The NEC4 dividing date: what clause 63.1 sets and what it decides
By Roman Bazelchuk | NEC Accredited Project Manager | APMG Project Planning and Control
Founder, NEC Planning Solutions Ltd
On one NEC3 contract I worked on, related compensation events piled up on top of each other. Instead of going in separately and on time, each one waited for the outcome of another. Meanwhile the revised programmes went more than six months without being accepted, so the later events rested on an Accepted Programme that was out of date. In the end it all had to go into one claim, and neither party was clear which programme was right. The accepted one no longer matched the site. The one that did had not been accepted. NEC4 answers that question with one date for each event.
The NEC4 dividing date is the date of the Project Manager's or Supervisor's instruction, notification, certificate or changed decision that gave rise to a compensation event or, for other events, the date of notification (clause 63.1). Cost splits there into actual and forecast, and clause 63.5 measures delay from the Accepted Programme current on it.
Arguments about the value of a compensation event often start with a date, and it is not always the date either side reaches for first. It is not the day the ground turned out worse than the Site Information said, and it is not the day the planner first heard about it. It is a date the contract fixes, and two of the main choices in the assessment are made the moment it is fixed.
That is why the dividing date is not a formality. Get the date wrong and both halves of a quotation rest on the wrong footing: the money on the wrong records, the time on the wrong programme.
The dividing date is not the eight-week clock in clause 61.3, which runs from the day the Contractor became aware of the event, and it is not one of the clause 62 dates that govern the quotation itself. The guide to the compensation event time bar covers those clocks, and the delay analysis guide covers how the time assessment is run.
This article sets out how clause 63.1 fixes the NEC4 dividing date, the three things it then decides, the dates it is often confused with, how it differs from NEC3, and a worked example in which two events with dividing dates nine days apart are measured against different programmes.
How clause 63.1 sets the NEC4 dividing date
Clause 63.1 sets the date in two limbs. Which limb applies depends on where the event came from, not on who notified it or when.
Events that arise from a communication
For a compensation event that arises from the Project Manager or the Supervisor giving an instruction or notification, issuing a certificate or changing an earlier decision, the dividing date is the date of that communication. An instruction changing the Scope under clause 60.1(1) is the common case: the dividing date is the date of the instruction, whether the changed work starts that afternoon or three months later.
The date stays with the communication even when the event is not notified on time. Clause 61.1 has the Project Manager notify these events itself when it communicates. Where it does not, the Contractor notifies them under clause 61.3, and the eight-week bar does not apply to an event of this kind, provided it is notified before the defects date (clause 61.7). The notification may come weeks after the instruction, but the dividing date is still the date of the instruction.
Every other event
For any other compensation event, the dividing date is the date the event was notified. This limb covers the events the Contractor tends to find first: physical conditions under clause 60.1(12), weather under clause 60.1(13), or the Client not providing something by the date the Accepted Programme shows.
Here the Contractor sets the date. A physical condition met on a Monday and notified on the Friday has a Friday dividing date. An event notified seven weeks after it was met, inside the time bar, has a dividing date seven weeks later than it needed to have. Nothing in clause 63.1 moves the date back to the day the event began.
A continuing event, such as an obstruction that keeps affecting the work, still has one dividing date: the date it was notified. Weather is measured month by month under clause 60.1(13), so a spell that runs into a second month may be a separate event with its own dividing date. The guide to structuring a time impact assessment shows how to state that date in a single sentence at the top of an assessment, so the Project Manager can test it before reading anything else.
Three things the dividing date fixes
Once the date is set, three parts of the assessment are fixed with it.
The line between recorded and forecast cost
Clause 63.1 assesses the change to the Prices as the effect of the event on the actual Defined Cost of the work done by the dividing date, the forecast Defined Cost of the work not done by then, and the resulting Fee. Work done before the date is costed from what was spent. Work after it is costed as a forecast made as at that date.
On the wording of clause 63.1, the forecast stays a forecast even when the quotation is written after the work is finished. CECA's NEC4 bulletin on the dividing date makes the point for an instruction changing the Scope: the changed work is priced as a forecast, and actual costs that become available later should not change the assessment.
