ABSTRACT
When considering the principle of compensation events under the ECC, it is appropriate first to consider how change is managed with most other standard forms of contract. Changes to the Scope in the ECC are normally defined in other contracts as variations. The traditional approach to managing change in construction contracts is normally dealt with in three separate elements within the contract. They are Variation, Extension of Time, Loss and Expense. A very important difference to the traditional methods is that no reference is made to any of the Contractor's original contract pricing except by the agreement of the Parties. This ensures that the Contractor's original financial and cash flow structure is unaffected by the compensation event. Compensation events within the NEC contracts are much more than about change though; they also reflect the risk profile of the contract. All time and cost effects are contained within the evaluation of the compensation event.
