Early warnings

Laura Campbell examines the key features and mechanisms for early warnings in the NEC4 Engineering and Construction Contract (the ‘NEC4 ECC’).

This series of articles has already emphasised that the NEC4 suite works on the basis of collaboration and pro-active contract management. The Early Warning provisions reinforce this approach.

What are the key features of the Early Warning provisions?

The NEC4 ECC includes an early warning mechanism (Clause 15) which is of mutual benefit to the parties under the standard form to control cost, time and quality management. The early warning provisions echo the principles of mutual trust and co-operation by encouraging the parties to find solutions collaboratively and timeously when there is the risk of:

• a price increase;
• a delay to project completion or to meeting a Key Date; or
• the project not being completed to meet requirements for the works to be fully operational upon completion.

Early warnings are managed via an Early Warning Register. This is essentially a risk register. The Project Manager prepares this at the beginning of the project and organises an early warning meeting soon afterwards. Subsequent early warning meetings take place on a regular basis once the project is underway otherwise upon instruction by either the Contractor or the Project Manager as issues arise. Sub-Contractors and others may be asked to attend an early warning meeting if their input is required to resolve an issue.

At an early warning meeting, those in attendance discuss:

• how to avoid or reduce the effect of matters which may have a detrimental impact on the project; and
• solutions to issues and consider the allocation of relevant actions to tackle the risks.

The Project Manager is responsible for updating the Early Warning Register to record decisions made at an early warning meeting and then circulates the Early Warning Register to the Contractor within a week of the meeting. If a decision results in the need for a change to the Scope, the Project Manager issues an instruction for that change when they issue the revised Early Warning Register. The Early Warning Register can also be amended to remove items which no longer present a time, cost or quality risk to the project. It should also identify who is responsible under the contract for actions relating to matters recorded on the Early Warning Register and steps to be taken to deal with matters.

The parties should also include potential early warning matters in the Contract Data when they enter into the contract to the extent that factors can be identified at that stage. These matters will then be included in the Early Warning Register from the outset so that the parties can review each item at early warning meetings for any impact on the project. The Early Warning Register should also note how the risks identified might be avoided or reduced.

Key takeaways:

• The early warning provisions can be used to proactively manage cost, time and quality issues under the NEC4 ECC.
• The Early Warning Register is a live document. It is important to keep it up-to-date and to work through issues collaboratively as the project progresses.
• You should refer to the contractual provisions in full and the Early Warning Register associated with your project if you experience any issues.

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