NEC4 Compensation Events: When the Project Manager Can Make Their Own Assessment (Clause 64) and How Contractors Protect Entitlement

Most NEC4 compensation event advice focuses on Clauses 61 and 62. The bigger commercial risk often appears later, when an NEC4 clause 64 compensation event ends up being valued by the Project Manager rather than by your quotation. That is necessary, but it is not the whole risk.

Clause 64 is where many contractors lose margin quietly. The Project Manager decides to assess the CE themselves, often with less time detail, fewer allowances, and a conservative view of cost and time. If you are not ready, the “PM assessment” becomes the number that sets the commercial tone of the project.

This article explains when Clause 64 applies, what the Project Manager should do, and what a contractor can do in practice to avoid it or manage it.

Why Clause 64 matters

Clause 64 is not a debate about whether the event is a compensation event. It is about who values it and on what information. The aim is to keep control of valuation so an NEC4 clause 64 compensation event does not become the default outcome due to admin delay or weak submissions.

When Clause 64 is triggered, you risk three things:

• Your price and time assessment becomes reactive. You are responding to someone else’s valuation.

• The assessment may be built on limited records, or on assumptions you would not choose.

• The CE register starts filling with “PM assessments”, which makes later agreement harder.

NEC’s own guidance frames Clause 64.1 as applying where the contractor has failed to meet key CE process obligations.

When the Project Manager makes their own assessment under Clause 64.1

Clause 64.1 sets out the reasons the Project Manager should make their own assessment. NEC summarises these as four contractor failure modes linked to programme and the compensation event process.

Rather than memorising the contract wording, manage the reality on live projects. Clause 64 is most commonly triggered when one of the following happens:

1. The contractor does not submit a quotation on time after being instructed.

2. The contractor does not provide a quotation that is “correctly assessed” in the NEC sense, meaning it does not comply with the assessment rules and information requirements.

3. The contractor does not provide a revised quotation when properly instructed to do so.

4. The contractor fails to provide the programme and supporting information needed to demonstrate time impact properly.

NEC’s own guidance sets the “obligation to assess” around these four reasons.

Separately, NEC guidance and commentary also highlight that if contractor submissions are late or weak, PM assessment becomes the default outcome.

What Clause 64.2 changes in practice

Clause 64.2 matters when the accepted programme is missing, out of date, or not usable for prospective assessment. In that situation, the Project Manager may produce their own programme position to assess the effect on the remaining work.

This is the exact trap that links Clause 64 to programme discipline. If your accepted programme is stale, or your update is not credible, you give the Project Manager space to “fill the gap” with their own view of progress and logic.

What to do to avoid Clause 64

You avoid Clause 64 by being fast, compliant, and decision-ready. The aim is not to write long narratives. It is to remove reasons for the Project Manager to assess.

Use these controls.

Control 1: A CE clock that tracks the right dates

Track more than the 8-week time bar. Track the quotation instruction date, quotation due date, the PM reply due date, and the date you will issue a failure-to-reply notice if needed. NEC sets a mechanism for late replies to quotations, but it only helps if you run dates properly.

Control 2: A quotation pack that is compliant and easy to accept

Use a standard format every time:

• Cover page: the CE reference, the event description, and the decision you want

• Assumptions: numbered, specific, and linked to evidence

• Cost build-up: basis of rates, records, and what is included

• Time impact: a programme extract showing the impacted chain of logic

• Evidence index: one page listing instruction refs, drawings, RFIs, site records

  
  

This reduces “not correctly assessed” responses and limits the excuses for a PM assessment route. NEC commentary is clear that PMs should not simply ignore quotations or revisions without deciding whether the quotation complies with the contract requirements.

Control 3: Programme hygiene at the point of quotation

When you submit a quotation, include a clear statement of the programme basis you are using for prospective assessment. If the accepted programme is out of date, explain how progress to date is reflected and show the logic impact on the remaining work.

NEC guidance on out-of-date programmes makes the same point: programme status affects how the CE is assessed and whether the assessment process can run as intended.

Control 4: Make revisions fast and controlled

If the PM requests a revised quotation, treat it as a controlled re-issue, not a fresh negotiation.

• Keep the original pack structure

• Highlight changes in a short “revision log”

• Re-issue only the pages that change, plus a new cover page

The quicker and cleaner your revision, the less likely the PM is to move to Clause 64.

