What is loss and expense? The JCT and NEC4 distinction
Loss and expense describes a contractual route under JCT forms for recovering qualifying financial loss caused by matters affecting the progress of the works.
Practical commentary. Check the contract form, edition, amendments and applicable law for your project.
Start with the form and edition
JCT is a family of contracts. The provisions, clause numbers and administering roles vary by form and edition. A reference from a 2016 Standard Building Contract should not be presented as the rule for all JCT contracts, including the 2024 suite.
Check the Relevant Matters and the notification and ascertainment provisions in the signed contract. Relevant Events used for time entitlement and Relevant Matters used for loss and expense are distinct lists; an extension of time does not automatically establish financial recovery.
Connect the matter with the loss
Prepare a review pack identifying the relied-on matter, affected work, supporting instruction or communication, notice, cost basis and claimed effect. Separate amounts already included in a variation valuation from additional amounts sought, so the same cost is not counted twice.
Keep a reconciliation from each amount to its evidence and record assumptions or unresolved questions. Do not replace an explanation of cause and effect with a total project overspend.
Use NEC4’s own assessment process
Under NEC4 ECC, review the compensation event provisions where an event may change the Prices or dates. Do not import JCT labels, notice requirements or loss-and-expense valuation methods into an NEC assessment without a contractual basis.
Sources and further reading
- JCT: Design and Build Contract 2024 contents and clause structure
- NEC: Purposes of notifications
- GMH: compensation-event quotations (practical commentary; check the applicable edition and amendments).
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