10
concrete concrete
2 Metres of 5 £1 £5
4 Tonnes of 10 £1 £10 drainage 4 Tonnes of 2 £1 £2
steel steel
3 M3 of ‐ £1 ‐
Total of the Prices £40 concrete Total of the Prices £32
4 Tonnes of ‐ £1 ‐
Less previous £15
steel
PWDD £15 Amount due £17
Less previous ‐
Amount due £15
51

©NEC 2023
PWDD: Options C to E
PWDD
compensation
Defined Cost events
Plus Fee
Fee Fee
Defined Cost Defined Cost
11.2(10) 11.2(10)
(SCC): (SCC):
11.2(24) 11.2(24)
(31) The Price for Work Done to Date is the total Defined Cost which the Project Manager
forecasts will have been paid by the Contractor before the next assessment date plus the Fee.
52
PWDD: Options C to E
PWDD:
Month 1 Month 2
Total of the
Prices / total
of the Prices PWDD at month 1
Defined Cost
plus Fee:
Fee
Defined
Cost
Less
Dis.
53
PWDD: Option F
PWDD
Defined Cost compensation

plus Fee events
63.17 If work the Contractor is to do
is affected by a compensation event,
the Project Manager and the
Contractor agree the change to the
Defined Cost price for the work and any change to
Fee
Amount of payments to the Completion Date and Key Dates.
11.2(10)
Subcontractors and the prices If they do not agree, the Project
of work done by the Contractor Manager decides the change.
itself
11.2(25)
Note: compensation
events in the
Subcontracts are dealt
(31) The Price for Work Done to Date is the total Defined Cost which the Project Manager within the
Subcontracts
forecasts will have been paid by the Contractor before the next assessment date plus the Fee.
54

©NEC 2023
3.4 DEFINED COST – SCHEDULES OF COST

COMPONENTS
55
Schedule of Cost Components (SCC)

• Used under Options C, D and E (11.2(24))
• SCC is not used for Option F
• The SCC covers all Defined Cost including Subcontractor’s
cost
(24) Defined Cost is the cost of the components in the
Schedule of Cost Components less Disallowed Cost.
56
Schedule of Cost Components (SCC): people 1

• People whose normal place of working is the Working Areas are
paid for the time worked on the contract whether they are within
the Working Areas or not – so working from home or visiting a
supplier’s factory to witness tests is recoverable
• People whose normal place of working is not within the Working
Areas but who are working in the Working Areas are recovered but
only proportionate to the time spent in the Working Areas – so
they cannot recover the cost of working from home, head office
etc.
• People whose normal place of working is not within the Working
Areas but who have been identified in the Contract Data as
recoverable as part of Defined Cost wherever they work as long as
they are working on the contract – so working from home or head
office etc.
57

©NEC 2023
Schedule of Cost Components (SCC): people 1

(continued)
• Cost component 11, 12 and 13 identifies the costs recoverable for
people directly employed by the Contractor
• Cost component 14 identifies the costs recoverable for people not
directly employed by the Contractor such as consultants or agency
staff
• Note the ability to specify Working Areas in Contract Data part two
• Also these can be added to under clause 16.3
Clause 16.3 (last bullet) states that a reason for not accepting
is that the area is used for work not on the contract. It must
be exclusively for the contract
58
Schedule of Cost Components (SCC): Equipment 2

• 21: allows hired Equipment, but recall clause 52.1 (‘open
market or competitively tendered prices…’)
• 22: this allows a hire rate to be used for internal
Equipment
• 23: allows purchased Equipment to be written‐down over
the contract
• 24: specialist Equipment (as it may be difficult to obtain
open market prices for these)
• 25: payments for Equipment which is consumed (for
example welding rods, fuel)
59
Schedule of Cost Components (SCC):

Plant and Materials 3
• 31: straightforward provision
• 32: credit for disposal
60

©NEC 2023

Subcontractors 4
• Note definition of Subcontractor in clause 11.2(19)
• 41: payments to Subcontractors on a back to back basis
with the amount the Contractor pays to them, but
without taking into account any amounts paid or retained
from the Subcontractor, which would result in the Client
paying or retaining the same amount twice.
For example
• retention
• delay damages / bonus for early Completion
• Subcontractor’s share (pain / gain share)
61
Schedule of Cost Components (SCC): charges 5

• 51: cost of water, gas, electric telephone and internet
• 52: these may include planning / building control
• 53: lists a number of payments that are allowable
• 54: payments made and received for the disposal or sale

of materials from excavation and demolition
62

manufacture and fabrication 6
• This covers manufacture and fabrication of Plant and
Materials which are done by the Contractor and are
• wholly or partly designed for the works and
• manufactured or fabricated outside of the Working Areas
Examples may include: railway sleepers, I‐beams etc
• Amounts calculated by multiplying each of the rates for
people in the Contract Data by the total time appropriate to
that rate spent on manufacture and fabrication
• Only addition to the rates will be
• the cost of Plant and Materials which is recovered under cost
component 3 and
• the Fee
63

©NEC 2023
Schedule of Cost Components (SCC): design 7

• This covers the cost of design of the works and Equipment
done outside the Working Areas by the Contractor
• examples may include structural or architectural design for a new
hospital, temporary works design for a process plant facility
• Components of cost are
• amounts calculated by multiplying each of the rates for people in the
Contract Data by the total time appropriate to that rate spent on
design of the works and Equipment outside the Working Areas
• the cost of travel to and from the Working Areas for the categories of
design employees listed in the Contract Data
• Only addition to the rates will be the Fee
64
Schedule of Cost Components (SCC): insurance 8

