Compensation Event Review Delayed by Client NEC4 Option A

Under NEC4 Option A, the Contractor has issued a Compensation Event quotation for review. The quotation included for risk and time allocated to complete the additional works.

The Client has taken a long time to review the quotation and asked for revised quotations. The additional works are now almost complete and the Client is asking for all risk to now be removed from the original quotation and timesheets provided to substantiate the actual hours worked.

Is it right that a Client can delay assessing a quotation which was based on a forecast / quotations before works are complete and then keep requesting revised quotations until works are complete?

The Client is not correct in my view.

The change to the Prices is assessed as the effect of the compensation event upon

• the actual Defined Cost of the work done by the dividing date,
• the forecast Defined Cost of the work not done by the dividing date

The dividing date does not change, no matter how many revised quotations are requested, or agreed extensions, therefore the correct position is to maintain the Defined Cost / Forecast Defined Cost split as per the dividing date when the CE was raised.

This is to promote the prompt closure of CEN / CEQ’s, otherwise, you would just be dealing with all Compensation Event at the end of the project, which is not the intent of NEC4.

It might be interesting to explore the scenario with your Client that your risk allowance is now much higher, would the Client be willing to pay a higher quotation value ?