If the Project Manager says “I will assess this compensation event myself”

Do not panic, and do not go quiet. Your job is to influence the assessment and create a clean audit trail.

Step 1: Ask for the reason and the trigger

Reply the same day and ask which Clause 64.1 reason is being relied upon. Keep it factual.

If the trigger is late quotation, state the dates and whether an extension was agreed.

If the trigger is “not correctly assessed”, ask what specific compliance point is said to be missing.

Step 2: Issue an “assessment support pack” even if you are not invited

If the PM is assessing, you still want your evidence and programme logic in front of them.

Send a short pack:

• One-page summary of event, dates, and references

• Cost substantiation and key rates

• Programme extract showing the impacted chain

• A tight assumptions list

Keep it tight. The PM will use what is easiest to use.

Step 3: Protect your position without overstatement

If you disagree with the assessment when it arrives, use the contract mechanisms for challenge. Keep your disagreement evidence-led and specific. Avoid broad statements like “unfair” or “not acceptable”. Focus on identifiable issues: missing records, incorrect progress status, incorrect logic, incorrect rates, or wrong assumptions.

A useful precedent point on impartial administration

Costain v Bechtel is often referenced in NEC discussions about the Project Manager’s role in assessment and certification.

The case concerned allegations of improper interference and whether the project manager owed a duty of impartiality. The court did not accept that there was clearly no duty of impartiality and held there was a serious issue to be tried, though it refused interim injunction relief on practical grounds.

Some summaries describe the case as supporting an implied duty to act impartially when administering payment and assessment functions.

You do not need to cite this in correspondence. The practical takeaway is simpler: run a professional, evidence-led process and assume your quotation and records may be tested later.

Clause 64 is not where you want weak paperwork.

Table: Clause 64 triggers and contractor controls

Clause 64 trigger in plain English	What you do in practice
Quotation not submitted on time	Request extension in writing early, then submit an interim quotation with clear assumptions if scope is incomplete.
Quotation is said to be “not correctly assessed”	Use a standard pack structure and include a cost basis, time basis, and evidence index every time. Ask for the exact non-compliance point and re-issue quickly.
Revised quotation not provided	Re-issue within the time allowed, with a short revision log and clearly identified changes.
Programme information is missing or not credible	Attach a programme extract showing progress status and the impacted logic chain. State the programme basis for prospective assessment.

Want the Clause 64 controls as a ready-to-use pack? See how we set this up on live projects here.

Two short templates you can reuse

Template 1: Response when the PM moves to Clause 64

Subject: CE-0XX, Clause 64 assessment

Thank you for confirming you intend to make your own assessment. Please confirm which Clause 64.1 reason applies on this CE. For completeness, we attach an assessment support pack including cost substantiation, assumptions, and a programme extract showing the time impact.

Template 2: Submission note for a decision-ready quotation

Subject: CE-0XX Quotation submission

Please find attached our quotation for CE-0XX. The pack includes a cover page with the decision requested, assumptions, cost build-up, programme extract for time impact, and an evidence index.

Common mistakes that make Clause 64 more likely

• Late quotations because the team waits for perfect information. Submit a controlled quotation with clear assumptions, then revise when the missing information arrives.

  
  

• Weak programme extracts. If the programme logic is unclear, your time impact is easy to discount.

  
  

• Unstructured packs. If the PM cannot see the decision request, the assumptions, and the substantiation quickly, the CE drifts or moves to PM assessment.

  
  

• Not tracking dates. If you do not manage timescales, the CE process becomes reactive.

If you want to reduce PM assessments on your projects, the fastest improvement is usually a standard quotation pack template plus a weekly CE clock review.

If you are seeing frequent PM assessments or slow CE decisions, we can tighten the process quickly with a controlled register and decision-ready quotation packs. How we work.

References

1. NEC Contracts, “When and why NEC project managers have to assess compensation events” (28 June 2022).

2. NEC Contracts, “Revising quotations for compensation events”.

3. NEC Contracts, “Out-of-date accepted programmes”.

4. NEC Contracts, “No accepted programme in place”.

5. NEC Contracts, “The Project Manager in the NEC4 ECC” webinar Q&A (17 May 2017).

6. Northern Ireland Housing Executive v Healthy Buildings Ltd [2013] NIQB 124.

7. Costain Ltd v Bechtel Ltd [2005] EWHC 1018 (TCC), case summaries and judgment.