Contract Administration: JCT vs NEC

Why Contract Administration Matters

Contract administration is the commercial engine of a construction project, and the JCT vs NEC choice shapes how it works. It is the process by which the quantity surveyor, contract administrator and project manager turn the contract into a working commercial framework. That means managing payments, assessing change, resolving questions of time and money and, finally, settling the account. The procurement route decides the contractual structure. Contract administration decides whether that structure works in practice.

The two dominant contract suites in UK construction, JCT and NEC, take very different approaches. JCT dates back to 1931. It separates change, time and cost into distinct mechanisms. Variations are valued under one set of clauses, extensions of time are assessed under another, and loss and expense is ascertained under a third.

NEC was first published in 1993 to encourage collaboration and proactive risk management. It brings all three together in the compensation event. One process produces one assessment, covering time and money together.

This article compares contract administration under JCT SBC/Q 2024 and NEC4 ECC side by side. It covers the processes the QS manages day to day. These are interim payments, change, extensions of time, loss and expense, completion and defects, the programme, early warning, final accounts and dispute resolution. It follows on from our Construction Procurement Routes guide, which explains how the procurement route determines the contract form.

A note on clause numbers. Clause numbering changes between editions and is often amended in bespoke contracts. JCT references below follow the SBC 2016 numbering, which the 2024 edition largely retains. NEC references follow the published NEC4 ECC. Always check against the contract you are administering.

The Key Contractual Roles

Who Does What Under Each Contract

The first difference the QS meets is the role structure. Under JCT, the key roles are the employer, the contractor, the Architect/Contract Administrator, the quantity surveyor and, where appointed, the clerk of works. The Architect/Contract Administrator issues instructions, certifies completion and decides extensions of time. The QS prepares valuations, values variations, ascertains loss and expense when instructed and prepares the final account statement. Broadly, the Architect/Contract Administrator decides entitlement and the QS quantifies it.

NEC4 uses different roles. The key parties are the Client and the Contractor. The Project Manager and the Supervisor act for the Client, and an Adjudicator deals with disputes. The Project Manager does much of what JCT splits between the Architect/Contract Administrator and the QS. The Project Manager assesses compensation events, covering both entitlement and value. The Project Manager also certifies payments, accepts programmes and certifies Completion. The Supervisor deals with quality, testing and Defects.

NEC4 does not mention a quantity surveyor at all. In practice, the QS usually supports the Project Manager. That support includes assessing compensation events, auditing Defined Cost and reporting on cost. The QS’s influence depends on how the Client sets up the Project Manager’s team.

This difference matters. Under JCT, the QS has a defined contractual role, named in the valuation and loss and expense clauses. Under NEC, the QS works through the Project Manager’s authority. The Project Manager remains responsible for every assessment. A QS new to NEC needs to understand that their judgement is exercised on the Project Manager’s behalf, not independently.

Interim Payments

JCT: Valuations and Interim Certificates

Under SBC, interim payments usually follow a monthly cycle, with due dates set out in the Contract Particulars. The QS prepares an interim valuation. It covers the value of work properly executed, materials on site, listed off-site materials where the conditions are met, variations and any ascertained loss and expense. The Architect/Contract Administrator issues an interim certificate, and the employer pays the certified sum less retention.

The cycle is underpinned by the Housing Grants, Construction and Regeneration Act 1996, as amended in 2009. A payment notice must be given within five days of the due date. The payer can then serve a pay less notice before the final date for payment.

The JCT default retention rate is 3%, although 3 to 5% is common. Half is released at practical completion. The rest is released when the Certificate of Making Good is issued. Retention gives the employer security against defects, but it ties up the contractor’s cash. That is why the Construction Playbook encourages fair payment practices, including project bank accounts.

The QS’s role in JCT valuations is central. The QS inspects the works, or relies on the clerk of works’ records. The work done since the last valuation is measured and priced at the bill rates. Materials on and off site are included where the contract conditions are met. Agreed variations and any ascertained loss and expense are added. The valuation must be fair. It should neither overstate the work to help the contractor’s cash flow nor understate it to protect the employer.

