hello everyone um Welcome to our webinar today on compensation events we're just going to give it a few minutes uh just to let people join uh before we begin um yeah for okay um yeah welcome everyone um to our webinar NEC 101 compensation events and introduction um with me today I have um Laura Campbell senior senior associate at Shar rard um and Robert jard um senior um senior consultant at NEC um before I hand over to them I just wanted to um let you guys know about a few housekeeping rules um if you have any questions at any point please feel free to ask them in the Q&A section um and uh our speakers will get to them at the end um a recording and the slides will be available um shortly after this has broadcast alongside any Q&A uh questions that haven't been answered uh during the webinar if we don't have any time um yeah we'll go back and and answer them um but yeah other than that um I'm happy to hand over to Laura and Rob okay thank you thank you very much foran welcome everybody so there a big big decision today wasn't it anyc webinar or um or the or the budget so those of you at least for half an hour going to going to sit and listen to uh mainly Laura and myself talking about conversation events we do say it's an introduction we'll have a little bit of deep diving around some of the subject areas and we would welcome your your your questions on that so um please enjoy Laura over to you great thanks Rob um delighted to be here with the NEC Community today talking about compensation events um thanks for inviting me to come and talk to you all um so I'm just going to move on a couple of slides just um there's the agenda so um we're going to talk through what common mistakes people make general advice best practice um so and and we're focusing on the nec4 engineering and Construction contract so most of the Clause references will be from that specific form of contract um so moving on to the the initial slide so as as an introduction we've sort of split the presentation into um a slide about the principal and then a slide about um mistakes advice best practice on various aspects of compensation events so initially what is a compensation event um very simply put it's a contract management tool in the NEC Suite of contracts to deal with time and money um as we say on the slide here in another simple way it's something that's listed in the contract that the contract refers to as being a compensation event um if you're familiar with the NEC or if you're becoming familiar with the NEC you'll be used to looking at clause 60.1 and you'll see that there is a very generous long list of compensation events listed there and it could be anything from um the example we've given here at 60113 the client does not provide something which is is to provide by the date shown on the accepted program or it could be something such as an archaeological find on the site that's also catered For along with a number of other matters which could arise during the course of your project which which are not necessarily unforeseen because they're listed here but you know you don't know whether they're going to happen or not um and it gives you that mechanism for dealing with some of those events if they do arise um there is a list of the core compensation events at Clause 60.1 of many of the NEC contracts there are also some Main and secondary options I'm just going to pass to Rob who's just going to talk a little bit more about some of those Main and secondary option compensation events yeah so the the list of compensation events is not um static as such with other if you like standard forms of contract um then those contracts are not presented in the same way as NEC and they just get a sort of a a vertical list of things which they call you know you may be entitled to a a claim or or or the like as a contractor so you have to do a little bit of hunting with NEC so um we have something called core Clauses so get that 2122 list of standard things which are a conversation event um but then depending upon the main option chosen secondary options you can add to that list you can further add to that list or modify it through what are called Z Clauses or in the contract data so some examples there if you pick main option b or d then there are three extra conversation events that occur because you are using ability quantities for example you may uh not follow correctly a standard method measurements or there may be for example a mistake in the Bill of quties so that that's two main options options b and d add three more compensation events to the uh to the list also some of the secondary options if you decide to incorporate for example X2 into your contract which is about changes in the law then should a change in the law occur during the currency of the contract then that change of the law is basically processed or administered as a compensation event um so so so it's not a fixed list that's that's the main point it's variable depending upon the main secary options chosen but also according to client specific requirements they may modify that list they may increase it through the contract data there's a part of the contract data that says the following are additional compensation events or they may take out some of the existing um conversation F or even modify the wording of them through a z clause so you need to be very careful if you certainly if you're a tenderer looking at exactly what is the exact version of the lc4 contract that we're talking about um what are the main secondary options are there any additional Z Clauses or um or are there any additional compensation added to the contract data so basically you get a bespoke list of conversation events um depending upon the particular nc4 contract chos and how the client or their advisers have put the contract together so take take care there's not a simple if you like single list of what is uh a compensation and while we presented it this way we sort of split the principle from if you like the quantum just so that we understand there are there are hurdles to be jumped over if something isn't a conversation event then the rest of the Clauses in that particular part of the contract are irrelevant you can have something you have the utmost for the contractor for if it occurs but if it is not listed as being a compensation rent then it is not compensation rent okay thank you Laura thanks Rob um so so that's that's a really really good context and I'd say that you know in practice we we do come across um examples of um additional compensation events needing to be added via the contract data and and the Zed Clauses for that's that's all um really important on a practical level um and also one other point that I wanted to make on this slide before we move on is that um there's often a misconception that the compensation event only deals with money because I think when we think about the word compensation we often think about money you know you want financial compensation for something however under the NEC the compensation events actually unlike some other standard form contracts wrap up time and money all in one um so any claim for a compensation event you should