• This is a ‘credit’ (deduction) based on that element
already covered by the insurance provisions under the
contract
65
Typical Option C cost breakdown:

Contractor's application
REF ITEM COST TOTAL
1 People 17,756.70 17,756.70
2 Equipment 6,493.00 6,493.00
3 Plant and materials 16,950.00 16,950.00
4 Subcontractors 290,000.00 290,000.00
5 Charges 650.00 650.00
6 Manufacture and fabrication 1,200.00 1,200.00
7 Design 6,000.00 6,000.00
Subtotal 339,049.70
Fee Fee percentage - 10% 33,904.97
TOTAL 372,954.67
Note: It is advisable that the PWDD (i.e. how payment is made) resembles the total of the Prices. This will help
validate that the rates and percentages are accurate. This can be modelled as part of the tender process.
It is also advisable to consider all costs that will be incurred and whether they fall into Defined Cost, if not, they need
to be included in the Fee.
66

©NEC 2023
PWDD Options C, D and E (11.2(31))

PWDD
Fee
11.2(10)
Note:
Clause 52.1: anything
Defined Cost ‐
not included in Defined Schedule of Cost
Cost is treated as Components 11.2(24)
included in the Fee
Less:
Disallowed Cost
11.2(26)
67
Short Schedule of Cost Components (SSCC)

• This is the basis for assessing compensation events under
Options A and B (11.2(23))
(22) Defined Cost is the cost of the components in

the Short Schedule of Cost Components.
• This is an abridged version of the SCC
• It still contains the same eight sections
68
Short Schedule of Cost Components (SSCC) – main

differences
• People
• People Rates are the people rates (stated in the Contract Data) and
those added under clause 63.16 – by agreement or assessed by the
Project Manager based on existing People Rates
• People Rates are paid for
• people who are directly employed by the Contractor and whose normal
place of working is the Working Areas, whether they are within the
Working Areas or not,
• people who are directly employed by the Contractor whose normal place
of working is not within the Working Areas but who are working in the
Working Areas proportionate to the time spent in the Working Areas and
• people who are not directly employed by the Contractor but are paid for
by it according to the time worked within the Working Areas
69

©NEC 2023
Short Schedule of Cost Components (SSCC) – main

differences (continued)
• Equipment
• published list stated in the Contract Data after the application of
the percentage adjustment or rates stated in Contract Data or
• competitively tendered or open market rates
70
• Exercise 3.3
71
3.5 DEFINED COST – DISALLOWED COST
72

©NEC 2023
What is the purpose of Disallowed Cost

Options C, D and E 11.2(26), Option F 11.2(27)?
• These clauses are intended to motivate the Contractor to
work efficiently and enable it to be reimbursed for all items in
the Schedule of Cost Components if it does.
• If it does not work efficiently, for example
• ordering Plant and Materials above the level required to cover loss
and wastage
• having Equipment available on Site which is over and above the level
required
the costs will be disallowed
• The Contractor should demonstrate that Disallowed Cost is
being managed as part of the overall management of Defined
Cost
73
Disallowed Cost: Options C to E

(26) Disallowed Cost is cost which EXAMPLES
• is not justified by the Contractor’s accounts and • Incomplete or lost records
records,
• should not have been paid to a Subcontractor or • No evidence of payment or an overpayment or an
supplier in accordance with its contract, incorrect assessment
• was incurred only because the Contractor did not
• follow an acceptance or procurement procedure • An example may be the required inspection by the
stated in the Scope, Supervisor before drainage is backfilled. If this did not
take place then the additional cost of removing backfill
for the inspection to take place would be a Disallowed
Cost
• give an early warning which the contract required it • Critical therefore to have a well managed early
to give or warning system
• give notification to the Project Manager of the • The legal fees a Contractor incurs in pursuing an
preparation for and conduct of an adjudication or adjudication with a Subcontractor
proceedings of a tribunal between the Contractor
and a Subcontractor or supplier
and the cost of ………
74
Disallowed Cost: Options C to E

…… and the cost of EXAMPLES
• correcting Defects after Completion, • This draws a close to the cost of putting right Defects.
The cost prior to Completion is therefore allowable
unless the next bullet applies
• correcting Defects caused by the Contractor not • An example may be that brickwork is required to be
complying with a constraint on how it is to Provide the covered by hessian sacks each evening, this was not
Works stated in the Scope, complied with. The cost of replacing spalled bricks
would therefore be disallowed
• Plant and Materials not used to Provide the Works
(after allowing for reasonable wastage) unless
resulting from a change to the Scope,
• resources not used to Provide the Works (after • This protects the Client against resources being shifted
allowing for reasonable availability and utilisation) or onto a contract because it is open‐book
not taken away from the Working Areas when the
Project Manager requested and
• preparation for and conduct of an adjudication, or
payments to a member of the Dispute Avoidance
Board or proceedings of the tribunal between the
Parties.
75

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Disallowed Cost: Option F (additional item to those in

Option C to E) EXAMPLES
• is a payment to a Subcontractor for • The Contractor in Contract Data part two states it will
• work which the Contract Data states that the provide Site security. It then employs a Subcontractor
Contractor will do themselves or to provide it. An invoice from that Subcontractor
• the Contractor’s management would be disallowed; the Contractor would recover
the price for the activity stated in Contract Data part
one
76
• Exercise 3.4
77
INSPECTING ACCOUNTS AND RECORDS
78

