The current version of this suite of contracts is the NEC4. For the purpose of this blog we will use the NEC4 Engineering and Construction Contract, with amendments as at October 2020.
The NEC contract places an emphasis on project management. It requires the contractor to provide a programme of works. The project manager for the contract maintains a risk register which includes any early warning matters. The early warning procedure is mandatory on both parties.
The early warning notice is intended to act as notice of events which (1) might happen and (2) have the potential to affect the contract if they do occur. The contractor is required to provide early warning to the project manager as soon as they become aware of any matter which could increase the contract price, delay completion, delay meeting a key date or otherwise impair performance of the works. In other words, the contractor cannot hold back notification of issues until the end of the contract.
Similarly, the employer must bring any problems to the contractor's attention at the earliest opportunity. The NEC4 also provides for parties to attend risk reduction meetings to address how to reduce the effect of the notified risks.
The contractor may also give an early warning to the project manager of any other matters which could increase the total cost. The project manager may give the same warning if they become aware of any matter which could increase the contractor's total cost.
As such, an early warning notice should be given as soon as a contractor is aware of any matter which could result in increased costs, delay or impair the performance of the works.
Next week we will consider compensation events under the NEC form of contract. If you haven’t read our previous delay blogs, they can be found here.
Should you require assistance with any aspect of a construction contract, we have a large and experienced construction team who would be happy to discuss this with you.
