NEC4 ECC clause 63.5 – effect of a compensation event on X7 delay damages

NEC3 and NEC4 Contracts
1

Under NEC4 ECC main Option A, B or C, with secondary Option X7 and no relevant amendments:

Hypothetically

  • The Completion Date was 31 December 2025.

  • The Accepted Programme current at the dividing date, assumed to be 31 May 2026, shows planned Completion on 30 June 2026.

  • The Contractor has not completed and X7 delay damages are being applied.

  • A client-risk compensation event is assessed as delaying planned Completion by 62 days, from 30 June to 31 August 2026.

Does clause 63.5 move the Completion Date by the same 62 days, to 3 March 2026, rather than to the new planned Completion date of 31 August?

If the Contractor completes after 3 March, does X7 continue to apply from the revised Completion Date until actual Completion? My understanding is that the CE removes damages only for the period covered by the extension, not all delay damages if the Contractor still completes after the revised date. Any damages already deducted for the period now before the revised Completion Date should be repaid or credited, with interest under X7.2 and clause 51.3. Is that right?

2

Hi Paul, yes 63.5 changes the Completion Date by the same amount of time as planned Completion is changed, i.e. 62 days to the 3rd March and not to the 31st August.

I’m confused when you state ‘if the Contractor completes after 3 March 2026’, the Contractor hasn’t completed by the 3rd March if the programme current at the dividing date is dated 31st May 2026, the dividing date must either also be the 31st May or later?

You are correct about X7.2, the delay damages are repaid with interest from the date of the payment by the Contractor to the Client which presumably spans 3 possible assessment dates, e.g. January 26, February 26 and March 26? In this case you need to calculate the interest payable from each payment to the date of re-payment.

The delay up to the 31st May 2026 i.e. when the last programme was accepted and also assuming that coincides with when the payment of damages was made, reduces from 151 days to 89, however the delay will start to increase again until the Contractor actually achieves Completion, currently planned for the 31st August 2026.

I hope this helps but happy to discuss if I have misinterpreted your question.