NEC compensation events: the eight-week notification time bar

Under the NEC Engineering and Construction Contract, the contractor has to tell the Project Manager about a compensation event. That notice is subject to a time bar of eight weeks from when the contractor became aware of the event. This guide covers NEC3 (April 2013) and NEC4, which share the rule but differ in the detail.

What clause 61.3 requires

A compensation event is one of the events listed in clause 60.1 (and any additional events in the Contract Data). Examples include late access to the Site, late information from the Project Manager and physical conditions an experienced contractor would not have allowed for. If the Project Manager has not notified the event, the contractor must notify it.

Under NEC3 clause 61.3, the contractor notifies the Project Manager of an event that has happened, or that it expects to happen, if it believes the event is a compensation event and the Project Manager has not notified it. If the contractor does not notify within eight weeks of becoming aware of the event, it is not entitled to a change in the Prices, the Completion Date or a Key Date. The exception is where the Project Manager should have notified the event and did not.

The period runs in weeks. NEC counts calendar weeks, so public holidays and weekends do not extend it.

Early warning comes first

Most compensation events should also be the subject of an early warning: under NEC3 clause 16.1, as soon as the contractor becomes aware of a matter that could increase the cost, delay Completion or impair the performance of the works. The early warning is separate from the compensation event notice and does not replace it.

If the Project Manager decides an experienced contractor could have given an early warning and did not, the event is assessed as if the warning had been given (NEC3 clause 63.5). That usually reduces the compensation.

What the notice should contain

The contract does not prescribe a form, but a clear notice should state:

• that the contractor is notifying a compensation event under clause 61.3;
• the item of clause 60.1 relied on;
• what happened, and the date the contractor became aware of it;
• the expected effect on Defined Cost and on planned Completion;
• the early warning reference and date (clause 16.1), or why none was needed.

Send it to the Project Manager, in the form and through the system the contract requires.

What happens next

Under NEC3 clause 61.4 the Project Manager replies within one week, or a longer period the contractor agrees. If the Project Manager decides the event is a compensation event, it instructs the contractor to submit a quotation. The quotation (changes to the Prices and any delay to Completion and Key Dates, with a revised programme where needed) is due within three weeks of that instruction under clause 62.3.

If the Project Manager does not reply, the contractor may notify that failure. If there is still no reply within two weeks of that notice, NEC3 clause 61.4 treats the event as accepted as a compensation event and treats the notice as an instruction to submit a quotation.

Worked example

A contractor learns on Tuesday 3 March 2026 that the Client cannot give access to part of the Site on the date in the Accepted Programme. That is a compensation event under NEC3 clause 60.1(2).

1. Early warning: give it straight away, ideally on Tuesday 3 or Wednesday 4 March 2026.
2. Compensation event notice: eight calendar weeks from Tuesday 3 March 2026 is Tuesday 28 April 2026. Send the notice well before then.
3. Public holidays: Good Friday (3 April), Family Day (6 April) and Freedom Day (Monday 27 April) all fall within the period. We have assumed they do not extend it, because the period is counted in calendar weeks.
4. Quotation: if the Project Manager instructs a quotation on, say, Tuesday 10 March 2026, it is due by Tuesday 31 March 2026.

In practice there is little reason to wait. A notice sent the same week as the early warning keeps both clocks simple.

What missing the bar costs

If the notice is late and no exception applies, the contractor loses its entitlement to more money and more time for that event under the contract.

Differences between NEC3 and NEC4

The eight-week period and the weeks-based count are the same in both editions. The differences are:

• The exception (61.3). NEC3 lifts the bar where the Project Manager should have notified the event and did not. NEC4 lifts it instead where the event arises from the Project Manager or Supervisor giving an instruction or notification, issuing a certificate or changing an earlier decision.
• The trigger (61.3). NEC3 counts from becoming aware of the event. NEC4 counts from becoming aware that the event has happened.
• Early warning. NEC3 clause 16.1; NEC4 clause 15.1, with the early warning register and meetings.
• Reduced compensation for no early warning. NEC3 clause 63.5; NEC4 clause 63.7, with the Project Manager stating its view when it instructs quotations.
• Terms. NEC4 uses Scope in place of Works Information and Client in place of Employer.

The quotation period (three weeks, clause 62.3) and the Project Manager's one-week reply (clause 61.4) carry across. See NEC3 contracts on Sakhani for the edition detail.

Check your own contract

This guide describes the standard conditions. The signed contract's own amendments, including Z clauses, Contract Data part one and any secondary options, govern over them. Some projects shorten the eight-week period or add a form of notice, so check those documents before relying on the dates above. This guide is general information, not legal advice.

What Sakhani does about this

Sakhani reads the signed contract, including its Z clauses and Contract Data, and counts the eight weeks from the date you record the event. It reminds the people responsible before the period closes and drafts the early warning and the compensation event notice for a person to check and send. See how it works or register to try it on a project.