How does NEC4 clause 66 work?
A compensation event is implemented when the Project Manager notifies acceptance of a quotation, notifies its own assessment, or a quotation is treated as accepted, and an implemented assessment is not revised even if the forecast proves wrong.
Updated: 15 September 2026. By Jack Butler-Kettle, Quantity Surveyor & Claims Consultant.
The answer
Clause 66 is the end of the compensation event procedure and the reason the earlier stages matter so much. Under clause 66.1 a compensation event is implemented when the Project Manager notifies the Contractor that it accepts the quotation, when the Project Manager notifies the Contractor of its own assessment, or when a quotation is treated as accepted because a reply never came. Under clause 66.2 an implemented assessment is not revised except as the contract states, and the contract states very little: the main route back is where the Project Manager stated an assumption when instructing the quotation and later notifies a correction to it, which is itself a new compensation event under 60.1(17). Otherwise a forecast that turns out too low is not topped up and one that turns out too high is not clawed back, and that cuts both ways in every option. Once implemented, the change to the Prices is carried into the activity schedule or the bill of quantities under Options A and B, or into the total of the Prices that the target is measured against under Options C and D. Clause 65 sits alongside for changes the Project Manager is only considering: it may instruct a quotation for a proposed instruction, the Contractor submits it within three weeks, and the Project Manager replies within three weeks by instructing the change, notifying that it will not be instructed, or notifying that the quotation is not accepted. What goes wrong is that parties do not respect the finality. Contractors present their actual cost at the final assessment; Project Managers try to reduce an implemented figure because the work cost less; both are outside the contract. The opposite failure is worse: nothing is ever implemented because no acceptance and no failure is notified, so dozens of events reach the final assessment unpriced. Keep a register of the implementation date and figure for each event.
Example
The situation
A quotation is accepted at £33,000, built on a forecast of two weeks of plant and labour. The work in fact takes three weeks and costs the Contractor £41,000, and the event has already been implemented.
What happens
- Under Option A the Contractor is paid £33,000 through the activity schedule and the £8,000 shortfall stays with it.
- Had the work taken one week and cost £25,000, the Contractor would still be paid £33,000 and the Client could not reduce it.
- Under Option C the Contractor is still paid its Defined Cost plus Fee through the Price for Work Done to Date, so the £41,000 is paid.
- The target moved by only £33,000, so the £8,000 difference shows up in the Contractor's share rather than being recovered as a revision to the event.
The implemented event under each Option
| Item | Option A | Option C |
|---|---|---|
| Accepted quotation | £33,000 | £33,000 |
| Actual cost | £41,000 | £41,000 |
| Paid to the Contractor | £33,000 | £41,000 |
| Where the £8,000 difference lands | With the Contractor | In the Contractor's share |
The outcome
The implemented event is not revised in either direction: under Option A the £8,000 shortfall stays with the Contractor, and under Option C it moves the Contractor's share.
Our NEC compensation event review keeps the implemented figure for each event separate from what the work later cost.