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Variations vs Compensation Events: JCT and NEC Compared

How a JCT variation and an NEC4 compensation event differ: who starts the process, the notification time bar, the quotation route, how each is valued, and how both reach your payment application.

Overview

Change happens on every job. What differs between contract families is who has to speak first, how quickly, and what happens when they do not. Under JCT the change is a Variation, instructed by the contract administrator and then valued. Under NEC4 it is a compensation event, and the burden of notifying and pricing it sits far more heavily on the contractor, behind a hard time bar. Treat the two the same way and you will lose money under NEC.

Key Takeaways

  • A JCT variation is instructed then valued; an NEC compensation event is notified, quoted and assessed.
  • NEC4 lists twenty-one compensation events at clause 60.1, and clause 61.3 extinguishes the entitlement after eight weeks without notification — except for events the project manager should have notified.
  • NEC gives the contractor three weeks to quote, with a deemed-acceptance route if the project manager does not respond — check your edition.
  • JCT valuation runs from bill rates through adjusted rates to fair valuation, then daywork where measurement is not possible.
  • Both routes end as a referenced line in a payment application, and the Construction Act notice mechanism then applies.

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The starting point: no implied power to change the works

There is no implied power to order a variation. The power has to come from an express term in the contract, which is why both families set it out explicitly. A variation is an alteration to the scope of the works, in the form of an addition, a substitution or an omission. NEC does not use the word variation at all: a change to the Scope is one of the listed compensation events, and it sits alongside a set of other events — such as employer-side delays and unforeseen conditions — that also entitle the contractor to time or money.

  • Without an express term, nobody can unilaterally change the scope of the works.
  • JCT: a Variation is instructed, then valued.
  • NEC: a change to the Scope is one compensation event among many; it is notified, quoted and assessed.
  • The NEC list is wider than "variations" — it captures events a JCT job would handle as loss and expense or extension of time.

JCT variations

Under the JCT Standard Building Contract, the architect or contract administrator may issue an instruction requiring a variation, and may sanction in writing a variation the contractor made without such an instruction — under the 2024 edition these sit at clauses 3.14.1 and 3.14.4. Clause numbering moves between JCT editions, so check the numbers against your own contract rather than quoting them from a page like this one. The commercial mechanics are more stable than the numbering: once instructed, the variation is valued either through a quotation the employer accepts, or by the quantity surveyor applying the contract’s valuation rules — rates from the bill where the work is comparable, adjusted rates where it is similar but not identical, fair valuation where it is neither, and daywork where it cannot properly be measured at all. JCT SBC/Q 2016 makes that last route explicit at clause 5.7.

  • The instruction is what creates the entitlement. Confirm verbal instructions in writing before starting.
  • The 2024 edition places the instruction and sanction powers at clauses 3.14.1 and 3.14.4.
  • Valuation is either an accepted quotation for the varied work or a valuation under the contract’s rules.
  • The valuation hierarchy runs from bill rates through adjusted rates to fair valuation, then daywork.
  • JCT SBC/Q 2016 clause 5.7 allows daywork valuation where the work cannot properly be measured.
  • JCT contracts also carry a quotation route for varied work; the schedule it lives in differs by edition, so check yours.

NEC4 compensation events

NEC4 ECC lists twenty-one compensation events at clause 60.1. The critical difference from JCT is procedural. Clause 61.3 requires the contractor to notify within eight weeks of becoming aware that the event has happened; miss it and the Prices, the Completion Date and any Key Date are not changed. That bar is not absolute. It does not bite where the event arises from the project manager or the supervisor giving an instruction or notification, issuing a certificate or changing an earlier decision — those are the events the project manager should have notified under clause 61.1, and the contractor does not lose its entitlement because the project manager stayed quiet. Once the process is running, the contractor has three weeks to submit a quotation. NEC has long carried a deemed-acceptance mechanism where the project manager fails to respond: under NEC3 a project manager who did not notify a decision within two weeks of the contractor’s reminder was treated as having accepted. NEC4 carries an equivalent mechanism, but the wording and the reminder step changed between the editions, so read your own clause before relying on it. Assessment is on cost rather than on tendered rates, using the contract’s own cost definitions.

  • Twenty-one compensation events are listed at clause 60.1 of NEC4 ECC.
  • Clause 61.3: eight weeks from becoming aware the event has happened, or the Prices, Completion Date and Key Dates are not changed.
  • The bar does not apply where the event arises from a project manager or supervisor instruction, notification, certificate or changed earlier decision — those should have been notified under clause 61.1.
  • Do not rely on the carve-out. Notify anyway: arguing afterwards about which side of it an event fell is the expensive way to find out.
  • Three weeks for the contractor to submit a quotation once instructed to do so.
  • A deemed-acceptance route exists where the project manager does not respond — check the clause and the reminder step in your edition.
  • Assessment is cost-based, not a re-rate of the bill.
  • A compensation event can move both the money and the programme; a JCT variation and an extension of time are separate processes.

Side by side

The table below is a working summary, not a substitute for reading your contract. Clause numbering in particular differs between editions of both families.

JCT variationNEC4 compensation event
Who starts itThe contract administrator instructs.Either party notifies; often the contractor must.
Time bar on the contractorNo equivalent hard bar on notifying a variation.Eight weeks from awareness, unless the event was one the project manager should have notified.
QuotationA quotation route is available as an alternative to valuation.Quotation is the default: three weeks to submit.
If the other side goes silentValuation proceeds under the contract’s rules.A deemed-acceptance route can apply — check your edition.
Basis of valuationBill rates, adjusted rates, fair valuation, or daywork.Cost-based, under the contract’s cost definitions.
Effect on programmeExtension of time is a separate process.Time and money are assessed together in the event.