be seeing a claim for time and a claim for money it may be that the claim for time is zero it may be that the claim for money is zero but certainly it should be dealing with both of those matters yeah I think that's a that's a really important point so in most of the CER forms of contract you tend to get as a contractor four chances to ask for more Tamer money and you do that separately so in know you know uh the likes of fidic for example there may be a variation you might be uh in tarch of the bill rates or analgous Bill rates if it's a remeasured contract you may in turn be entitled to some disrup ition should that extra work that variation cause you to be disrupted you may feel that you're entitled as a contractor to um what's called an extension of time to get like in any C speak the completion date delayed and you may feel that you due additional preliminaries um for that extension of time so you tend to get four bites at the Cherry with standard forms of contract uh and they they can appear at various times my experience is they all appear way too late way after the job is finished which is uh I don't think very good modern day practice so and it's not easy but basically it shrinks all of those four as as Laur rightly said into one quotation that needs to address all time andal cost so you're already in quite a challenging position uh that you have to think about the whole time and cost effect that this particular conversation on its own merits will have upon the contractor great thanks Rob so some ma mistakes advice best practice in relation to initial compensation events um it is important to consider at the outset of your project your risk register or your early warning register and make sure that it aligns with the compensation events cat for in the contract um make sure that all of your risks are covered in the correct way so that um some of them may in fact already be dealt with as the compensation events um if you're adding new compensation events to the project as we've already said these need to be set out and you need to read all of the contract documentation to see where they are um to make sure that there isn't something in the Z Clauses that you weren't aware of or something additional in the contract data um and also really importantly the NC has lots of tools for managing the process of the any of the compensation events much of this is set out in Clause 60 um but also obviously the early warning register is there for a reason and that's a really important tool for proactively managing your contract actively managing that project to be fully aware of the potential compensation events which might arise as your project progresses and um and how it can be managed and if you're using that early warning register then you're managing the NEC in that Spirit of mutual trust and cooperation which is really important and really Central to a successful collaboration yeah I would just add that um I in my opinion the uh the list of what is a compensation is is fair between the parties it's a reasonable starting point um I I'd be very careful if I were CL not to be led exclusively by that allocation of risk so you should really put your own project risk registered together um set about trying to avoid reduce or mitigate most risk as best you possibly can the residual risk the leftover risk the risk you couldn't avoid reduce or mitigate then you need to according to the theory allocate to the party best able to manage it I'm not sure I truly subscribe to that theory but I'm more of the thinking that you need to clearly allocate it to one party or the other who needs to cater for that either by pricing and programming it from the contractor's perspective or by providing some sort of sensible contingency from a client's perspective so really it's up to you and your project risk register to be gu as to how you should allocate uh risk on a project I think you have a really really good starting point in NEC but don't think that that's the best you know best for project in all cases and certainly you know there are risks in in parts of the worlds of earthquakes and tsunamis and all sorts of things exciting things like that that need to be taken seriously and catered For properly in the contract whether or not they called a compensation rent or a clients or a contractor's liability is is another discussion but um think about where you know your project your location your jurisdiction and the things that sit around um sit around and you know sit around that project from a risk perspective okay thanks Lauren great thanks Rob um so moving on now to notification of compensation events so um I think we've already alluded to this slightly that um you know if if it doesn't fall into something which is described as a compensation event then it it simply won't be um it does have to attach to the contract in that way um so who actually notifies when a compensation event occurs is it the contractor is it the employer is it the project manager we've not really said that much yet about the project manager but um obviously the project manager is a really key person involved in contract management it's an absolutely integral role under the NEC contract to have that project manager in place um so if you look at the nuances of the NEC for ECC and many of the other contracts um but referring to the nec4 ECC Clause 14 .3 and we've set the wording out here the project manager may give an instruction to the contractor which changes the scope or key date um so on that basis most of the compensation events that you see will be notified by the project manager assuming that the contract is running in accordance with the provisions in in the um collaborative way um so it often will be the project manager that is managing that process um and for those of you less familiar with the NEC um the rest of clause 14 set out the RO some of the roles and responsibilities of the project manager and the supervisor um so compensation events are all about the time and cost impact as we've said so it does follow really that the project manager is going to be responsible for making a lot of those notifications um I think we've said here on the slide that it's about 90% that the project manager will be notifying compensation events um for the other 10% they fall exclusively to the contractor to notify the project manager that's covered in clause 61.3 and it's really important to note and this isn't just this Clause this is a general theme through the NEC here there's an 8we Time bar so if the contractor is responsible for notifying a compensation event and they don't do so within eight weeks then um that that's that's it that's that's the time bar then they can't subsequently come back and notify um and the reason for this time bar is as we've said already it's to kind of try and prevent the compensation events from stacking up during the project it's another way of proactively managing the contract to make sure that time and cost implications are dealt with at the right time as and when they arise um because then the client gets a true sense and the contractor gets a true sense of how long the project is going to take