NEC4 Compensation Events: How Contractors Should Assess Delay Impacts
- Roman Bazelchuk
- Aug 3, 2025
- 6 min read
Updated: 6 days ago
If you are working under the NEC4 Engineering and Construction Contract (ECC), your entitlement to time on a compensation event is only as good as the way you assess it.
Most contractors do not lose time because the event was weak. They lose it because the programme evidence is unclear, the “dividing date” baseline is wrong, or the delay model mixes the compensation event with unrelated project noise.
The NEC approach is deliberately prospective. It is meant to keep commercial conversations current and prevent end of project delay fights. In today’s market, that matters more than ever. UK adjudication volumes remain high and poor contract administration is consistently cited as a leading driver of disputes, so clean CE assessments are a genuine dispute avoidance tool, not just paperwork.
For that reason, this NEC4 compensation events delay assessment method is built to be auditable, repeatable, and anchored to the Accepted Programme at the dividing date.
NEC4 compensation delay assessment (Clause 63.5)
The NEC practice note is the clearest “how to” explanation. It boils clause 63.5 down to two requirements:
Determine the effect the compensation event has on planned Completion and Key Dates.
Use the Accepted Programme current at the dividing date to do that assessment.
The objective is equally important: you assess the effect due only to the compensation event, not the effect of everything else going wrong on the project.
This is where many submissions fail. Contractors often use a “latest programme” that has not been accepted, or they run an impact analysis that quietly corrects logic errors, resequences work, or removes float that was always there. That may feel commercially sensible, but it is not what NEC is asking you to do.
The dividing date and why it is where entitlement is won or lost
Think of the dividing date (NEC4 Compensation Events) as the contractual “snapshot”. Your assessment must start from the Accepted Programme that was current at that point, not from your tender baseline and not from a refreshed programme you produced later to make the story look cleaner.
The practice note also makes a subtle but critical point: your assessment must recognise what happened between the date of the Accepted Programme and the dividing date, including other compensation events and also delays from events that are not compensation events. In other words, you do not pretend the project stood still since the last accepted submission.
NEC4 compensation events delay assessment: a consultancy-grade method that survives scrutiny
When we support contractors, we keep the method boring, auditable, and repeatable. That is what makes it hard to attack.
Step 1. Lock down the baseline properly
Use the Accepted Programme current at the dividing date. Record the programme ID, issue date, acceptance status, data date, calendars, and the exact logic settings used. If you cannot evidence these, you invite an argument before you even discuss delay.
Step 2. Identify the “affected path”, not just the affected activity
Map the compensation event to the specific operations it changes (design, procurement, access, temporary works, testing, commissioning, interface constraints). Then identify the successor chain to planned Completion or the relevant Key Date. Your narrative should show you understand how the delay actually propagates.
Step 3. Apply changes only where the CE genuinely changes the forecast
The NEC practice note is explicit: you change durations of activities that are not complete at the dividing date where appropriate to recognise the effect. Completed activities may have been affected and that impact must be recognised, but you do not rewrite history by changing their actual timing.
Step 4. Include realistic mitigation and time risk allowances, on a competent-response basis
NEC expects you to include mitigation and risk allowances on the basis that the Contractor reacts competently and promptly. That does not mean “assume perfect conditions”. It means your mitigation plan must be credible (resources, access, approvals, lead times, working hours), and your risk allowances must be tied to real risks, not a blanket percentage.
Step 5. Build a CE assessment programme
NEC allows a separate programme version for the purpose of the CE assessment. The key is to be clear that this is not being submitted for acceptance. It is simply your calculation model that demonstrates the effect.
Practically, the best format is: (a) a locked PDF of the Accepted Programme at the dividing date, (b) a marked-up copy showing only CE-driven changes, and (c) a short narrative that explains assumptions and the causal chain.
Time risk allowances (TRA), float and why your CE can be rejected even if the event is valid
Two trends are colliding here.
