NEC4 cheat sheets

Form, authority and receipt

Under clause 13.1, contractual communications must be readable, copyable and recordable, with writing in the contract language. Under clause 13.2, where Scope specifies a communication system, a communication takes effect when communicated through that system. Otherwise it takes effect when received at the recipient’s last notified address or, if none has been notified, the address in Contract Data.

Check the action being communicated and the sender’s authority. The Project Manager and Supervisor have different functions. Under clause 14.2, a delegation identifies the person and the actions delegated and is notified to the Contractor. A Client representative’s job title or attendance at a meeting does not establish authority to change Scope.

1. Identify the action

   State whether the communication gives a notification, issues an instruction, submits information for acceptance or communicates a decision or certificate. Identify the work, requirement and document revision concerned. A request for clarification does not itself change Scope.

2. Issue it correctly

   Clause 13.7 requires contractual notifications and certificates to be communicated separately from other communications. Link related records without burying a required notice in a report or meeting minutes. Keep an early warning separate from a compensation event notification, even where both concern the same issue.

3. Track the response

   Apply the period stated for the particular procedure. Where the contract requires a reply but states no different period, clause 13.3 uses the period for reply in Contract Data. It is not a deadline for answering every message. Under clause 13.5, an extension to the period for reply must be agreed before the reply is due and communicated by the Project Manager. Check the separate extension provisions for other procedural periods.

4. Communicate the decision

   For submissions for acceptance, clause 13.4 requires a reply. Reasons for non-acceptance must contain sufficient detail to allow correction. The Contractor resubmits within the period for reply, taking those reasons into account. A call may resolve a missing detail without immediate rejection, but retain the information supplied and the formal decision.

Acceptance and unanswered submissions

Needing more information to assess a submission fully is a stated reason for withholding acceptance. This general submissions provision must not be applied as though a compensation event notification were a submission for acceptance. That notification has its own decision procedure.

Acceptance has the effect given to it by the relevant provision. Design acceptance does not transfer design liability or responsibility for providing the works. Under clause 21.2, the Contractor does not proceed with the relevant work until the Project Manager has accepted its design. Programme acceptance and compensation event quotation acceptance have different effects.

For design and programme submissions, withholding acceptance for a reason not stated in the contract is a compensation event under clause 60.1(9). Clause 13.8 confirms that withholding acceptance for a stated reason is not a compensation event.

There is no general rule that an unanswered submission is accepted. Programmes and compensation event quotations have particular failure-notice procedures. Check the required notice and additional period before relying on the consequence. A failure by the Project Manager or Supervisor to reply within a period required by the contract may also be a compensation event under clause 60.1(6). Its effects still require assessment.

When a warning is required

The Contractor and Project Manager notify each other as soon as either becomes aware of a matter which could:

• Increase the total of the Prices.
• Delay Completion.
• Delay meeting a Key Date.
• Impair the performance of the works in use.

The Contractor and Project Manager may also notify other matters which could increase the Contractor’s total cost. Wider project issues can be brought into the same process, with contractual warnings kept identifiable. A warning does not depend on agreeing liability, a price or the full delay effect.

1. Notify and log

   Use the contractual communication arrangements. The Project Manager enters the notified matter in the Early Warning Register. A meeting minute or general register entry should not be assumed to satisfy a required separate notification.

2. Work through the response promptly

   Speak to the relevant designers, planner, supplier, operator or commercial team. Do not wait for the regular meeting before investigating or discussing an urgent issue. Either the Contractor or Project Manager can instruct an early warning meeting, with other participants involved under the contract.

3. Consider and record the decisions

   Use the early warning meeting to examine proposals, agree actions and consider wider effects. Bring the outcomes of focused discussions into that process. Record what will be done, by whom and when, without using the register as a substitute for required instructions or acceptance.

4. Act, review and close

   Carry out the actions, examine their effect and identify any further response. An agreed supplier delivery date does not complete delivery or the required tests. Review whether matters can be removed from the register once their effects and outstanding actions have been dealt with.

