NEC Compensation Events and Time-Bars Explained
What Is a Compensation Event?
Under NEC contracts, a compensation event is the mechanism for adjusting the contract price and the completion date when something happens that is not the contractor's fault. The contract lists the events that qualify - changes to the Scope, late access, unforeseen physical conditions, certain weather, and employer risk events among them. Compensation events are the only route to additional time and money under NEC, which makes managing them properly fundamental to the commercial outcome of the project.
The Process
The compensation event process is procedural and sequential: the event is identified and notified, the Project Manager responds, a quotation is prepared on a defined cost basis showing the programme impact, and the quotation is assessed and, if accepted, implemented. Each step has timescales attached, and the discipline of following them is what protects entitlement.
The Eight-Week Time-Bar
The single most important provision for any contractor or subcontractor is the notification time-bar. Under the standard NEC provisions, if the contractor does not notify a compensation event within eight weeks of becoming aware of it, entitlement to additional time and money for that event is lost - no matter how valid the underlying claim. This is the most common and most avoidable way money is lost on NEC projects.
Why Events Get Missed
Events are rarely missed deliberately. They are missed because change creeps in gradually, because the team is focused on delivery rather than contract administration, or because no system is in place to catch and notify events as they arise. By the time the commercial impact is obvious, the eight-week window has often closed. The discipline of notifying early - even events that may turn out to be minor - is the only reliable protection.
Building a Proper Quotation
A compensation event quotation must be built on defined cost and demonstrate the effect on the programme - not simply re-rate the tender. That means a build-up of the people, equipment and plant cost, an appropriate risk allowance, and a clear demonstration of the programme impact. Quotations that are poorly constructed are easily reduced on assessment, eroding the entitlement that was properly due.
How Projjex Helps
Projjex manages the full compensation event lifecycle on NEC projects - building the systems that catch events in time, preparing robust quotations, and challenging under-assessments. Across recent projects this has implemented over £4.6m of compensation events. Get in touch to protect your position.