NEC4: Assessing the Amount Due

Under NEC4, the Project Manager assesses the amount due at each assessment date (clause 50). The Project Manager then certifies a payment within one week. That certificate acts as the payment notice required by the Construction Act. The amount due is the Price for Work Done to Date, plus other amounts to be paid to the Contractor, less amounts to be paid by or retained from the Contractor.

How the Price for Work Done to Date is calculated depends on the main Option.

Under Option A, it is the total of the Prices for completed activities on the Activity Schedule. There is nothing for part-complete activities. That makes the way activities are broken down important.

Under Option B, it is the quantity of completed work priced at the bill rates.

Under Options C and D, it is the Defined Cost the contractor has paid or is about to pay, plus the Fee. Disallowed Cost is excluded. The pain/gain share is not settled at each interim assessment. A preliminary share is assessed at Completion and the final share in the final assessment.

NEC4 also gives the contractor a strong reason to keep its programme up to date. If no programme is identified in the Contract Data, one quarter of the Price for Work Done to Date is retained until the contractor submits a first programme showing the required information.

Retention under NEC4 applies only if Option X16 is chosen. No retention is taken until the Price for Work Done to Date exceeds the retention free amount. The amount retained is halved at Completion of the whole of the works. It is reduced to zero after the Defects Certificate is issued.

For the QS supporting the Project Manager, NEC payment work calls for different skills. Under Option A, the QS assesses whether activities are complete rather than measuring quantities. Under Options C and D, the QS audits the contractor’s Defined Cost. That means checking timesheets, invoices and subcontract accounts. It also means removing Disallowed Cost, such as costs not justified by the accounts, rework from the contractor’s own errors or costs that should not have been incurred. This is more forensic than a traditional JCT valuation.

Variations and Compensation Events

JCT: Instructions and the Valuation Rules

Under SBC, the Architect/Contract Administrator instructs variations under clause 3.14. The contractor must generally comply. It can make reasonable objection to certain types of variation, such as changes to access or working hours. As an alternative, the Architect/Contract Administrator can ask for a Variation Quotation under Schedule 2. That lets the contractor price the change, including time and loss and expense, before it is instructed.

Otherwise, the QS values the variation under the valuation rules in clauses 5.6 to 5.10. Similar work under similar conditions is valued at the bill rates. Similar work under different conditions, or in significantly different quantities, is valued at the bill rates with a fair allowance. Work of a different character is valued at fair rates. Work that cannot properly be measured is valued as daywork under clause 5.7.

JCT keeps the value of the changed work separate from its time and cost consequences. If a variation delays completion, the contractor seeks an extension of time because it is a Relevant Event (clause 2.29). If it causes cost beyond the value of the work itself, such as disruption or prolonged preliminaries, the contractor claims loss and expense because it is a Relevant Matter (clause 4.24). The QS deals with all three. They are separate entitlements under separate clauses, and a contractor can receive one without the others.

NEC4: The Compensation Event

Under NEC4, the compensation event is the single mechanism for change. There are no separate variation, extension of time or loss and expense clauses. Clause 60.1 lists the compensation events. They include changes to the Scope, Project Manager instructions, physical conditions, weather measurements and many others.

When a compensation event occurs, it is notified. The contractor then submits a quotation, which the Project Manager either accepts or replaces with their own assessment. The quotation covers the change to the Prices and any delay to the Completion Date and Key Dates, assessed together.

The timescales are strict.

The contractor must notify a compensation event within eight weeks of becoming aware of it (clause 61.3). Otherwise, it loses the right to a change in the Prices, Completion Date or Key Dates. The time bar does not apply where the Project Manager should have notified the event.

The Project Manager replies to a notification within one week (clause 61.4). The contractor then has three weeks to submit a quotation. The Project Manager then has two weeks to reply. The reply can accept the quotation, instruct a revised one or state that the Project Manager will make their own assessment (clause 62.3).

If the Project Manager fails to reply in time, the contractor can notify that failure. If the failure continues for a further two weeks, the notification or quotation is treated as accepted (clauses 61.4 and 62.6).