©NEC 2023
Open book inspection

Defined Cost 52
• The audit provisions are 52.2/3 The Contractor keeps these records
detailed in • accounts of payments of Defined Cost (52.2),
• accounts of payments made to Subcontractors
• clauses 52.2 and 52.4 under (52.3),
Options C, D and E, and • proof that the payments have been made,
• communications about and assessments of
• clauses 52.3 and 52.4, Option F compensation events for Subcontractors and
• other records as stated in the Scope.
• Consideration points
• good recording keeping and proof of payment
• Contractor’s accounting procedures
• Subcontractor management/compensation events
• Scope – other records
• agree appropriate timing for inspection
79
• Exercise 3.5
80
Carrying out open‐book inspection

of accounts and records
• It is in both parties interest to ensure that the
commercial management is robust and agreement is
obtained on the Defined Cost
• Open‐book inspection of accounts and records does not

suggest mistrust; rather, a need for good governance
81

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Skills for inspecting accounts and records

Commercial
Accounting
management
Contractual understanding
(ECC) Inspection skills
Understanding of Defined
Cost and Fee
Detailed understanding of
Knowledge of the accounting procedures:
construction industry accruals, payroll uplifts, etc
82
Finalising Defined Cost – clause 50.9

• Defined Cost can be finalised as the contract progresses
• Once finalised the Contractor can claim no further costs
for that part of works and the Defined Cost is not subject
to further audit by the Client
• Contractor notifies Project Manager at any time when a
Defined Cost for a part of the works has been finalised
and makes records available (50.9)
83

• Project Manager reviews and within 13 weeks
• accepts
• notifies the Contractor that further records are needed or
• notifies the Contractor of errors in the assessment
• Contractor provides further records or corrects errors
within 4 weeks
84

©NEC 2023

• Project Manager reviews the revised records and within four
weeks
• accepts or
• notifies the Contractor of the correct assessment
• If the Project Manager fails to notify a decision within the
time stated the Contractor’s assessment is treated as correct
Agree a process for

Regular audits should
regularly finalising
make the agreement
parts of Defined Cost
very simple
at the outset
85
Summary
• Defined Cost and Fee are instrumental building blocks to the
ECC main Options
• They each have varying roles within the main Options
• It is critical that the rates and percentages are accurate and
relevant to the appropriate main Option
• The ECC requires the Prices to be updated and Defined Cost
to be forecast (for Options C, D, E and F)
• Finally, open‐book procedures need to be implemented for
Options C, D, E and F
86
Agree how to manage in a collaborative way
87

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Collaborative working is key
Without an Accepted
Programme and effective
early warning process it
will make it difficult to
assess compensation
events objectively
Collaborative teams
Agree at the outset
typically agree in a
of the project how
meeting environment
the process will work
and then formally
(systems)
notify and accept
88
• Exercise 3.6
89
• The compensation event process needs careful management.
In order to maintain a collaborative relationship the Project
Manager will need to play an active role here and may need
to educate on what the process is and how it should be best
managed
• The Defined Cost and Fee are used to
• assess compensation events under all main Options and
• determine what the Contractor gets paid under Options C to F
• Open book inspection of accounts and records procedures
will need to be set up for Options C to F
90

©NEC 2023
Delivering
real value
Day 4 – Contract Management and Project Closure

1. 2. 3. 4.
Project Closure
Payment
Managing the
programme
Fee
ECC contract
Session 4
CONTRACT MANAGEMENT AND PROJECT CLOSURE

©NEC 2023
Session 4 programme
4.1 Reporting
4.2 Other matters
4.3 Project closure
4.4 ECC contract management in action

4.1 REPORTING
Reporting requirements under the ECC

• The ECC places emphasis on commercial reporting – this differs
between the main Options
• under Option A and B the Activity Schedule and Bill of Quantities are
updated so that the revised total of the Prices incorporate changes
• Option A, (32) The Prices are the lump sum prices for each of the activities on the
11.2(32) Activity Schedule unless later changed in accordance with the contract.
• Option B, (33) The Prices are the lump sums and the amounts obtained by multiplying
11.2(33) the rates by the quantities for the items in the Bill of Quantities.
• this is also a requirement of the other main Options, for example

• Option C,
11.2(32) (32) The Prices are the lump sum prices for each of the activities on the
Activity Schedule unless later changed in accordance with the contract.

©NEC 2023
Updating the Prices

• We therefore have an updated assessment of the Prices
Prices (as adjusted)

In Options A to D, the tendered total of the Prices is updated to
take account of compensation events and also, in Options B and D,
remeasurement
Option A and C: 11.2 (32): Activities
Option B and D: 11.2 (33): Bill of Quantities
On target contracts, Options C and D, the updated Prices provide

an updated total of the Prices (target) which is used in the
calculation of the Contractor's share clause C and D 54
Note: main Option E and F are cost reimbursable contracts and they
do not have a tendered total of the Prices. The Prices are
Option E: 11.2 (34): Defined Cost plus Fee
Option F: 11.2 (34): Defined Cost plus Fee
Forecasting the total Defined Cost