How each reaches your application

Both routes end in the same place: a line in a payment application, backed by a reference the payer can check. Under JCT the variation carries its instruction reference and its valuation, and any part that could not be measured carries its signed daywork sheets. Under NEC the assessed compensation event moves into the project manager’s assessment for the cycle, so the argument is settled before the certificate rather than after it. Either way, the Construction Act mechanism then applies: the sum applied for becomes the notified sum unless a compliant payment notice or pay less notice says otherwise.

  • Give every change its own application line with its own reference. Never bury it in the measured work.
  • Attach the instruction, the valuation or quotation, and any daywork sheets to the line.
  • Under NEC, chase the quotation and the response — an unassessed event is money sitting outside every valuation.
  • Under JCT, confirm verbal instructions the same day. An unconfirmed instruction is the most common final-account casualty.
  • Keep a live change register in both cases; the final account is only as good as the register behind it.

Where people lose money

The failure modes are different in each family, and both are avoidable with a register and a diary.

  • NEC: missing the eight-week notification window on an event the project manager was never going to notify, which extinguishes the entitlement entirely.
  • NEC: submitting a quotation late, or never chasing the project manager’s response.
  • JCT: carrying out instructed work with no written confirmation of the instruction.
  • JCT: accepting a fair valuation without checking whether comparable bill rates existed.
  • Both: claiming daywork where the work could have been measured, and having the whole line reduced.
  • Both: reaching final account with changes that were never notified, quoted or valued at the time.

Sources

The mechanics on this page were checked against the sources named below before publication. Clause numbering differs between contract editions — the JCT instruction clauses cited here are from the 2024 edition and the daywork clause from SBC/Q 2016. Where a number could not be evidenced, the rule is stated without one. Check your own contract particulars; this is general information, not legal advice.

  • Designing Buildings, "Variations in construction contracts" (no implied power to instruct a variation; addition, substitution or omission) — designingbuildings.co.uk/wiki/Variations_in_construction_contracts
  • NEC, "Compensation events – an introduction for new NEC users" (twenty-one events listed at clause 60.1; the eight-week notification bar; the three-week quotation period) — neccontract.com/news/compensation-events-an-introduction-for-new-nec-users
  • NEC, "The mismatch between ‘belief’ and ‘awareness’ in clause 61.3", 14 February 2022 (the eight weeks run from the Contractor becoming aware that the event has happened; missing it means no change to the Prices or the programme) — neccontract.com/news/the-mismatch-between-belief-and-awareness-in-clause-61-3
  • NEC4 Engine, "NEC4 8-week time bar — clause 61.3 complete guide" (quoting clause 61.3, including the carve-out for events arising from the Project Manager or Supervisor giving an instruction or notification, issuing a certificate or changing an earlier decision) — nec4engine.com/blog/nec4-time-bar-clause-61-3
  • isurv, "Valuing variations retrospectively: valuation using dayworks" (JCT Standard Building Contract with Quantities 2016, clause 5.7) — isurv.com/info/1170/valuing_change/5384/valuing_variations_retrospectively/2
  • Housing Grants, Construction and Regeneration Act 1996, Part II, ss.109–111 (as amended by the Local Democracy, Economic Development and Construction Act 2009) — legislation.gov.uk/ukpga/1996/53/part/II

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Last reviewed: 2 September 2026

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Variations vs Compensation Events FAQ

A variation is a JCT concept: an instructed change to the scope of the works, which is then valued. A compensation event is an NEC concept and is wider — a change to the Scope is only one of twenty-one events listed at clause 60.1 of NEC4 ECC, which also cover matters a JCT job would handle as loss and expense or an extension of time. The procedural difference matters more than the terminology: NEC puts a hard notification deadline on the contractor.
Eight weeks from becoming aware that the event has happened, under clause 61.3. Miss it and the Prices, the Completion Date and any Key Date are not changed. There is one carve-out: the bar does not apply where the event arises from the project manager or supervisor giving an instruction or notification, issuing a certificate or changing an earlier decision, because those are events the project manager should have notified under clause 61.1. Do not plan around the carve-out — notify anyway, rather than arguing later about which side of it an event fell.
Three weeks from being instructed to submit it. NEC also provides a deemed-acceptance route where the project manager fails to respond to the contractor within the contractual period — the wording and the reminder step changed between NEC3 and NEC4, so check the clause in your own edition before relying on it.
Either through a quotation for the varied work that the employer accepts, or by the quantity surveyor applying the contract’s valuation rules. Those rules work down a hierarchy: bill rates where the work is comparable, adjusted rates where it is similar, a fair valuation where it is neither, and daywork where the work cannot properly be measured at all. JCT SBC/Q 2016 makes the daywork route explicit at clause 5.7.
It can. NEC assesses the time and the money effects of a compensation event together, which is one of the clearest differences from JCT, where valuing a variation and granting an extension of time are separate processes with separate notices. That is also why an unassessed NEC event is more damaging than an unvalued JCT variation: it leaves both the price and the programme unresolved.
Yes, where the work cannot properly be measured and valued at the contract rates. Daywork is a valuation method rather than a category of work, so a single variation can be part measured and part daywork. Expect the payer to argue for measurement wherever a comparable rate exists, so record why measurement was not workable at the time rather than months later.

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