NEC ECC: Cancelling Compensation Events

You do not state which Main Option you are using, although you should treat the scope of works as a ‘configuration control’ exercise, using the Contract Date as the baseline and incrementally adjusting the scope as compensation events are notified (and accepted)…

If you notify a compensation event to add to the scope of works, you would, effectively, need to notify a further compensation event to remove the same scope. In reality this may not be necessary if the Contractor is in agreement with a zero assessment, although remember that people come and go on any project and you need to make sure that everything is formally implemented in such a way that disputes may not arise at a later date.

Applying the contract correctly, the compensation events you mention in all three scenarios may not actually be ‘zero’ value. Remember that a PM’s assessment of a quotation must take account of Defined Cost actually incurred before the ‘switch date’, including preparation of quotations under Main Options C and D, where this is properly incurred and increases the Defined Cost.

  1. You will need to notify a further compensation event to ‘cancel’ the scope of works, because the Contractor is obliged to put this compensation event into effect.

  2. Again you will need to notify a further compensation event, as above, and for the same reason.

  3. Again you will need to notify a further compensation event, as above, and for the same reason.

It may seem ‘tidier’ to just implement ‘zero’ quotation assessments, but this does not mean that these issues will be conclusively ‘closed out’.