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All Change in the Change ClauseNEC3 to NEC4 Comparison of Core Clause 6

Compensation Events

GVE NEC3 to NEC4 Comparison .qxp_Layout 1 14/09/2017 11:47 Page 2

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D G A S • A V I A T I O N • M A R I N E • I N T E R N A T I O N A L

• This comparison is based on the Engineering and Construction

Contract but many of the changes will be applicable to other

forms within the suite of documents

• In the following table not all clauses are listed. If a clause is not

noted then there are no changes between NEC3 and NEC4

• Each change has been allocated a change rating from '1' being

highly significant to '3' being of low significance

More significant/important changes with potential commercial

implications

Minor grammatical changes, gender neutrality, amendments such as

'Works Information' to 'Scope', 'Employer' to 'Client' etc

Note: this rating is purely subjective and for the purpose of this document only

and should not be relied upon.

Clause changes but no significant shift in risk. Just need to be aware

• Four main general changes:

Employer → Client

Works Information → Scope

Risk Register → Early Warning Register

Gender neutral

• Users should ensure they are aware of any project specific

amendments or changes to the contract

• Any views or interpretation are those of GVE Commercial

Solutions Limited

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2

3


60.1 The following are compensation events. 60.1 The following events are compensationevents.

The word ‘events’ added.Possibly to provide a strongerlink to ‘becoming aware thatthe event has happened’ inclause 61.3 or possibly forclarification in the absence ofa definition of compensationevent.

CommentsNEC4 - Compensation events - 60NEC3 - Compensation events - 60 Change

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60.1(1)

The Project Manager gives an instructionchanging the Works Information except:• a change made in order to accept a Defector• a change to the Works Information

provided by the Contractor for his designwhich is made either at his request or tocomply with other Works Informationprovided by the Employer.

60.1(1)

The Project Manager gives an instructionchanging the Scope except:• a change made in order to accept a Defector• 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 the Scopeprovided by the Client.

‘Works Information’ becomes‘Scope’, ‘Employer’ becomes‘Client’ and male pronounsremoved. Minor rewording forclarity.

3

60.1(2)

The Employer does not allow access to anduse of a part of the Site by the later of itsaccess date and the date shown on theAccepted Programme.

60.1(2)

The Client does not allow access to and useof a part of the Site by the later of its accessdate and the date for access shown on theAccepted Programme.

‘Employer’ becomes ‘Client’and ‘date’ becomes ‘date foraccess’ thereby providingclarity as to which date.

3

60.1(3)

The Employer does not provide somethingwhich he is to provide by the date forproviding it shown on the AcceptedProgramme.

60.1(3)

The Client does not provide something whichit is to provide by the date shown in theAccepted Programme.

‘Employer’ becomes ‘Client’and male pronouns removed.Also ‘on’ the AcceptedProgramme has beenchanged to ‘in’.

3

60.1(5)

‘Employer’ and ‘Works Information’. 60.1(5)

‘Client’ and ‘Scope’. ‘Employer’ becomes ‘Client’and ‘Works Information’becomes ‘Scope’.

3

60.1(6)

‘this’ contract. 60.1(6)

‘the’ contract. Administration change - ‘this’becomes ‘the’ contract.

3

60.1(8)

- 60.1(8)

Gender neutral. Administration change -gender neutral.

3

60.1(9)

‘this’ contract. 60.1(9)

‘the’ contract. Administration change - ‘this’becomes ‘the’ contract.

3

60.1(12)

‘him’. 60.1(12)

- Male pronouns removed -gender neutral.

3

60.1(14)

An event which is an Employer's risk statedin this contract.

60.1(14)

An event which is the Client's liability statedin these conditions of contract.

‘Employer’ becomes ‘Client’,‘risk’ becomes ‘liability’ and‘this contract’ becomes ‘theseconditions of contract’.Insurance/indemnity issues vscompensation events? Bewarethe inclusion of 'risk registers'.

1

60.1(16)

‘Employer’ and ‘Works Information’. 60.1(16)

‘Client’ and ‘Scope’. ‘Employer’ becomes ‘Client’and ‘Works Information’becomes ‘Scope’.

3

60.1(17)

The Project Manager notifies a correction toan assumption which he has stated about acompensation event.

60.1(17)

The Project Manager notifies the Contractorof a correction to an assumption which theProject Manager stated about acompensation event.

Male pronouns removed.3


60.1(18)

‘Employer’ and ‘this’ contract. 60.1(18)

‘Client’ and ‘the’ contract. ‘Employer’ becomes ‘Client’and ‘this’ become ‘the’contract.

3


60.1(19)

An event which• stops the Contractor completing the works

or• stops the Contractor completing the works

by the date shown on the AcceptedProgramme,

and which• neither Party could prevent,• an experienced contractor would have

judged at the Contract Date to have such asmall chance of occurring that it wouldhave been unreasonable to have allowedfor it and

• is not one of the other compensationevents stated in this contract.

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 plannedCompletion shown on the AcceptedProgramme,

and which• neither Party could prevent,• an experienced contractor would have

judged at the Contract Date to have such asmall chance of occurring that it wouldhave been unreasonable to have allowedfor it and

• is not one of the other compensationevents stated in the contract.