how much it's going to cost whether decisions need to be made elsewhere um you know if there's a huge cost impact because of something that's occurred which wasn't anticipated at the beginning of the project it may be that other parts of the project project need to be scaled back for example so it is really important to keep these under review at all times um we've produced a short flowchart here just to show the two options so as you can see option one is where the project manager notifies we've only got two boxes that's a much simpler process um option two where the contractor notifies it's slightly more um drawn out process um so under option one very simply the project manager notifies the contractor of a compensation event and asks for a quotation at the same time so that's all wrapped up in one notification um the contractor then has three weeks this seems like a reasonable period of time to respond to the request and that kickstarts the quotation process um which we'll be talking about in a little while under option two where the contractor notifies the project manager of a compensation event within a week the project manager has to reply to that notification um and if they if they need further information they can ask that further information they can ask um for further details um in particular they'll need to know what's changed whether it's whether the contractor saying the completion date needs to be moved whether a key date needs to be moved whether the prices need to be increased or even decreased that's also um something that could happen and again that kickstarts the quotation process as I've already mentioned the project manager is really critical to the management of the contract now if the project manager does not respond to the contractor's notification of a compensation event within a week that's the time scale um the contractor then has to notify the project manager of that failure to respond um the project manager has a further two weeks to respond and if the project manager doesn't respond to that compensation event it is deemed accepted um so whether or not you feel potentially as a client that the contractor has provided enough information to satisfy one of those compensation events in clause 60.1 or elsewhere in the contract um if the project manager doesn't respond then they are then entitled to go on and submit a quotation so um it's really important to make sure that all those time scales followed um so moving on to some mistakes just if I just um Ju Just go back one if you would Laura yeah sure uh yeah if you can there you go there we go just a point with option one so the supervisor doesn't just a little blip the supervisor a conversation could occur because the supervisor gives an instruction for example to um uh search for a defect and no defect is found but in fact the supervisor does not notify the contractor of the conversation event that's exclusively between project manager and contractor unless of course that power is delegated by the supervisor Sorry by the project manager to the supervisor the interesting thing to me is so option two is is more heavily weighted if you like but as Laura rightly says you know you you will find the vast majority of compensation events fall to be notified by the project manager to the contractor my experience is that that doesn't happen in practice we still feel that it's something the contractor should do if the contractor wants more money they should ask for it but in fact you know good practice on behalf of a client you know you've just as a project manager given instruction changing the scope you know it's got in you know it's got ter implications get on with it kickart it um notify the contractor of the compensation event 61.1 instructor quotation to be submitted 61.2 and in fact should the contractor not provide that quotation within three weeks it falls to you to assess it as a you know impartial independent um certifier So ba basically the show goes on with or without the contractor's a notification so again that is that is distinctly different to any other former contract I've ever you know read which leaves it for the like they the the uh the seller the contractor if you like to kickart uh in their opinion they're due more Tamor money so you know this it's a very different approach to any other form of contracts thank you Laura great thanks Bob um we say to each other a lot here aren't we but never mind we'll find something else to say yeah so so um mistakes advice best practice I think we've covered quite a bit of this already um just drawing out a couple of points from this slide um I think we wanted to add that it can be slightly contentious where a compensation event occurs but the contractor doesn't notify it because it actually would involve a decrease in prices so that's just something to look out for as well and again this is where the project manager should be doing their job really well and you know checking that the prices don't need to decrease or um instead of increase um and again I think we've said this and I think we'd say this um on many occasions keep using that early warning process you shouldn't be in a position really where you're faced with um notification of a compensation event that you didn't know about before unless it really is truly something unforseen that that wasn't anticipated you know the day before or the week before or the month before so again it's all about that planning and that process yeah there is um you know logical sequences in the most things you should have half an idea could could be could be coming around the corner tomorrow next week the week after so should be giving the heads up through the early warning process and where possible acting like adults trying to solve the problem if it's all possible so so we're trying to actually um get rid of or avoid conversation EV if if it's all possible so an early warning is something that that could happen a conversation is something that has happened so it's no good not a conversation event just because youve watched the news and it says a terrible storm is coming you know you know so a conversation is something that basically is historic it could have a future implication of course but it's something that has already happened great thanks Rob and one other point that I would add at that point is um on notification um it's really important when you when you make your notification that firstly if you've been using a particular contract management system that that is used consistently and that the notification goes through the right Channel um I'm just thinking to um to contexts where you know you're dealing with claims to compensation events and um and it's not notified properly then then that that ends up being a no um and also making sure it's a single notification so um it's very easy to send an email or to send send a letter or a COR some form of Correspondence saying there's a notification of a change of scope and um a compensation event and another instruction but actually and this applies to all instructions really they ought to be notified separately rather than mixed up so you can sort of deal with