• In Options C, D, E and F, the Contractor prepares forecasts
of Defined Cost in consultation with the Project Manager
• Clause 20.4
20.4 The Contractor prepares forecasts of the total Defined Cost for the
whole of the works in consultation with the Project Manager and
submits them to the Project Manager. Forecasts are prepared at the
intervals stated in the Contract Data from the starting date until
Completion of the whole of the works. An explanation of the changes
made since the previous forecast is submitted with each forecast.
• Agree dates in the diary when this will take place

Forecasting the total Defined Cost

• An additional requirement to explain forecasts exists
• Again, clause 20.4
20.4 The Contractor prepares forecasts of the total Defined Cost for the whole of the
works in consultation with the Project Manager and submits them to the Project
Manager. Forecasts are prepared at the intervals stated in the Contract Data from
the starting date until Completion of the whole of the works. An explanation of
the changes made since the previous forecast is submitted with each forecast.
• Under Options C and D we need to understand the Prices

and forecast Defined Cost and the relationship between
the two. This is effectively a cost/value reconciliation as a
contractor would normally do

©NEC 2023
Reporting forecasts of Defined Cost

On the target contracts main Options C and D, the Prices are
updated to account for change and, for Option D, remeasurement,
and to provide an updated total of the Prices (target) which is used
in the calculation of the Contractor's share clause C and D 54
Option C: 11.2 (32): Activities

Option D: 11.2 (33): Bill of Quantities
Prices (as adjusted)
Clause C,D,E and F 20.4 “…..forecasts of the total

Defined Cost for the whole of the works…”
Option E: 11.2 (34): Defined Cost plus Fee

Option F: 11.2 (34): Defined Cost plus Fee
10
Summary
• Each main Option is different in terms of how finances are
reported
• A key role of the Project Manager is to establish and manage
this reporting function
• Further clarity could be included within the Scope provided by
the Client. If not already included this could be changed
(clause 14.3)
Establish the reporting procedures at the
commencement of the project
Meet regularly as a team
11
4.2 OTHER MATTERS
12

©NEC 2023
Other matters
16.3 Adding to the The Contractor may submit a proposal to add to the Working
Working Areas Areas. A reason for the Project Manager to not accept the
proposal is that the proposed area is not necessary to Provide
the Works or used for work not in the contract
The Working Areas concept is used in the Schedule of Cost
Components and Short Schedule of Cost Components. It affects
payment in main Options C to E and items included in
compensation events in Options A to E.
17.1 Ambiguities and Both parties have an obligation to notify. The Project Manager
inconsistencies states how the ambiguity or inconsistency should be resolved. If
it’s giving an instruction to change the Scope for the Contractor's
design in order to comply with the Scope provided by the Client,
is not a compensation event (60.1(1), second bullet). But
correcting ambiguities and inconsistencies in the Scope provided
by the Client would be (clause 60.1(1) and see 63.10)
13
Other matters
17.2 Illegal and Both parties have an obligation to notify. If the Scope does
impossible include an illegal or impossible requirement, the Project
requirements Manager gives an instruction to change the Scope accordingly
19.1 Prevention If an unexpected and catastrophic event occurs which is judged
to prevent the project completing, the Project Manager gives an
instruction to the Contractor stating how the event is to be dealt
with. It is assessed as a compensation event (clause 60.1(19))
21.2 Design The Contractor submit particulars of its design as required by the
acceptance Scope. The Contractor does not proceed before acceptance.
Clause 14.1 clarifies the status of ‘acceptance’
23.1 Design of Equipment (clause 11.2(9)) covers items not included in the
Equipment works, for example temporary footbridges and hoardings
14
Other matters
24.1 People The name of any new or replacement key person needs to be
accepted by the Project Manager
24.2 Removing a The Project Manager may, having stated the reasons, instruct the
person Contractor to remove a person
28.1 Assignment Each Party notifies the other Party if they intend to transfer the
benefit of the contract or any rights under it. This is not strictly
an issue for the Project Manager, but if the Client is transferring
benefits and rights, it may also be doing the same in the Project
Manager’s contract with the Client
29.2 Disclosure The Contractor may publicise the works only with the Client’s
agreement. The Project Manager may well be the administrator
of this
15

©NEC 2023
Other matters
Section 4 Quality Although not directly part of the Project Manager role, it is
management suggested that the Project Manager ensures that the Supervisor
understands its role, what is written within the Scope and the
procedures in section 4. Also ensure that they both use clear
methods of communication. The ECC pro‐formas are
recommended as a minimum
40.3 Quality plan The Project Manager accepts the Contractor’s quality plans and
checks compliance. If the Contractor at any time fails to comply
the Project Manager instructs the Contractor to do so
45 Accepting Defects The Project Manager may accept Defects. It is suggested that
this is done in conjunction with the Supervisor and Client. Note,
accepting a Defect may also accept a revised programme
16
Other matters
70.1, 71.1 Plant and The Project Manager may need to include Plant and Materials
Materials marked marked by the Supervisor in its assessment
by the Supervisor
70.2, 72.1 Project The Project Manager may be asked for permission by the
Manager’s Contractor to remove Plant and Materials from the Working
permission Areas, or leave Equipment in the works
73.1 Objects of value The Project Manager may need to instruct the Contractor how to
deal with objects of value or of historical or other interest found
by the Contractor within the Site
Section 8 Liabilities and The Project Manager will need to check the Contractor's
insurances insurances at commencement of the contract (covered in session
1) and also upon each renewal date. This should continue until
the defects date, or longer for PI insurance
17
Other Matters: acceleration

