Time risk allowances in NEC: the only risk provision the contract actually protects
- Aug 28, 2025
- 10 min read
By Roman Bazelchuk | NEC Accredited Project Manager | APMG Project Planning and Control
Founder, NEC Planning Solutions Ltd
Most contractors treat time risk allowances as a presentational question: how much contingency to show, where to put it, how to stop the project manager challenging it. The framing misses what TRA actually is under NEC, and the miss costs real money at exactly the moments the contract was designed to protect.
A time risk allowance is the only risk provision in the contractor's programme that the contract explicitly protects. NEC guidance is clear that time risk allowances are retained when assessing the delay to planned Completion caused by a compensation event. The impact of the event lands on top of the allowance. It does not consume it. The contractor who shows a reasoned three-day allowance inside a commissioning activity keeps that allowance when a compensation event hits the same activity, because the allowance is the contractor's provision for the contractor's own risk, and a compensation event is not the contractor's risk.
Risk hidden inside padded durations gets no such protection. A contractor who buries the same three days invisibly inside the activity duration has no allowance to retain, because nothing identifiable exists to retain. When the compensation event is assessed, the padded duration simply absorbs part of the impact, and the contractor's quotation recovers less time than the same contractor with the same risk shown visibly would have recovered. The risk was real in both cases. Only the visible version was protected.
This is the argument for reasonable time risk allowances, and it is stronger than the compliance argument most articles make. Clause 31.2 requires float and time risk allowances to be shown, and a programme without them can properly be rejected. That is true and it matters. But the deeper point is that the disclosure requirement is not a burden imposed on the contractor. It is the mechanism through which the contractor's risk provision becomes contractually protected. The word "reasonable" is simply the price of the protection. Visible, reasoned, defensible allowances get protected. Hidden or arbitrary ones do not.
What a time risk allowance actually is
A time risk allowance is the contractor's provision, shown in the programme, for events that are at the contractor's own risk. Ordinary weather exposure on external works. Access friction on a congested site. Productivity uncertainty on unfamiliar work. Commissioning iterations that experience says will happen but cannot be assigned to a specific cause in advance. These are matters the contractor carries under the contract, and a realistic programme makes time provision for them.
The allowance sits inside or alongside the operations that carry the risk, not as a block of contingency parked at the end of the programme. NEC guidance treats the lumped end-of-programme buffer as a poor approach because it is not logical and is misrepresentative: it says nothing about which operations are exposed or whether the provision is proportionate to anything. An allowance attached to the operation it protects can be understood, discussed, and defended. A soft block at the back end reads as a negotiation position.
Two things a time risk allowance is not. It is not terminal float, which is the gap between planned Completion and the Completion Date and is treated separately under the contract; the distinction and its commercial consequences are covered in detail in the article on time risk allowance versus terminal float. And it is not padding, which is the word used by people who have not understood the protection mechanism. Padding is hidden and arbitrary. A time risk allowance is visible and reasoned. The contract treats the two completely differently, which is the entire point.
Why "reasonable" is the operative test
The programme acceptance regime under clause 31 gives the project manager defined grounds for not accepting a programme, including that it does not represent the contractor's plans realistically or does not show the information the contract requires. Time risk allowances sit inside both grounds, and they fail in two opposite directions.
A programme with no visible TRA fails as unrealistic. Every activity at its optimistic duration, planned Completion at the earliest arithmetic date, no provision anywhere for the ordinary friction every project produces. The project manager reading this programme is being asked to accept a best-case sequence as the contractor's plan, and the acceptance grounds entitle them to decline. The article on what the project manager checks when reviewing an NEC programme covers how this reads from the reviewer's side of the table.
A programme with excessive or arbitrary TRA fails in the other direction. Allowances inflated beyond what the risk justifies, or a flat percentage smeared across every activity with no operational logic, read as either concealed float-grabbing or lazy planning. The project manager cannot verify what the allowance is for, which means they cannot accept that the programme represents a realistic plan. The generic percentage is the most common version of this failure, and it loses programmes acceptance not because the number is necessarily wrong but because it cannot be explained.