them this is the compensation event claim um and then the quotation would also be separate so that's just something to note in terms of that actual notification making sure it's all done via the provisions in the contract um so moving on from that how is it assessed so you've gone through the process of um identifying whether or not it is a compensation event whether something falls into that list or the list that you've got in your contract um you've gone through the notification process so once you've done that notification how is it then assessed so you use a dividing date um as we've already said compensation events are they look at historic events so you're looking back to see what the actual time cost impact has been so far as a result of that compensation event um so essentially it's doing that assessment um it could be something like archaeological objects have been found on site um there's a delay while you get the archaeologists to come and have a look and see what you found um and to see if there's anything else that needs to be done so obviously that would be a compensation event you'd need to think about how much additional time would be needed to get the project back on track and um depending on on you know the extent of those archaeological finds for example it may be that it's a small matter and nothing really needs to be done so there wouldn't be any additional costs um it may be that actually you know more specialist surveys are required and there would be a cost for that so that's just an example really um which sort of links into the next point which is about having that dividing date you're looking back at what's happened so far and then you're also looking forward about what is the future time and cost impact of that compensation event so again using the archaeological objects example it may be that actually there is something significant on your site and you've got to do a bit of redesign that obviously will cost money so that that's the sort of thing that you'd be looking for um and of course we've not really mentioned the program that much anymore but um the accepted program obviously is a very important integral tool to managing the contract um so any assessment of compensation event at the dividing date must be based on the accepted program at the time of notification of the compensation event so again um it's about ensuring that you're keeping the program updated and making sure that it is accepted via the program Provisions in the contract um and a general point is that what the compensation event regime is trying to do and particularly via the assessment um it's trying to put the contractor back into the position they would have been in but for the compensation event so really it's it's a matter of fairness um but equally the contractor has to um submit a reasonable quotation um based on evidence and you know um well thought through fully substantiated costs and um and estimates for the the amount of time that it might require to to sort out the matter um so when a quotation comes in from the contractor it needs to be assessed by the project manager um so the key points really to think about are is it reasonable um is it a fully itemized costed request um in terms of money on the time side of that um have they substantiated how many days extra days it would take take to to continue with the works or how many weeks Etc um is it a reasonable s sensible substantiated compensation event quotation I think those are those are the main questions um Rob did you have anything to add to that um no just just going back on a few of those points so I I really like the the current drafting I think was from the 2023 version of um of of the EC in particular that that has now in my opinion clearly defined what is a dividing date and how it should be used in terms of time in in clause 63.1 and money uh sorry 63.5 for time 63.1 for for money um I still don't see people generally following that we we we we like to go safe here and do a waitand see approach but that is absolutely not what the contract says um and there's a bit of case law on healthy buildings which you know basically ignored the provision 6 3.1 which I think is uh a bit of a tragedy from a from a judge's perspective but never mind but the contract clearly tells us now yeah in my opinion clearly articulates just how we go about assessing tamad or money using which version of the um of of the accepted program you could potentially have one every week and you might assess a quotation two or three weeks after the the instruction was given perhaps to change the scope so it was always an issue well what how how do I do that which version of which program do I use to go back and assess so I think you know reading carefully the word in 63.1 63.5 should help people um do this as contemporaneously as you possibly can and that that's really my best advice don't let things Mount up don't let things Fester get on with it get on with trying to create that rolling fin account and do things contemporaneously if you possibly can and the theory the the for approach I'm a big fan of I mean that's not disimilar to how a judge would do with a a breach contract so we're not going to hold the contractor to a bad rate or Price let's say in a in in a bill quantities contract we're going to say what would it have cost you but for the compensation rent what will it now cost you in time and or money because of the compensation rent and so we're looking at the difference the extra over the book for um and and I think that's a very fair way to do things now so you can if you want have things like alternative quotations use that sparingly you can if you need to know in advance how much extra time and all money then you can use the proposed instructions approach um so you it's very flexible you basically have lots of Provisions at your disposal to do what you think is best certainly from a project manager perspective what is best for both parties in in the circumstances okay thanks Laur great thanks for all just another flowchart on um assessment and quotations um so again um when we looked at notifications we we said that um the request for quotation might come from the project manager if they've notified the compensation event after that the contractor then has three weeks within which to submit the quotation and again it's got to be it's got to come with details and substantiation it can't just be you know a couple of lines saying we think we've got an entitlement to compensation event for x million um and for you know three a three month extension of time has to be properly set out um hopefully a couple of weeks later the project manager accepts the quotation all being well um and then the compensation event is implemented the project moves on from that and until such time is another compensation of Enterprises um of course if the project manager isn't satisfied with what the contractor's provided or if they think that the quotation is um is not quite accurate then obviously they're doing their own assessment and they can go back and ask the contractor to revise that quotation the contractor then has a further three weeks within