Register and meeting times

Under clause 15.2, the Project Manager prepares and issues the first register to the Contractor within one week of the starting date and instructs the Contractor to attend the first early warning meeting within two weeks of that date. Further meetings take place at intervals no longer than those stated in Contract Data until Completion of the whole of the works. Focused meetings can be held sooner when required.

Under clause 15.4, the Project Manager revises and issues the register within one week of each early warning meeting. Where a decision requires a change to Scope, the Project Manager issues the instruction at the same time as the revised register. Urgent agreed actions should reach the people carrying them out promptly.

If the Contractor fails to give a required warning

If the Project Manager decides the Contractor missed an early warning which an experienced contractor could have given, clause 61.5 requires that decision to be notified in the instruction to submit quotations. Clause 63.7 then requires assessment as if the warning had been given. Examine what timely action could have avoided. There is no automatic loss of the whole compensation event.

Under C to F, cost incurred only because the Contractor failed to give a required early warning can also be Disallowed Cost. Apply the selected option’s definition and establish the connection between the failure and the cost. The fictional Ironbark Recycled Water Scheme used in the articles follows Option C. Ordinary cost which would have arisen anyway is not disallowed on the missed-warning ground.

Early warning and compensation event notification

The two processes have different functions. An early warning does not replace a compensation event notification or stop its time bar. Clause 15.1 does not require a warning for a matter already notified as a compensation event, although its effects can still be managed through the early warning process.

First submission and programme content

The Accepted Programme is the programme identified in Contract Data or the latest programme accepted by the Project Manager. If none is identified in Contract Data, clause 31.1 requires the first submission within the period stated there. Clause 31.2 requires the contractual dates, planned Completion, sequence and timing of operations, principal resources and methods, float and time risk allowances. Show the Client’s and Others’ work and the dates when access, information, acceptances and other inputs are needed.

1. Prepare a workable sequence

   Develop the programme with the people who will carry out and coordinate the work. Allow for testing, commissioning, interfaces with operating facilities and the time needed for contractual decisions. Time risk allowance belongs with the relevant uncertainty, rather than in an unexplained contingency at the end.

2. Review and submit

   Work through the assumptions with the Project Manager and relevant teams before submitting. Identify the revision, supporting files and changes. For a revised programme, clause 32.1 requires actual progress, its effect on remaining work, how delays and notified Defects will be dealt with, and other proposed changes.

3. Accept or correct

   Under clause 31.3, the Project Manager has two weeks from submission to notify acceptance or reasons for non-acceptance. The four stated reasons concern impracticable proposals, missing required information, unrealistic intentions and non-compliance with Scope. The Contractor resubmits within the period for reply, taking the reasons into account. Simple queries can be resolved promptly without using the whole reply period.

4. Update and use

   Under clause 32.2, submit revisions within the period for reply after a Project Manager instruction, when the Contractor chooses and at intervals no longer than those stated in Contract Data, from the starting date until Completion of the whole works. Show the actual delivery position, including delays which are the Contractor’s liability.

Missing replies and first programmes

If the Project Manager does not reply within two weeks, the Contractor may notify that failure. Only if the failure continues for a further week after the notification is the programme treated as accepted. The initial two-week period alone does not produce acceptance.

Clause 50.5 concerns a missing first programme where none is identified in Contract Data: one quarter of the Price for Work Done to Date is withheld until a first programme showing the information required by the contract is submitted for acceptance. It is not a general deduction whenever a revised programme remains unaccepted.

Acceptance, float and compensation events

Acceptance does not change Scope, the Completion Date or Key Dates, transfer responsibility or establish compensation event entitlement. A programme forecasting planned Completion after the Completion Date should show that position honestly. Lateness alone is not one of the four stated reasons for withholding acceptance.

