compensation event
An event the contract lists that can give the Contractor more money or time, such as a Scope change or unexpected ground conditions. Some can reduce the Prices.
ECC 60.1
Is it a valid compensation event? · Module 1 of 4
Does the instruction change the Scope?
On 11 May 2026 the Project Manager, Dana Whitfield, keeps heavy lorries off Mill Lane at school times. Is that a compensation event?
Compensation event. An event the contract lists as one. It can change the Prices and both kinds of date: the Completion Date and the Key Dates.
Independent course material. It is not published or endorsed by NEC. Short quotes from NEC4 (© NEC 2017) and the FIDIC Red Book (© FIDIC 2017) are used for review and comment. Read the full clauses in your own copy of the contract.
Exhibit 1Mill Lane on a school day
Minutes barred on each school day
The old windowMorning, from 08:00Afternoon, from 14:45
The new limit is longer and covers every heavy vehicle. It changes a constraint, so it is CE012.
Source: ECC 11.2(16), 60.1, 60.1(1), 66.2.
Key terms
Eight terms you will meet in this module
Terms in this module
Tap a term with a dotted underline anywhere in the lesson to see its meaning.
Scope
Information that describes the works or limits how the Contractor may do them. It sits in documents the Contract Data lists or in an instruction. NEC3 called it Works Information.
ECC 11.2(16)
Contract Data
The project details that complete an ECC. Part one holds the Client's entries and part two the Contractor's. Terms in italics take their values from it.
ECC Contract Data
Provide the Works
The Contractor's core duty: to do all the work needed to finish the works as the contract requires, plus the incidental work and services the contract calls for.
ECC 11.2(15)
Prices
Under Option A or C, the lump sum priced against each activity. Under B or D, the priced bill items. Compensation events change them.
ECC Option C 11.2(32)
Defined Cost
Under Options C to E, the Contractor's costs that the Schedule of Cost Components allows, minus any Disallowed Cost. Options A and B use the Short Schedule instead.
ECC Option C 11.2(24)
Completion Date
The date the Contractor must reach Completion by. It starts as the date written in the Contract Data and moves only under the contract, such as through compensation events.
ECC 11.2(3)
Accepted Programme
The programme the Project Manager last accepted, or the one named in the Contract Data until then. Each accepted programme replaces the one before it.
ECC 11.2(1)
Source: ECC 11.2(1), 11.2(3), 11.2(15), 11.2(16), 60.1. ECC Option C 11.2(24), 11.2(32). Contract Data.
What a compensation event is
Six steps turn a listed event into new Prices and dates
Exhibit 2The route, with CE011's dates
“The following events are compensation events” (60.1)
Clause 60.1 lists 21, and Aldermere's contract adds none.
CE011 is Dana's instruction to seal the culvert joints inside, which Module 2 follows. Dana notifies events that come from her own or the Supervisor's communications (61.1). Merrow Vale notifies the rest, and any she missed (61.3).
Source: ECC 60.1, 61.1, 61.3, 61.4, 62.3, 63.1, 63.5, 66.1, 66.2.
What a compensation event is
An event that is not valid moves nothing, so validity comes first
Exhibit 3Delay damages at GBP 4,000 a day, with and without the valid events
With no valid events: Completion 26 days late
GBP 104,000CE007: 7 days, from 5 May 2026
−GBP 28,000CE014, Dana's assessment: 12 days
−GBP 48,000CE014, the Adjudicator: 6 more days
−GBP 24,000Paid: 1 day of delay damages
GBP 4,000For the Parties, changes to the Prices and the dates “are their only rights in respect of a compensation event” (63.6).
Source: ECC 63.6, 66.2, X7.1. ECC Option C 54.1, 54.2.
The full test
Eight questions, in order, decide whether an event is valid
Exhibit 4Take them in order, and stop at the first that ends the matterTaught in this module
Module 4 runs the whole test on two Aldermere events.