which to submit a revised quotation and again I think it's worth reinforcing the point that if the parties are working together considering the risks looking at the early warning register then um it should be fairly straightforward to work together when a quotation comes in and the project manager should be um should be proactive actually when a quotation comes in if if the project manager isn't satisfied rather than just going back to the contractor and saying sorry we're not accepting that I think again they need to take a sensible approach and say okay the quotation isn't what we were looking for you know for audit purposes or for whatever else um we need a bit more information and it's worth the project manager sort of sitting down with the contractor and saying if you provide all of these pieces of information um then we can look at the quotation again but at the moment it's just not quite um as substantive as we need it to be to be able to make that really solid assessment so again that working together cannot be um underestimated um if it's the project manager at fault for um failing to reply to a qu quotation within two weeks of its submission then again we've got this provision for the contractor to notify the project manager of that failure and if the failure to reply continues for further two weeks the quotation is then treated as accepted so again this is something to watch out for it's what we call a deeming provision and um the project manager really needs to making sure that they are complying with those time scales so as not to inadvertently accept quotation yeah um oh my my addition to this really so my my go-to Clause is uh 63.2 I love it I love it bits and it says if the project manager contractor agree or something like this then they can revert to rates or Lum sums instead of building up from first principles now this this you may not find in favor with Auditors as I found in the past but if your wisdom and experience Etc leads you to believe that £500 is a perfectly reasonable number for this for this particular conversation and then there's nothing to stop you agreeing that you do not always have to build it up with a great amount of you know of detail of substantiation you just agree you agree that you know X dollar or pounds a square meter or 500 UK pounds or whatever it is is a reasonable uh amount of money for for this particular conversation because otherwise it becomes a little bit insane if you're spending more in professional time and therefore for money than the actual compensation rent is worth so I personally believe that maybe may we need to look at this over time is that maybe a third or so of all compensation events you should start with clause 63.2 and see if you can agree sensible rat and or Lum on if you cannot sit down as Laura rightly says and be um uh collaborative work this thing out together um look into each other's eyes don't know how many you good at poers and poker Tails but you will find out quite easily when somebody is trying to string you along a little bit and and where it's a really big ticket conversation a significant amount of tomor cost and surely it's worth assembling a small team a mixed team to act collaboratively to try as quickly as they can on behalf of at least the contractor and the client if not also subcontractors to come up as quickly as possible with their time and cost implications because every business is deserving of knowing the implications of a conversation as soon as you reasonably can get to it without gambling I'm not I'm not suggesting we flick coins gamble rush I'm just saying you know doing things together working collaborative is very much the key to to successfully um getting compensation implemented quite quickly thanks yeah I say I agree with that um in terms of I think quite often in practice the compensation events that that come to us as um lawyers to look at perhaps the chunkier and meteor ones I think there are lots of compensation events that as Rob said are dealt with you know on a sensible basis by the party sitting down and saying actually you know we've seen this before and we can estimate that this is going to be500 pound or whatever I think th those sorts of compensation events we don't see so much um they are dealt with as they should be under the mechanisms within the contract so um and I think I think these these Provisions sort of the more detailed Provisions um then apply if it's something more substantial I think yeah great so um I think we've covered most of the points on this slide um about being collaborative using Clause 63.2 more um can you realistically forecast two decimal places of accuracy um and again um we've already talked about the rolling final account ethos and the fact that the project manager is really integral to doing the um assessments so probably the point um I think we're on to the final couple of slides now um obviously what you really want to know is you've gone through the process how do you implement your compensation event how do you actually make it happen um so I think we've touched on this already in terms of it could just be agreed by the parties that it's a compensation event we know roughly what it's going cost we've had a sensible discussion about how that's going to be um assessed and then it is implemented um the less ideal outcome is if it's deemed acceptance so if um the contractor or the project manager has failed to do something in terms of notification or of assessment then a compensation offense simply could through the contractual mechanisms become implemented um or it could be that um the project manager has accepted it so there are three possible ways there and it's particularly important if you've got an option a or an option b contract to make sure it is implemented so that the contractor can actually be paid for that compensation event um and the last point on this slide is that um under Clause 66.3 once a compensation event is implemented it's not possible to then go back and reverse that so in the assessment process that's something else to be really careful about if you're if there's any shadow of a doubt then have another look at it before you implement it otherwise it's it's implemented and there's no going back yeah so just to highlight so options A and B in particular um there is no provision in the contract for paying on account contractor might have you know done some1 th000 pounds worth of additional works if you go around in circles arguing arguing arguing and you've not implemented it you will not get onto the activity schedule with option A or the bill con with option b and that is the main means by which you determine What's called the price for work done to date cannot certify payment on account and therefore it's not paid for so you know the the the pressures are certainly with options A and B to get that agreed and implemented as you know in keeping with at least when the work's being carried out um so that's very important you can also remember that you can uh each conversation doesn't have to be a single lumpsum item let's say for option A it can be it can two three four five different different um items and we're