NEC4 Clause 62: How to Prepare a Compensation Event Quotation (And Get It Accepted)

1. Why Clause 62 Matters

Under NEC4, a compensation event (CE) only changes the Prices, the Completion Date or the Key Dates once it has been properly notified, quoted and implemented. Clause 61 covers notification. Clause 63 covers how the event is assessed. Clause 62 is the step in between: turning the event into a priced, time-quantified quotation.

In practice, this is where entitlement is won or lost. A notification that is never followed by a quotation cannot be implemented. A quotation that omits part of the cost cannot easily be topped up later — under Clause 63.6, the rights of the Client and the Contractor to changes to the Prices, the Completion Date and the Key Dates are their only rights in respect of a compensation event.

The good news: Clause 62 gives the Contractor a clear, enforceable timetable — and, under Clause 62.6, a deemed acceptance mechanism when the Project Manager fails to reply.

2. When You Are Instructed to Quote (Clause 61.2)

Under Clause 61.2, the Project Manager's notification that an event is a compensation event includes an instruction to the Contractor to submit quotations. The instruction to quote and the CE notification arrive together — you do not wait for a separate instruction.

The Project Manager does not include the instruction in two situations:

• the event arises from a fault of the Contractor, or
• the event has no effect upon Defined Cost, Completion or meeting a Key Date.

If the Project Manager notifies a CE but does not instruct quotations, ask why. It may be a genuine view that there is no effect — or it may be an oversight you need to challenge before the assessment window closes.

3. What the Quotation Must Contain (Clause 62.2)

Clause 62.2 sets out the required contents of a quotation. A quotation for a compensation event comprises:

• Proposed changes to the Prices — the cost effect, assessed by the Contractor
• Any delay to the Completion Date and Key Dates — the time effect, assessed by the Contractor

Two further requirements are easy to miss:

• Details of the assessment must be submitted with each quotation — not just the bottom-line figures, but the workings behind them
• If the programme for the remaining work is altered by the CE, the quotation includes the alterations to the Accepted Programme

This is why a quotation is rarely a one-page letter. Under Clause 63.1, the cost effect is assessed on the actual Defined Cost of the work done by the dividing date, the forecast Defined Cost of the work not yet done, and the resulting Fee — although Clause 63.2 allows the Project Manager and the Contractor to agree rates or lump sums instead, which is how priced options (A and B) are commonly assessed. See our guide to Clause 63 assessment for the detail.

4. The Timetable: 3 Weeks In, 2 Weeks Out (Clause 62.3)

The Project Manager then replies within two weeks of the submission. The reply must be one of three things:

• a notification of acceptance of the quotation,
• an instruction to submit a revised quotation, or
• a notification that the Project Manager will make the assessment.

If the reply is not one of these, it is not a valid reply under Clause 62.3 — which matters, because the clock under Clause 62.6 starts running from the Project Manager's failure to reply within the time allowed.

5. Revised Quotations (Clause 62.4)

Clause 62.4 protects the Contractor from open-ended re-pricing cycles. The Project Manager may instruct a revised quotation only after explaining the reasonsfor doing so. There is no "just redo it" under NEC4 — the Project Manager must tell you what is wrong with the quotation.

Once instructed, the Contractor submits the revised quotation within three weeks— the same calendar-week discipline as the first submission. If the Project Manager's reasons are vague, ask for the specific basis: rates, Defined Cost, forecast, or programme effect. The more specific the reasons, the more targeted your revision.

6. Extending the Clock (Clause 62.5)

Clause 62.5 allows the time for submitting a quotation — or for the Project Manager to reply — to be extended, but only if the Project Manager and the Contractor agree to the extension before the submission or reply is due.

Two practical consequences follow:

• Ask early. An extension requested after the deadline is not an extension under Clause 62.5 — at that point you are already in breach of the timetable.
• Confirm in writing. The Project Manager informs the Contractor of the extension that has been agreed. If you agreed an extension verbally, confirm it in writing so the record is unambiguous.

This is also the clause that protects you in the other direction: the Project Manager cannot unilaterally extend their own two-week reply period to slow the process down.

7. When Silence Works in Your Favour (Clause 62.6)

Clause 62.6 is one of the most powerful — and most under-used — provisions in NEC4. If the Project Manager does not reply to a quotation within the time allowed:

1. Notify the Project Manager of the failure. If you submitted more than one quotation for the CE, the notification states which quotation you propose is to be used.
2. Wait two weeks. If the failure continues for a further two weeks after your notification, the quotation is treated as accepted by the Project Manager.

An accepted quotation is then implemented. Under Clause 66.2, when a compensation event is implemented, the Prices, the Completion Date and the Key Dates are changed accordingly. And under Clause 66.3, the assessment of an implemented compensation event is not revised except as stated in the contract — which is why, as NEC's own guidance notes, once implemented, only the adjudicator can change the accepted quotation.

8. What If the Project Manager Assesses Instead? (Clause 64)

Clause 64.1 lets the Project Manager assess the compensation event themselves in defined situations:

• the Contractor has not submitted the quotation and details of its assessment within the time allowed,
• the Project Manager decides the Contractor has not assessed the CE correctly in the quotation — and has not instructed a revised quotation, or
• the Contractor has not submitted a programme (or alterations to a programme) that the contract requires, or the Project Manager has not accepted the Contractor's latest programme for one of the reasons stated in the contract.

Note the link to the programme: under NEC4, a contractor who lets its programme lapse loses more than programme clarity — it also hands the Project Manager the basis for a Clause 64 assessment.

Under Clause 64.3, the Project Manager notifies the Contractor of the assessment and gives details of it within the period allowed for the Contractor's submission of its quotation— the same discipline that applies to the Contractor. And Clause 64.4 mirrors Clause 62.6: if the Project Manager does not assess within the time allowed, the Contractor notifies the failure, and if it continues for a further two weeks, the Contractor's quotation is treated as accepted.

9. Five Mistakes That Cost Contractors

• Pricing time and cost in isolation. Clause 62.2 requires both the change to the Prices and the delay to the Completion Date and Key Dates. A quotation that addresses only one is incomplete and can be rejected — or worse, assessed by the Project Manager under Clause 64.
• Submitting figures without the assessment details. The details of the assessment must accompany the quotation. Bottom-line numbers without workings invite a Clause 64 assessment.
• Missing the three-week window. Calendar weeks, not working days. If you need more time, agree an extension under Clause 62.5 before the deadline — not after.
• Ignoring the programme. If the CE alters the programme for the remaining work, the alterations to the Accepted Programme must be included in the quotation. Omitting them weakens the time claim under Clause 63.5, which measures delay against the Accepted Programme current at the dividing date.
• Never using Clause 62.6. When the Project Manager misses the two-week reply period, the deemed acceptance mechanism exists for a reason. Notify the failure, state your preferred quotation, and put the two-week clock on record.

10. Free Tools to Help

NEC4Engine offers free tools to help you manage the quotation process:

• CE Quotation Draft — structure a Clause 62 quotation covering Prices, Completion Date and Key Dates
• CE Cost Calculator — build the Defined Cost and Fee assessment behind your quotation
• Programme Delay Analyzer — quantify the time effect against the Accepted Programme
• NEC4 Clause Search — pull up the exact wording of 62.2 to 62.6 in seconds