Forecast Assessment and Correction of Assumption

NEC3 and NEC4 Contracts Compensation Events
1

I have a question regarding the forecast assessment of Compensation Events and the correction of assumptions.

If a Contractor assesses a compensation event and forecasts the defined costs (for works not yet done) at £10,000.00, and that assessment is implemented but later proven wrong, then the risk (or gain) sits with the Contractor - you do not ever revert back to actual cost.

So, if the Employer decides to make their own assessment of the Compensation Event; let’s say their forecast assessment is implemented at £8,000.00, is it reasonable to assert that the risk now sits with the Employer - if the actual defined costs exceed the assessment value should they correct the CE?

Is the Employer’s own forecast assessment deemed an ‘assumption’ by default, or must the Employer expressly state within their assessment/quotation that the costs are merely ‘assumptions’ which may be corrected a later date?

2

the Project Manager makes assumptions not the Employer. Yes the assumption would have to be an expressly stated assumption for the quotation to be revisited (new quotation for the correction of the assumption). The PM’s assessment is not an “assumption”.

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