NEC Contract

NEC contract options

NEC contracts come in six main pricing options. Option A — priced contract with activity schedule (lump sum). Option B — priced contract with bill of quantities. Option C — target contract with activity schedule (pain/gain share). Option D — target contract with BoQ. Option E — cost reimbursable. Option F — management contract. UK infrastructure tends to use C; public buildings tend to use A or B.

Early warnings and compensation events

NEC mandates a proactive early-warning system: any party who becomes aware of a matter that could affect cost, time, or performance must issue an early warning notice. Once issued, the parties meet to mitigate.

Variations under NEC are handled via Compensation Events — a structured process with notification windows (typically 8 weeks), quotation, acceptance, and implementation. The process is more formal than a JCT variation; consultants used to JCT often find NEC paperwork-heavy.

Common pitfalls

• Missing the 8-week compensation event notification window. Under NEC, if you don't notify within the contractual time limit, you may lose the right to claim entirely. Consultants new to NEC routinely miss this.
• Treating a compensation event like a JCT variation. The processes are different. Compensation events have stricter timeline rules and more upfront engagement requirements.
• Not maintaining the NEC programme. NEC requires the contractor to keep the programme up to date; the consultant must accept it. If the programme isn't accepted, compensation event assessment defaults can hurt the client.

Related

• What is a JCT contract? →
• What is a compensation event? →
• Variation management module →