Commentators differ. Keating on NEC, as Fenwick Elliott reports it, sees nothing to exclude later information available at the date of assessment. In Healthy Buildings ([2017] NIQB 43), a case on the NEC3 Professional Services Contract, quotations were not asked for until months after the instruction, by which time the work had been done. The Northern Ireland High Court held that, with the contract's timetable not kept, the actual cost and time records should inform the assessment. The decision is persuasive rather than binding outside Northern Ireland, but the line in that case fell on the date of the instruction, which is where NEC4's first limb puts it too. The compensation event quotation guide shows how the money is built either side of the date.
Actual cost has to be proved. On Options C, D, E and F, cost that the Contractor's accounts and records do not justify is Disallowed Cost under clause 11.2(26), or 11.2(27) on Option F, so the days between an event starting and its notification need the same records as any other work: allocation sheets, plant returns, invoices.
The Accepted Programme that measures the delay
Clause 63.5 assesses delay to the Completion Date as the time by which planned Completion moves later than planned Completion on the Accepted Programme current at the dividing date. A revision submitted but not yet accepted on that date is not the Accepted Programme, however much better it describes the job, and nor is a programme accepted afterwards.
Since the January 2019 amendments, clause 63.5 also takes into account any delay the event has already caused in the Accepted Programme, and events that have happened between that programme's date and the dividing date. NEC added the words to bring an October 2017 practice note into the contract. The assessment therefore starts from the last Accepted Programme brought forward to the dividing date for the events that have happened since its date, before the new event goes in. A contract on the original June 2017 wording, without the amendments, does not carry that sentence, so check which version was signed.
The gap is seldom small. An article on NEC's own website says the programme in force at a dividing date is likely to be at least four weeks old, and that the closer it is to the dividing date, the fewer the difficulties in the assessment. Where there is no Accepted Programme, clause 64 can put the assessment in the Project Manager's hands, using its own assessment of the programme for the remaining work. The guide to compensation events without an Accepted Programme covers that case.
When I review the time side of a compensation event, the first check is the critical path. Is the impact on it genuine, or does it only look that way? If it is genuine, the second check is the forecast duration of the event itself. That has to be verified too, because a real event with the wrong duration still gives the wrong delay.
PLANNER'S TAKEAWAY Record the Accepted Programme revision current on each dividing date in the compensation event register, and save it as issued before anything is impacted. The more recent that revision, the smaller the gap. If the two-week reply under clause 31.3 does not come, notify the failure. If it continues a further week, the programme is treated as accepted. |
Who carries the forecasting risk
The forecast side carries its own rules. Clause 63.8 includes risk allowances for matters with a significant chance of occurring that are at the Contractor's risk, and those allowances belong to the forecast: once work is done and recorded, there is nothing left to allow for. Clause 63.9 assumes the Contractor reacts competently and promptly to the event, so the forecast prices a competent response rather than whatever response follows.
Once the event is implemented, clause 66.3 says its assessment is not revised except as the contract states, so a forecast that proves wrong stays wrong. Where the effects are too uncertain to forecast reasonably, the Project Manager can state assumptions under clause 61.6, and a later correction of an assumption is itself a compensation event under clause 60.1(17). For a Contractor facing an event it cannot forecast, asking the Project Manager to state assumptions is safer than pricing a guess or waiting for actual cost.
What the dividing date does not decide
Three other dates are often mistaken for it.
When the event happened
The event happened when it happened. A physical condition met on 2 March and notified on 19 March has a dividing date of 19 March, but its cost from 2 March is still part of the assessment, as actual Defined Cost of the work done by the dividing date. The dividing date moves the line between records and forecast. It does not move the event.
When the eight weeks started
Clause 61.3's eight weeks run from the day the Contractor became aware of the event. That date decides whether a notification can still change the Prices, the Completion Date or a Key Date, not how the event is measured. A notification made inside the eight weeks still sets a later dividing date than one made the day the event was recognised.
