The early warning procedure in the NEC4 contracts is one of the clearest expressions of the NEC philosophy of proactive project management. From the first edition of the NEC, the inclusion of early warnings distinguished the contract from more traditional forms by introducing a structured and contractual approach to risk management.^[1] The objective is to deal with a risk as soon as it becomes apparent, as this is almost always far less costly than addressing the consequences at a later stage. As Benjamin Franklin observed, “an ounce of prevention is worth a pound of cure.”^[2]

The early warning process is included in all the long and short form NEC4 contracts, with an abridged process in the short contracts. This article provides an overview of the management of early warnings under the NEC4 Engineering and Construction Contract (NEC4 ECC).

Notifying early warnings

Clause 15.1 states:

‘The Contractor and the Project Manager give an early warning by notifying the other as soon as either becomes aware of any matter which could

• increase the total of the Prices,
• delay Completion,
• delay meeting a Key Date or
• impair the performance of the works in use.’

The four reasons stated in clause 15.1 broadly concern matters that could adversely affect time, cost, and quality. The obligation to notify is reciprocal and arises as soon as either the project manager or the contractor first becomes aware of the matter. Early warnings are notifications which the contract requires to be communicated separately (clause 13.7) and in a recordable form (clause 13.1).

The final paragraph of clause 15.1 allows either party to notify an early warning of any other matter which could increase the contractor’s total cost. Notifying an early warning for this reason is discretionary.  An increase in the contractor’s total cost is most likely to be the contractor’s risk under the contract. However, NEC contracts recognise the importance of managing such risk and that both parties may still benefit from early collaborative discussion.

Additional reasons for notifying early warnings are set out in secondary options X10 (Information Modelling), X12 (Multi-party Collaboration) and X29 (Climate Change).

An early warning is not required for a matter which has already been notified as a compensation event. This reinforces the important distinction between clause 15, which is concerned with managing risk, and compensation events, which deal with managing change.

The Early Warning Register

The early warning register is defined in clause 11.2(8) and represents the project’s contractual risk management tool. It is not intended, and should not be used, as a mechanism for allocating risk. The early warning register records the issues, the agreed actions and who is responsible for taking them. Matters to be included in the early warning register may include those identified by the client and the contractor before entering into the contract, provided they are stated in the contract data. There can sometimes be reluctance to identify risks in the contract data for fear that doing so would allocate responsibility. This is not the case, and the definition in clause 11.2(8) makes this clear.

All early warning matters are entered in the early warning register by the project manager (clause 15.1).  The project manager prepares the first register within one week of the starting date (clause 15.2) and revises it after each early warning meeting (clause 15.4). The project manager acts as the custodian of the register, responsible for safeguarding the management of the early warning process. Broome suggests (along with other practical tips) that a remote project manager could delegate these duties to others in accordance with clause 14.2^[3]; however, it's important to note that the early warning process may also involve the project manager giving instructions to change the scope (see below).

Early warning matters may be removed from the register with the agreement of those attending early meetings, together with a review of whether different actions are needed (clause 15.3). The early warning register should therefore be treated as a live document used to set the agenda for the early warning meetings rather than a retrospective record.

Early warning meetings

The early warning meeting, if conducted in accordance with the contract, is where the process delivers its real value. The first early warning takes place within two weeks of the starting date and later at intervals no longer than that stated in the contract data. Adhoc meetings may also take place if instructed by the project manager or the contractor (clause 15.2).

Clause 15.3 requires those attending to co-operate in considering how the effects of the identified risks can be avoided or reduced, and to agree on the actions to be taken. In this respect, clause 15.3 sets out the behaviours expected in the management of early warnings and risk. Early warning discussions are not intended to allocate responsibility or liability. Their purpose is to identify solutions. Using the process to apportion blame is contrary to the collaborative intent of clause 10.2 and undermines the mechanism's effectiveness.

Where the agreed mitigation requires a change to the scope, the project manager issues an instruction (clause 14.3) at the same time the revised early warning register is issued (clause 15.4). The process is therefore intended to allow the parties to move directly from risk identification to action.

Subcontractors are required to attend where their involvement will help resolve the issue. Provided the project manager or the contractor agree, either may instruct others to attend meetings (clause 15.2).

Integration with the programme

Early warnings are closely aligned with the programme provisions in clauses 31 and 32. The accepted programme is the primary tool for demonstrating how the contractor intends to complete the works and for assessing the time effect of compensation events (clause 63.5). Early warnings identify risks to that programme at a stage when resequencing, acceleration or other mitigation measures can still be considered and incorporated into a revised programme for acceptance.

Relationship with compensation events

Early warnings and compensation events perform different but complementary functions. There is no automatic link between the two. An early warning may never become a compensation event, and a compensation event may arise without an early warning. Users should also note that the early warning notice does not replace the contractor’s eight-week notification time bar for compensation events (clause 61.3).

When a risk is identified early and properly managed, the cost and time consequences of any subsequent compensation event are likely to be significantly reduced. Failure by the project manager to notify of an early warning of a matter they were aware of may also be a breach of the project manager’s duty owed to their client.

If the project manager, when instructing quotations under clause 61.5, decides that the contractor did not give an early warning that an experienced contractor could have given, the event is assessed as if the early warning had been given (clause 63.7).  One might be tempted to engage in a discussion on what constitutes an ‘experienced contractor’; however, it is unlikely that a contractor would outwardly say they were not experienced.^[4]  The purpose of clause 63.7 is described neatly by Waterhouse as “…to reflect the missed opportunity to mitigate the effect of something that later created a compensation event.”^[5]

Disallowed Cost

Under the cost-based main options (C,D,E & F), failure by the contractor to notify an early warning may also result in disallowed cost where that cost was incurred only because the early warning was not given.^[6] This is a stricter test than clause 61.5, as the application of disallowed cost is not subject to the ‘experienced contractor’ test and simply whether the contractor has met its obligation to notify in accordance with clause 15.1.

Conclusion

Early warnings lie at the heart of the NEC4 approach to project delivery amd should be regarded as a tool of mutual benefit. Used properly, early warnings reduce the number and impact of compensation events and improve the likelihood of achieving time and cost certainty. Clause 15 provides a structured and contractual process for identifying and managing risk at the earliest possible stage. Its integration with the programme and the compensation event procedure ensures that time and cost are assessed on the basis of realistic forecasts rather than hindsight.

The reciprocal obligations on the contractor and the project manager, together with the commercial consequences of failing to comply, reinforce the NEC philosophy that successful projects are delivered through proactive management, collaboration and mutual trust. When operated as intended, the early warning process is one of the most effective tools available for achieving successful project outcomes.

David Hunter

March 2026

^[1] NEC early warning notices: a unique risk management tool of mutual benefit: Rudi Klein 14 March 2017, https://www.neccontract.com/news/nec-early-warning-notices-a-unique-risk-management-tool-of-mutual-benefit.

^[2] As recorded in Franklin’s Poor Richard’s Almanack (1736), when Franklin was writing about fire safety in Philadelphia.

^[3] Jon Broome, ‘Seven practical tips for making NEC early warnings more effective’ NEC News Issue No 134 (Nov. 2024) 7.

^[4] Bronwyn Mitchell & Barry Trebes, Managing Reality: Book 5 – Managing Procedures (3rd edn, ICE Publishing 2017) 18.

^[5] Patrick Waterhouse, NEC4: Defined Cost and Compensation Events (ICE Publishing 2021) 62.

^[6] Clause C11.2(26), D11.2(26), E11.2(26) and F11.2(27).