Compensation Events is a term that is unique to the NEC family of contracts and in short it is the NEC’s claims process. However, NEC3 compensation events are very different from the claims processes prescribed in the other standard forms of construction contract as they promote a partnering-based approach to the resolution of issues before they become disputes.
In essence, compensation events cover for variations, losses and expenses as well as extensions of time and are generally a single assessment that deals with the entire effect of an event in terms of time and money…sounds easy enough right?
And although as the term suggests there is often some form of compensation this is of course not always the case. There is a lot that can and does go wrong on any engineering or construction project and under the NEC such matters are, in an ideal world dealt with by both the Contractor and the Employer following the prescribed procedures and are limited to those, and only those that have been specifically identified and agreed to in the contract as a compensation event.
So why then, with such a defined process and a mechanism to limit the number of disputes and problems that arise during projects is there on-going confusion and problems associated with compensation events?
Additional compensation events are often added as an after-thought because of sloppy or unclear wording and that is where this training course comes in. It has been designed and developed to provide all Course Participants with a practical approach to deal with compensation events firstly in terms of what the contractual provisions require the parties to do but secondly in terms of how the parties should proceed and what procedure they should follow.
Using the NEC3 Black Book and a real-life case study as reference we will tackle this topic in detail as we look at a practical and proven process for administering and managing compensation events from both the Contractors and the Employers points of view.