The philosophical difference is fundamental. JCT treats change through three separate mechanisms. NEC4 treats it as one event that adjusts the price and the completion date together. The NEC approach is arguably more efficient, but only if both sides engage promptly. A contractor who misses the notification deadline, or a Project Manager who misses a reply deadline, faces real commercial consequences.

Extensions of Time

JCT: Relevant Events

Under SBC, the contractor is entitled to an extension of time if completion is likely to be delayed by a Relevant Event (clause 2.29). These include variations, acts or omissions of the employer, deferred possession, late information, changes in law, exceptionally adverse weather and strikes. JCT 2024 added further events, including the discovery of contamination and unexploded ordnance, and optional cover for epidemics.

The contractor must give notice of delay once it becomes reasonably apparent that progress is or is likely to be delayed (clause 2.27). The Architect/Contract Administrator must then decide and fix a new Completion Date where appropriate. Under the 2024 edition, the deadline for that decision is eight weeks, reduced from 12 weeks in 2016.

The extension of time mechanism protects both parties. It shields the contractor from liquidated damages for delay it did not cause. It also protects the employer’s right to liquidated damages. Without it, that right could be defeated by the prevention principle, the rule that a party cannot benefit from delay it has caused.

On concurrent delay, Henry Boot Construction (UK) Ltd v Malmaison Hotel (Manchester) Ltd (1999) remains the leading case. Where a Relevant Event and a contractor-risk event cause delay at the same time, the contractor gets an extension of time. However, it does not recover loss and expense for the concurrent period. The parties can change this by contract. In North Midland Building Ltd v Cyden Homes Ltd [2018] EWCA Civ 1744, the Court of Appeal upheld a clause that denied an extension for concurrent delay.

The QS must understand the difference between Relevant Events (clause 2.29) and Relevant Matters (clause 4.24). Relevant Events give time. Relevant Matters give money. Some events appear in both lists. A variation, for example, gives both time and money. Others give only time. Exceptionally adverse weather gives an extension of time but no loss and expense. Each claim must be tested against both lists.

NEC4: Time Through the Compensation Event

Under NEC4, there is no separate extension of time mechanism. Time is assessed as part of each compensation event. The delay to the Completion Date is the length of time by which planned Completion is later than the planned Completion shown on the Accepted Programme current at the dividing date (clause 63.5).

This approach protects the contractor’s terminal float, the gap between planned Completion and the Completion Date. A compensation event moves the Completion Date by the full delay to planned Completion, so terminal float is preserved. The contractor’s time risk allowances are part of its planned durations and are also protected. Float elsewhere in the programme is not reserved for the contractor and can absorb the effect of a compensation event.

Concurrency is handled differently from JCT. The assessment uses the Accepted Programme current at the dividing date. That programme should already show the effect of the contractor’s own delays up to that point. The compensation event is assessed from that position. This avoids much of the retrospective concurrency analysis common under JCT. However, it only works if the programme is kept up to date and accepted throughout the project.

Loss and Expense

JCT: A Separate Recovery Mechanism

Under SBC, the contractor is entitled to direct loss and expense caused by a Relevant Matter, subject to complying with the notification provisions (clauses 4.20 and 4.21). The contractor must notify as soon as the likely effect becomes reasonably apparent. It must also provide an initial assessment and regular updates.

Since 2016, the wording has been “subject to” rather than “provided always that”. Some argued this meant notice was no longer a condition precedent. However, recent authority treats it as one. Contractors should assume late notice can end the entitlement.

The QS ascertains the loss and expense. That means examining the evidence, such as timesheets, invoices, programme analysis and productivity records, and calculating the cost caused by the Relevant Matter. Common heads of claim include extended preliminaries, disruption, idle resources, head office overheads and finance charges.

The usual principles of proof apply. The contractor must show that the Relevant Matter caused the loss, not its own inefficiency. It must take reasonable steps to mitigate. The loss must also be “direct”, which broadly means the kind of loss that flows naturally from the event.