The Contractor generally need not wait for programme acceptance before proceeding with the work. Separate requirements, including acceptance of the relevant design, still apply. Withholding programme acceptance for a reason not stated in the contract is a compensation event under clause 60.1(9).

Activity float is available to the event which uses it first. Terminal float and current time risk allowances are the Contractor’s. When an activity finishes before its risk allowance is used, the released time becomes activity float or terminal float according to the updated sequence. It must not be retained again as unused allowance on completed work.

For a compensation event, use the Accepted Programme current at the dividing date. Take account of relevant intervening events and any effect of the event already represented. Isolate the event’s effect without deleting actual progress or prior Contractor delay from the baseline. The ordinary delivery update must still show all effects.

Clauses 64.1 and 64.2 address the Project Manager’s own assessment where required programmes or alterations have not been submitted, or the latest programme has not been accepted for a stated contractual reason when the quotation is submitted. Non-acceptance for a reason not stated in the contract is not that trigger.

Requirements and responsibilities

The Contractor provides the works in accordance with Scope. A Defect includes work which does not comply with Scope, or Contractor-designed work which does not comply with applicable law or the Contractor’s design accepted by the Project Manager. Clause 40.1 requires the quality management system stated in Scope. Under clause 40.2, the Contractor submits its quality policy statement and quality plan to the Project Manager for acceptance within the period in Contract Data, and submits changes to the plan for acceptance.

The Supervisor carries out the testing, inspection and Defect functions allocated to that role. The Project Manager deals with acceptance of quality documents, changes to Scope and commercial decisions. Neither presence on site nor a general job title substitutes for the contract’s allocation of authority and notified delegations.

1. Identify the requirement

   Use current Scope and the relevant accepted Contractor design. Establish the test criteria before the work is covered or equipment is dispatched. The accepted quality plan explains how the Contractor controls the work; acceptance leaves the Contractor’s obligations in place.

2. Arrange and record testing

   Clause 41 applies to tests and inspections required by Scope or applicable law. Coordinate attendance with the programme, give the required notices and retain results. Where clause 42.1 applies, Plant and Materials required to be tested before delivery must not be brought to the Working Areas until the Supervisor notifies that they have passed.

3. Notify and correct Defects

   Under clause 43.2, the Contractor and Supervisor notify each other of Defects as soon as they become aware of them until the defects date. Identify the requirement not met, location and supporting evidence. Clause 44.1 requires correction whether or not the Supervisor has notified the Defect. Under clause 41.4, a test or inspection which shows a Defect is repeated after correction.

4. Retain the correction record

   Link the notification, repair and repeat-test evidence. The Supervisor issues the Defects Certificate at the time required by clause 44.3. It lists Defects the Supervisor notified before the defects date which remain uncorrected, or states that there are none. It is not a warranty that no undiscovered Defects exist, and its issue does not remove the Client’s rights concerning Defects the Supervisor has not found or notified.

Defect correction periods and access

Under clause 44.2, the defect correction period starts at Completion for Defects notified before Completion and at notification for those notified afterwards. For a part taken over by the Client, clause 44.4 delays the start until the necessary access and use have been provided. Record the access arrangement and the applicable correction period for each notified Defect.

The defects date is the deadline for notifying Defects and instructing searches, rather than a common date for finishing every repair. Completion is a separate contractual test. Notified Defects which prevent the Client using the works or Others doing their work must be corrected for Completion, alongside the applicable requirements for Completion work.

Accepting a Defect or failing to correct it

Clause 45 allows the Project Manager and Contractor to agree a change to Scope so that a Defect need not be corrected, with a reduction in the Prices, an earlier Completion Date or both. The required agreement and contractual action must occur before treating the requirement as changed. Clause 46 sets out the assessment where a notified Defect is not corrected as required, with different provisions depending on access.

Apply the cost rules separately from the duty to correct. Under C, D and E, correction after Completion is expressly Disallowed Cost. Correction before Completion is not automatically disallowed merely because the work was defective. Option F has different exclusions. The Client’s cost of repeat testing under clause 41.6 is another separate assessment.