• This may happen at any point but perhaps more typically towards the
end of the project
• Either the Contractor or Project Manager may propose an acceleration
• If both are prepared to consider it, the Project Manager instructs the
Contractor to submit a quotation (clause 36.1) – stating the changes to
Key Dates and the Completion Date
• The Contractor is not obliged to consider acceleration (it only has to meet
the Completion Date)
• Quotation also includes proposed changes to the Prices and a revised
programme showing an earlier Completion Date (clause 36.2)
• The monetary value is not assessed as per compensation events – the
Contractor effectively proposes a commercial figure
• If agreed, the Project Manager changes the Prices, Completion Date and
Key Dates accordingly, and accepts the revised programme (clause 36.3)
18

©NEC 2023
Other matters:
Contractor’s proposals to reduce amount paid
• The Contractor may propose changes to the Client’s
Scope to reduce the amount paid to the Contractor (16.1)
• The Project Manager consults with the Client and the
Contractor
• Within 4 weeks the Project Manager
• accepts the proposal and instructs a change to the Scope
• instructs the Contractor to submit a quotation for a proposed
instruction (as in clause 65) or
• informs the Contractor the proposal is not accepted
19
Other matters:
Contractor’s proposals to reduce amount paid
• The change to the Scope is a compensation event
• For Option A and B, the Prices are reduced by an amount
calculated by multiplying the assessed effect of the
compensation event (the price reduction) by the value
engineering percentage (clause 63.12)
• the Contractor therefore shares in the benefit
• For Options C and D, the Prices are not reduced (clause 63.13)
• since the target total of the Prices is not reduced, the Contractor
therefore shares in the pain/gain benefit
This encourages value engineering collaboration

20
Other matters:
Contractor’s proposals to reduce operating cost
• If X21 applies, the Contractor may propose changes to the Client’s Scope
to reduce the cost of operating and maintaining an asset (clause X21.1)
• If the Project Manager is prepared to consider the change, the Contractor
submits a quotation (clause X21.2). There is no basis given for assessing
this quotation; it is not a compensation event
• The Project Manager replies within the period for reply
• accepts the quotation, changes the Scope, Prices, Completion Date and Key
Dates accordingly, and accepts the revised programme, or
• does not accept it, with reasons
• If not accepted, the Project Manager cannot then instruct the change
subsequently, unless it accepts original quotation
This encourages life cycle costing and consideration

21

©NEC 2023
Dispute resolution – the Options

• 3 Options available
• Option W1 unless the United Kingdom Housing Grants,
Construction and Regeneration Act 1996 (HGCRA) applies
• Option W2 if the HGCRA applies
• these two Options use Senior Representatives and adjudication
as the methods of dispute resolution
• Option W3 Dispute Avoidance Board
• this Option does not include adjudication but uses a Dispute
Avoidance Board as the method of dispute resolution
22
Dispute resolution – W1 and W2

• Both Options involve Senior Representatives as a dispute
escalation procedure before adjudication
• Option W1 contains deadlines for the notification of
disputes to the Senior Representatives, and requires the
referral to Senior Representatives before adjudication
• Option W2, to be compliant with the HGCRA, does not
contain deadlines, nor require the referral to Senior
Representatives before adjudication
• Both Options state Adjudicator should be appointed
under NEC Dispute Resolution Service Contract
23
Dispute resolution – W1 and W2

Issue Option W1 Option W2
Notifying and Referral has to be made within the Referral to Adjudicator can be made
referring a timescales within the Dispute “at any time” whether or not dispute
dispute Reference Table. If not, the party has gone to Senior Representatives
loses the right to refer to the Senior (W2.2(1))
Representatives, Adjudicator or
tribunal (W1.1, W1.3(1))
Referral to Senior Representatives stated in the Senior Representatives stated in the
Senior Contract Data. They may be replaced Contract Data. They may be replaced
Representatives (W1.1(1)). Dispute must be referred (W2.1(1)). Dispute referred to Senior
to Senior Representatives before Representatives before Adjudicator if
Adjudicator (W1.1(1)) Parties agree (W2.1(1))
24

©NEC 2023
Dispute resolution –
W1 and W2 Senior Representatives
Deadline for Each Party submits statement of case Each Party submits statement of case
providing within one week of notification of within one week of notification of
information dispute to Senior Representatives dispute to Senior Representatives
(W1.1(2)) (W2.1(2))
Effect of Senior Senior Representatives make neither Senior Representatives make neither
Representatives’ recommendations nor decisions. recommendations nor decisions.
involvement Project Manager and Contractor put Project Manager and Contractor put
agreed issues into effect (W1.1(3)) agreed issues into effect (W2.1(3))
Disputing the The dissatisfied Party must issue The dissatisfied Party may issue notice
resolution by the notice of adjudication within 2 weeks of adjudication at any time (W2.2(1))
Senior otherwise it loses the right to
Representatives adjudication or tribunal. Dispute
referred to Adjudicator within 1 week
of notice (W1.3(1))
25
Dispute resolution – W1 and W2 adjudication

