This guide explains the mechanism, which compensation events it applies to, when the clock starts, the exceptions, and how to prevent time-barred claims.
How the time bar works
Under clause 61.3, the Contractor notifies the Project Manager of any event they believe is a compensation event. If notification does not happen within eight weeks of the Contractor becoming aware the event has occurred, entitlement to a change in Prices, Completion Date, or Key Dates is lost.
The time bar is absolute. There is no provision for late notification, no discretion for the Project Manager to waive it, and no appeal mechanism within the contract.
The notification must comply with clause 13.1: it must be in a form that can be read, copied, and recorded, communicated to the Project Manager at the address stated in the Contract Data. A verbal discussion, an email about the topic generally, or a note in progress meeting minutes does not constitute valid notification.
Once the Project Manager receives a valid CE notification, they have one week to respond under clause 61.4. They can accept the notification, reject it (stating reasons), or notify that the event has already been notified. If the PM does not respond within one week, the notification is treated as accepted.
NEC4 clause 61.3: the eight-week countdown from awareness to time bar
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Which compensation events require Contractor notification
The time bar applies only to compensation events the Contractor is responsible for notifying. These are events where the Project Manager has not already issued an instruction, notification, certificate, or changed an earlier decision that triggers the event.
Of the 19 categories in clause 60.1, the Contractor typically notifies events arising from site conditions or third-party actions:
| Clause | Category | Common trigger |
|---|---|---|
| 60.1(12) | Physical conditions | Unexpected ground, uncharted utilities, contamination |
| 60.1(13) | Weather | Conditions exceeding the 1-in-10-year threshold |
| 60.1(2) | Access | Access not provided by the date on the Accepted Programme |
| 60.1(4) | Stopping work | PM or Supervisor instruction to stop or not start work |
| 60.1(5) | Work by Others | The Contractor encounters work done by Others not stated in the Scope |
| 60.1(16) | Delay to tests | The Client does not provide materials, facilities, or samples for tests within the time stated |
| 60.1(19) | Prevention | An event stopping the Contractor completing the works |
For events arising from the Project Manager's own actions (giving an instruction changing Scope under 60.1(1), issuing a certificate, changing a decision), the PM notifies under clause 61.1. The Contractor time bar does not apply to these.
When the clock starts: awareness, occurrence, and belief
The eight weeks runs from when the Contractor becomes aware that the event has happened. Not from when the event occurred.
Consider physical conditions under clause 60.1(12). The site team encounters unexpected ground on 1 March and records "harder ground than expected" in the site diary.
Nobody in the commercial team reviews that entry until 20 March. The QS analyses the situation and confirms on 25 March that this constitutes a compensation event.
Clause 61.3 contains a mismatch that complicates the answer. The first half requires the Contractor to notify what they "believe" to be a compensation event. The second half (the time bar) runs from "becoming aware" the event has happened.
As neccontract.com has noted, awareness of a factual event (hard ground) may precede belief that it constitutes a compensation event (qualifying under the experienced contractor test). If analysis takes longer than eight weeks from initial awareness, the Contractor could be time-barred before they have enough information to notify with confidence.
A further complication: whose awareness counts? The NEC4 refers to "the Contractor" becoming aware, not a specific individual. If a site operative encounters unexpected ground on day one but the commercial team does not learn of it for five weeks, the Contractor's awareness arguably began on day one. The contract treats the Contractor as a single entity. Internal communication delays do not extend the eight-week window.
The safest approach
Notify early, even when uncertain. A notification that turns out not to be a compensation event costs nothing. A valid CE notified too late costs everything. Early notification also moves the dividing date forward, preserving more of the assessment as forecast-based Defined Cost.
Worked example: £149,850 lost to the time bar
A highways contractor on an NEC4 Option C contract encounters unexpected utility diversions during excavation. The utilities are not shown on the Site Information drawings issued with the Scope.
| Date | Event |
|---|---|
| 5 January | Site team encounters uncharted utilities during excavation |
| 5 January | Supervisor records "unexpected services found, work rerouted" in site diary |
| 12 January | Temporary works begin. Additional cost accrues daily |
| 8 February | QS reviews January site diaries during monthly CVR preparation |
| 15 February | Commercial team identifies potential CE under clause 60.1(12) |
| 20 February | Meeting with Project Manager to discuss. No formal CE notification issued |
| 2 March | Eight weeks from 5 January. Time bar expires |
| 10 March | Contractor issues CE notification. Project Manager rejects it as time-barred |
The additional Defined Cost was £135,000. With Fee at 11% (illustrative), the total entitlement was £149,850. The Contractor recovered nothing.
The entitlement was real. The uncharted utilities met the experienced contractor test under clause 60.1(12) because they could not reasonably have been anticipated from the Site Information.
The failure was procedural, not substantive. The Contractor waited to gather evidence before notifying. By the time the notification was issued, the eight-week window had closed.