not following a method measurement so you can have procurement based descriptions in your activity schedule so think through all those sorts of things when you so you got to compile so you decide is conversation event decide what is reasonable and fair in accordance with the contract in terms of time and money and have a look at very carefully how you you know need to be paid for the uh for the for the usually additional works and that mainly goes for options A and B options C to have work slightly different in that it's based upon defined costs that will be paid by the contractor before the next assessment date so you can get away perhaps with a little bit more lag in the assessment and conversation events but um it's still advisable to to do them as as quickly as you can the exception to all of this of course is where we use Clause 61.6 project manager assumptions where we say to the contractor okay we can we appreciate that um you preparing a quotation for this particular conversation event is is is quite uncertain and you might give uh some what I call prental assumptions upon which the contractor will prepare that quotation if any of those quotations turn out any of the assumptions turn out to be wrong then a separate separate compensation event is uh occurs where you address the differences but as law rightly says you could very well they've got the pricing wrong too high or too low of the original quotation for the original compensation event and you cannot later address that um should should the project man assumptions be incorrect so yeah very very important to recognize I mean it's almost like a mini offering acceptance there's no real difference to how you know how tenders work so you offer a lumps on price you agree that's it million dollars job done if you find out it's too high or too low tough luck so if you find out in option A or B that your 10,000 compensation is too high or too low tough luck so take care to get it about right so I still see somehow conversation we think we're that good that we do them always to two decimal places we're not that good I can tell you that now um you know it's in the O dve So to me you're focusing on in the or drive times and money not we are don't kid yourselves you are not so brilliant that you can precisely do this to uh to to decimal places that still won't change tomorrow I guarantee all of you will submit quotations tomorrow or read them that it's a two decimal places but never mind thanks Rob I think we're on to the last slide now so um whilst this one relates to the implementation Point um in terms of mistakes ADV viice best practice I think these comments actually apply to any aspect of compensation events in the process um many of these points we've already mention so having a wait and see approach thinking you can leave the compensation events to the end of the project is simply not true um as we've mentioned the NEC is meant to be proactively managed to give everybody a real indication of cost and time throughout the project so again use the early warning mechanism um use the compensation event mechanism to make sure that you manage those costs and time risks throughout um make sure that you think through the payment of this um um particularly for option A and B um as we've mentioned record keeping evidence Gathering again um as we've already mentioned you're probably using some form of contract management system make sure that everything is stored in there for the purposes of the compensation events so that when you're making assessments you've got all the information that you need um as as we know it's really important to have that Central repository um we've probably all come across examples where you desperately need some information and it's in somebody's inbox or separate file and they've left the organizations so making sure that record keeping and evidence Gathering is is done um throughout the project and particularly at points where where you're assessing compensation events really important um and just really making sure that you are using the whole contract um it's got lots of mechanisms for dealing with time and money particularly obviously compensation events but also the notification and communication Provisions are really key to getting it right um and I think the final point for me really is that um it is a collaborative cont cont and we've said various times that actually sitting down having a sensible discussion working through it together as as a collaboration rather than as as parties who are polls apart is really a good approach and um one that the NEC encourages and fosters um so any final comments Rob uh I only just St out from it all and and basically say don't try not to let conversation EV consume you because they can do quite quickly so I you know they just about sneak into my top 10 of most important things to do in managing a contract but they seem to elevate themselves very quickly to number one because that's all that people want to talk about I'm not surprised there were 550 people or something who um entered this webinar today they everybody loves the term compensation rents don't they for some reason it's bit like old-fashioned claims and variation orders so you know what is far more important is of course number one has got to be health and safety number two has got to keep that keep that scope up to date ASE you possibly can number three he's got to be having a quite brilliant program that that you know is realistic and practicable number four is an overuse of the of the early warning system let's let's Hammer that let's work collaboratively and sort out problems before some of these things become conversation fents and then there's some gaps I I can't remember what is 567 in my opinion but maybe number 10 is the world of conversation events so all we are doing just stand back for it all we are doing in conversation is agreeing whether the prices go up or down let's say in an option C or a contract do they go up or down yes or no do any of the dates get delayed yes or no that's it it's it's those two simple questions do we adjust the prices yes or no do we delay any of the dates of course the dates could be key dates sexual completion dates or completion date the whole the works all of this chat all of the pages in the contract all of the US user guides all the Social Media stuff all the conference talk it's just about those two things isn't it just and and so you've got to find a way to to making sure that that you you you treat them with respect you give them the appropriate amount of time and effort but my humble opinion is there are far more important things for us to to uh to get right so you know it's very difficult in in the hours that you've got in the day I'm not proport suggesting you should work 20 hours a day just work the 7 and a half you do but allocate your time according to what is most important to manage the contract bearing in mind that every organization these days and I agree with it have a realtime demand for high quality management information so they want to know at all times you know what is the completion date what is plan completion what is the likely