Deadline for Four weeks but may be extended if 7 days for the referring Party to
providing the Parties and Adjudicator agree provide the referral (W2.3(2)).
information (W1.3(3)) Timetable for further information set
by the Adjudicator to enable a
decision to be given within the overall
time allowed (W2.3(4))
Adjudicator Made within 28 days (W1.3(8)). This Made within 28 days (W2.3(8)). The
decision can be extended by agreement. The decision may be extended by up to 14
Adjudicator’s fees and expenses days. The Adjudicator may allocate its
allocated as per its appointment fees and expenses between the Parties
Effect of the Binding but not final (W1.3(10)). The Binding but not final (W2.3(11)). The
Adjudicator’s dissatisfied Party must notify such dissatisfied Party must notify such
decision within 4 weeks otherwise it loses the within 4 weeks otherwise it loses the
right to tribunal (W1.4(3)) right to tribunal (W2.4(2))
26
Dispute resolution – W3
• Option requires reference to Dispute Avoidance Board (DAB)
before referral to the tribunal
• W3 does not include for adjudication. As it is written, it would not
be used for any contract which needs to be compliant with the
HGCRA
• The DAB is appointed at the beginning of the contract, and consists
of one or three members as stated in the Contract Data (clause
W3.1(1))
• The DAB members visit the Site at intervals stated in the Contract
Data to enable it to become aware of potential disputes (clause
W3.1(5))
• The DAB should be appointed under NEC Dispute Resolution
Service Contract (clause W3.1(2))
27

©NEC 2023
Dispute resolution – W3
Issue Option W3
Referral to DAB Potential dispute is referred to DAB (W3.3(2)) before being

formally referred to tribunal (W3.3(1))
Notifying and referring a Potential dispute is referred to DAB between 2 and 4 weeks after
dispute notification of issue to the other Party and Project Manager
(W3.2(3))
Action of DAB DAB makes non‐binding recommendation if Parties have not
resolved potential dispute (W3.2(5))
Disputing DAB’s The dissatisfied Party must notify the other Party that it has a
recommendation dispute and intends to refer it to the tribunal within 4 weeks of
provision of the DAB’s recommendation. Otherwise, it loses the
right to refer to tribunal (W3.3(2))
28
4.3 PROJECT CLOSURE
29
Project closure: certifying Completion

• Back to the definition (check 1)
• Contractor has corrected notified Defects which would have
prevented the Client from using the works or Others from doing
their work
• Which of these examples fails the above test?
• the fire alarm system in a new school does not work
• security shutters in the newly refurbished bank do not work
• ornamental landscaping works in car park
30

©NEC 2023
Project closure: certifying

Completion
• Back to the definition (check 2)
• Contractor has done all the work which
the Scope states is to be done by the
Completion Date
• Examples
• if the Scope specifically requested a
register of assets then the Project
Manager would not certify Completion
The Project Manager needs to
until obtained
check what the Scope states
• further examples could include staff and ensure Completion has
training and the completion of been achieved. The status of
operational and maintenance manuals the asset is typically key to
most Clients
31
Project closure: certifying Completion

• An example Completion
certificate can be found
in the User Guide
‘Managing an
engineering and
construction contract’
volume 4
32
Project closure: take over

• If stated in Contract Data part one, the Client need not take
over the works before the Completion Date (clause 35.1)
• Otherwise the Client takes over within 2 weeks of Completion
(clause 35.1)
• The Client also has the authority to use any part of the works
before Completion is certified (clause 35.2)
• ‘Use’ defines when take over occurs (clause 35.2), the Project
Manager then certifies within 1 week (clause 35.3)
• If using part of the works for
• a reason stated in the Scope or
• to suit the Contractor's method of working
then this is not classed as take over (clause 35.2)
33

©NEC 2023

• Take over is a compensation event if this effects time and/or
cost (clause 60.1(15))
• However, clause 60.1(15) states “…..before both Completion
and the Completion Date.”
• This means that take over before Completion but after the
Completion Date, so the Contractor is in delay (planned
Completion is after the Completion Date), is not a
compensation event
• The Client could therefore start using the works in this period
of Contractor delay without it being a compensation event.
This could further delay and/or increase the Contractor’s costs
34

• An example take over
certificate can be found
in the User Guide
‘Managing an
engineering and
volume 4
35
Project closure: Defects Certificate

• This is issued by the Supervisor at
• the defects date if there are no notified Defects or
• the earlier of the last defect correction period and the date when all
notified Defects have been corrected
• This is the duty of the Supervisor but it is suggested that the
Project Manager ensures this is logged as an action. Very
often this could be a year (52 weeks) or 2 years (104 weeks)
after Completion and may be forgotten
• Note that the defects date runs from “Completion of the
whole of the works” (Contract Data part one)
• it does not run from any sectional Completion or take over
36

©NEC 2023
Defects timetable – just a reminder

Completion defects date
Earlier of
defect
date when
Defects notified: correction
all notified
period defect
Defects
before Completion correction
corrected
period
or defect
after Completion correction
period
before defects date
Latest issue of
• Remember, Supervisor notifies Defects Defects Certificate
37
Project closure: Defects Certificate

• An example Defects
Certificate can be found
in the User Guide
‘Managing an
engineering and
volume 4
38
Project closure: payment

• The Project Manager assesses the amount due at each
assessment date (clause 50.1)
• This continues until (clause 50.1)
• the Supervisor issues the Defects Certificate or
• the Project Manager issues a termination certificate
• The Project Manager will need to stay in touch with the
Client/project team so if any amount becomes due it is
paid at the end of the relevant assessment interval
• Late payment attracts interest (clause 51.2)
39