What should have happened: the site supervisor's diary entry on 5 January should have triggered a commercial review within 48 hours. By 7 January, the QS should have identified the potential CE and issued a notification under clause 61.3 citing 60.1(12). The notification does not require a quotation. The quotation follows later under clause 62.3, with a separate three-week period.
Recommended notification process: diary entry to CE notification within 48 hours
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Exceptions and modifications
Contractual carve-outs
Clause 61.3 does not apply when the compensation event arises from the Project Manager or Supervisor:
- Giving an instruction
- Giving a notification
- Issuing a certificate
- Changing an earlier decision
The logic is straightforward: the Project Manager already knows about these events because they caused them. If the PM fails to notify under clause 61.1, the Contractor can still notify late without being time-barred.
All other categories ("Contractor risk" events) are subject to the time bar. Physical conditions (60.1(12)), weather (60.1(13)), and access failures (60.1(2)) all require notification within eight weeks of awareness.
Z clause modifications
Many NEC4 contracts include Z clauses that modify the standard time bar. Some employers extend the notification period beyond eight weeks.
Others add procedural requirements: specifying which CE category applies, requiring notification to a named individual, or mandating a particular notification format. Always check contract-specific Z clauses before relying on the standard eight-week period.
Early warnings do not satisfy the time bar
A common misconception: issuing an early warning under clause 15 does not constitute a compensation event notification under clause 61.3. The two mechanisms serve different purposes.
An early warning alerts parties to a matter that could increase cost, delay Completion, or impair performance. A CE notification is a formal assertion that a specific compensation event has occurred. A Contractor can issue an early warning about potential ground conditions and still be time-barred if they do not follow up with a separate CE notification within eight weeks of becoming aware the event has happened.
In practice, the early warning often comes first. The CE notification should follow as soon as the Contractor believes the event qualifies. Both are required. Neither replaces the other.
What a CE notification should contain
NEC4 does not prescribe a specific format for CE notifications, but clause 13.1 requires that it can be read, copied, and recorded. At minimum, the notification should include:
- A clear statement that it is a compensation event notification under clause 61.3
- The date the Contractor became aware of the event
- A description of the event and its effect on the works
- The clause 60.1 category the Contractor believes applies
Specifying the clause category is not strictly required under the standard contract, but it strengthens the notification and reduces the risk of rejection. Some Z clauses make it mandatory.
Five steps to prevent time-barred claims
Time-barred claims are a systems failure, not a knowledge failure. Most commercial managers know the rule. The gap between when something happens on site and when someone with contract knowledge reviews it is where claims expire.
Review site diaries within 48 hours. The most common cause of time-barred claims is delayed diary review. If your commercial team only reads site records during monthly CVR preparation, potential CEs are ageing towards the deadline every day.
Notify first, substantiate later. Clause 61.3 requires notification of what the Contractor "believes" to be a compensation event. Belief is a lower threshold than certainty. Issue the notification. Gather evidence afterwards.
Maintain a CE tracker with awareness dates. For every potential compensation event, record the date of first awareness alongside the event date. Calculate the deadline. Flag anything approaching six weeks as urgent.
Connect site records to early warning and CE workflows. When a supervisor records an event with commercial implications, that record should trigger review by someone with contract knowledge. The gap between recording and review is where time bars happen. Robust records and compliance processes close this gap.
Run a weekly commercial review. Every Friday, review the open items: new events in this week's diaries, items approaching the eight-week deadline, notifications due before Monday. Supplement weekly reviews with a periodic contract health check to catch systemic compliance failures before they compound.
This ten-minute review prevents six-figure losses.
The evidential role of site diary records
When a compensation event is disputed, the first question is: when did the Contractor become aware? The site diary is the primary evidence.
A diary entry from 5 January that says "unexpected services encountered during excavation, works rerouted" is contemporaneous evidence of awareness on that date. This makes it difficult for the Contractor to argue a later awareness date.
Conversely, absence of records cuts both ways. If your site diary does not record the event, you may struggle to prove when awareness began.
For NEC4 contracts, structured site records are not just good practice. They are the evidence base that determines whether your compensation events survive the time bar or die in the gap between what happened and when you acted.
Gather's QS AI Agent identifies 40% more compensation events than manual review by analysing every diary entry against NEC4 clause categories. Events are flagged within days, not weeks. The eight-week clock starts the same day for everyone. The difference is whether your commercial team finds out in 48 hours or 48 days.
Quick reference: NEC4 notification periods
| Action | Period | Consequence of missing |
|---|---|---|
| Contractor CE notification | 8 weeks from awareness | Time-barred (clause 61.3) |
| PM response to notification | 1 week | Deemed acceptance (clause 61.4) |
| Contractor quotation | 3 weeks | PM may assess (clause 62.3) |
| PM response to quotation | 2 weeks | Deemed acceptance (clause 62.6) |
| Subcontractor notification (ECS) | 7 weeks from awareness | Time-barred under subcontract |
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