‘this contract’ becomes ‘thecontract’ and ‘the works’becomes ‘whole of the works’,‘planned Completion’ added.

3

N/A N/A 60.1(20)

The Project Manager notifies the Contractorthat a quotation for a proposed instruction isnot accepted.

Not included in NEC3 - Aroute to be paid for preparingquotes that are proposedunder new clause 65 and notaccepted. A new notice underclause 60.1 (20) would needto be raised when theproposed change is notinstructed. As the notificationis by the Project Managerthen the time-bar in clause61.3 would not apply.

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N/A N/A 60.1(21)

Additional compensation events stated inContract Data part one.

Not included in NEC3. Thisnow reverts back to theprinciple of NEC2. Needs tobe read in conjunction withContract Data part one.Contractor to identify anyadditional compensationevents and promote theirinclusion in Contract Datapart one rather thanattempting to use riskregisters, qualifications,tender clarifications etc.

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61.1 For compensation events which arise from theProject Manager or the Supervisor giving aninstruction, issuing a certificate, changing anearlier decision or correcting an assumption,the Project Manager notifies the Contractor ofthe compensation event at the time of thatcommunication. He also instructs theContractor to submit quotations, unless theevent arises from a fault of the Contractor orquotations have already been submitted. TheContractor puts the instruction or changeddecision into effect.

61.1 For a compensation event which arises fromthe Project Manager or the Supervisor givingan instruction or notification, issuing acertificate or changing an earlier decision,the Project Manager notifies the Contractorof the compensation event at the time of thatcommunication.

Clause 61.1 in NEC3 is nowsplit into clause 61.1 and 61.2in NEC4. The words ‘correctingan assumption’ removed fromclause 61.1 presumablybecause correcting anassumption already falls undera notification from the ProjectManager. The words ‘puts theinstruction or changed decisioninto effect’ removed.Presumably because thisrequirement is covered by cl14.3, 20.1, 27.3. In new clause65.1 the words ‘The Contractordoes not put a proposedinstruction into effect’ are usedso does this imply that for anyother instruction that theContractor must put theinstruction into effect?

2

CommentsNEC4 - Notifying compensation events - 61NEC3 - Notifying compensation events - 61 Change

N/A N/A 61.2 The Project Manager includes in thenotification of a compensation event aninstruction to the Contractor to submitquotations 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.

Clause 61.2 dealt with'proposed' instructions inNEC3 but these are nowcovered in clause 65. Someconcern as to how the noticeand instruction are issued tothe Contractor - ‘includes in’?(seems to conflict with Clause13.7).This revised wordingalso affects how/when the'discussion' in clause 62.1 issupposed to take place.

2

61.2 The Project Manager may instruct theContractor to submit quotations for aproposed instruction or a proposed changeddecision. The Contractor does not put aproposed instruction or a proposed changeddecision into effect.

N/A Moved to clause 65. The original clause 61.2 inNEC3 is now included in clause65 within NEC4. See clause 65for comment.

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61.3 The Contractor notifies the Project Managerof an event which has happened or which heexpects to happen as a compensation eventif• the Contractor believes that the event is a

compensation event and• the Project Manager has not notified the

event to the Contractor.

If the Contractor does not notify acompensation event within eight weeks ofbecoming aware of the event, he is notentitled to a change in the Prices, theCompletion Date or a Key Date unless theevent arises from the Project Manager or theSupervisor giving an instruction, issuing acertificate, changing an earlier decision orcorrecting an assumption.

61.3 The Contractor notifies the Project Managerof an event which has happened or which isexpected to happen as a compensationevent if• the Contractor believes that the event is a

compensation event and• the Project Manager has not notified the

event to the Contractor.

If the Contractor does not notify acompensation event within eight weeks ofbecoming aware that the event hashappened, the Prices, the Completion Dateor a Key Date are not changed unless theevent arises from the Project Manager or theSupervisor giving an instruction ornotification, issuing a certificate or changingan earlier decision.

The 8 week time barcommencement date haschanged. Formerly it waswhen the Contractor becameaware of an event. It is nowwhen the Contractor is awarethat the event has happened.See J Brown / S Goodwinarticles on clause 61.3 and thetime bar.

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61.4 If the Project Manager decides that an eventnotified by the Contractor• arises from a fault of the Contractor,• has not happened and is not expected to

happen,• has no effect upon Defined Cost,

Completion or meeting a Key Date or• is not one of the compensation events

stated in this contracthe notifies the Contractor of his decision thatthe Prices, the Completion Date and the KeyDates are not to be changed. If the ProjectManager decides otherwise, he notifies theContractor accordingly and instructs him tosubmit quotations.

The Project Manager notifies his decision tothe Contractor and, if his decision is that thePrices, the Completion Date or the KeyDates are to be changed, instructs him tosubmit quotations before the end of either• one week after the Contractor's notification

or• a longer period to which the Contractor has

agreed.

