CE quotations that survive PM scrutiny under NEC4

Most rejected quotations are not wrong on entitlement. They are thin on proof. The Project Manager agrees a compensation event happened, then picks apart the money and the time because the numbers float free of the records. You lose two weeks to resubmission, and sometimes you lose the assessment entirely when the PM makes it under clause 64.

An NEC4 compensation event quotation that survives PM scrutiny does one thing well. It ties every figure to a record the PM can check. This guide walks the clause 62 mechanics, the Defined Cost and Fee build, the risk allowance, and the three things PMs attack first.

The clause 62 clock you cannot ignore

Once a compensation event is notified and the PM has decided it is a CE, you are on the clock.

Under clause 62.3, you submit your quotation within three weeks of being asked for it. The PM then replies within two weeks. The reply is one of four things: acceptance, an instruction to submit a revised quotation, notification that the PM will make their own assessment, or notification that the event will not be a CE after all.

NEC4 added a deemed acceptance route. If the PM fails to reply within the two weeks, you notify them. If they stay silent for a further two weeks, your quotation is treated as accepted. That mechanism only helps you if the quotation was watertight when it went in. A weak quotation that slips through on silence is a weak position when the final account arrives.

The quotation itself has two parts under clause 62.2: the proposed changes to the Prices, and any changes to the Accepted Programme. Miss the programme and you have handed the PM a reason to send it back before they even reach your rates.

Defined Cost plus Fee, built line by line

Clause 63.1 sets the rule. You assess the change to the Prices as the effect of the compensation event on Defined Cost plus the Fee. Work already done is actual Defined Cost. Work not yet done is a forecast.

Defined Cost is not "what it cost us". It is what the contract says qualifies, through the Schedule of Cost Components or the Short Schedule, depending on your main Option. People, Equipment, Plant and Materials, subcontractors, and charges each have their own basis. The Fee is the percentage in the Contract Data applied on top.

Here is where quotations come apart. The QS pulls a labour figure from a spreadsheet, applies a rate, and moves on. The PM asks which operatives, on which shifts, doing what. If the answer lives in a supervisor's notebook or a WhatsApp thread, the figure is unsubstantiated, and unsubstantiated cost gets discounted.

On Options C, D and E, there is a second trap. Anything in your Defined Cost that meets the disallowed cost definition comes straight back out. A quotation that quietly carries disallowed cost is not a strong quotation. It is a resubmission waiting to happen.

The three things PMs attack first

Every experienced PM reviews a CE quotation the same way. They go for the soft spots.

Unsubstantiated time. You claim the event pushed planned Completion by two weeks, but the programme impact is asserted, not demonstrated. The Accepted Programme does not show the affected activities, the logic links, or the float consumed. Without that, the time claim is opinion. Clause 63.5 lets you include a risk allowance for time, but only where there is a significant chance the delay occurs, and only if you can show the basis.

Missing records. The cost build looks reasonable until the PM asks for backup. Delivery tickets for the plant. Timesheets for the operatives. Photos of the changed condition on the date it changed. If the records are scattered or created after the fact, the PM treats the figure as inflated and assesses low.

Optimistic productivity. You forecast the disrupted work at tender productivity, when the site was already running below it. The PM compares your assumption to actual output on the surrounding activities and marks it down. If your own diary shows the real rate, you either use it or you explain why the event changed it.

Notice the pattern. All three attacks are evidence attacks. None of them are really about entitlement.

Record-referenced quotations win

The fix is not better arguing. It is better referencing.

A record-referenced quotation states, next to every cost and time line, exactly which record proves it. The labour line cites the timesheets by shift and date. The plant line cites the delivery and off-hire tickets. The disruption assessment cites the diary entries that show the changed condition and the productivity drop, with photographs timestamped and GPS-tagged. The programme change cites the activities affected and the float position on the Accepted Programme at the data date.

Do this and the review changes character. The PM is no longer weighing your assertion against their judgement. They are checking your figure against your evidence, and the evidence is contemporaneous, which is the standard NEC4 assessment is built on. Prospective assessment under clause 63 depends on good data at the moment of assessment. Contemporaneous records are that data.

This is exactly the work the QS AI Agent is built to carry. Gather reads every site diary entry as it lands, links it to the programme activity and the cost code, and surfaces the records that back a compensation event before the notice period runs out. When it is time to price the CE, the substantiation is already assembled, not reconstructed from four spreadsheets and an inbox. If you want to see a record-referenced quotation built from live site data, book a 15-minute demo.

