Assessing payment under NEC4

A surveyor moving between forms carries habits. Most transfer harmlessly. A few do not, and NEC4 is where they cause the most trouble, because the language is different enough to feel foreign and similar enough to invite guessing.

Assessment dates, not valuation dates

NEC4 works from assessment dates. The first is decided at the start of the contract and later ones follow at the interval stated in the Contract Data, typically monthly, until the defects date.

The Project Manager assesses the amount due at each assessment date and certifies within one week of it. Payment follows within the period the contract states.

Two habits to drop. First, the assessment happens whether or not the Contractor has applied. Second, an application does not move the assessment date; the date is fixed by the contract.

Price for Work Done to Date

The amount due is built around the Price for Work Done to Date, and what that phrase means changes with the main Option. This is the single biggest departure from JCT thinking.

That is the point JCT surveyors find hardest. There is no partial valuation of an activity under Option A. If the activity schedule is coarse, a contractor can do a great deal of work and be entitled to nothing for it, which is why activity schedule granularity is a commercial issue at tender rather than an administrative one afterwards.

Defined Cost on target and cost reimbursable options

On Options C, D and E the assessment is not a measurement exercise at all. It is a review of cost: what has been paid or is due to be paid, tested against the definitions in the contract and the Schedule of Cost Components, with disallowed cost removed.

Disallowed Cost is where the work is. It covers cost that was not justified by the accounts and records, cost incurred only because the Contractor did not follow an acceptance or procurement procedure, and cost of correcting Defects, among others. Assessing it requires access to records rather than a site walk.

Compensation events, not variations

Change under NEC is dealt with through compensation events, and the mechanism is prospective. The Contractor gives notice, quotations are submitted and accepted or assessed, and the Prices change.

Once a compensation event is implemented, its effect is in the Prices. It is not a separate line to be added at each assessment in the way a JCT variation is. A surveyor keeping a running variation register alongside an NEC job has usually built something that will disagree with the Prices.

Time bars matter here in a way JCT surveyors are not used to. Notification periods are real and their consequences are real.

The payment timetable

Payment becomes due at the assessment date. The final date for payment follows within the period stated, and Option Y(UK)2 supplies the notice provisions required by the Construction Act for contracts in the United Kingdom.

Do not carry JCT's numbers across. Read the Contract Data and the Y(UK)2 clauses, and record the periods at project set-up in the same way you would for a JCT job.

Vocabulary that catches people out

• Defects date is not practical completion. Completion is its own defined term.
• Retention is a secondary Option (X16) rather than a standard feature.
• Delay damages are Option X7, not a core clause.
• The Fee applies to Defined Cost on the cost-based Options and is not overhead and profit in the JCT sense.
• Capitalised terms are defined terms. If a word is capitalised, look it up rather than reading it in its ordinary sense.

That last point is the most useful habit to acquire. NEC drafting is deliberately mechanical, and almost every dispute about what a clause means turns out to be a dispute that a definition already settled.