Programme Risk

NEC Early Warning vs Compensation Event: when one becomes the other

Most teams treat early warnings and compensation events as separate processes. The contract treats them as one register with different obligations attached. Get the judgement wrong and you either spam EWs that should have been CEs, or sit on CEs that should have been notified weeks earlier.

20 April 2026 · 8 min read · Free to read

Executive summary

The early-warning process is the contract’s cheap insurance. It costs almost nothing to run; it pays out when a CE is contested, when float ownership is fought, when an adjudicator wants to know what was said and when.

Yet on most programmes, EW practice collapses inside the first quarter. Notifications dry up; the risk register goes stale; risk-reduction meetings stop happening. By the time a serious event lands, the register that should have been the team’s evidence base is months out of date. The cheapest discipline in the contract has been thrown away.

Clause analysis

The programme risk clause analysis

Clause 15: the early-warning duty

Either party gives an early warning of any matter that could increase the total of the Prices, delay Completion, delay a Key Date, or impair the performance of the works in use. The duty is mutual. Failure to give an EW that an experienced contractor should have given is one of the very few places the assessment of a CE is reduced under clause 63.

Clause 15: the Early Warning Register

The PM keeps the Early Warning Register. Each entry records the matter, the proposed actions, and what happens to those actions over time. The Register is not a noticeboard; it is the running minute of how the team is treating risk.

Clause 16: risk-reduction meetings

Either party can call a risk-reduction meeting on any matter in the Register. The agenda is fixed: the people attending make and consider proposals for how the matter can be avoided or reduced; they decide actions; they record who does what by when. The Register is updated with the decisions.

The bridge to compensation events

An EW is not itself a CE. But many CEs originate as EWs: a design change flagged in week three becomes a clause 60.1(1) CE in week six when the instruction is issued. The EW register is what evidences when the team became aware. That date drives the eight-week clause 61.3 time bar.

Commercial implications

What it means on a live programme.

On a live programme, the EW register is the most useful single document the commercial team owns. It is the contemporaneous record that survives memory, staff turnover, and contested narratives. It is the document an adjudicator reads first.

What kills it is volume bias. The register fills with low-value entries; the high-value ones get lost; people stop reading it. Six months in, the register exists but is not trusted, which means it is not used, which means the next CE arrives without the evidence base that should have been built around it.

Failure modes

Where this fails in practice.

Late EWs. The team knew about the matter for three weeks before notifying. The Register entry shows it; the CE assessment is later reduced under clause 63 because an experienced contractor would have notified earlier.
EW register as a noticeboard. Entries logged but never updated. Three weeks later nobody knows what was decided, what was done, or whether the matter is still live.
Risk-reduction meetings stop happening. Quarter two goes by without a single clause 16 meeting on a programme with twelve open EWs. When a CE arrives, the contract’s formal risk-management process is a paper trail of nothing.
EW used as CE substitute. The Contractor logs an EW for an event that is plainly a CE under clause 60.1, then sits on it past the eight-week window. The PM later treats the matter as time-barred, and the EW register is the proof of awareness.
EWs without proposed actions. One-line entries: “design change pending.” No actions proposed, no owner, no review date. The Register adds zero value to a later assessment.
Two registers, one team. The PM’s formal Register and the contractor’s shadow risk log diverge. By month three they record different facts about the same events.

Key points

What good looks like.

One Early Warning Register, owned by the PM, accessible to both parties in real time. No shadow registers, no parallel logs.
Every entry has: matter, proposed actions, owner, review date, status. Five fields. Anything less is a noticeboard.
A clause-16 meeting cadence the team actually keeps. Weekly during high-risk phases, fortnightly otherwise. Cancellations require a written reason.
EW notifications drafted from a template that names the matter, the impact category (price / Completion / Key Date / use), and the proposed actions. Three sentences max.
EW register cited explicitly in CE notifications. “The Contractor became aware of this event on [date], recorded in the Early Warning Register entry [ref].” That single sentence kills the time-bar argument before it starts.
A monthly “graduation” review. Which EWs are now CEs? Which are closed? Which need risk-reduction meetings called? The review is a thirty-minute calendar item, not a project.

Practical takeaway

The discipline that compounds.

The EW process pays out twice: once in the events that never become CEs because the risk-reduction meeting found a way through, and again in the events that do become CEs but arrive with three months of contemporaneous record-keeping behind them. Treating the Register as paperwork means losing both.

Next in this theme: programme acceleration and float ownership: the events the EW register is supposed to surface but rarely does. Subscribe to get the next post the morning it ships.