RICS publishes a guidance note on ascertaining loss and expense. It covers method, evidence and the QS’s duty to assess claims fairly. The QS’s ascertainment should be independent. It should neither accept the contractor’s figures uncritically nor reject them without investigation. It should also be able to withstand scrutiny in adjudication.

NEC4: Within the Compensation Event

Under NEC4, there is no separate loss and expense claim. The compensation event assessment already captures the cost consequences of change. These include time-related costs from delay, disruption, idle resources and extra management, all measured as changes in Defined Cost.

The Fee is then added. It covers head office overheads and profit, so these are not claimed separately as they often are under JCT. The contractor still has to show the effect of the event in its quotation. However, it does so once, at the time, rather than months or years later.

NEC4 also links risk management to the assessment. If the Project Manager has notified that the contractor failed to give an early warning an experienced contractor could have given, the compensation event is assessed as if the warning had been given (clause 63.7). That can reduce the assessment to what it would have cost if the problem had been raised in time.

This integration is one of NEC4’s most significant differences from JCT. The full commercial effect of change is assessed while the work is happening. That is more demanding during the project, but it usually leads to fewer disputes at the end.

Delay Damages Under Both Contracts

Both contracts let the employer recover damages if the contractor fails to complete by the Completion Date, as extended.

Under JCT, liquidated damages are set in the Contract Particulars. Before deducting them, the Architect/Contract Administrator must issue a Non-Completion Certificate. The employer must also give the required notices.

Under NEC4, delay damages are a secondary Option (X7). If X7 applies, the contractor pays delay damages at the rate in the Contract Data for each day from the Completion Date until Completion or take over.

The mechanics differ, but the effect is the same. The contractor bears the financial risk of delay for which it is responsible.

Completion and Defects

JCT: Practical Completion and the Rectification Period

Under SBC, the Architect/Contract Administrator certifies practical completion when, in their opinion, practical completion has been achieved (clause 2.30). The contract does not define practical completion. It is a matter of professional judgement. Case law broadly treats it as the works being complete for practical purposes, with only minor items outstanding.

The Practical Completion Certificate has several important effects. The Rectification Period begins. Half the retention is released. The contractor’s insurance obligations for the works generally end. Liquidated damages stop accruing.

The Rectification Period is set in the Contract Particulars. If none is stated, SBC defaults to six months, although 12 months is common. During this period, the Architect/Contract Administrator can instruct the contractor to make good defects at its own cost. A schedule of defects is issued at the end of the period. Once all are made good, the Certificate of Making Good is issued and the rest of the retention is released.

If the contractor fails to return, the employer can employ others and recover the cost. Alternatively, the employer can accept a defect, and an appropriate deduction is made from the contract sum.

NEC4: Completion, the Defects Date and the Defects Certificate

Under NEC4, Completion has a contractual definition (clause 11.2(2)). The contractor must have done all the work the Scope says is to be done by the Completion Date. It must also have corrected any notified Defects that would stop the Client from using the works or Others from doing their work.

The Project Manager decides and certifies the date of Completion (clause 30.2). The Supervisor does not.

Two separate periods then follow, and they are easily confused.

The defects date is stated in the Contract Data, often 52 weeks after Completion. Until then, the Supervisor and the Contractor notify each other of Defects as they find them. This is the nearest equivalent to the JCT Rectification Period.

The defect correction period is the time allowed to correct each notified Defect, often two to four weeks. It runs from the notification, or from Completion for Defects notified earlier.

The Supervisor issues the Defects Certificate at the later of the defects date and the end of the last defect correction period. If the contractor does not correct a notified Defect in time, the Project Manager assesses what it would cost to have others correct it. The contractor then pays that amount.

Because Completion is tied to the Scope, NEC4 gives more certainty about what must be finished before Completion is certified. It can also cause arguments about whether minor non-compliances prevent Completion. Careful drafting of the Scope, especially about what must be done by Completion, reduces that risk.

The Programme

JCT: A Management Tool

Under SBC, the contractor must provide a master programme (clause 2.9). Unless the parties specifically incorporate it, the programme is not a contract document and imposes no obligations beyond the contract.