The main option determines the cost rules

Options A and B use the Short Schedule of Cost Components for compensation event assessments. Routine payment follows the priced-work rules. Options C, D and E use the Schedule of Cost Components, less Disallowed Cost, for payment and compensation events. Option F uses neither schedule and has its own Defined Cost definition.

F includes payments due to Subcontractors for subcontracted work, with its contractual adjustments, and prices for work done by the Contractor, less Disallowed Cost. It must not be treated as Option E. The selected Contract Data, rates, percentages and amendments need to be read with the applicable definition.

1. Select the basis

   Identify the main option and whether the calculation concerns payment or a compensation event. For C, D and E, payment uses the Project Manager’s forecast of Defined Cost paid before the next assessment date. A compensation event uses the dividing-date rules for actual and forecast Defined Cost.

2. Classify and value each cost

   Where a cost schedule applies, identify the relevant component, such as people, Equipment, Plant and Materials or subcontracted work. Satisfy its conditions, including relevant Working Areas rules and any specific provisions for design, manufacture or eligible off-site people. Use contractual rates and percentages where required. Apply the open-market or competitively tendered basis to other amounts, deducting recoverable discounts, rebates and taxes. Include an amount in only one component. Under F, apply its separate definition rather than a cost schedule.

3. Check Disallowed Cost

   C, D and E use clause 11.2(26); F uses clause 11.2(27). A and B do not use these Disallowed Cost definitions. A payment unsupported by accounts and records, or not due under the relevant subcontract or supply contract, may be disallowed. For grounds concerning missed warnings or specified procedures, establish the cost incurred only because of the failure. An overspend or inefficient outcome alone does not establish a ground.

4. Keep the evidence and apply Fee

   Link the work to the applicable rates, time and quantities, invoices, subcontract entitlement and payment evidence. Clause 52 provides for records and inspection. Add the Fee using the fee percentage. Other costs treated as included in Fee are not separate reimbursable additions, and the same overhead must not be counted twice.

Common classification checks

• People: establish who did the work, where, for how long and which contractual valuation applies. A project accounting code alone does not establish eligibility.
• Equipment: distinguish hire and Contractor-owned Equipment and apply the relevant contractual rates or valuation basis. Recorded depreciation is not automatically the contractual amount.
• Plant and Materials: link the supply, use and relevant records to the works. Apply the schedule and the option’s exclusions, including their exceptions.
• Subcontracts: establish what was due under the subcontract and prevent duplicate inclusion of the same labour or resources as the Contractor’s own costs.

Defect correction and option differences

Under C, D and E, correction after Completion is expressly disallowed. Correction before Completion is not automatically disallowed: apply the definition, including the ground concerning Defects caused by failure to follow a Scope constraint on how the works are provided. Failure to achieve the finished result alone does not prove that particular ground.

F does not repeat C, D and E’s express exclusions for Defect correction, unused Plant and Materials or unused resources. Apply F’s own definition and subcontract entitlement. The duty to correct a Defect continues whatever its cost treatment.

Payment, target and compensation events

Apply C and D’s target and share calculations separately. Eligible Defined Cost can enter payment without increasing the target. A compensation event must first qualify under the contract; clause 63.1 then applies actual Defined Cost for work done by the dividing date and forecast Defined Cost for work not done by then, plus the resulting Fee. Under A and B, Fee is part of that event assessment, rather than a routine addition to priced-work payments.

Routine payment under the main options

• Option A: use completed activities or groups in the Activity Schedule, applying the contract’s completion test. An activity percentage is not automatically payable.
• Option B: use completed quantities at Bill of Quantities rates and the applicable proportions of lump-sum work.
• Options C, D and E: use Defined Cost which the Project Manager forecasts the Contractor will have paid before the next assessment date, plus Fee.
• Option F: use its management-contract definition of Defined Cost and Price for Work Done to Date, including the Fee. Do not apply C, D and E’s schedule and forecast-paid definition unchanged.