When the quotation was written or implemented
Clause 62.3 gives the Contractor three weeks from the instruction to submit a quotation, and clause 66.1 implements the event when the Project Manager notifies acceptance of a quotation or its own assessment, or when a quotation is treated as accepted. Neither date moves the dividing date. A quotation prepared in June for a March dividing date still prices the work after March as a forecast made in March, and still measures delay from the programme current in March.
NEC3 and NEC4: where the line moved
NEC3 had no defined dividing date. Its clause 63.1 split work already done from work not yet done at the date the Project Manager instructed, or should have instructed, the Contractor to submit quotations, and its clause 63.3 measured delay against the Accepted Programme without tying it to a date. NEC4, published in June 2017, gave the line a name and two limbs, and the January 2019 amendments added the sentence on delay already in the programme. NEC3 contracts are still running, so the rule that applies is the one in the contract on the desk.
NEC3 | NEC4 | |
The defined term | None: clause 63.1 refers to work already done and work not yet done | The dividing date (clause 63.1) |
Where the line falls | The date the Project Manager instructed, or should have instructed, the Contractor to submit quotations | For an event arising from an instruction, notification, certificate or changed decision, the date of that communication. For any other event, the date it was notified |
The programme for delay | The Accepted Programme (clause 63.3) | The Accepted Programme current at the dividing date (clause 63.5) |
Delay the event has already caused | Not addressed in clause 63.3 | Taken into account under clause 63.5, since the January 2019 amendments |
The comparison of NEC3 and NEC4 covers the other programme changes between the two editions.
A worked example: two events, two programmes
The dates are illustrative. Revision 6 of the programme was accepted on 3 February. Revision 7, carrying progress to the end of February, was submitted on 3 March and accepted on 17 March, inside the two weeks clause 31.3 allows.
On 2 March the piling crew met an obstruction that an experienced contractor would have judged, at the Contract Date, too unlikely to allow for. The Contractor notified it as a physical condition under clause 60.1(12) on 19 March, inside the eight weeks, which ran to 27 April.
On 10 March, between the two dates, the Project Manager instructed a change to the Scope of the pile caps.
The instruction's dividing date is 10 March. Revision 7 had not yet been accepted, so the change is assessed against Revision 6, brought forward to 10 March for the events since its date, and all of its cost is forecast, because none of the changed work had been done.
The obstruction's dividing date is 19 March. By then Revision 7 had been accepted, so it is the programme for that assessment. The cost from 2 March to 19 March is actual Defined Cost, proved from the standing time and plant records, and the rest is forecast. Had the Contractor notified on 3 March, the next working day, the dividing date would have been 16 days earlier: the obstruction would have been assessed against Revision 6, and almost all of its cost would have been forecast.
Neither answer is better in the abstract. The early notification gives a forecast the Contractor has to stand behind. The late one gives records the Contractor has to have kept. What the Contractor cannot do is choose the date afterwards.
COMMERCIAL CONSEQUENCE On the events the Contractor finds, the notification date sets the pricing basis. In the worked example, the later notification moved sixteen days of cost from forecast to records and changed the programme the delay was measured against. Agree with the site team who notifies and how fast, and start cost records the day the event begins. |
What to record for every compensation event
Six entries, made on the day, answer the questions a reviewer will ask.
Entry | Why it matters | Clause |
The limb, the dividing date and the reference of the communication or notification | Fixes the line between actual and forecast cost, and the programme | 63.1 |
The Accepted Programme revision current that day, saved as issued | The programme the delay is measured against | 63.5 |
The date the Contractor became aware of the event, and the eight-week deadline | Decides whether the event can still change the Prices, the Completion Date or a Key Date | 61.3 |
Cost records from the day the event began | Actual Defined Cost has to be proved. On Options C, D, E and F, cost the records do not justify is Disallowed Cost | 63.1, 11.2(26), 11.2(27) |
Any assumptions the Project Manager states | The basis of the forecast, and a new compensation event if corrected | 61.6, 60.1(17) |
The date of the instruction to submit a quotation, and the date the quotation is due | Three weeks to submit the quotation | 62.3 |
The guides to clause 31 programme acceptance and clause 32 revisions explain how the Accepted Programme stays current. Where several events overlap, each has its own dividing date and its own programme, and multiple compensation events sets out how to keep them apart.