In practice, it is a tool for managing and monitoring progress. The Architect/Contract Administrator and QS use it to track progress and assess the effect of delay. Because it carries no contractual weight, delay disputes often need retrospective analysis after the event.

NEC4: The Accepted Programme

Under NEC4, the programme has real contractual effect, even though it is not strictly a contract document. The contractor must submit a programme showing the information listed in clause 31.2. This includes the starting date, access dates, Key Dates, the Completion Date, planned Completion, float, time risk allowances, the order and timing of work and the resources to be used.

The Project Manager either accepts the programme or gives reasons for not accepting it, within two weeks. The contractor then submits revised programmes at the intervals stated in the Contract Data. Each shows actual progress, the effect of compensation events and how the contractor plans to deal with delays.

The Accepted Programme matters because it is the baseline for assessing compensation events. Its current version at the dividing date largely decides how much time, and therefore how much time-related cost, an event is worth. Payment is affected too. Without an Accepted Programme, a compensation event is assessed using the Project Manager’s own view of the programme.

This programme-centred approach is one of the most significant practical differences between the two contracts. It forces both parties to treat the programme as a live commercial document. It reduces the need for retrospective delay claims. However, it requires real resources and discipline from both the contractor’s planners and the Project Manager’s team.

Early Warning and Risk Management

JCT: Reactive Notification

The core JCT conditions have no NEC-style early warning procedure. The contractor must notify delay (clause 2.27) and loss and expense (clauses 4.20 and 4.21). These notices are triggered by events that have happened or are about to happen.

JCT does include supplemental provisions on collaborative working, but these are much less prescriptive than NEC4’s procedure. In practice, good project management under JCT relies on regular progress meetings and risk reviews. These are management habits rather than contractual obligations.

NEC4: Proactive Risk Management

Early warning is one of NEC4’s defining features (clause 15). The Contractor and the Project Manager must each give an early warning as soon as they become aware of any matter that could increase the Prices, delay Completion or a Key Date, or impair the performance of the works in use.

The Project Manager keeps an Early Warning Register. The parties hold early warning meetings at the intervals stated in the Contract Data to review the register and agree how to avoid or reduce each risk. NEC3 called these “risk reduction meetings”, but NEC4 has renamed them.

The procedure has real commercial teeth. If the contractor fails to give an early warning that an experienced contractor could have given, the Project Manager can say so when instructing the quotation. The event is then assessed as if the warning had been given (clause 63.7). That gives the contractor a direct financial incentive to raise problems early. The cultural effect is significant. NEC projects tend to be more open about risk, because the contract rewards early notice.

Final Accounts

JCT: The Final Certificate

Under SBC, the contractor provides the documents needed to adjust the contract sum within six months of practical completion. Within three months of receiving them, the QS prepares a statement of all adjustments. These cover variations, provisional sums, fluctuations and loss and expense. The Architect/Contract Administrator then issues the Final Certificate (clause 4.15).

Under clause 1.9 of SBC 2024, the Final Certificate is conclusive evidence on certain matters. These include the following.

First, where the contract expressly reserves the quality of materials or workmanship for the Architect/Contract Administrator’s approval, they are to that approval. Second, the contract sum has been properly adjusted. Third, all extensions of time due have been given. Fourth, the reimbursement of loss and expense is in final settlement.

The certificate is not conclusive that the rest of the works comply with the contract. A party that wants to challenge it must start adjudication, arbitration or court proceedings within 28 days of issue. Otherwise, it becomes conclusive.

The QS’s role in the JCT final account is substantial. The QS must ensure every variation has been valued and every loss and expense claim ascertained or rejected. All provisional sums must be adjusted and the retention properly dealt with. Final accounts often involve extended negotiation, and on complex projects they can take 12 to 18 months after practical completion to agree.

NEC4: The Final Assessment

Under NEC4, the Project Manager makes the final assessment no later than four weeks after the Supervisor issues the Defects Certificate (clause 53). It covers all implemented compensation events and releases any remaining retention. Under Options C and D, it also sets the contractor’s final share.