©NEC 2023

• Linking back to the Defects Certificate, the Project Manager will
need to assess any Defects that remain that the Contractor was
given access to but did not correct (clause 46.1)
• The Project Manager will also need to assess any Defects that
remain to which the Contractor was not given access (clause 46.2)
• These are valued differently
• under clause 46.1 it is the cost of other people correcting Defects (generally
anticipated to be higher than if the Contractor corrected them)
• under clause 46.2 (as they were not given access) this is the cost of the
original Contractor correcting Defects (generally anticipated to be a lower
cost than clause 46.1)
40

• Under Options C (clause 54.1) and D (clause 54.5) the
Project Manager will need to make an assessment of the
Contractor’s share
• A preliminary assessment is made at Completion of the
whole of the works – Options C (clause 54.3) and D
(clause 54.7)
• A final assessment is made in clause 53 “final
assessment” after the Defects Certificate is issued –
Options C (clause 54.4) and D (clause 54.8)
41

• Option C uses the total of the Prices in the calculation; Option
D uses the defined Total of the Prices (clause 11.2(35))
• If the Price for Work Done to Date is less than the total (Total)
of the Prices the Contractor is paid its share of the saving –
Option C (clause 54.2) and D (clause 54.6). The Client has had
the benefit of the share up to this point
• If however, the Price for Work Done to Date is greater that the
total (Total) of the Prices then the Contractor pays its share of
the excess – Options C (clause 54.2) and D (clause 54.6). In
this case the Client has been bearing the full cost of the
overspend up to this point
42

©NEC 2023
Project closure: final assessment

• The Project Manager makes an assessment of final amount
due and certifies a final payment, with full details, no later
than
• 4 weeks after the Supervisor issues the Defects Certificate or
• 13 weeks after the Project Manager issues a termination certificate
(clause 53.1)
• If the Project Manager fails to do so, the Contractor may issue
final assessment to the Client
• The final assessment is “conclusive evidence” of amount due
unless disputed in accordance with procedures in the contract
43
Project closure: termination

• If a Party wishes to terminate it notifies the Project
Manager and the other Party, giving details of the
reasons (clause 90.1)
• The Project Manager issues a termination certificate
• promptly (how quickly is “promptly”?)
• if the reason complies with the contract (clause 90.2)
• The Project Manager implements procedures for
termination immediately after it issues a termination
certificate (clause 90.3)
44
Project closure: termination payment

• The Project Manager makes no further normal
assessments (clause 50.1)
• Existing certified payments may be withheld depending
on
• the reason for termination (clause 90.3) and
• requirements of HGCRA if applicable (clause Y2.4)
• The Project Manager makes the final assessment no later
than 13 weeks after termination certificate (clause 53)
45

©NEC 2023
• Exercise 4.1
46
4.4 ECC CONTRACT MANAGEMENT IN ACTION
47
• Exercise 4.2
48

©NEC 2023
• Exercise 4.3
49
Observations of the exercise

• The exercise has been deliberately structured to reflect
the logic the NEC believe a good Project Manager should
follow
• This goes back to clause 10.1 and 10.2
• ‘…….act as stated………’ (i.e. ensure compliance)
• ‘…….in a spirit of mutual trust and co‐operation…….’ (work
collaboratively)
50

• The Project Manager plays a
key leadership role
• On certain occasions an
effective Project Manager Nurturing spirit of mutual
may need to trust and collaboration
• identify problems
• educate on the use of the
Ensuring compliance
contract and rationale
• ensure compliance
Educating/ Informing
• maintain the spirit of
mutual trust and co‐operation
51

©NEC 2023

• Back to scenario 5, the Finance Director is frustrated that
a compensation event has cost less than agreed
1. Identify problem Establish that this is a source of concern
2. Educate on the use of Meet with the Finance Director and go through the contract
the contract and – explain about the potential gain share at Completion and
rationale also the scenario where compensation events that cost more
are not revised. This should give the Finance Director a more
balanced view
3. Compliance Encourage the Finance Director to comply with the contract
4. Maintain the spirit of By maintaining a relationship with the Finance Director and
mutual trust and co‐ ensuring payment is made, this should be achieved
operation
52
SUMMARY OF TRAINING PROGRAMME
53
Overall summary
• The training programme days have covered the role of
the Project Manager in chronological order
• It is evident that the ECC contains clear processes
• In particular the 3 stimuli to good management (early
warnings, programme and compensation events) are
linked to one another
• Both the programme and compensation events sections
contain defined responses and timescales
The Project Manager’s role is critical to success
54

©NEC 2023
Overall summary
• As a suggested ethos, the
Project Manager is perhaps
continually
• educating (what the ECC Nurturing spirit of mutual
trust and collaboration
requires)
• ensuring compliance
with this, and
Ensuring compliance
• nurturing the spirit
of mutual trust
Educating/ Informing
and co‐operation
55
Overall summary
• No amount of process can guarantee project success
• A successful project requires good process and collaborative
working – the people
• The spirit of mutual trust and co‐operation (clause 10.2) is
vital to success
• The Project Manager’s role is the key role to make sure this all
happens. It should be an ambassador of the contract and
help ensure the process is followed and undertaken in a spirit
of mutual trust and co‐operation
The Project Manager should be an
ambassador of the contract
56
NEXT STEP: FINAL ASSESSMENTS
57

