NEC4 Programme and Compensation Events: Assessing Delay

When work changes or progress is delayed, the Contractor still has to organise the remaining work while any compensation event is assessed. The programme needs to show all known effects on delivery, including those for which the Contractor remains liable. Leaving them out gives the site team a sequence which no longer reflects what it has to deliver.

A later forecast finish may reflect several events, changes in productivity and decisions about how to proceed. It does not, by itself, establish how much delay a compensation event caused. The assessment must identify the effect attributable to that event, while programme revisions continue to show how the Contractor intends to complete the work.

Updating the programme while the event is assessed

Under clause 32.1, a revised programme shows actual progress and its effects on the timing of remaining work, together with proposals for dealing with delays, correcting notified Defects and other proposed changes to the Accepted Programme. Those requirements continue while compensation event entitlement or assessment is unresolved. The work and its dependencies still need to be shown, even where liability is disputed.

Ordinary weather, a procurement problem and a compensation event may all affect the same sequence. The Contractor should identify their causes and show their combined effect in the programme submitted for acceptance, including delay for which it remains liable. Where arrangements are uncertain, the accompanying explanation should identify the assumptions and decisions still needed. The existing Completion Date remains until it is changed through the relevant contractual mechanism.

Acceptance of a revised programme does not establish compensation event entitlement or grant additional time. Nor does it transfer the Contractor’s responsibility for organising the work to the Project Manager. The review described in Programme Preparation and Acceptance concerns whether the programme can be accepted, without requiring every unresolved event to be settled first.

Keep an identifiable copy of the programme used to assess each event, alongside the relevant Accepted Programme and supporting records. The comparison must isolate delay attributable to the event, rather than include delay for which the Contractor remains liable. This does not mean deleting actual progress or prior Contractor delay from the baseline. Record the revisions used and explain the comparison. The assessment copy supports the quotation; it is not a second programme for directing the site, and alterations included under clause 62.2 do not replace the separate programme submission requirements.

The Accepted Programme at the dividing date

The fictional Ironbark Recycled Water Scheme is a regional Australian utility project using ECC Option C. A pipeline, pumping station and balancing tank will supply an industrial estate from an existing treatment plant. The plant remains operational during construction and connection.

On one pipeline section, the Project Manager instructs a revised alignment requiring 130 metres instead of 100 metres, with additional excavation and reinstatement. The instruction is issued before that section starts. The Project Manager notifies the compensation event and instructs a quotation. This is the same change examined in Compensation Event Quotations Preparation and Assessment.

Clause 63.1 establishes the dividing date. For this event, it is the date of the instruction. Preparing the quotation later does not move that date. Clause 63.5 uses the Accepted Programme current at the dividing date when assessing delay to the Completion Date. The programme most recently accepted when the quotation is prepared may therefore be the wrong starting point.

Check the programme revision and the record establishing when it became the Accepted Programme. Its progress or status date is the date to which progress has been recorded. Its acceptance date records when the Project Manager accepted that version. The dividing date is established under clause 63.1 for the particular event. A programme accepted recently may therefore contain progress information which is several weeks old.

At Ironbark, the relevant Accepted Programme was prepared a week before the instruction. The team reviews progress, procurement and other events during that week and establishes that they have not changed the relevant sequence or planned Completion. No adjustment for intervening events is needed for those parts of this assessment.

Progress and events before the dividing date

Clause 63.5 requires account to be taken of events between the date of the Accepted Programme and the dividing date. It also requires recognition of any delay caused by the compensation event already represented in that programme. Simply comparing an old programme printout with a later one would not identify which movement belongs to the event.

Progress records need to establish what had actually been completed and what remained at the dividing date. Delivery information, instructions and event records help explain changes to the remaining durations or dependencies. Completed work retains its actual timing. Use the Accepted Programme’s logic as the basis for the assessment, explaining the changes needed to account for intervening events and the compensation event itself.

Contractor delay before the dividing date may already have affected the work, and other compensation events may have changed the sequence. Their effects must be recognised without attributing them to the event being assessed. Where causes interact, examine the activities and dependencies affected. Allocating all movement to one event or subtracting an unexplained number of days will not establish its effect.

If the Accepted Programme already shows part of the delay caused by the event being assessed, include that effect without inserting the same delay a second time. Looking only at movement after that programme could miss the part already represented. The assessment record should explain how the delay already shown and any further effect have been treated.

Assessing the Ironbark pipeline change

The original Ironbark section requires five productive working days. The revised alignment requires seven, using the same crew and Equipment arrangement. An additional working day of time risk allowance is included for the identified risk of ordinary wet-weather interruptions affecting the longer open-trench operation. The revised section therefore occupies eight working days for this assessment.

