Early Warning Between Notification of Compensation Event

We as the Contractor raised a Notification of a Compensation Event due to unforeseen ground conditions. The Employer rejected this notification stating there was insufficient information provided to justify a Compensation Event.

After dissecting the Site / Works Information we were able to provide more information which we included within a new Notification of Compensation Event, which the Employer accepted.

This event had both a cost and time impact (Sectional Completion)

The Employer has now Project Manager Assessed the quotation for this event stating that we had not provided an Early Warning, specifically highlighting that we had not informed them there would be an impact to a section completion date, they have therefore assessed this less than we claimed.

Is the Employer right to do this ?

QS007 I can’t necessarily answer whether the Employer was right to do it or not, but they can do it provided they follow the procedure in the contract. The Contractor notifies a CE under clause 61.3 and must do so within 8 weeks of becoming aware of the event. Under clause 61.4 the PM should have reacted to your CE notification within 1 week and decided whether it was a CE or not, presumably they needed more information to be able to decide and therefore should have asked for an extension to the 1 week.
They clearly have decided that it is a CE as they have now assessed it, therefore they should have notified you of that decision under 61.4 and instructed you to submit a quotation - did they do that? If they did instruct a quotation and if they decided that you did not early warn then the PM should have notified you of that under clause 61.5 at the time the instruction to submit quotations was given. This is a condition precedent to the enactment of clause 63.5 which requires the CE to be assessed as if an EW had been given; in other words if the 61.5 notice is not given at the time of instructing the quote it cannot be imposed retrospectively. It is imperative that the PM has followed the contract otherwise their action maybe wrong.

I think the timing of what happened is important, the last sentence of clause 16.1 states that an early warning of a matter for which a compensation event has been previously notified is not required. If you notified the event as a CE as soon as you became aware of it then that should suffice but if you were aware of the ground condition before, then you should have notified an EW before.

I think that is all I can offer on the information you have provided.


Thanks for your response.

They had rejected the first CE and we then raised a second CE on CEMAR providing further information which the PM then Accepted. It was only on the 2 attempt they accepted that the obstruction was unforeseeable (ground condition). They had not accepted that CE under 61.5 but 61.4.

I appreciate that after rejection of the first CE other avenues of escalation would have been required but we’ve worked collaboratively with the Client to resolve this issue at project level.

We believe the first CE negates the need for an EWN because as you stated a CEN was raised.