total of the prices we cannot do this this is what I did for the first 10 years in oldfashioned civils contracts where you agreed nothing until the job was finished and then you knuckled down and started fighting for a year or 10 uh that that is that is disastrous for organization so we owe it to be ethical and professional and do these things in real time but you have to be careful with the you know it's a judgment call as to how much time and effort goes into this I think it's Question Time Laura is that right that's right there we go thanks robt unfortunately of of the 512 people still left there's at least that many questions I think so um never mind so from the top do you want me to have a well we can all see the questions and answers everybody I think has got access to those so we'll go from the top with the exception of one of not to common theme whether we said this wrong or not I don't know but I I can't remember but if for those three parts of deemed acceptance that sit within the compensation process the word may used the contractor does not have to give a reminder to the to the project manager of their failure if they fail to do what they should do reply to a notified conversation rent within a week or reply to a a quotation for a conversation rent within two weeks then two things happen one another conversation occurs because the project manager is late that conversation is CLA 6.1 bracket 6 the other thing that happens is the contractor has the right not the obligation to to remind the project manager of of their failure um and if they take exert that right which could be one to or 3 weeks later the clock is reset I think in know the Clauses project manager gets an extra two weeks so if the remains silent for two weeks which is two calendar weeks 14 calendar days then it is deemed accepted so you do not have to give that reminder if you don't want to as a contractor and if you fail to give the reminder the obligation still sits with the project manager to respond to that original question whatever it is in the first place so you know the fact that you're out of time doesn't mean that you don't have to give a response so if a contractor notifies the compensation let's say for physical conditions and you failed to respond within two weeks you are still obligated to respond to that with or without a reminder from from the contractor the problem doesn't go away because you're out of time and another question quite quickly before I go through some of the others is can you extend the times and yes basically I think 13.5 allows you to uh change your any time pretty well in the contract but there's another Clause 60 something but something I should remember uh 1.5 something like that well I can't remember which which allows you to extend C certain times in the conversation process so forget me rambling so let's go from the top of this chip in Laura if you wish to when you want to um and I'm in Hong Kong so what the heck 8 hours difference isn't it so 12 hour2 your time so you can all look at the Q and A in in your box and then we'll wrap up in 12 to 13 minutes we've recently priced the conversation Anonymous attender I love Anonymous attendees but never mind we've recently priced a conversation event which been implemented put my valuation C and oh it's gone that's to the bottom see somebody CL a question now request invoices well if it's implemented it's implemented uh you could be a nice person to send them through but it won't change anything and actually what if what if actually your record would show more show that actually you were you'd under assessed the compensation in the first place but basically if it is implemented then job done that's exactly what Laura said you do not go back and change it because 66.3 says if later records demonstrate that the the quotation if you like was was incorrect then you do not adjust it now that has a fairly big impact with options A and B no impact pry well whatsoever for option is but option C and D then um you're still going to get paid whatever it actually cost it's just that we don't change the target if you find that it was a little bit it didn't go quite as much as it should have done another anonymous attendee 810 can you give some examples of additional CES um Laura I can give you one so right now if I was a contractor I'd be pretty worried that the price of oil as set by oecd might exceed $100 a barrel or something like that so why to stick in a conversation event that says should the price of oil exceed $100 as set by then it's a conversation event should the chancellor of the exer introduce some nasty little new tax in five minutes so I shouldn't be political should I that um that nobody was aware of uh you could put that in as a as a CE any thoughts Laura have you seen some additional conversation events so um I think it's exactly those kinds of technical points that we see um generally I mean I think the list of compensation events is quite comprehensive already in the NEC um and quite often when I'm approached to add additional ones um bearing in mind I work for a lot of um public authorities in the UK um quite often when we look at them we sort of sit down and and say actually I think that would already fall under one of the compensation events that's that's in the contract and I think it's just a case of often explaining how wide encompassing some of those are so um I don't see them very often but it is exactly that kind of technical point if there's a particularly bespoke project such as a big infrastructure project then I think yes you would see um you would see separate compensation events specific to that project yeah I've done this sometimes where it's arguable something like all there's some demolition that maybe some as bestos we're not too sure and then you said well arguably probably sit within Clause 61112 but then somebody said but it might not so I hate the term for the avoidance of down but for the avoidance of doubt you can say additional compensation is as best encounter during demolition of building XYZ you know I don't think that contradicts 60.1 12 in anyway just he's abundantly clear isn't it uh so let me go back up to the Top If I might so actually cook uh if the contract program overruns for example doors not D on time can we legally say we need two extension uh no I don't think so assum when you are the contractor and the program overruns you mean so if plan completion happens after the completion date due to your well due to something frankly which is a contractor's risk then then no there's no change to the completion date as we said at the start the only way you can change the completion date is that a compensation event you know it's on it's on the list of compensation events I cannot see anything that is remotely on the list of conversation events to uh enable the completion date to be changed so apologies Ashley uh learn for the future Gerard that's see was so appreciate C is is at 1211 should capture both time and money if they were to caveat it do we have a right to VI please don't caveat it there's no such thing in the ECC Andrew will tell me differently in the ecsc but in the ECC there