The revised drawings and quantities identify the additional excavation and pipework. The proposed method, resources and expected productivity explain the longer duration. The planner and site team also need to check how reinstatement is coordinated and what must be complete before testing and commissioning can start. Adding three days to an activity bar without checking those dependencies would not establish the effect on planned Completion.

For this calculation, the connection requirements remain unchanged, pipe procurement supports the revised timing and the operator remains available for the downstream testing and commissioning. Procurement information and discussion with the operator need to support those arrangements. A later construction finish does not, by itself, establish when the operator or commissioning specialist will be available.

The affected branch has two working days of available float before it delays that downstream sequence. Increasing the section from five to eight working days uses those two days. The remaining one day moves planned Completion from Day 20 to Day 21.

The day positions are working days on one consistent illustrative project calendar, rather than actual dates.

The assessment should retain the relevant programme file and logic, original and revised work descriptions, duration build-up, procurement information and records of the downstream arrangements. The two days of float must arise from a practicable sequence, not an arbitrary date constraint inserted to produce the desired result.

Ownership of float and time risk allowance

Activity or path float is shared between the Client and Contractor on a first come first served basis. Delay for which the Contractor is liable can use it, as can a compensation event. The change to the Completion Date depends on the resulting delay to planned Completion attributable to the event. On Ironbark’s affected branch, the two available days absorb part of the three-day increase, leaving one day’s delay to planned Completion.

Terminal float belongs to the Contractor. It is the gap between planned Completion and the Completion Date: five days at Ironbark, with intended Completion on Day 20 and a contractual date of Day 25. The Project Manager cannot first use that margin to absorb a compensation event’s delay. Clause 63.5 assesses the delay attributable to the event by reference to planned Completion, even if that date remains earlier than the existing Completion Date.

Ironbark’s one-day assessed delay therefore moves the Completion Date from Day 25 to Day 26 when implemented, while planned Completion moves from Day 20 to Day 21. The five-day terminal margin is preserved. Delay for which the Contractor is liable would not produce that corresponding change to the Completion Date and could reduce the margin instead.

Time risk allowance also belongs to the Contractor, but it is not float. It makes provision for uncertainty in carrying out particular work. The Project Manager cannot remove a realistic allowance for remaining work simply because the risk rests with the Contractor and then use that time to offset a compensation event. Clause 63.8 also requires the event assessment to include allowances for cost and time risks which have a significant chance of occurring and are not compensation events. Ironbark’s additional day covers the increased exposure to ordinary wet-weather interruptions and is included once in the eight-day duration.

Once an activity is complete, any unused time risk allowance ceases to be an allowance for that activity. Suppose an operation would take eight working days in ideal conditions, but the programme shows ten days, including two days of time risk allowance. If it actually takes eight days, the next update must record that actual duration. The two unused days have to be reflected elsewhere in the programme.

If the earlier finish creates a larger gap before the next operation without bringing planned Completion forward, the released time becomes activity float, available on a first come first served basis. If the updated sequence allows planned Completion to move two days earlier while the Completion Date stays unchanged, it becomes two additional days of terminal float belonging to the Contractor. Depending on the programme logic and other constraints, the saving may be divided between the two. The update must reflect actual progress and realistic intentions for the remaining work, without counting the same saving twice.

For work still to be carried out, time risk allowance makes provision for the risks which may affect that work. Review it against the method and remaining exposure. A realistic allowance should not be removed merely to reduce the assessed effect of a compensation event.

No Key Date is affected by Ironbark’s alignment change. Where one is affected, clause 63.5 separately examines the event’s effect on the planned date for meeting its stated Condition. A one-day effect on planned Completion does not automatically establish the same effect on a Key Date.

Weather and events without an instruction

Not every compensation event starts with an instruction changing the work. A weather event arises from the recorded conditions, not the later instruction to submit a quotation. For a weather compensation event, clause 63.1 establishes the dividing date as the date the compensation event is notified. The relevant Accepted Programme may already show some or all of the disruption by then.

Under clause 60.1(13), the specified weather measurement is recorded within a calendar month, before Completion of the whole of the works, at the place stated in Contract Data. Comparison with the stated weather data must show that the measurement occurs on average less frequently than once in ten years. Only the difference from the once-in-ten-year value is taken into account in assessing this weather compensation event. Qualifying weather does not turn the whole wet period into a compensation event.

At a separate stage of excavation on Ironbark, suppose cumulative rainfall is a specified measurement and the weather data establish a once-in-ten-year value of 120 mm for that calendar month at the stated place. The recorded measurement is 180 mm and satisfies the contractual test. The qualifying difference is 60 mm.

The site has to manage the effects of all 180 mm. In this example, the programme review establishes that the full weather interruption moves planned Completion six working days later than the forecast before that interruption. The programme submitted for acceptance must show that six-day movement, the affected operations and the revised sequence for the remaining work. Showing only the compensable part would leave the site team and plant operator working from an unrealistic forecast.