1. Confirm dates, documents and the legal position

   Identify the assessment interval, dates, applicable payment provisions and selected options. The standard ECC requires the Contractor’s application before each assessment date. Under standard clause 50.4, a missing or late application limits the amount due to the lower of the previous amount due and the amount otherwise assessed. Check Y(Aus)1, project amendments and applicable legislation before applying that rule to an Australian payment claim.

2. Submit an intelligible application

   Show the amount considered due, how it is calculated and the significant changes. Comply with the actual contractual and statutory content requirements. Where amendments demand particular supporting material with the application, that requirement cannot simply be ignored. Under the unamended cost provisions, record-keeping and inspection support the assessment without making an exhaustive accounts export the application itself.

3. Assess and certify on the correct basis

   The Project Manager uses the information available to assess the amount due, including the application. Under C, D and E, forecast cumulative eligible payments before the next assessment date. This can include payments for work already done and work not yet done. Cost merely incurred but not forecast to be paid by then is a different measure. Apply Disallowed Cost and add Fee, then include the other amounts due under the selected contract.

4. Pay, inspect and correct

   The first payment equals the amount due; later payments are the change since the previous assessment, rather than a subtraction of bank payments from a cost return. The Party owing payment pays within the applicable period. Keep the contractual certificate and any statutory payment schedule compliant with their respective requirements. Continue inspection of accounts and records and make corrections under the contract as information becomes available. Assess contractual interest where applicable, rather than assuming every later adjustment carries interest on the same basis.

The forecast and the supporting records

Build the forecast from current progress, the programme, accepted subcontract arrangements, resource commitments and payment terms. A credible application should be broadly foreseeable to a Project Manager engaged with the works. Separate the immediate assessment from detailed checking which can continue afterwards, while ensuring costs remain justified and records available.

For example, a subcontract amount may already be included in the accounting records but not be due for payment before the next assessment date. Conversely, eligible work and payments expected during the coming interval can fall within the forecast. Explain disputed or uncertain items individually and revisit them under the correction and finalisation provisions.

Standard ECC timing and Australian overrides

Under the unamended standard ECC, the Project Manager certifies within one week of the assessment date. Each certified payment is made within three weeks of that date, or the different period stated in Contract Data. These are reference periods, not an Australian payment calendar. Y(Aus)1, other amendments and mandatory legislation may change the dates and required notices.

Contract Data’s identification of a security of payment Act does not determine which legislation applies. That follows the law’s own application rules and may differ from the entry, particularly where work crosses a state or territory boundary. Check the actual project and current law before setting the claim, schedule and payment timetable. The linked payment article addresses the November 2024 ECC Y(Aus)1 wording; check the version incorporated in the executed contract and subsequent changes in law.

Target, share and later assessments

Under C and D, a compensation event can adjust the Prices forming the target. That implemented forecast is not simply added to the next payment. The Contractor’s share is a separate calculation against the adjusted target under clause 54; E has no equivalent share. Continue corrections and finalisation under the applicable clauses, and distinguish the periodic payment assessment from final assessment.

For C to F, clause 50.9 allows the Contractor to notify that Defined Cost for a part of the works is finalised and make the supporting records available. The Project Manager has thirteen weeks to accept, request further records or notify errors. The Contractor has four weeks to provide the records or corrections, followed by a four-week Project Manager response. Failure to notify a decision within the applicable period causes that part of Defined Cost to be treated as correct, without an additional failure notice. This procedure is separate from ordinary payment and the final assessment.

Identify and notify the event

Check clause 60.1, the selected options, additional events in Contract Data and project amendments. Not every change, delay or additional cost is a compensation event. Early warning has a different purpose and does not replace compensation event notification or stop its time bar.