Reasonable is the test that sits between the two failures, and it has a practical form. For each operation carrying an allowance, the contractor should be able to answer three questions. What is the contractor-risk exposure on this operation? Why is it not already covered elsewhere? Why is this amount of time a proportionate provision for it? An allowance that survives those three questions is defensible at acceptance, in updates, and at compensation event assessment. An allowance that cannot answer them is exposed in all three places.
There is no exact science to setting the numbers, and NEC guidance says as much. Reasonable does not mean precise. It means reasoned: derived from the nature of the operation, the conditions it will be performed under, and the contractor's experience of similar work. A three-day allowance on a ten-day external activity in winter, explained in one sentence of the programme narrative, is reasonable. Eight per cent on everything is not an allowance at all. It is a number.
The protection mechanism at compensation event assessment
The commercial value of visible TRA concentrates at compensation event assessment, and the mechanism deserves to be understood precisely because it is where the money moves.
When a compensation event is assessed, the delay to planned Completion is measured by impacting the event on the accepted programme. NEC guidance is explicit that the contractor's time risk allowances are retained in that assessment. The event's impact is added to the programme as it stands, allowances included, because the allowances are provision for the contractor's risk and the event being assessed is not the contractor's risk. The contractor does not have to spend its weather allowance absorbing the employer's design change.
Now run the same event through the programme of a contractor who hid the same risk provision inside durations. The padded activity has slack the programme does not declare. When the event is impacted, some of its effect disappears into the undeclared slack, the calculated delay to planned Completion is smaller, and the quotation recovers less time. The project manager has done nothing wrong. The programme itself gave the entitlement away, silently, because the risk provision was invisible and therefore unprotected.
The asymmetry is stark and almost never stated plainly. Two contractors with identical risk and identical real durations can recover different amounts from the same compensation event, purely on whether the risk provision was shown or hidden. Across a contract with fifteen or twenty compensation events, the difference compounds into a sum that dwarfs whatever discomfort the contractor felt about declaring allowances at acceptance. The articles on the compensation event time bar and how contractors should assess delay impacts cover the assessment mechanics that this protection operates inside.
This is also why the instinct to hide risk is exactly backwards. Contractors conceal allowances because they fear the project manager will strip them out at acceptance. What actually happens is the inverse: declared, reasoned allowances are difficult to strip because the contract requires them to be shown and the acceptance grounds do not include "the project manager would prefer less allowance." Hidden allowances are stripped automatically, by the arithmetic, every time an event is assessed. The contractor chose invisibility to protect the provision and invisibility is what forfeits it.
Keeping allowances honest through the update cycle
Time risk allowances are not a tender artefact. They are variable, and the update cycle is where they either stay credible or quietly rot.
If the risk an allowance provided for never materialised, the next programme revision should show that gain: the activity completes early, planned Completion moves forward where the logic allows, and the unused allowance falls away. If the risk profile has changed, the allowance changes with it. A programme that carries historic allowances inside completed activities, or that strips allowances aggressively to make an update look recovered, has stopped representing the contractor's plan realistically, and both versions surrender the credibility that makes the next acceptance and the next quotation easier.
The discipline is light. Each revision under clause 32, the allowances get the same fifteen minutes as progress and logic: which were consumed, which fell away, which need revisiting because conditions moved. The article on clause 32 programme revision covers the revision rhythm this sits inside, and the article on NEC4 programme compliance covers the commercial exposures that open up when the rhythm lapses.
There is one genuinely counterintuitive effect worth knowing. Unused TRA on critical operations can, through the update cycle, bring planned Completion forward and increase the gap to the Completion Date. The mechanics of that effect, and why it does not make the two concepts interchangeable, belong to the time risk allowance versus terminal float discussion. The short version for this article: managing TRA honestly through updates is not just hygiene. It is how realistic provision converts into forecast improvement when the risk does not bite.
What a defensible TRA approach looks like in practice
Pulled together, the approach that survives acceptance, updates, and assessment has four visible characteristics.
