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Under the Construction Act, the payer must pay the notified sum by the final date for payment, unless a valid pay less notice has been given in time.

The notified sum is established by the applicable payment notice or a valid payee’s notice. Where the payer fails to issue a required payment notice, a compliant application may operate as a notice in default, or the payee may be entitled to serve one.

The following matters should be established:

1. Whether the Construction Act applies to the contract.
2. The payment due date, notice deadlines and final date for payment.
3. Whether valid payment notices or pay less notices were served.

Where the statutory right applies, non-payment may be referred to adjudication.

Suspension may also be available where the statutory conditions are satisfied. At least seven days’ notice, stating the grounds for suspension, must first be given.

Under NEC4, a compensation event may change the Prices, the Completion Date or a Key Date. Entitlement depends on the contract and compliance with its notification procedures.

The assessment should establish:

1. Whether the event falls within clause 60.1, an applicable Option or an amended provision.
2. Whether the required notification was given within the contractual period.
3. Whether the correct dividing date, Defined Cost, Fee and relevant Accepted Programme were used in the assessment.
4. Whether the contractual procedures for responding to notifications and quotations were followed.

Under the unamended NEC4 Engineering and Construction Contract, a Contractor generally has eight weeks from becoming aware that an event has happened to notify it. The corresponding period under the Engineering and Construction Subcontract is generally seven weeks.

Exceptions apply where the event arises from specified instructions, notifications, certificates or changed decisions. The relevant contract provisions must be checked.

An incorrect rejection or assessment may be challenged under the contract’s dispute resolution procedure. NEC4 also provides procedures for deemed acceptance where specified notices and response periods have not been observed.

An extension of time requires an event recognised by the contract and evidence of its effect on completion.

The assessment should establish:

1. Whether the event qualifies for an extension under the contract, such as a Relevant Event under JCT or a compensation event under NEC.
2. Whether the required notices were issued in accordance with the contract.
3. Whether the programme and progress records demonstrate the event’s effect on completion, including any concurrent delay.

Under JCT, the assessment concerns delay to completion. Under NEC4 ECC, compensation-event delay is assessed by reference to its effect on planned Completion under the relevant programme provisions.

An extension of time provides relief from liquidated damages for the period of the extension. It does not, of itself, establish an entitlement to additional payment.

Under JCT, recovery of loss and expense depends on the applicable Relevant Matter provisions. Under NEC, compensation events may provide adjustments to both time and the Prices.

Any deduction of liquidated damages must comply with the contract. Where the Construction Act applies, a deduction from the notified sum also requires a valid pay less notice.

Prolongation concerns the additional costs of an extended period of performance. Disruption concerns loss of productivity caused by interference with planned working methods or resources.

Recovery depends on establishing:

1. An event for which the other party bears contractual responsibility.
2. A causal connection between that event and the delay, disruption or additional cost.
3. Records supporting the time and costs claimed, including forecasts where the contract requires them.
4. Compliance with the applicable notice and valuation procedures.

Claims for unabsorbed head-office overheads or lost profit require evidence of loss caused by the relevant event. A formula cannot establish entitlement where the underlying loss has not been demonstrated.

The SCL Delay and Disruption Protocol provides guidance on assessing such claims. Where a formula is appropriate, it favours the Emden or Eichleay methods rather than Hudson.

Acceleration costs are not automatically recoverable because earlier completion is requested. The contractual entitlement, revised programme and basis of payment should be agreed in writing before additional resources are committed.

The final account should distinguish agreed amounts from disputed valuations and deductions. Payment of undisputed sums should be pursued in accordance with the contract.

Each deduction or contra charge should be assessed against:

1. Its contractual or other legal basis.
2. Compliance with the applicable notice requirements.
3. Evidence supporting the alleged liability and amount.
4. Any contractual procedure for notifying and making good defects.

Where the Construction Act applies, a deduction from the notified sum requires a valid pay less notice.

Final-account provisions may also impose strict deadlines for challenging certificates or assessments. Under JCT, Final Certificates or Final Statements may become conclusive on specified matters. NEC4 contains separate final-assessment provisions.

The applicable form, edition and amendments must be checked before any challenge period expires.

Final-account disputes may be referred to adjudication where a statutory or contractual right exists.

Under the Construction Act, a party to a qualifying construction contract may refer a dispute to adjudication at any time.

The adjudicator must ordinarily reach a decision within 28 days of referral, subject to the permitted extensions. The decision is binding unless and until the dispute is finally resolved by litigation, arbitration or agreement.

Before commencing adjudication, consider:

1. Whether a dispute has arisen and the claim has been sufficiently identified.
2. Whether the contractual and factual evidence is ready for the accelerated procedure.
3. Whether the claim’s value justifies the likely costs.
4. Whether the proposed referral concerns a single dispute within the adjudicator’s jurisdiction.

Each party ordinarily bears its own legal and consultancy costs. The adjudicator’s fees and expenses are dealt with under the applicable adjudication provisions.

For international projects, the availability of adjudication or dispute-board procedures depends on the contract and applicable law.