NEC Planning Solutions prepares and reviews compensation event quotations from the dividing date forward: the date and the programme current on it, the time impact assessment, the split of the cost and the narrative. A single compensation event starts from £1,250 plus VAT, and initial scoping is at no charge.
See how compensation event support works.
The author's view
The dividing date is decided on an ordinary working day, often by someone who does not know they are deciding it. A site manager who waits until the cost of an obstruction is known before telling anyone has chosen the programme the delay will be measured against, and has chosen to price the first weeks from records rather than a forecast. Neither choice was made on purpose.
My view is that the second limb should be run like a clock, not a judgement. Notify the event when it is recognised, write the dividing date and the programme revision on the notification itself, and let the quotation follow. The contract then works as written: the Project Manager reviews a forecast made at a known date against a known programme, instead of an argument about which programme and whose records.
On site, I start with the early warning, given as soon as I am aware of the matter, which is usually the day the event occurs. The compensation event notification is prepared alongside it and goes in as soon as I believe the event is a compensation event. It does not wait for the programme to move. Some events change the Prices without delaying Completion, and the eight weeks in clause 61.3 run from becoming aware that the event has happened, not from its first effect on the programme. If the Project Manager states under clause 61.5 that I missed an early warning an experienced contractor could have given, clause 63.7 has the event assessed as if I had given it.
The first limb asks less of the Contractor and more of the programme. An instruction carries its own date, so the Contractor's part is to make sure the Accepted Programme on that date is one it would be content to be measured against. That is a planning discipline, not a commercial one, and it is settled weeks before the instruction arrives.
NEC4 dividing date: frequently asked questions
What is the dividing date in NEC4?
It is the date clause 63.1 fixes for assessing a compensation event: the date of the Project Manager's or Supervisor's instruction, notification, certificate or changed decision that gave rise to it or, for any other event, the date it was notified. Work done by then is costed as actual Defined Cost, the rest as forecast, and clause 63.5 measures delay from the Accepted Programme current that day.
Is the dividing date the date the compensation event happened?
Not for the events the Contractor finds, such as physical conditions or weather. Their dividing date is the date of notification, which may be days or weeks after the event began. The cost between the event starting and the dividing date still counts, but as actual Defined Cost that has to be proved from records. The eight weeks in clause 61.3 run from awareness, which is a separate date again.
Which programme is a compensation event assessed against?
Under clause 63.5, the Accepted Programme current at the dividing date. A revision submitted but not yet accepted on that date does not count, and nor does a programme accepted afterwards. Since the January 2019 amendments, the assessment also takes into account delay the event has already caused in the Accepted Programme, and events between that programme's date and the dividing date.
Can a forecast be replaced with actual costs once the work is done?
Clause 63.1 treats work not done by the dividing date as a forecast, and for an instruction changing the Scope, CECA's NEC4 bulletin on the dividing date advises against replacing it with actual costs. Commentators differ over how far Healthy Buildings, an NEC3 Professional Services Contract case that let actual cost records into a late assessment, applies. An implemented assessment is not revised except as the contract states (clause 66.3), and uncertain effects can be covered by assumptions under clause 61.6.
Does a late notification change the dividing date?
For events that do not arise from the Project Manager's or Supervisor's own communications, yes. Their dividing date is the date of notification, so a later notification sets a later date: more of the cost becomes actual Defined Cost that has to be proved, and a later Accepted Programme may apply. For an event arising from an instruction, the dividing date stays at the date of the instruction.
About the author
Roman Bazelchuk is the Founder of NEC Planning Solutions Ltd, a UK project planning and controls consultancy supporting contractors with NEC programme compliance, compensation event assessments and live project controls. He is an NEC Accredited Project Manager and holds the APMG Project Planning and Control qualification, with a BEng in Mechanical Engineering and postgraduate training in Planning and Control.
NEC Planning Solutions provides contract-aware planning support through a QA-governed delivery model, helping project teams keep programmes accepted, current and commercially useful from tender through to live delivery.
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