If the Project Manager does not notify hisdecision, the Contractor may notify theProject Manager of his failure. A failure by theProject Manager to reply within two weeks ofthis notification is treated as acceptance bythe Project Manager that the event is acompensation event and an instruction tosubmit quotations.

61.4 The Project Manager replies to theContractor's notification of a compensationevent within• one week after the Contractor's notification

or• a longer period to which the Contractor has

agreed.If the event• arises from a 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 the contractthe Project Manager notifies the Contractorthat the Prices, the Completion Date and theKey Dates are not to be changed and statesthe reasons in the notification. Otherwise theProject Manager notifies the Contractor thatthe event is a compensation event andincludes in the notification an instruction tothe Contractor to submit quotations.

If the Project Manager fails to reply to theContractor's notification of a compensationevent within the time allowed, the Contractormay notify the Project Manager of that failure.If the failure continues for a further two weeksafter the Contractor's notification it is treatedas acceptance by the Project Manager thatthe event is a compensation event and aninstruction to submit quotations.

The words 'decision' and'decides' have been removedpresumably in an attempt tolimit the Project Manager'sability to change a decisiononce the Contractor has beeninstructed to provide aquotation. For the samereason, the Project Manager isalso now required to notifypositively that the event is acompensation event. Theprovision of the Contractor notnotifying in time (the time bar)has been formalised as areason in the Project Manager'sreply for the event not being acompensation event.Requirement for an instructionwithin a notice - how does thissit with clause 13.7?

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61.5 If the Project Manager decides that theContractor did not give an early warning ofthe event which an experienced Contractorcould have given, he notifies this decision tothe Contractor when he instructs him tosubmit quotations.

61.5 If the Project Manager decides that theContractor did not give an early warning ofthe event which an experienced Contractorcould have given, the Project Manager statesthis in the instruction to the Contractor tosubmit quotations.

Male pronouns removed andslight rewording in clause.Requirement for noticeremoved although with newclause 61.2 it should now beincluded in the instructionwhich is now included withinthe compensation event notice

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61.6 If the Project Manager decides that theeffects of a compensation event are toouncertain to be forecast reasonably, hestates assumptions about the event in hisinstruction to the Contractor to submitquotations. Assessment of the event isbased on these assumptions. If any of themis later found to have been wrong, theProject Manager notifies a correction.

61.6 If the effects of a compensation event are toouncertain to be forecast reasonably, theProject Manager states assumptions aboutthe compensation event in the instruction tothe Contractor to submit quotations.Assessment of the event is based on theseassumptions. If any of them is later found tohave been wrong, the Project Managernotifies a correction.

Male pronouns removed andslight rewording in clause.

3

61.7 A compensation event is not notified afterthe defects date.

61.7 A compensation event is not notified by theProject Manager or the Contractor after theissue of the Defects Certificate.

The backstop date for notifying acompensation event is reliant uponan action that the Supervisor isobliged to do being done i.e.issuing a list of Defects that theContractor has not completed or astatement there are no Defects. Ifthis is not done it could be arguedthat compensation events couldbe notified after the defects date.In NEC3 it was simply a date inContract Data. The defects datebecomes the Defects Certificate.Beware of timing of compensationnotices near the end of the project.

2


62.1 ‘he’ 62.1 ‘it’ Male pronouns removed.Clause 61.1/61.4notice/instruction appears toaffect the timing of thediscussion under this clause.

3

CommentsNEC4 - Quotations for compensation events - 62NEC3 - Quotations for compensation events - 62 Change

62.2 ‘his’ 62.2 ‘the’ Male pronouns removed.3

62.4 ‘his’ 62.4 Gender neutral. Male pronouns removed.3

62.5 The Project Manager extends the timeallowed for• the Contractor to submit quotations for a

compensation event and• the Project Manager to reply to a quotationif the Project Manager and the Contractoragree to the extension before the submissionis due. The Project Manager notifies theextension that has been agreed to theContractor.

62.5 The Project Manager extends the timeallowed for• the Contractor to submit quotations for a

compensation event or• the Project Manager to reply to a quotationif the Project Manager and the Contractoragree to the extension before the submissionis due. The Project Manager informs theContractor of the extension which has beenagreed.

‘notifies’ becomes ‘informs’The change removes theobligation of the Project Managerhaving to satisfy the notifyingprovisions of clause 13.7. Therisk is the Contractor could be'informed' within meeting minutesand the like but shouldn't causeproblems on the basis that anyextension is supposed to be byagreement anyway.

2

62.3 The Contractor submits quotations withinthree weeks of being instructed to do so bythe Project Manager. The Project Managerreplies within two weeks of the submission.His reply is• an instruction to submit a revised quotation,• an acceptance of a quotation,• a notification that a proposed instruction

will not be given or a proposed changeddecision will not be made or

• a notification that he will be making his ownassessment.

62.3 The Contractor submits quotations withinthree weeks of being instructed to do so bythe Project Manager. The Project Managerreplies within two weeks of the submission.The reply is• a notification of acceptance of the

quotation,• an instruction to submit a revised quotation

or• that the Project Manager will be making the

assessment.