For the compensation event assessment, the planner and site team use the weather and progress records to separate the effect of the qualifying excess from the weather for which the Contractor remains liable. Their supporting analysis establishes that, without the excess, planned Completion would still be four working days later than the earlier forecast, compared with six days with it. These are net programme effects after allowing for the existing realistic provisions. The example assumes no overlapping cause or other change to the sequence.

The assessed delay due to the weather compensation event is therefore two working days, not six. Neither the 60 mm measurement difference nor its proportion of total rainfall automatically produces that result. The result must follow from the work affected, the programme logic, available activity float and the actual or forecast consequences of the excess weather. The relevant records might show stopped excavation, drying-out time, the work which could continue and the resulting effect on testing and connection.

The four days attributable to weather for which the Contractor remains liable are excluded from this event’s assessed delay, but remain visible in the delivery programme and progress records. Actual Contractor delay before the dividing date must still be recognised, and completed work retains its actual timing. Where the Accepted Programme already contains the weather’s effects, the analysis must identify the qualifying part already represented without inserting it again.

Where delays overlap or affect different paths, the result cannot be established by a simple subtraction of days. The team must examine the interaction and explain the assessment under clause 63.5. Nor does excluding ordinary-weather delay from a change to the Completion Date automatically make its costs unpaid under Option C. Payment follows its own rules, separately from the event’s time assessment and any target adjustment.

Reviewing the assessment before submission

Before formal submission, the planner should work through the assessment with the people responsible for construction, procurement and commissioning, involving the Project Manager and commercial staff. They need to establish whether the activities, resources and dependencies describe work that can actually be carried out. Resolving those questions while the assessment is being prepared allows formal submission to record a proposal the relevant people have already examined.

A telephone call may resolve an unexplained dependency or locate a supporting record. If the programme explanation is incomplete, identify the operation or link which needs correction and work through it with the relevant people. The Project Manager still makes and communicates the contractual decision. Agreement among specialists helps prepare that decision, but does not replace it or authorise a change to Scope.

The team should consider practicable alternatives, including the alternative quotations addressed by clause 62.1 and the competent, prompt response assumed by clause 63.9. Earlier procurement or a different sequence may help, but additional resources cannot simply be assumed to be available or able to work safely in the same space. An assessment does not create an unrestricted obligation to accelerate. Acceleration to achieve Completion before the Completion Date has its separate procedure under clause 36.

Those discussions must take place alongside the required notices and submissions, not delay them. Any extension needs the agreement and communication required by the relevant provision before the deadline. An early warning may help the team reduce the effects while the compensation event is assessed, but it does not replace the separate notification or assessment requirements.

Unaccepted programmes and implementation

Programme omissions and acceptance history can affect who makes the assessment. Clause 64.1 requires the Project Manager to assess the compensation event in specified circumstances. These include missing programme submissions or alterations required when the Contractor submits its quotation, and non-acceptance of its latest programme for a reason stated in the contract at that point. The clause also covers a quotation and assessment details not submitted in time, or an incorrect assessment where the Project Manager has not instructed a revised quotation.

Where clause 64.2 applies, the Project Manager assesses the programme for the remaining work and uses it in assessing the event. Check the submission history and reasons for non-acceptance to establish which provisions apply. An unaccepted revision does not, on its own, remove entitlement or permit an arbitrary duration. The Project Manager must apply the contractual assessment rules and provide details of its assessment.

Implementation occurs under clause 66.1 when the Project Manager notifies acceptance of the Contractor’s quotation, notifies its own assessment, or a quotation is treated as accepted under the contract. Clause 66.2 changes the contractual dates in accordance with that assessment. For Ironbark, implementation moves the Completion Date from Day 25 to Day 26. Before then, a routine programme revision may show planned Completion at Day 21 while retaining the existing Completion Date at Day 25.

Subsequent programmes show the changed contractual date alongside the current forecast. Under clause 66.3, an implemented assessment is not revised simply because a forecast on which it was based proves wrong. A correction to an assumption formally stated by the Project Manager is dealt with as a separate compensation event under clauses 61.6 and 60.1(17), and the contractual dispute procedures remain available. The Contractor must still update its programme to reflect actual progress and its intentions for the remaining work.

On Ironbark, the site team and operator use the current programme to arrange connection and testing. The retained assessment explains why the instruction moves the Completion Date by one day. That movement does not automatically establish a daily prolongation charge; the event’s cost effects need their own assessment.

The provisions discussed are those of NEC4 ECC June 2017 incorporating the January 2023 amendments. Check the signed contract, including Scope, Contract Data and amendments, before applying them.