NEC 4 Clause 63.3 and 63.4

In what situation (reduce the total Defined Cost, but the Prices are not reduced) in 63.3 and what situation (reduce the total Defined Cost, the Prices are reduced) in 64.4?

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NEC4 clause 63.3 was previously 63.2 under NEC3, with the wording slightly amended.

NEC4 clause 63.4 was previously 63.10 under main options A and B and 63.11 under main options C and D and has now been added as a core clause rather than an ‘option specific’ clause.

NEC4 clause 63.4 states particular reasons why the Prices are reduced but clause 63.3 doesn’t. This ‘general’ approach at 63.3 is a reference to 63.4, 63.12 (see below) and also secondary options X2 and X12, which specifically provide that the Prices may be reduced, for a corresponding compensation event, at clauses X2.1, X12.3 (6) and X12.3 (7). The optional nature of some of these provisions means that 63.3 cannot make express reference to them.

As an example for clause 63.3, Others do not work within the times shown on the Accepted Programme and you have a corresponding obligation to facilitate their works and provide access to the work site. If Others work to different times and complete their works quicker, which consequently reduces your associated Defined Cost, then in principle it is a compensation event, although under clause 63.3 the Prices are NOT reduced.

Clause 63.4 states 2 reasons why the Prices are reduced, that is an instructed change to the Scope and the correction of an assumption, which are compensation events under clauses 60.1 (1) and 60.1 (8) respectively.

If the change to the Scope was proposed by the Contractor, however, then the Prices ARE reduced by the value engineering percentage under clause 63.12 for options A and B, but are NOT reduced under clause 63.13 for options C and D.

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