The clause has been madegender neutral.The bullet point in NEC3 stating"a notification that a proposedinstruction will not be given or aproposed changed decision willnot be made" has beenremoved. This is because the'proposed instruction' provisionhas moved to clause 65.

3

62.6 If the Project Manager does not reply to aquotation within the time allowed, theContractor may notify the Project Manager ofhis failure. If the Contractor submitted morethan one quotation for the compensationevent, he states in his notification whichquotation he proposes is to be accepted. Ifthe Project Manager does not reply to thenotification within two weeks, and unless thequotation is for a proposed instruction or aproposed changed decision, the Contractor'snotification is treated as acceptance of thequotation by the Project Manager.

62.6 If the Project Manager does not reply to aquotation within the time allowed, theContractor may notify the Project Manager ofthat failure. If the Contractor submitted morethan one quotation for the compensationevent, the notification states which quotationthe Contractor proposes is to be used. If thefailure continues for a further two weeks afterthe Contractor's notification it is treated asacceptance by the Project Manager of thequotation.

Male pronouns removed and‘unless the quotation is for aproposed instruction or aproposed changed decision’removed from NEC4 due toclause 65 now dealing with'proposed instructions'.

3

CommentsNEC4 - Quotations for compensation events - 62NEC3 - Quotations for compensation events - 62 Change


CommentsNEC4 - Assessing compensation events - 63NEC3 - Assessing compensation events - 63 Change

63.1 The changes to the Prices is assessed as theeffect of the compensation event upon• the actual Defined Cost of the work done,• the forecast Defined Cost of the work not

yet done and• the resulting Fee.

If the compensation event arose from theProject Manager or the Supervisor giving aninstruction, issuing a certificate, changing anearlier decision or correcting an assumption,the date which divides the work already donefrom the work not yet done is the date of thatcommunication. In all other cases, the date isthe date of the notification of thecompensation event.

63.1 The changes to the Prices is assessed as theeffect of the compensation event upon• the actual Defined Cost of the work done

by the dividing date,• the forecast Defined Cost of the work not

done by the dividing date and• the resulting Fee.

For a compensation event that arises fromthe Project Manager or the Supervisor givingan instruction or notification, issuing acertificate or changing an earlier decision,the dividing date is the date of thatcommunication.

For other compensation events, the dividingdate is the date of the notification of thecompensation event.

‘Dividing date’ added to provideclarity regarding the use offorecast and actual cost butdoes not change the clausemeaning. Regardless of theNorthern Ireland HousingExecutive case (2017) theparties are still required toassess compensation events asper clause 63.1. In this case theTribunal considered that in thespecific circumstances wherethe parties had failed toadminister the contractcorrectly it was right that theConsultant should makeavailable (in discovery) actualrecords for consideration in theassessment of compensationevents.

2

N/A N/A 63.2 The Project Manager and the Contractor mayagree rates or lump sums to assess thechange to the Prices.

This clause has beenintroduced into the coreclauses for every option.Originally this was onlyapplicable to Options A&B.Note the word ‘agree’.

2

63.2 If the effect of a compensation event is toreduce the total Defined Cost, the Prices arenot reduced except as stated in thiscontract.

63.3 If the effect of a compensation event is toreduce the total Defined Cost, the Prices arenot reduced unless otherwise stated in theseconditions of contract.

‘this contract’ becomes ‘theseconditions of contract’.

3


N/A N/A 63.4 If the effect of a compensation event is toreduce the total Defined Cost and the eventis• a change to the Scope other than a change

to the Scope provided by the Client, whichthe Contractor proposed and the ProjectManager accepted or

• a correction to an assumption stated by theProject Manager for assessing an earliercompensation event

the Prices are reduced.

Used to be option specific butnow added to the core clauses.However, the wording has beenamended to add "other than achange to the Scope providedby the Client, which theContractor proposed and theProject Manager accepted."See also NEC4 Main Optionclause amendments 63.12(Options A & B - valueengineering) and 63.13(Options C & D).

2

63.3 A delay to the Completion Date is assessedas the length of time that, due to thecompensation event, planned Completion islater than planned Completion as shown onthe Accepted Programme. A delay to a KeyDate is assessed as the length of time that,due to the compensation event, the planneddate when the Condition stated for a KeyDate will be met is later than the date shownon the Accepted Programme.

63.5 A delay to the Completion Date is assessedas the length of time that, due to thecompensation event, planned Completion islater than planned Completion as shown onthe Accepted Programme current at thedividing date.

A delay to a Key Date is assessed as thelength of time that, due to the compensationevent, the planned date when the Conditionstated for a Key Date will be met is later thanthe date shown on the Accepted Programmecurrent at the dividing date.

When assessing delay only those operationswhich the Contractor has not completed andwhich are affected by the compensationevent are changed.

Significant change in the wordingwithin NEC4. There is nowreference to the AcceptedProgramme current at the dividingdate. Clause 63.1 explains thedividing date. In the case of acompensation event notified by theContractor the notice becomes thedividing date. Under clause 61.3the Contractor has up to 8 weeksto issue this notice. On theoccasions where the Contractordoes expend a proportion of this 8weeks it is highly likely that a newAccepted Programme will be inplace. The Contractor could findthemselves foregoing time and costentitlement if the possibleinterpretation of the wording ofclause 63.5 is applied.

