NEC4 Early Warnings: A Contractor's Guide to Clause 15 and the Early Warning Register

NEC4 early warnings are notifications given by the Contractor or the Project Manager of any matter which could increase the Prices, delay Completion, delay a Key Date or impair the performance of the works in use. They are set out in clause 15 of the NEC4 Engineering and Construction Contract and are the main tool the contract gives both parties to deal with problems before they turn into cost and delay.

Early warnings are simple on paper. In practice they are one of the most poorly managed parts of NEC contract administration. Registers go stale, meetings become a formality and matters that should have been flagged in week three surface as disputed compensation events in month nine. This guide explains what clause 15 requires, how the Early Warning Register and early warning meetings should work and what a missed early warning can cost a contractor.

What must be notified as an early warning?

Under clause 15.1, the Contractor and the Project Manager give an early warning by notifying the other as soon as either becomes aware of any matter which could:

• Increase the total of the Prices
• Delay Completion
• Delay meeting a Key Date
• Impair the performance of the works in use

The Contractor may also give an early warning of any other matter which could increase its total cost, even where that matter would not change the Prices.

The test is "could", not "will". An early warning does not need proof, a quantified effect or an admission of fault. It needs awareness of a matter that might have one of those effects. That low threshold is deliberate. The earlier a matter is raised, the more options there are to deal with it.

Typical early warning matters on a construction project include:

• Late or incomplete design information
• Ground conditions that differ from the site information
• Utilities or services found in unexpected positions
• Long lead items at risk of late delivery
• Access restrictions or third party constraints
• Design clashes found during coordination
• Resource shortages in the supply chain
• Weather conditions affecting critical activities

An early warning of a matter for which a compensation event has already been notified is not required.

How does the Early Warning Register work?

The Early Warning Register is the record of every matter notified as an early warning, along with the actions agreed to avoid or reduce its effect.

Under clause 15.2, the Project Manager prepares a first Early Warning Register and issues it to the Contractor within one week of the starting date. The Project Manager then enters each new early warning in the register as it is notified.

A register that works well records, for each matter:

• A clear description of the matter
• The date it was notified and who notified it
• The potential effect on cost, time and performance
• The actions agreed, who owns each action and by when
• The status of the matter and the date it was closed

The Early Warning Register replaced the NEC3 risk register. The rename matters. The register is not a general project risk log or a copy of the contractor's internal risk register. It is a contractual record of matters notified and decisions made.

What happens at an early warning meeting?

The Project Manager instructs the Contractor to attend a first early warning meeting within two weeks of the starting date. Further early warning meetings are held at no longer than the interval stated in the Contract Data until Completion of the whole of the works. Either party may instruct the other to attend an early warning meeting at any time. Other people, such as subcontractors or designers, may attend where both parties agree.

At an early warning meeting, those attending cooperate in:

• Making and considering proposals for how the effect of each matter in the register can be avoided or reduced
• Seeking solutions that will bring advantage to all those who will be affected
• Deciding on the actions to be taken and who will take them
• Deciding which matters can be removed from the register because the risk has passed

The Project Manager revises the Early Warning Register to record the decisions made and issues the revised register to the Contractor within one week of the meeting.

Good early warning meetings are short and focused on decisions. Poor ones read through a long list of old entries without closing anything out. If most items on the register have been open for months with no change in status, the process is not working.

Why do early warnings matter commercially?

Early warnings are a collaborative tool, but they also carry real commercial weight for a contractor.

Clause 61.5 allows the Project Manager, when instructing a quotation for a compensation event, to notify its decision that the Contractor did not give an early warning of the event which an experienced contractor could have given. Where that happens, clause 63.7 requires the compensation event to be assessed as if the Contractor had given the early warning.

In practice that means the assessment assumes the matter was raised on time and that the actions an early warning meeting would have produced were taken. Any extra cost or delay caused by the late warning falls on the Contractor. The contractor keeps its entitlement to the compensation event, but the value can be reduced.

The contract links the Project Manager's decision under clause 61.5 to the instruction to submit a quotation. Contractors should check whether that decision was notified at that point before accepting a reduced assessment.

For the formal compensation event process itself, including the eight week notification time bar under clause 61.3, contractors should manage early warnings and compensation events together rather than as separate registers kept by different people. Our quantity surveying support works alongside project management on exactly this interface.

Early warning versus compensation event notification

These are two different contractual steps that are often confused.

A single matter often needs both. Late design information, for example, may need an early warning as soon as the delay looks likely and a compensation event notification once the information is late against the Accepted Programme.

Common early warning failings on NEC4 projects

The same problems appear across many NEC contracts:

• Early warnings not given because the site team sees them as an admission of a problem
• Matters raised verbally at progress meetings but never notified through the contract communication system
• Early warnings given only once a compensation event is already obvious
• Registers not reissued within one week of the meeting
• Actions recorded without an owner or a date
• Early warning meetings merged into general progress meetings and never held as a separate agenda item
• Early warnings and compensation events tracked by different people who never compare registers

Each of these weakens the contractor's position. Together they are one of the most common reasons compensation events are assessed at less than their full value.

How contractors can make early warnings work

A few practical habits make a real difference:

1. 1Treat early warnings as routine. Build notification into weekly site and commercial reviews so matters are raised as a matter of course.
2. 2Use the contract communication system. Early warnings must be notified in the form and method the contract requires, which is often a named platform. A comment in meeting minutes is not an early warning notification.
3. 3Be specific. Describe the matter, the likely effect and the activities affected on the programme.
4. 4Link early warnings to the programme. Show which activities are at risk so the potential effect on planned Completion is clear. See our guide to the NEC4 Accepted Programme.
5. 5Close items out. A register that only grows is a sign that decisions are not being made.
6. 6Keep one joined up view. Early warnings, compensation events and programme revisions should be reviewed together by the people managing the contract.

Need support with NEC4 contract administration?

Matthews & Roberts provides project management support to contractors delivering NEC3 and NEC4 contracts. That includes running the Early Warning Register, preparing for early warning meetings, managing compensation event notifications and keeping the programme current so the contractor's position is protected throughout the project.

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