Source: ECC 11.2(16), 13.1, 13.2, 13.7, 14.2, 14.3, 17.1, 45, 46, 60.1, 60.2, 60.3, 61.1, 61.2, 61.3, 61.4, 61.7, 63.10, W1.1.
Quick check · The event and the test
Two questions on what you have just covered
Quick checkPick an answer to see if you are right and why
2 questions to answer
Source: ECC 11.2(10), 60.1. ECC Option C 11.2(31), 54.1.
What the Scope is
Scope says what to build or limits how, and sits in two places only
Exhibit 5The Aldermere Scope
The Scope on any date
It describes the works. It “specifies and describes the works” (11.2(16)).
It sets constraints. It limits how Merrow Vale Provides the Works.
Client's Scope and Contractor's Scope are this course's short names for the two parts (60.1(1)).
Source: ECC 11.2(15), 11.2(16), 60.1(1). Contract Data parts one and two.
What the Scope is
Much of the project paper is not Scope, however much the price relied on it
Exhibit 6Scope or not? Sort seven Aldermere papers
Paper 1 of 7
…
You placed…
Scope
- The specification, listed in Contract Data part one.
- Merrow Vale's tender design statement, listed in part two.
- Dana's instruction of 11 May 2026 on heavy vehicles.
Not Scope
- An emailed answer to a tender query that no listed document holds.
- The three borehole logs in the Site Information.
- The Activity Schedule, with Merrow Vale's lump sums.
- The Accepted Programme, as Dana last accepted it.
Source: ECC 11.2(16), 11.2(18), 14.1, 20.1. ECC Option C 55.2.
Who can change it
Only the Project Manager, or a delegate she has named, can change the Scope
Exhibit 7The route of a change
Only the Project Manager “may give an instruction to the Contractor which changes the Scope” (14.3).
What makes the change count
- Dana instructsor a named delegate14.2, 14.3
- In a lasting formothers can read, copy and keep13.1
- Through the portalthe system the Scope names13.2
- It changes the Scopea compensation event unless excluded60.1(1)
What follows
Merrow Vale obeys
A duty, not a condition (27.3).
Dana notifies it
When she gives the instruction (61.1).
Or Merrow Vale does
If she does not, with no eight-week bar (61.3).
Source: ECC 11.2(16), 13.1, 13.2, 14.2, 14.3, 27.3, 60.1(1), 61.1, 61.3.
Who can change it
A direction from anyone else changes nothing until Dana instructs it
Exhibit 8Who can change the Aldermere Scope?
| Who | Can change the Scope? |
|---|---|
| Dana WhitfieldThe Project Manager | Yes, by instruction (14.3) |
| A delegateNamed in a notice from Dana | Yes, for the actions the notice lists |
| Tom BarrowThe Supervisor, who checks the quality of the work | No, unless Dana delegates it to him |
| Aldermere WaterThe Client | No, even by letter |
| The Client's designerAldermere Water's consultant | No, even by email |
| An early warning meetingA decision there that needs a Scope change | Not until Dana instructs it with the revised Early Warning Register (15.4) |
Work done on anyone else's word is at Merrow Vale's risk. Ask Dana to instruct it first.
Source: ECC 14.2, 14.3, 15.4, 60.1(1), 60.1(4).
Quick check · The Scope and its changes
Two questions on what you have just covered
Quick checkPick an answer to see if you are right and why
2 questions to answer
Source: ECC 11.2(16), 13.2, 14.1.
The test
Compare the instruction with the Scope just before it
Exhibit 9CE012: the Scope beside Dana's instruction
“The Project Manager gives an instruction changing the Scope” (60.1(1))
| Line | The Scope just beforeSite constraints, Contract Data part one | Dana's instruction11 May 2026, through the portal |
|---|---|---|
| Vehicles | Deliveries | Vehicles over 7.5 tonnes Changed |
| Where | The Mill Lane entrance | The whole of Mill Lane Changed |
| Morning | 08:15 to 09:00 | 08:00 to 09:15 Changed |
| Afternoon | No limit | 14:45 to 15:45 New |
| Days | School days | School days |
Four of the five lines changed. The instruction alters a constraint the Scope states, so the Scope has changed. Dana notified it as CE012.
