NEC4 Update – May 2019

By: Nicola J. Ellis and Charles D. Oliver

On 1 March 2019 the NEC published a revision to the NEC4 suite of contracts, first published in June 2017. Whilst generally focused on addressing typographical errors and/or terminology corrections, a more significant amendment has been made to clause 63.5 – a new clause introduced in NEC4 but subsequently critiqued for a lack of clarity.

The NEC itself described NEC4 as an “evolved edition” of NEC3, with updates to reflect industry feedback. Amongst other changes, the compensation event provisions were revised with the inclusion of new and amended clauses providing greater detail regarding the key requirements for assessing delays to Completion Dates and Key Dates. The NEC also issued a Practice Note (in October 2017) to support use of the new provisions, which make reference to the fact that the Accepted Programme current at the ‘dividing date’ (the date that divides actual from forecast Defined Cost) was to be used in making these assessments.

The following wording, with clause 63.4, has however been criticised by users as being unclear:

When assessing delay only those operations which the Contractor has not completed and which are affected by the compensation event are changed.”

This has been replaced with the following wording, which effectively embed the guidance contained in the Practice Note:

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.

It is hoped that this change will realise the benefits intended by inclusion of clause 63.5 in the first place.

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