What clause 15 requires
This guide covers the NEC4 Engineering and Construction Contract (ECC, 2017, as amended in January 2019 and October 2020). Other NEC4 forms number their clauses differently, and many National Highways contracts carry Z-clauses that change the early warning arrangements. Read your own Contract Data and Z-clauses before relying on a clause number here.
Clause 15.1 requires the Contractor and the Project Manager each to notify the other as soon as either becomes aware of any matter that could increase the total of the Prices, delay Completion, delay meeting a Key Date or impair the performance of the works in use. The matter goes on the Early Warning Register.
Under clause 15.2, either party can instruct the other to attend an early warning meeting, and either may instruct other people to attend if the other agrees. Under 15.3, those who attend co-operate in making and considering proposals to avoid or reduce the effect of each matter, in seeking solutions that bring advantage to everyone affected, and in deciding what action is taken and by whom. Under 15.4, the Project Manager revises the Early Warning Register to record those decisions and issues it to the Contractor. The Project Manager owns the register. The Contractor's job is to feed it and to check it.
NEC3 called the meeting a risk reduction meeting and numbered the clause 16. In NEC4 the early warning meeting sits in clause 15, and clause 16 deals with ambiguities and inconsistencies. A notice or procedure that cites clause 16 for early warnings is citing the wrong edition.
An early warning gives no entitlement to time or money. Only a compensation event does. The early warning is the mechanism for avoiding the problem, or at least reducing it, before it becomes a claim.
What counts as an early warning
The test in clause 15.1 is "could", not "will". A matter with a real possibility of producing one of the four effects should be notified, whether or not the effect has happened and whichever party caused it.
A supplier telling the Contractor it may miss a delivery date is an early warning, even if the Contractor expects to recover the time. A design query that is taking longer than expected to answer, and could hold up a downstream activity, is an early warning before any delay occurs. A change in regulations that could force rework is an early warning before the impact has been assessed.
The duty binds the Project Manager as well. Client-side matters that could lead to compensation events, such as design changes under discussion, access being negotiated or deferrals being considered, are matters the Project Manager should raise. The sanction described below is written against the Contractor only. The contract contains no equivalent assessment rule for a Project Manager who stays silent, and this guide does not go beyond that. A Contractor who thinks the Project Manager's silence has cost it money should take advice on the specific facts.
Clause 15.1 has no exemption for matters that sit with the Client as risk. The Client's liabilities are in clause 80 and are a separate question: whether the Client carries a risk decides who pays if it happens, and has no bearing on whether it should be warned about. Do not hold back a notification on the basis that the risk is the Client's.
There is no fixed number of days. The words are "as soon as" the party becomes aware. How quickly the Contractor warned is the first thing looked at if the Project Manager later says it should have warned earlier.
Over-notifying has a cost. A register full of marginal entries buries the matters that matter, and the "could" test is still about a real possibility. Warn on anything an experienced contractor would regard as a real prospect of one of the four effects, and keep the entry short.
Running the early warning meeting
Either party can instruct a meeting at any time under 15.2. The same clause sets the cadence: the Project Manager issues the first Early Warning Register within one week of the starting date, instructs the first early warning meeting within two weeks of it, and later meetings are held at intervals no longer than the period stated in Contract Data part one. Check that entry and any Z-clause that alters it. Monthly suits most schemes, and fortnightly suits a fast-moving one. A meeting should also follow any significant notification, usually within a week or two.
Hold it apart from the progress meeting. When risk is an agenda item at the end of a progress meeting it gets the time left over and is dominated by this week's problems. Attendees should be the Project Manager, the Contractor's representative and the people who know the matters on the register, such as the planner, the commercial lead and the subcontractor or designer concerned.
A workable agenda has five items: review the register entry by entry; new matters notified since the last meeting; actions that have not moved; a forward look at anything not yet notified; agree owners and dates for every open action. The Project Manager revises the register in the room or immediately after, and issues it. The register is the output of the meeting and the minutes are supporting.
The tone matters because 15.3 asks for solutions that bring advantage to everyone affected. A meeting that turns into "that is the Contractor's risk" and "that is a Client issue" has stopped doing what the clause asks. The chair sets the tone.
Four failures account for most weak meetings. Actions are not closed out, so the register accumulates stale entries. Senior people attend only occasionally and reset the discussion when they do. The register is updated after the event as an administrative task and drifts from what was agreed. One side withholds the awkward matters and notifies only the easy ones. Each of these is within the control of the people in the room.
Two clocks: early warnings and compensation event notifications
Early warnings and compensation events run on different tests and different clocks, and a lot of NEC disputes come from treating them as one.
Clause 61.3 applies when the Contractor believes an event is a compensation event and the Project Manager has not notified it. The Contractor notifies the Project Manager of an event that has happened or is expected to happen. If the Contractor does not notify within eight weeks of becoming aware that the event has happened, the Prices, the Completion Date and the Key Dates are not changed, unless the event arises from the Project Manager or the Supervisor giving an instruction or notification, issuing a certificate or changing an earlier decision.
Three consequences follow. First, an early warning is not a clause 61.3 notification, and it does not stop the eight-week period running. A Contractor that has warned about unexpected ground conditions and then waits to see how bad they are still has to notify under 61.3 within eight weeks of becoming aware that the event had happened. Events that arise from a Project Manager or Supervisor instruction, notification, certificate or changed decision sit outside the bar, because the Project Manager should notify those under 61.1. Second, 61.3 allows notification of an event expected to happen, so a Contractor does not have to wait for the event to occur before notifying. Third, the early warning has no time bar in days but is tested against what an experienced contractor could have given, while the compensation event has a hard eight-week bar. Keep a separate diary entry for each.