1. Notify and obtain the decision

   For events which the Project Manager should notify under clause 61.1, notify at the required communication. Under clause 61.3, the Contractor notifies an event which has happened or is expected to happen if it believes it is a compensation event and the Project Manager has not notified it. Normally the Contractor must notify within eight weeks of becoming aware that the event has happened or lose entitlement to a change to Prices or dates. The exception concerns events arising from the specified instruction, notification, certificate or changed decision of the Project Manager or Supervisor; it does not cover every Client-related event. Under clause 61.7, notification cannot be made after the Defects Certificate.

2. Prepare the instructed quotation

   Clause 62.3 normally allows three weeks from the instruction. Include the change to Prices, any delay to the Completion Date and Key Dates, and alterations to the Accepted Programme where required. Apply the relevant dividing date, actual and forecast Defined Cost rules, Fee and justified risk allowances. Consider alternatives through clause 62.1 and document assumptions made under clause 61.6.

3. Assess and reply

   The Project Manager normally has two weeks after submission to accept, instruct a revised quotation with reasons or notify that it will assess. A revised quotation is normally submitted within three weeks of the instruction. Clause 64.1 specifies when the Project Manager must assess; under clause 64.3, the period is the time allowed for the Contractor’s quotation, starting when the need for the assessment becomes apparent. Use the contract’s assessment rules and provide the details.

4. Record implementation

   Under clause 66.1, implementation occurs when the Project Manager notifies acceptance of the quotation or its own assessment, or a quotation is treated as accepted under the contract. Record the changes to Prices, the Completion Date and Key Dates. The changed work does not have to be finished first.

Missing decisions and follow-up notices

• Event notification, clause 61.4: the Project Manager normally replies within one week. If it does not, the Contractor may notify the failure. A further two weeks without the required reply leads to the event being treated as accepted as a compensation event and an instruction to submit quotations. This accepts the event, not an unsubmitted price or delay assessment.
• Quotation, clause 62.6: after the missed reply the Contractor may notify the failure. If it continues for a further two weeks, the identified quotation is treated as accepted.
• Own assessment, clause 64.4: if the Project Manager fails to assess within the allowed time, the Contractor may notify the failure. A further two weeks without the assessment leads to the identified Contractor quotation being treated as accepted under that provision. Where more than one quotation exists, identify the one proposed for use. This procedure cannot accept a quotation which has never been submitted.

Do not merge these three procedures into a single assumed-acceptance rule. Agree extensions using the relevant clause and before the applicable deadline where required. Discussions and a request for information do not themselves extend time.

When the Project Manager assesses

Clause 64.1 requires an assessment where the Contractor’s quotation and details are not submitted in time, or its assessment is incorrect and a revision has not been instructed. Its programme grounds concern required submissions which have not been made, or the latest programme not being accepted for a stated contractual reason when quotations are submitted. This is not a general right to substitute a preferred price. Where clause 64.2 applies, the Project Manager also assesses the programme for the remaining work.

Cost, programme and finality

Select the correct main-option cost rules. A and B use the Short Schedule of Cost Components; C, D and E use the Schedule of Cost Components. Neither schedule applies to F, which has particular provisions for work carried out by the Contractor itself. Under clause 63.1, separate actual Defined Cost for work done by the dividing date from forecast Defined Cost for work not done then, with the resulting Fee. For specified Project Manager or Supervisor communications, the dividing date is the communication date; for other events, it is the compensation event notification date.

Use the Accepted Programme applicable at the dividing date, accounting for relevant intervening events. The delivery update shows all effects; the compensation event assessment isolates the event’s effect on planned Completion and the relevant Key Date condition. Contractor-liability delays, the ownership of float and time risk allowances require separate attention. A wet-weather period, for example, may contain both an event effect and effects which remain the Contractor’s liability.

Clause 66.3 prevents revision merely because an implemented forecast proves wrong. Correction of a Project Manager assumption is dealt with as a separate compensation event, and dispute procedures remain available. Check the particular option’s rules, including bill quantities under B and D. Under C and D, an implemented change to the target remains distinct from the payment and share calculations.