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63.4 ‘Employer’. 63.6 ‘Client’. ‘Employer’ becomes ‘Client’.3

63.5 If the Project Manager has notified theContractor of his decision that the Contractordid not give an early warning of acompensation event which an experiencedcontractor could have given, the event isassessed as if the Contractor had given earlywarning.

63.7 If the Project Manager has stated in theinstruction to submit quotations that theContractor did not give an early warning ofthe event which an experienced contractorcould have given, the compensation event isassessed as if the Contractor had given anearly warning.

‘notified’ becomes ‘stated inthe instruction’. The onus ison the Project Manager tomake the statement at thetime of issuing instructions fora quotation. See clause 61.5.

3

63.6 Assessment of the effect of a compensationevent includes risk allowances for cost andtime for matters which have a significantchance of occurring and are at theContractor's risk under this contract.

63.8 The assessment of the effect of acompensation event includes risk allowancesfor cost and time for matters which have asignificant chance of occurring and are notcompensation events.

Slight rewording of clause. Itmay become difficult toseparate out liabilities thatcould perhaps be othercompensation events in theirown right.

3

63.7 Assessments are based upon theassumption that the Contractor reactscompetently and promptly to thecompensation event, that any Defined Costand time due to the event are reasonablyincurred and that the Accepted Programmecan be changed.

63.9 The assessment of the effect of acompensation event is based upon theassumptions that the Contractor reactscompetently and promptly to the event andthat any Defined Cost and time due to theevent are reasonably incurred.

‘compensation event’ becomesjust ‘event’ and ‘the AcceptedProgramme can be changed’removed from NEC4. UserGuide says Client is protectedfrom ‘inefficiency’ but this hasto be questioned as the verynature of change is that it canintroduce inefficiency.

2

63.8 A compensation event which is an instructionto change the Works Information in order toresolve an ambiguity or inconsistency isassessed as if the Prices, the CompletionDate and the Key Dates were for theinterpretation most favourable to the Partywhich did not provide the Works Information.

63.10 A compensation event which is an instructionto change the Scope in order to resolve anambiguity or inconsistency is assessed as ifthe Prices, the Completion Date and the KeyDates were for the interpretation mostfavourable to the Party which did not providethe Scope.

‘Works Information’ becomes‘Scope’.

3


63.9 If a change to the Works Information makesthe description of the Condition for a KeyDate incorrect, the Project Manager correctsthe description. This correction is taken intoaccount in assessing the compensation eventfor the change to the Works Information.

63.11 If a change to the Scope makes thedescription of the Condition for a Key Dateincorrect, the Project Manager corrects thedescription. This correction is taken intoaccount in assessing the compensationevent for the change to the Scope.

‘Works Information’ becomes‘Scope’.

3


CommentsNEC4 - The Project Manager's assessments - 64NEC3 - The Project Manager's assessments - 64 Change

64.4 If the Project Manger does not assess acompensation event within the time allowed,the Contractor may notify the Project Managerof his failure. If the Contractor submitted morethan one quotation for the compensationevent he states in his notification whichquotation he proposes is to be accepted. Ifthe Project Manager does not reply within twoweeks of this notification the notification istreated as acceptance of the Contractor'squotation by the Project Manager.

64.4 If the Project Manager does not assess acompensation event within the time allowed,the Contractor may notify the ProjectManager of that failure. If the Contractorsubmitted more than one quotation for thecompensation event, the notification stateswhich quotation the Contractor proposes isto be used. If the failure continues for afurther two weeks after the Contractor'snotification it is treated as acceptance by theProject Manager of the quotation.

Male pronouns removed andslight clause rewording. Theclause still does not introduceany time limit on when theContractor has to notify ofthe Project Manager's failure.

3

CommentsNEC4 - Proposed Instructions - 65NEC3 - N/A - Proposed Instructions Previously inClause 61.2

Change

61.2 In NEC3 clause 61.2 was for proposedinstructions and clause 65.1 wasimplementing compensation events (nowclause 66).

65.1 The Project Manager may instruct theContractor to submit a quotation for aproposed instruction. The Project Managerstates in the instruction the date by whichthe proposed instruction may be given. TheContractor does not put a proposedinstruction into effect.

Introduces a time period inrespect of the proposedinstruction. This could be aminimum of 3 weeks giventhe time allowed to prepare aquotation under clause 65.2.

1

N/A N/A 65.3 If the quotation is not accepted, the ProjectManager may issue the instruction, notify theinstruction as a compensation event andinstruct the Contractor to submit a quotation.

i.e. the process starts again.1

N/A N/A 65.2 The Contractor submits quotations for aproposed instruction within three weeks ofbeing instructed to do so by the ProjectManager. The quotation is assessed as acompensation event. The Project Managerreplies to the Contractor's quotation by thedate when the proposed instruction may begiven. The reply is• an instruction to submit a revised quotation

including the reasons for doing so,• the issue of the instruction together with a

notification of the instruction as acompensation event and acceptance of thequotation or

• a notification that the quotation is notaccepted

If the Project Manager does not reply to thequotation within the time allowed, thequotation is not accepted.