The share is based on the difference between the final total of the Prices, which is the adjusted target, and the Price for Work Done to Date. It is calculated using the share ranges and percentages in the Contract Data. Underspends are shared between the parties, and so are overspends.

The final assessment is conclusive and binding unless it is revised by agreement or a dispute is referred within the time limits in the dispute resolution Option. As under JCT, there is a short window to challenge the final figure.

NEC4 final accounts are usually quicker than JCT’s, because change is meant to be assessed during the project rather than left to the end. By the time the Defects Certificate is issued, most compensation events should be implemented. The final assessment then confirms the Prices, makes the final payment and settles the share. There is less room for the long negotiations typical of JCT final accounts. However, that depends on compensation events being dealt with promptly. A backlog of unassessed events can make the NEC final account just as protracted.

Dispute Resolution

Adjudication: The Statutory Right

Both contracts are subject to the statutory right to adjudicate under the Housing Grants, Construction and Regeneration Act 1996. Either party can refer a dispute to adjudication at any time. The adjudicator must decide within 28 days. That can be extended by 14 days with the referring party’s consent, or longer if both parties agree. The decision is binding until the dispute is finally settled by arbitration, litigation or agreement.

Since it began in 1998, adjudication has transformed construction disputes. It gives a fast, relatively low-cost decision without stopping the project.

JCT: Adjudication, Then Arbitration or Litigation

Under SBC, either party can adjudicate at any time. Final determination is by arbitration or litigation, as chosen in the Contract Particulars. Litigation applies unless arbitration is selected. The 28-day window to challenge the Final Certificate is a critical deadline. The QS should make sure any unresolved disputes are identified before it closes.

NEC4: The W Options

NEC4 offers three dispute resolution Options. The right one depends on whether the Construction Act applies.

Option W2 is for contracts where the Construction Act applies, which covers most UK construction work. Either party can refer a dispute to adjudication at any time. Final determination is by the tribunal, either arbitration or the courts.

Option W1 is for contracts where the Act does not apply. Adjudication is a precondition before a dispute can go to the tribunal.

Option W3 provides a Dispute Avoidance Board, a standing panel that helps the parties avoid disputes and makes recommendations. If a dispute is not resolved, it goes to the tribunal. W3 can only be used where the Construction Act does not apply.

NEC4 also adds a step where senior representatives of each party try to negotiate a settlement. This reflects the contract’s emphasis on resolving differences early. Early warnings and early warning meetings are intended to deal with commercial issues before they become formal disputes.

Summary: JCT vs NEC4 at a Glance

Cross-References and Further Reading

This article sits within a series of practical guides on ProQS.site covering the core skills of the quantity surveyor.

Construction Procurement Routes. How the choice of procurement route determines the contract form, and how the QS’s role varies across routes.

Valuing Variations and Compensation Events. Worked examples of JCT variation valuation, daywork, NEC4 compensation event assessment, delay analysis and disruption.

Final Accounts and Settlement. How the final account is prepared and settled under JCT and NEC4, with a full worked example.

NRM 1 Cost Planning Guide. Cost planning from order of cost estimate to pre-tender cost plan, setting the budget the QS manages during construction.

NRM 2 Practical Measurement Guide. Preparing bills of quantities, which underpin JCT valuations and variation pricing.

BIM for Quantity Surveyors. How BIM supports cost management across procurement routes and contract forms.

Methods of Measurement in Construction. The main UK measurement standards and the contract forms they support.

What Comes Next

This article has set out the core contract administration processes under JCT SBC/Q 2024 and NEC4 ECC side by side. It has shown how paying the contractor, managing change, assessing time, recovering cost, completing the works and settling the account work under two very different approaches.

JCT separates change, time and cost into distinct mechanisms and gives the QS clearly defined roles in each. NEC4 brings them together in the compensation event. It asks the QS to work within the Project Manager’s authority and deal with change as it happens.

Neither approach is inherently better. JCT offers familiarity and a deep body of case law. NEC4 offers integration, collaboration and proactive risk management. The QS who can work confidently under both can work on almost any project in UK construction.