What happens when the PM assesses it themselves

Clause 64 is the one to respect. The PM makes their own assessment of a compensation event in several situations, including where you do not submit a required quotation in time, or where the PM decides you have not assessed it correctly and does not instruct a resubmission.

A PM assessment is rarely generous. It is made on the information the PM has, and if your records were thin, the assessment reflects that. Worse, it becomes the number unless you challenge it. The way to keep the assessment in your hands is simple. Submit on time, and submit something the PM cannot easily improve on by doing it themselves. A quotation with the records already attached gives the PM no reason to take the pen.

Common mistakes that trigger a resubmission

• Pricing the event but forgetting the programme change required by clause 62.2.
• Forecasting future work at tender productivity when the diary shows a lower actual rate.
• Carrying disallowed cost into Defined Cost on an Option C, D or E contract.
• Padding a risk allowance under clause 63.5 with no basis for the chance of the risk occurring.
• Quoting Defined Cost with no reference to the timesheets, tickets and diary entries that prove it.
• Waiting for deemed acceptance under a weak quotation instead of making it strong first.

A worked example

Take a £40m highways scheme. A revised drainage layout is issued as a Works Information change, notified and accepted as a compensation event. The QS prices it at £48,000: extra excavation, a fortnight of a tracked excavator, and two operatives for the duration.

First submission, no records attached. The PM accepts the principle but assesses at £31,000, marking down the plant duration and the labour on the grounds that neither is substantiated. The QS spends a week pulling backup from three spreadsheets and an email chain, resubmits, and settles at £44,000 after argument. The £4,000 gap is not entitlement. It is the cost of assessing after the event.

Now run it record-referenced. The excavator hours come from off-hire tickets. The operative hours come from timesheets tied to the shift records. The changed condition and the slower dig rate come from diary entries with timestamped photos on the days the work was done. The quotation goes in once, at £47,500, and the PM accepts it because there is nothing left to attack. Same event. Same entitlement. One resubmission avoided and £3,500 kept, because the records were there when they were needed.

Frequently asked questions

How long do I have to submit a compensation event quotation under NEC4?

Three weeks from the date the Project Manager asks you for the quotation, under clause 62.3. The PM then has two weeks to reply. If the PM does not reply, you can trigger the deemed acceptance route: notify them of the failure, and if they stay silent for a further two weeks, your quotation is treated as accepted.

What is the difference between Defined Cost and the quotation amount?

Defined Cost is the cost that qualifies under the contract, assessed through the Schedule of Cost Components or the Short Schedule for your main Option. The quotation amount is the change to the Prices, which under clause 63.1 is the effect of the compensation event on Defined Cost plus the Fee. Work already done uses actual Defined Cost. Work not yet done uses a forecast.

What do Project Managers reject most often in CE quotations?

Three things: time impact that is asserted but not shown on the Accepted Programme, cost that is not backed by contemporaneous records, and productivity assumptions that are more optimistic than the actual output on site. All three are evidence problems, not entitlement problems, which is why record-referenced quotations get accepted faster.

Can I include a risk allowance in a compensation event quotation?

Yes. Clause 63.5 allows a risk allowance for cost and time for matters that have a significant chance of occurring. The allowance has to be justified. A risk line with no stated basis for the likelihood or the amount is one of the first things a PM removes on review.

What happens if I do not submit a quotation in time?

Under clause 64.1, the Project Manager makes their own assessment of the compensation event. A PM assessment is made on the information the PM holds, so thin records lead to a low number, and that number stands unless you challenge it. Submitting on time with the records attached keeps the assessment in your hands.

The bottom line

A compensation event quotation is not an argument. It is a set of figures, each one standing on a record the Project Manager can check. Get the clause 62 timescales right, build Defined Cost plus Fee line by line, justify the risk allowance, show the programme impact, and reference every number to the diary, timesheet or ticket that proves it. Do that and the PM has nothing to attack.

The teams that keep their assessments do not argue harder. They keep better records, and they keep them as the work happens.

Ready to build CE quotations the PM accepts first time? Gather reads every site diary entry, links it to your programme and cost codes, and has the substantiation ready before the notice period expires. Book a 15-minute demo.

Source: Gather Insights, the AI-powered site diary and commercial record management platform for UK construction.