Clarification of the process.The last sentence limits theperiod in which the quotationremains valid.

1

64.1 ‘this’ contract. 64.1 ‘the’ contract. Minor change - ‘this’ and ‘the’contract.

3

64.2 The Project Manager assesses acompensation event using his ownassessment of the programme for theremaining work if• there is no Accepted Programme or• the Contractor has not submitted a

programme or alterations to a programmefor acceptance as required by this contract.

64.2 The Project Manager assesses theprogramme for the remaining work and uses itin the assessment of a compensation event if• there is no Accepted Programme,• the Contractor has not submitted a

programme or alterations to a programmefor acceptance as required by the contractor

• the Project Manager has not accepted theContractor's latest programme for one ofthe reasons stated in the contract.

Bullet point added - ‘theProject Manager has notaccepted the Contractor'slatest programme for one ofthe reasons stated in thecontract’ added in NEC4. Thisshould clarify that if the ProjectManager has not accepted theContractor's latest programmethen there is still an obligationto make an assessment.

2

64.3 The Project Manager notifies the Contractorof his assessment of a compensation eventand gives him details of it within the periodallowed for the Contractor's submission ofhis quotation for the same event. This periodstarts when the need for the ProjectManager's assessment becomes apparent.

64.3 The Project Manager notifies the Contractorof the assessment of a compensation eventand gives details of the assessment withinthe period allowed for the Contractor'ssubmission of its quotation for the samecompensation event. This period starts whenthe need for the Project Manager'sassessment becomes apparent.

Male pronouns removed and‘event’ becomes‘compensation event’.

3


CommentsNEC4 - Implementing compensation events - 66NEC3 - Implementing compensation events - 65 Change

65.1 ‘his’. 66.1 A compensation event is implemented when• the Project Manager notifies acceptance of

the Contractor's quotation,• the Project Manager notifies the Contractor

of an assessment made by the ProjectManager or

• a Contractor's quotation is treated ashaving been accepted by the ProjectManager.

Gender neutral - malepronouns removed.

3

N/A N/A 66.2 When a compensation event is implementedthe Prices, the Completion Date and the KeyDates are changed accordingly.

Added wording in NEC4 arefor completeness. Optionstatements moved to coreclauses.

3

65.2 The assessment of a compensation event isnot revised if a forecast upon which it isbased is shown by later recorded informationto have been wrong.

66.3 The assessment of an implementedcompensation event is not revised except asstated in these conditions of contract.

‘implemented’ added beforecompensation events and theword ‘forecast’ has beenremoved. Implementedcompensation events notrevised except as stated in‘these conditions of contract’i.e. via dispute clause W2.3(4).In NEC3 it could be argued thatcompensation events could berevisited for things other than a‘forecast’ being wrong.

1

CommentsNEC4NEC3 Change

63.10 If the effect of a compensation event is toreduce the total Defined Cost and the eventis• a change to the Works Information or• a correction of an assumption stated by the

Project Manager for assessing an earliercompensation event,


63.4 Now core clause 63.4 above. NEC4 core clause 63.4 butwith amended wording. AlsoNEC4 Main Option A specificclause 63.12.

2

N/A N/A 63.12 If the effect of a compensation event is toreduce the total Defined Cost and the eventis a change to the Scope provided by theClient, which the Contractor proposed andthe Project Manager accepted, the Prices arereduced by an amount calculated bymultiplying the assessed effect of thecompensation event by the value engineeringpercentage.

No previous value engineeringclause in Option A. The valueengineering percentage is50% by default unless analternative is inserted inContract Data part one. Notecore clauses 16.1 and 63.4.

2

63.12 Assessments for changed Prices forcompensation events are in the form ofchanges to the Activity Schedule.


No changes, just a differentclause number.

3

63.14 If the Project Manager and the Contractoragree, rates and lump sums may be used toassess a compensation event.

63.2 The Project Manager and the Contractor mayagree rates or lump sums to assess thechange to the Prices.

Provision is now availablewith every option so has beenmoved to the core clauses.

3

Main Option A - Specific Changes


CommentsNEC4 = Main Option A - Specific ChangesNEC3 - Main Option A - Specific Changes Change

N/A N/A 63.16 If, when assessing a compensation event thePeople Rates do not include a rate for acategory of person required, the ProjectManager and Contractor may agree a newrate. If they do not agree the ProjectManager assesses the rate based on thePeople Rates. The agreed or assessed ratebecomes the People Rate for that categoryof person.

New clause to deal with thefact that the Short Scheduleof Cost Components nowuses 'People Rates'.Contractors need to givecareful consideration to thePeople Rates which mustnow be stated in theContract Data.

2

65.4 The changes to the Prices, the CompletionDate and the Key Dates are included in thenotification implementing a compensationevent.

66.2 When a compensation event is implementedthe Prices, the Completion Date and the KeyDates are changed accordingly.

Main Option specific clause inNEC3 has now become coreclause for all options withslight rearrangement ofwording in NEC4.

