The Contractor has not received a reply from the Project Manager ("PM") to a quotation he submitted three weeks ago. What should the Contractor do?

  • Stop work
  • Proceed as if the quote accepted
  • Notify a Compensation Event
  • Notify PM of failure to respond

The NEC compensation event mechanism. A strict regime of notices, all with various time limits. It is, of course, an important mechanism under which a Contractor seeks additional time and/or money to complete the works because of a particular event. Even we solicitors appreciate that occasionally time limits for notifications can be forgotten or allowed to slip. This is especially prevalent on complex projects where several compensation events can be live at any given time.

The answer to my poll is the last one: the Contractor should notify the PM of the failure to respond to the quotation he submitted if he has not heard anything for three weeks. Whilst it may be tempting to proceed as if the quotation has been accepted, the contract conditions require the Contractor to first notify the PM of the failure to respond if he/she does not do so within two weeks. A gentle reminder, if you will. Only if the PM fails to respond for another two weeks after this reminder can the Contractor proceed as if his quotation has been accepted.

The Contractor's notification to the PM must be in writing: "in a form which can be read, copied and recorded." So a quick email should suffice if other pressures will not allow for a formal letter - though a letter would be best, even if it is to be sent under cover of an email in the first instance. The NEC4 suite also refers to the use of a communication system – an information sharing system typically cloud based, such as 4Projects – which is to be specified in the contract Scope. Each specific contract should, of course, be double checked since amendments on the form of notifications and the address they are to be sent to are commonplace.

The compensation event mechanism may seem a little convoluted at times. It can also be frustrating for Contractors (and for Project Managers) where one or other of the parties is not operating it properly. Nevertheless, the notification procedure generally progresses as follows:

  1. Notification;
  2. Period for response;
  3. Notification of failure to response;
  4. Further period for response;
  5. Deemed acceptance.

It can be all too easy to overlook a notification deadline, or to simply leave it to sort itself out at some later stage. It can be especially easy to forget to chase the PM for a response. Taking the time to familiarise yourself with the contractual requirements will pay dividends.

In short, check the contractual requirements for both the initial notification and the reminder; and send the notifications out on time.


Erica Johnston

Senior Associate