is no such provision for that there is no contractor's assumptions there's no way to revisit it so as project manager you either should realize that it cannot be priced with any degree of certainty and give perhaps some prent assumptions or decide it's not and you know get a quotation that includes those things but basically no you agree Laura cannot Laura's agreed oh that's a big long sentence that one isn't it Anonymous attendee at 1216 how can the PM validate that the country contct submitted Seas within eight weeks oh it's a great Point that's a really great Point sometimes you cannot so it's it's a test of awareness isn't it and not everybody's deemed to be perhaps senior enough to pass that test so you could have a good old Qs on there year out who has no idea about anything frankly and uh over here something in the canteen and and you know does that mean they're aware of that problem that they just overheard so there's a level of seniority that deemed to pass that test for for awareness but um but yeah sometimes proven it could be could be very difficult and and hopefully you don't run into that sort of um that sort of problem so it is anyc to in my mind is a collaborative form of contract and we do the best we can but we do make mistakes I I do believe that you know contract Management systems and all of the technology that we have at our disposal should help and prompt us to manage contracts better in the future but yeah it it can be difficult we pick another one contractor Roman fce I need ask a tricky question no idea Rand I have to think about that one uh 12 18 I agree Simon um oh sorry he's the if the contractor this is at 1218 doesn't notify the PM that he hasn't notified remember there's no he or she but anyway it responded for say two weeks is that the point where the PM now has two weeks to respond only if the contractor gives that reminder at that point um otherwise you are still obligated to respond to the question that's in front of you CLA H responding way to alter the contractual time SC I think I've answered that uh when you descope so this is from anous Anonymous attendee I can't spell or speak Anonymous can I but when you descope contracted Works under an option A how do you do this without being labeled commercial benefit the PM well that's nonsense isn't it if if that's a default response then your PM needs to go back to school I think so um so how you assess if like emitted work is the same as you assess additional work is basically you approximately on the basis of Market a market rate or market price for for for doing that work or what you would have spent in terms of defined cost had you had you proceeded to do it so it doesn't matter how you price it or not price it you could price it high you could price it low in option A it's completely irrelevant when it comes to aess compensation event then you would say well how much do we think it would have cost you to have done this without the C now how much will it cost you to do with the c the difference or how much would it have cost you to do this but for the deletion that much um yeah I not doing that very well but if you decide you know that's the amount of defined cost that it would have cost you had you've done it irrespective of how you priced it that would be the deduction um there is no such thing as a commercial benefit of the PM the PM isn't even a party to the contract so they are there to be evenhanded fair-minded act like um independent certifier and and follow the contract do right by the contract they are not there to bash the contractor over the head uh Richard uh 1222 no respons is received by the PM within two weeks you've provided quotation which is then included the next application for payment can the contractor refuse to pay uh not the contractor can the client refuse to pay I think that should say uh then if it's option CDE e or F then the show goes on you should get paid the amount of cost define cost that you have paid in respect of the compensation event um but if it's option A or B and it's not implemented it's not on the active schedule not on the bill of con is then I'm afraid you it cannot be paid for and that's a problem isn't it now you could argue possibly you could say well I I'm deserving of interest you should have responded in time and had you have done it would have gotten the activity schedule and i' would been paid last month rather than next month so you know you could have a a little look at that I suppose um the project manager might respond to say but your quotation absolutely L of rubbish it's you know nothing like uh correct so it depends I'm not a lawyer Laura is a lawyer it depends you know very difficult to give um an absolute answer on that one it depends on so many things like how uh right and proper the quotation is in the first place um uh one quick one because at the bottom uh Mark at 1257 If contractor provides a c quotation can they add a subcontractor fee on top of the contractor fee those things have gone now so in NC 4 we don't we don't have subcontracted fee percentage and direct fee percentage so we've now promoted the subcontractor thankfully into the short schedule of cost components for option A and B and to the schedule cost for options CD and E and you can pick up a subcontractor quotation providing it open market rates and prices and add the full fee percentage that the contractor has added in contract data part two simples one of the best changes in nec4 thank you very much some very kind comments from Amar and Chris and there's two minutes to go and they're still coming in with questions and stuff so what we have promised you what Laura's promised I didn't promise Laura promised that she get all the questions and all the answers and get back to you tomorrow you heard that for her did you or was it just me I don't think she said that did she oh shut up m shall I no promises were made like that but but we will we will try and answer some of the questions that we don't have time for um yeah I think uh we will be wrapping up now I just wanted to let people know um or people may already be aware of the NEC Community app that you can download and sign up for if you wanted to discuss topics with um you know with your peers uh place to connect um and place to find out about NEC news and information oh and um just a final note on uh more webinars um thankfully I think this NEC 101 Series has been a very good success so we'll continue on uh with more topics um hopefully into the new year um we also have the NEC um are working with seeka the confederation of international contractor associations um and delivering a series of short webinars with them um with one being 2 p.m. today um so yeah just keep an eye out on the um NEC LinkedIn page um and all the information should be there and if anyone does have any ideas for future webinars or any topics that you'd like seeing covered uh feel free to email me and maybe we can make that happen but yeah thank you and I'd also like to thank Laura and Rob for delivering a great webinar um and thank you everyone for attending okay thanks everybody thank you Laura thanks Rob thanks for Han thanks for Han