3


60.4 ‘Works Information’. 60.4 ‘Scope’. ‘Works Information’ becomes‘Scope’.

3

60.6 The Project Manager corrects mistakes in theBill of Quantities which are departures fromthe rules for item descriptions and fordivision of the work into items in the methodof measurement or are due to ambiguities orinconsistencies. Each correction is acompensation event which may lead toreduced Prices.

60.6 The Project Manager gives an instruction tocorrect a mistake in the Bill of Quantitieswhich is• a departure from the rules for item

descriptions or division of the work intoitems in the method of measurement

• due to an ambiguity or inconsistency Each such correction is a compensationevent which may lead to reduced Prices.

Now a requirement for theProject Manager to give aninstruction correcting amistake.

2

Main Option B - Specific Changes

CommentsNEC4 - Main Option B - Specific ChangesNEC3 - Main Option B - Specific Changes Change

63.10 If the effect of a compensation event is toreduce the total Defined Cost and the eventis• a change to the Works Information or• a correction of an assumption stated by the

Project Manager for assessing an earliercompensation event,


63.4 Now core clause 63.4 above. NEC4 core clause 63.4 butwith amended wording. AlsoNEC4 Main Option B specificclause 63.12.

2

N/A N/A 63.12 If the effect of a compensation event is toreduce the total Defined Cost and the event isa change to the Scope provided by the Client,which the Contractor proposed and the ProjectManager accepted, the Prices are reduced byan amount calculated by multiplying theassessed effect of the compensation event bythe value engineering percentage.

No previous value engineeringclause in Option A. The valueengineering percentage is50% by default unless analternative is inserted inContract Data part one. Notecore clauses 16.1 and 63.4.

2

63.13 Last paragraph only:If the Project Manager and the Contractoragree, rates and lump sums may be used toassess compensation events.

63.15 Last paragraph only:Deleted as now covered by core clause 63.2

Clause renumbered butunchanged with the exceptionof the last paragraph which isdeleted as it is covered bycore clause 63.2.

3

N/A N/A 63.16 If, when assessing a compensation event thePeople Rates do not include a rate for acategory of person required, the ProjectManager and Contractor may agree a newrate. If they do not agree the Project Managerassesses the rate based on the People Rates.The agreed or assessed rate becomes thePeople Rate for that category of person.

New clause to deal with thefact that the Short Schedule ofCost Components now uses'People Rates'. Contractorsneed to give carefulconsideration to the PeopleRates which must now bestated in the Contract Data.

2




Main Option specific clause inNEC3 has now become coreclause for all options withslight rearrangement ofwording in NEC4.

3


63.11 Moved to core clauses. 63.4 Now core clause 63.4 above. NEC4 core clause 63.4 -‘Works Information’ becomes‘Scope’. Also see NEC4 MainOption C specific clause 63.13

3



No changes, just a differentclause number.

3



Provision is now availablewith every option so has beenmoved to the core clauses(63.2).

3

N/A N/A 63.13 If the effect of a compensation event is toreduce the total Defined Cost and the eventis a change to the Scope provided by theClient, which the Contractor proposed andthe Project Manager accepted, the Prices arenot reduced.

New clause 63.13 seems torepeat what new clause 63.4says only in a positive way.

3

Main Option C - Specific Changes

CommentsNEC4 - Main Option B - Specific ChangesNEC3 - Main Option B - Specific Changes Change

CommentsNEC4 - Main Option C - Specific ChangesNEC3 - Main Option C - Specific Changes Change

63.15 If the Project Manager and the Contractoragree, the Contractor assesses acompensation event using the ShorterSchedule of Cost Components. The ProjectManager may make his own assessmentsusing the Shorter Schedule of CostComponents.

N/A Option clause removed. The option clause has beenremoved. Possibly becauseThe Short Schedule of CostComponents (SSCC) nowrequires People Rates to beincluded in the Contract Datatherefore an agreement to usethe SSCC would also requirethe agreement of People Rates.

3



Main Option specific clausehas now become core clausefor all options with slightrearrangement of wording.

3


60.6 The Project Manager corrects mistakes in theBill of Quantities which are departures fromthe rules for item descriptions and fordivision of the work into items in the methodof measurement or are due to ambiguities orinconsistencies. Each correction is acompensation event which may lead toreduced Prices.

60.6 The Project Manager gives an instruction tocorrect a mistake in the Bill of Quantitieswhich is• a departure from the rules for item

descriptions or division of the work intoitems in the method of measurement

• due to an ambiguity or inconsistency.

Each such correction is a compensationevent which may lead to reduced Prices.

Now a requirement for theProject Manager to give aninstruction.

2

Main Option D - Specific Changes

60.4 ‘Works Information’. 60.4 ‘Scope’. ‘Works Information’ becomes‘Scope’.

3


CommentsNEC4 - Main Option D - Specific ChangesNEC3 - Main Option D- Specific Changes Change

N/A N/A 63.13 If the effect of a compensation event is toreduce the total Defined Cost and the eventis a change to the Scope provided by theClient, which the Contractor proposed andthe Project Manager accepted, the Prices arenot reduced.