Source: ECC 11.2(16), 14.1, 60.1(1). ECC Option C 55.2.
The test
A compensation event needs the Project Manager's instruction and a real change to the Scope
Exhibit 10Valid compensation event or not?
Case 1 of 6
…
You placed…
A compensation event
- Dana instructs a flatter embankment slope than the drawings show.
- Dana instructs Merrow Vale to leave out part of the works.
- Dana instructs a new limit on noise from the Mill Lane site.
Not a compensation event
- Dana reminds Merrow Vale of the delivery ban the Scope already sets.
- Dana tells Gareth Lyle by phone to start work at 07:00.
- Aldermere Water's designer emails Merrow Vale a revised detail.
Source: ECC 13.1, 13.2, 14.2, 14.3, 60.1(1), 61.2, 63.4.
Drafting
Most arguments start with the drafting, so make each requirement measurable
Exhibit 11Drafting at Aldermere
Performance
Prescriptive
Client's Scope, performance specification
The wet well passes a flotation check at the highest groundwater level in the Site Information.
Contractor's Scope, design statement
A 600 mm wet well base slab.
It sets what the work must achieve. An instruction on method then adds a constraint.
It says exactly what to build, and its writer carries the risk. This slab later failed its check (Module 4).
If the Client's Scope prescribes an answer that cannot meet a performance it also sets, that is an inconsistency (17.1, Module 3).
- Vague words such as “as required”Each side reads them its own way.
- Silence on a detail the work needsNothing on the inside of the culvert joints (CE011).
- Work to the Project Manager's “satisfaction”No measurable standard.
- Drawings that do not say who designs what (21.1)No one can tell whose Scope a change touches.
- One requirement written twice, in different wordsDrawing C-210 and specification 5.12 differed on the outfall pipes (CE009).
- Requirements in the Site InformationIt describes the Site and is not Scope (11.2(18)).
Source: ECC 11.2(16), 17.1, 21.1.
Quick check · The test and the drafting
Two questions on what you have just covered
Quick checkPick an answer to see if you are right and why
2 questions to answer
Source: ECC 17.1, 60.1(1), 61.2, 63.1.
On the project
Leila must decide whether Dana's reply of 5 May changed the Scope
Exhibit 12The Sunday pour, April and May 2026
The Scope as it stood: site constraints
Work 07:30 to 18:00 on weekdays and 08:00 to 13:00 on Saturdays. No work on Sundays.
- Tuesday 28 April 2026Raj asks Dana to confirm a Sunday pour of the wet well base on 17 May. Merrow Vale's programme shows it, and its tender price assumed it.
- Tuesday 5 May 2026Dana replies that the Scope bars Sunday work.
Is Dana's reply of 5 May a compensation event?
Right. The Scope barred Sunday work before Dana replied.
Not quite. The Scope barred Sunday work before Dana replied, so her reply changed nothing.
Leila compares the reply with three things
- The Scope as it stood. Sunday work was barred all along. The reply adds nothing, so nothing has changed.
- The tender price. It assumed a Sunday pour, but the price is not the test. Under Option C nothing in the Activity Schedule is Scope (Option C 55.2).
- The programme. One that breaks the Scope is a reason not to accept it (31.3). And acceptance “does not change the Contractor’s responsibility to Provide the Works” (14.1).
Nor is the reply a changed decision under 60.1(8). Even an accepted programme never allowed Sunday work. Raj pours on Saturday 16 May, inside the Saturday hours of 08:00 to 13:00.
Had the reply also barred Saturday pours, that part would have been a change.
Source: ECC 11.2(16), 14.1, 31.3, 60.1(8). ECC Option C 55.2.