First, more Project Managers are scrutinising programmes for missing time risk allowances, because NEC guidance is explicit that programmes should show the information the contract requires, and that time risk allowances should be identifiable and retained in CE assessments.
Second, contractors are increasingly trying to “engineer” entitlement by hiding allowances or overstating non-critical durations. That can backfire. If your programme does not transparently show time risk allowances or it contains obvious logic distortions, you create an easy reason for non-acceptance and a weak platform for CE time arguments.
A practical rule: do not argue about “float ownership” in abstract. Under NEC, your job is to show the forecast effect on planned Completion from the Accepted Programme at the dividing date. If your Accepted Programme already carried terminal float or embedded allowances, that is part of the starting point. Trying to remove it inside the CE model usually looks like retrospective claim shaping.
What if the Accepted Programme is out of date or not accepted?
This is common, especially on SME-led packages where the programme update cycle slips.
The NEC practice note gives a workable route:
• If long intervals were agreed in Contract Data, use the latest accepted programme and apply the normal method.
• If the Contractor failed to submit revised programmes in accordance with clause 32.2, the parties should try to agree a programme to use. If they cannot, the Project Manager can assess under clause 64.
• If a recent programme was submitted but not accepted, the parties should try to agree whether it can still be used for the assessment.
• If agreement cannot be reached, the Project Manager assesses under clause 64 based on the previously Accepted Programme.
Commercially, clause 64 assessments are where contractors often lose leverage, because you are no longer controlling the modelling approach. The best mitigation is simple: keep the programme acceptance cycle healthy and address reasons for non-acceptance early, before a major CE lands.
Logic errors and “programme hygiene” as an entitlement issue
The practice note also acknowledges a reality every planner sees: an Accepted Programme can contain an obvious error that does not reflect a genuine forecast effect. In that situation, the Project Manager and Contractor should resolve the problem in the logic, so the assessment remains about the CE and not about artefacts of a bad model.
From a contractor perspective, this is where professional judgement matters. If you quietly fix logic only in your CE model, you will be accused of manipulating the baseline. If you raise the logic issue transparently and propose a correction route (with an auditable change log), you are far more likely to protect entitlement.
Multiple compensation events
Where multiple compensation events arise, NEC expects them to be assessed sequentially, separately, and prospectively, recognising earlier events prior to the dividing date before assessing the new one. Grouping can be sensible only by agreement when events occur over a short period.
In practice, the cleanest approach is a running CE register that records, for each CE, the dividing date, the Accepted Programme reference, the modelling file name, and the resulting change to planned Completion. That keeps the audit trail intact when events stack up.
What “good” looks like in a CE time submission
If you want your assessment to land well with a Project Manager aim for:
A clear dividing-date baseline, evidenced.
A causal story tied to specific affected operations and their successor chain.
A CE assessment programme that changes only what the event changes.
A short assumptions schedule (access, approvals, work hours, procurement lead times, resources).
Mitigation measures that are realistic and demonstrably within the Contractor’s control.
Transparent time risk allowances, not hidden contingency.
References
NEC (Practice Note 1.1). NEC4 ECC Practice Note 1.1: Assessing delays due to compensation events. https://www.neccontract.com/getmedia/415d4555-7980-4a18-b604-eb8369f2dd64/NEC4-ECC-Practice-Note-1-1_web.pdf
NEC. “Why you need reasonable time risk allowances in NEC contracts”.
King’s College London / The Adjudication Society. 2024 Construction Adjudication in the United Kingdom (KCL Update 2024 Report). https://www.adjudication.org/sites/default/files/KCL_Update_2024_Report.pdf
Stevens & Bolton LLP. “Assessing delays under the NEC4 contract amends”.
Fenwick Elliott. “NEC Accepted Programmes: A Practical Guide” (Insight 94). https://www.fenwickelliott.com/research-insight/newsletters/insight/94
CECA. NEC4 Bulletin No. 10: Float, Types & Ownership (PDF).
Overlooked issue for SME Contractors