The allowances are distributed where the risk lives. Weather allowance on the weather-exposed work. Commissioning allowance on the commissioning. Procurement allowance in the procurement chain. Nothing lumped at the end, nothing smeared evenly across everything.
Each allowance can be explained in a sentence. The programme narrative says what the exposure is and why the provision is proportionate. One sentence per allowance is usually enough. The test is whether the project manager can read it and understand the reasoning without a meeting.
The allowances are visible as allowances. Whether shown as separate TRA activities, as identified portions of durations, or through the method the Scope specifies, the provision is identifiable. What can be identified can be retained at assessment. What cannot be identified cannot be protected.
The allowances move with reality. Consumed allowances are acknowledged. Unused allowances fall away through updates. Changed risk gets changed provision. The programme six months in still describes the job as it stands, which is the entire purpose of the accepted programme regime.
None of this requires probabilistic modelling or specialist software, although both can help on complex work. It requires the contractor to do visibly what good contractors already do privately: think about where the risk sits and provide for it. The only change is that the thinking goes into the programme instead of being buried inside it, and the contract rewards the visibility with protection.
The provision the contract pays you to declare
The case for reasonable time risk allowances is usually made as a compliance argument: clause 31.2 requires them, so show them. The compliance argument is true and it is the weaker half of the story.
The stronger half is the protection. NEC is one of the few contract forms that explicitly protects the contractor's declared risk provision at change assessment, and it extends that protection only to provision that is visible and reasoned. Declared allowances are retained when compensation events are assessed. Hidden allowances are consumed by the arithmetic, event after event, without anyone ever making a decision to take them. The contractor who hides risk to protect it has the mechanism exactly inverted.
Reasonable time risk allowances are not a concession to the project manager. They are the contractor's own risk capital, banked in the only place the contract guarantees it: in plain sight.
FAQ
What is a time risk allowance in NEC contracts?
A time risk allowance is the contractor's provision, shown in the programme, for events that are at the contractor's own risk: ordinary weather exposure, access friction, productivity uncertainty, commissioning iterations. Clause 31.2 requires float and time risk allowances to be shown on the programme. The allowance sits within or alongside the operations carrying the risk, not as a single block at the end, and it is retained when assessing the delay caused by a compensation event.
How much time risk allowance is reasonable?
There is no fixed percentage, and a flat uplift across all activities is the approach most likely to fail. Reasonable means reasoned: for each operation carrying an allowance, the contractor should be able to say what the exposure is, why it is not covered elsewhere, and why the amount is proportionate. An allowance derived from the nature of the operation and explainable in a sentence is defensible. A generic percentage is not an allowance, it is a number.
Can the project manager reject a programme over time risk allowances?
Yes, in both directions. A programme with no visible TRA can be rejected as not representing the contractor's plans realistically or not showing the information the contract requires. A programme with arbitrary or excessive allowances can be rejected on the same realism ground because the provision cannot be verified against anything. Reasoned, distributed, explained allowances are the position that survives review.
Is a time risk allowance the same as float or terminal float?
No. TRA is the contractor's provision for its own risk, sitting inside the programme logic. Terminal float is the gap between planned Completion and the Completion Date and is treated separately under the contract. The two are connected through the update cycle but do different jobs, and blurring them weakens both programme acceptance and compensation event positions. The full comparison is covered in time risk allowance vs terminal float in NEC.
What happens to time risk allowances when a compensation event is assessed?
They are retained. The event is impacted on the accepted programme with the contractor's allowances intact, because the allowances are provision for the contractor's risk and the event is not the contractor's risk. This is the core commercial reason for showing allowances visibly: declared provision is protected at assessment, while risk hidden inside padded durations is silently consumed by the impact arithmetic and recovers nothing.
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 BSc 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.
Programme acceptance stalling on time risk allowances, or quotations recovering less time than the events justify?
If allowances are being challenged at acceptance because they cannot be explained, if the programme is carrying hidden risk that compensation event assessments keep consuming, or if the update cycle has let the allowances drift from the reality of the job, specialist NEC programme support builds the reasoned, distributed, defensible TRA structure that the contract protects.