On the project
Dana's school-hours instruction passes the full test, and she notified CE012 the same day
Exhibit 13CE012 run through the full test
Question 1 of 8
| Question | CE012, instructed on 11 May 2026 |
|---|---|
| 1Which listed event is it? | An instruction changing the Scope, under clause 60.1(1).Listed |
| 2Did someone with the power give it, with effect? | Yes. Dana gave it herself, through the portal.Yes |
| 3Does it change the Scope as it stood? | Yes. It alters the constraint on vehicles at school times.Changed |
| 4Did it settle an ambiguity or inconsistency? | No. The Scope was clear, and no two documents conflicted.Clear |
| 5Does an exclusion apply? | No. It does not accept a Defect, and it changes the Client's Scope.None |
| 6Does its own test hold? | Not needed. Question 6 is for events other than an instruction.Skipped |
| 7Was it notified in time, and on its own? | Dana notified it herself on 11 May, so Merrow Vale had nothing to send (61.1).Notified |
| 8Does it have an effect, and what is the reply? | Yes. Dana asked for quotations in the same notification (61.2).Valid |
Source: ECC 11.2(16), 13.2, 60.1(1), 61.1, 61.2, 62.3, 63.1.
What to write
When the Project Manager is silent, notify the change yourself
Exhibit 14A model notification
To: [Project Manager] From: [name]
Date: [date]
We notify a compensation event (61.3).
Your instruction of [date] requires [what it asks for].
Just before it, [Scope document and clause] required [what it said].
It changes the Scope provided by the Client and does not accept a Defect (60.1(1)).
The eight-week limit does not apply, as “the event arises from the Project Manager or the Supervisor giving an instruction” (61.3).
Please reply within one week (61.4).
In the Toolkit: Letter 02, Notification of a compensation event
Send it separately, through the portal (13.7).
Source: ECC 13.2, 13.7, 60.1(1), 61.3, 61.4.
Grey areas
Most grey areas turn on what the Scope says, not on what anyone priced
Exhibit 15Questions practitioners ask
The Scope let us choose between two products, and Dana picked one. Is that a change?
Yes. Taking away a choice adds a constraint (11.2(16)). The effect may still be nil. If Merrow Vale would have picked the same product, cost and time do not move (61.2).
More of the same work turned up. Is that a change?
Only where the Scope limits the amount, by a stated quantity or by the extent its drawings show. An instruction to go beyond either is a change (60.1(1)). More work than Merrow Vale measured for the same drawn work is not. Under Option C its cost is shared through the Contractor's share. Extra from the ground is tested under 60.1(12).
The Scope makes the work subject to Dana's satisfaction. Can she ask for more?
The contract has no rule on this wording, and opinion is split. Some say she must judge against what the Scope plainly aims at (10.1, 10.2). Others say Merrow Vale priced the risk. Replace the phrase with a measurable test before tender.
Dana told us how to meet a performance requirement we were missing. Change or not?
Meeting the performance was always required, so that cost stays with Merrow Vale. Fixing the method adds a constraint, so only the extra cost of her method over Merrow Vale's own is assessed (63.1).
An early warning meeting agreed a Scope change. Can we start the work?
Not yet. The agreement is not an instruction. Dana instructs the change when she issues the revised Early Warning Register, within a week of the meeting (15.4). Wait for it, or ask for it.
Dana wants to take work out and give it to another firm. Can she?
Taking work out changes the Scope, so it is a compensation event, and a saving can cut the Prices (63.4). No NEC case settles whether she may omit work only to give it to Others. Ask for her reason in writing and take advice.
Source: ECC 10.1, 10.2, 11.2(16), 14.3, 15.4, 60.1(1), 60.1(12), 61.2, 63.1, 63.4. ECC Option C 54.1.
Going further
Courts read the Scope as written, so a requirement buried in a schedule still binds
Exhibit 16Cases, amendments and NEC3
2017MT Højgaard v E.ON
Not an NEC case. The Supreme Court held that a 20-year design life in a technical schedule bound the contractor, though it met the industry standard the contract named.