©NEC 2023
Assessment
On completion of the classroom training, you will need to
complete an online assessment in two parts, multiple‐
choice and long answer questions.
It can be accessed through the NEC website
(www.neccontract.com), via the My NEC area. You must
complete the assessment within 30‐days of receiving
notification of the assessment after the end of this course.
You will receive all necessary information via email once
we have confirmation of your attendance on this course.
58
Assessment
Please note
• You must attend all 4 classroom training days consecutively to
be granted access to take the final assessment.
• Failure to submit on the due date will result in failure of the
Accreditation
• Reasonable adjustments may only be considered in
exceptional circumstances (see your delegate guide).
Applications with evidence must be submitted by email for
approval to the NEC (accreditations@neccontract.com)
59
Assessment – delegate guide

Please ensure you refresh your memory of how the
assessment works by reading the delegate guidance.
The delegate guide is available on the NEC website. A copy
of the guide will also be included in the email following
this course
60

©NEC 2023
Assessment – scoring system

• A score of 75% or more on the multiple‐choice
questions will earn a maximum bonus of 5 marks
towards the final written paper assessment
• To achieve an overall pass, delegates will need to score
at least 70 marks (including any bonus from the multi‐
choice) in the written paper
• Delegates must complete the multi‐choice questions
first
61
Assessment
• Ensure the answer is comprehensive and covers the
marks for each part of the question
• Answers for each question must be between 750 and
1,500 words, not reaching or exceeding the limit will
result in marks being deducted from your overall score
• Answers must be your own work
• Do the multi‐choice questions as soon as possible to
maximise the time available within the remaining part of
the month for the written questions
62
Assessment – terminology and clauses

• Use appropriate italics (e.g. Project Manager, period for
reply)
• Use capitals (Defect, Accepted Programme)
• Don’t copy sections of clauses but use the right
terminology
• Ensure you use clause references e.g. “in accordance with
clause 24.2, the Project Manager….” or “The Project
Manager either accepts or does not accept the design [of
an item of Equipment] (clause 23.1)…”
63

©NEC 2023
Assessment – common clauses

• 10.1 – act as stated
• 12.3 – agreement by the Parties
• 13.1 – in a form that can be read, copied and recorded
• 13.3 – if there are no timescales in a clause – respond
within the period for reply
• 13.7 – notifications and certificates communicated
separately
• 14.1 – ‘acceptance’ does not change responsibility/
liability
64
Assessment – common clauses

• 20.1 – The Contractor Provides the Works in
accordance with the Scope
• 27.3 – The Contractor obeys an instruction which is in
accordance with the contract……
• Reference defined terms, for example
• Accepted Programme 11.2(1)
• Defect 11.2(6)
• The Price for Work Done to Date Option A (11.2(29)) is
……..
65
Assessment – terminology
Words and phrases NOT to use
• ‘raise’ an early warning
• ‘issue’ an early warning
• ‘raise’ a compensation event
• ‘issue’ a compensation event
• ‘approve’ the programme, Subcontractor, etc
• ‘reject’ an early warning
66

©NEC 2023
Assessment
Other things to avoid:
• CDM (applies to the UK) or any other legislation
• Latin (contra proferentem etc)
• Case law
• PRINCE2, Six Sigma etc (Project Management protocols)
67
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NEC Training

NEC4: ECC Project Manager Accreditation

Book One: Course Notes

NEC4: ECC Project Manager Accreditation

Day 1 ‐ Project Start up

NEC4: ECC Project Manager Accreditation

Introduction and housekeeping

 Breaks and lunch

Welcome and programme overview

L46350 NEC4 ECC Project Manager

Four session programme

L46350 NEC4 ECC Project Manager

1.1 Role of the Project Manager

1.2 ECC documents

1.3 Initial duties

1.4 Establishing key procedures

L46350 NEC4 ECC Project Manager

Different NEC4 ECC versions

• Version is stated on inside title page

1.1 ROLE OF THE PROJECT MANAGER

Role of the Project Manager

10.1 …..act as stated…..

What does this mean?

L46350 NEC4 ECC Project Manager

Role of the Project Manager

10.2 …..mutual trust and co-operation…..

What does this mean?

Role of the Project Manager

10.2 …..mutual trust and co-operation…..

To be a truly effective Project Manager, good

L46350 NEC4 ECC Project Manager

Overall role of the Project Manager

The two roles interact with each

Principles of project management

Quality control Change control

The principles of good project management are generic

Project management principles in the ECC

Change control Section 6

Risk management Section 1, clause 15

Communication protocol Clause 13

Following the contract ensures that these principles are implemented

L46350 NEC4 ECC Project Manager

Role of the Project Manager:

Role of the Project Manager:

31.3 Within two weeks of the Contractor submitting a programme for

 the Contractor's plans which it shows are not practicable,

Following the contract is good….

Impact if not adhered to: clause 60.1:

L46350 NEC4 ECC Project Manager

Following the contract is good….

 the Contractor’s plans which it shows are not practicable,

Impact if not adhered to: clause 60.1:

Following the contract is good….

Successful projects are based on

The ECC defines the process. People make the difference

L46350 NEC4 ECC Project Manager

1.2 ECC DOCUMENTS

conditions of contract consisting of

L46350 NEC4 ECC Project Manager

Contract Data part one (example)

Main Option Choices

B – Priced contract with bill of quantities Bill of quantities/ admeasurement

L46350 NEC4 ECC Project Manager

Core clauses and main Option clauses