The practical workflow is to track each warned matter through both. The register records the warning and the mitigation. If the matter turns into a compensation event within clause 60.1, for example an instruction changing the Scope under 60.1(1), the Contractor notifies under 61.3 and refers to the earlier register entry. The programme and cost effects are then assessed under clause 63. An entry that closes with no event costs the Contractor nothing. Giving a warning does not waive any right, so holding warnings back to preserve options protects nothing and risks the sanction below.
What happens if the Contractor does not warn
The consequence is set out in clauses 61.5 and 63.7, and it only applies if the Project Manager takes a specific step. The sequence is:
1. A compensation event arises and is dealt with under clause 61.
2. The Project Manager decides that the Contractor did not give an early warning of the event that an experienced contractor could have given. This is a decision for the Project Manager and does not apply automatically.
3. Under 61.5, the Project Manager states that decision in the instruction to the Contractor to submit quotations. Without that statement, 63.7 does not bite.
4. Under 63.7, the compensation event is assessed as if the Contractor had given the early warning. In plain words, the assessment assumes the Contractor warned when it could have, and that the mitigation the warning would have led to was carried out. The Contractor does not recover the part of the effect that earlier warning could have avoided.
5. If the Contractor disagrees with the decision, it should say so in writing promptly and, if the point is not resolved, treat it like any other Project Manager decision it disputes under the dispute resolution clause in your contract. The Contractor's best evidence is a dated record showing when it became aware, what it told the Project Manager and what mitigation was realistically available.
The test has two parts: whether an experienced contractor could have given the warning, and what difference it would have made. The second part is a question of fact, and it is where the money is.
A worked example, with illustrative figures. On 2 February the Contractor learns at a design review that the Client is likely to re-route a drain, which would make 40 precast chambers redundant. It does not warn. On 24 February it places a non-cancellable order for 40 chambers at £1,500 each, £60,000 in total. On 14 April the Project Manager instructs the re-route under 60.1(1). The Contractor's quotation includes the £60,000 of redundant chambers plus 32 replacement chambers at £1,500 each, £48,000, so £108,000 in all. The Project Manager decides that a warning on 3 February would have led to the order being held, and notifies that decision under 61.5. Under 63.7 the event is assessed as if the warning had been given, so the order is treated as not placed and the assessment is £48,000. The Contractor bears the other £60,000.
On Options C to F, there is a second route. Disallowed Cost is cost the Project Manager decides the Contractor is not entitled to be paid, and the definition in the Option clauses includes cost that arose only because the Contractor did not give an early warning the contract required. Most National Highways work is let on Option C or E, so a missing warning can reduce what is paid even where no compensation event is involved. Check the wording in your own contract.
Linking the register to the programme
The programme side of this is covered in the companion guide on NEC4 and schedule risk, which deals with the Accepted Programme, float and time risk allowances. This section covers only the link from the register.
Clause 31.2 requires the Contractor's programme to show float and time risk allowances. Clause 32.1 sets out what a revised programme shows, and it includes the effects of implemented compensation events and of notified early warning matters. Clause 32.2 sets when a revised programme is submitted: at the intervals in the Contract Data, when the Project Manager instructs, and when the Contractor chooses to submit one.
So at every revision, put the register next to the programme and ask three questions of each open entry. Is its effect shown? If not, why not? Has the agreed mitigation changed any logic or any allowance? Record the answers in the programme submission. A programme that ignores notified matters is weaker evidence in any later compensation event assessment, because the assessment starts from what the programme showed was known.
Register fields and a sample notice
A register that works carries the fields in the table below. The Project Manager keeps it, but the Contractor should agree the fields at the first meeting so that both sides' information fits.
A notice should be short and specific. For example: "Early warning under clause 15.1 of the ECC. On 2 February at the drainage design review, the Client's designer stated that a re-route of the Plot 4 surface water drain is likely. This could increase the Prices and delay Completion because 40 precast chambers are due to be ordered by 24 February. The Contractor proposes to hold the chamber order pending confirmation and requests an early warning meeting this week to agree the action." It states the date, the source, the effect, the proposed mitigation and a request for a meeting. It does not argue entitlement.
From the register to quantitative risk analysis
The register is the best live source of data for the project's risk register and, through it, for any quantitative schedule or cost risk analysis. Entries describe what might happen, who owns it and what is being done. Mapped to the risk register they show which risks are open, which have been mitigated and which have crystallised into compensation events. NEC4 does not require a quantitative risk analysis. On schemes where the client asks for a QSRA or QCRA, a register that is kept current is the quickest route to a defensible input.
On a QSRA we compare the register with the risk register and the programme at each update, and the test we apply is whether every open entry with a time effect appears as a risk or an allowance in the model, with its latest mitigation reflected.
A checklist for the next four weeks
1. Instruct a separate early warning meeting with its own date, agenda and attendee list, and hold it before the next progress meeting.
2. Clean the register: close dead entries, give every open entry an owner and a date, and flag anything with no update in the last two meetings.
3. Agree who updates the register and when. The Project Manager revises and issues it, so agree that the revision happens within the meeting week.
4. Add a register cross-check to every programme revision under clause 32.
5. Diary both clocks. For each warned matter, note when you became aware that an event had happened, so the eight-week period under 61.3 is visible.
6. Report the monthly counts of warnings raised, closed and outstanding to the steering group, with the three or four material entries.
If you want an outside check, the most useful single exercise is a review of the register against the current programme: does each open entry with a time effect show in the programme, and has it been reflected in the latest revision?