How to Successfully Manage Compensation Events

Even the best laid plans can sometimes change and that applies just as much to the construction industry as any other.

When change happens, managing it in a structured and collaborative way helps ensure you avoid disputes and manage the project more effectively.

In the Engineering Construction Contract (ECC), the process of managing change comes under compensation events (section 6).

Compensation events are the third stimulus to good management – the others being early warnings and programme management.

The significance of the ECC compensation event process cannot be underestimated. It has effectively reinvented the rulebook for change management in construction contracts.

Essentially, what they provide is clarity. Or to put a little more flesh on that statement, what they provide is a clear process, clear deadlines and clear sanctions if the process is not followed.

In section six of the ECC, there is a clear definition of the 19 compensation events and a process for notifying, quoting, assessing and implementing.

The process is very detailed but there are some simple rules you should bear in mind to ensure that you successfully manage compensation events.

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