New clause 63.13 seems torepeat what new clause 63.4says only in a positive way.

3

63.13 Last paragraph only:If the Project Manager and the Contractoragree, rates and lump sums may be used toassess compensation events.

63.15 Last paragraph only:Deleted as now covered by core clause 63.2

Clause renumbered butunchanged with the exceptionof the last paragraph which isdeleted as it is covered bycore clause 63.2.

3


N/A Option clause removed. The option clause has beenremoved. Possibly becauseThe Short Schedule of CostComponents (SSCC) nowrequires People Rates to beincluded in the Contract Datatherefore an agreement to usethe SSCC would also requirethe agreement of People Rates.

3

63.11 Moved to core clauses. 63.4 Now core clause 63.4 above. NEC4 core clause 63.4 -‘Works Information’ becomes‘Scope’. Also see NEC4 MainOption C specific clause 63.13.

3



Main Option specific clausehas now become core clausefor all options with slightrearrangement of wording.

3




Provision is now availablewith every option so has beenmoved to the core clauses(63.2).

3


N/A Option clause removed. The option clause has beenremoved. Possibly becausethe Short Schedule of CostComponents (SSCC) nowrequires People Rates to beincluded in the Contract Datatherefore an agreement to usethe SSCC would also requirethe agreement of PeopleRates.

3

65.3 The changes to the forecast Prices, theCompletion Date and the Key Dates areincluded in the notification implementing acompensation event.


Main Option specific clausehas now become core clausefor all options with slightrearrangement of wording.The word "forecast" has beendropped.

3

Main Option E - Specific Changes





Provision is now availablewith every option so has beenmoved to the core clauses.

3

N/A N/A 63.17 If work which the Contractor is to do isaffected by a compensation event, theProject Manager and the Contractor agreethe change to the price for the work and anychange to the Completion Date and KeyDates. If they do not agree, the ProjectManager decides the change.

NEC4 clause added for claritywhere work by the Contractoris affected by a compensationevent (bearing in mind thatOption F is a 'managementcontract’).

2

65.3 The changes to the forecast Prices, theCompletion Date and the Key Dates areincluded in the notification implementing acompensation event.


Main Option specific clausehas now become core clausefor all options with slightrearrangement of wording.The word ‘forecast’ has beendropped.

3

Main Option F - Specific Changes


A sample of clients

Ainsworth Civils & Engineering

Appleton Piling

Balfour Beatty

Balfour Beatty Civil Engineering

Balfour Beatty Construction Services

Balfour Beatty Ground Engineering

Balfour Beatty International

Balfour Beatty Rail

Balfour Beatty Utility Solutions

Balfour Beatty Mott MacDonald

Birse Civils

Birse Rail

Byrne Bros (Formwork)

Carillion

CB&I UK

Chorus

Chunnel Group

Costain

DockGuard

East Sussex County Council

F B Ellmer Construction

Four-Delivery

Galliard Construction

Galliard Homes

Galliford Try

GSE Civil Engineering

High-Point Rendel

Hochtief (UK) Construction

Hochtief/Taylor Woodrow JV

Jacobs Group

J Murphy & Sons

Kier Construction

Kier Infrastructure and Overseas

Laing O'Rourke

Lockmetal

Mansell Construction Services

Mowlem

Network Rail

Oakes Specialist Excavation

O'Keefe Construction (Greenwich)

O'Rourke Contracting

Owen Building Contractors

R G Group

Ringway

Russell Cawberry

Sapphire Balustrades

Sword Civils Engineering

Vinci Construction UK

VolkerFitzpatrick

William Lacey Group

Willmott Dixon Housing

Working with Legal AdvisorsWe frequently work with our clients’

legal advisors and are also referred

by legal advisors.

They include:

Addleshaw Goddard

Fenwick Elliott

Laytons Solicitors

Pinsent Masons

Sheridan Gold

Taylor Wessing

Veale Wasbrough Vizards


Contract training

We:

• Provide your employees with the tools and confidence

to gain success in contract management

• Illustrate the common pitfalls and how to avoid them

• Provide practical training and “what the textbooks

don’t tell you”

• Bespoke training tailored to the specific needs of

your staff and their projects

• Delivered on-site, at your chosen location or in

our Maidstone offices

• Delivered by our specialists who are all

experienced, practising consultants

• Collaborative training for joint ventures

Who would benefit?

Anyone involved in running or administrating a

construction project

“Bespoke training

in all major forms of

contract including

the NEC family and

the JCT range of

contracts”

B U I L D I N G • W A T E R • R A I L • R O A D • P O W E R A N D G


D G A S • A V I A T I O N • M A R I N E • I N T E R N A T I O N A L


GVE Commercial Solutions

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2 Westree Road, Maidstone,

Kent ME16 8HB.

Tel: 01622 755359

www.gvecs.co.uk © C

opyr

ight

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omm

erci

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olut

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ited

Steve Goodwin

Director

Mobile: 07966 617259

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Alan Vincent

Director

Mobile: 07774 922016

[email protected]

Paul Edwards

Director

Mobile: 07791 324809

[email protected]


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