2014Wales and West v PPS
The NEC3 lump sum covered coating for 2,000 m of pipe. The contractor said it laid about 8,000 m. An adjudicator found a change worth GBP 479,817.17. The court did not rule on the merits.
Is Atkins (2013) about more of the same work?
No. It turned on a bespoke clause 60.1(11) in a modified NEC3 contract. An arbitrator held that an excess of potholes was not a defect in the road network. The judge said the clause looked at each defect, not the total.
Which amendments narrow clause 60.1(1)?
Clauses saying the Contractor priced anything reasonably inferable, orders of precedence, and query procedures saying answers are not instructions. Read the Z clauses first.
What changed from NEC3?
Works Information became Scope, with the same two-part definition. NEC4 added the communication system rule (13.2). A delegation notice must now name the delegate and the actions (14.2).
Source: ECC 13.2, 14.2, 60.1(1). MT Højgaard v E.ON (2017). Wales and West v PPS (2014). Atkins v Secretary of State for Transport (2013).
Watch out
Five mistakes to avoid
Exhibit 17Common mistakes
Compare it with the Scope just before it.
ECC 11.2(16)Only Dana or a notified delegate can.
ECC 14.2, 14.3Constraints are Scope, so changing one is a compensation event.
ECC 60.1(1)Fold them into a listed document before the Contract Date.
ECC 11.2(16)The effect is assessed later.
ECC 63.1Source: ECC 11.2(16), 14.2, 14.3, 60.1(1), 63.1.
Summary
Every rule in this module, and where the contract keeps it
Exhibit 18The rules at a glance
| Topic | What the contract says |
|---|---|
| A compensation event | An event the contract lists. Changes to the Prices and dates are the Parties' only rights for it.Clauses 60.1, 63.6 |
| The full test | Eight questions in order. This module covers questions 1 and 3.Clauses 60.1, 11.2(16) |
| What Scope is | Information that describes the works or constrains how they are built, in listed documents or instructions.Clause 11.2(16) |
| Not Scope | The Site Information, the Activity Schedule, the programme and unlisted tender papers.Clauses 11.2(18), 14.1, Option C 55.2 |
| Who changes it | The Project Manager by instruction, or a delegate named in a notice.Clauses 14.2, 14.3 |
| When it has effect | Once the instruction is in a lasting form and goes through the portal.Clauses 13.1, 13.2 |
| What follows | The Contractor obeys. The Project Manager notifies it, or the Contractor does, with no eight-week bar.Clauses 27.3, 61.1, 61.3 |
| The test | Compare it with the Scope just before it, not with the price or the programme.Clauses 11.2(16), 14.1 |
| Cost | A separate question. A change with no effect gets no instruction to quote.Clauses 61.2, 63.1 |
| Meeting decisions | A Scope change agreed at an early warning meeting counts once the Project Manager instructs it.Clause 15.4 |
Source: ECC 11.2(16), 11.2(18), 13.1, 13.2, 14.1, 14.2, 14.3, 15.4, 27.3, 60.1, 60.1(1), 61.1, 61.2, 61.3, 63.1, 63.6. ECC Option C 55.2.
Check your understanding
Five questions
Quiz
Source: see each answer.
Module 1 complete
You can now test whether an instruction changes the Scope
Your quiz scoreNot taken yet
You can now
- Say what a compensation event is, and where validity sits in the process.
- Say what is Scope on a contract and what is not.
- Test an instruction against the Scope as it stood.
- Spot Scope drafting that invites the argument, and fix it before tender.
- Tell the Client's Scope from the Contractor's Scope.
Independent course material. It is not published or endorsed by NEC. Clause references are to the NEC4 Engineering and Construction Contract, June 2017 with amendments January 2023. The project and the people are invented. Short quotes from NEC4 (© NEC 2017) and the FIDIC Red Book (© FIDIC 2017) are used for review and comment. Read the full clauses in your own copy of the contract.
Source: NEC4 Engineering and Construction Contract, June 2017 with amendments January 2023.