How to draft an Early Warning

In this article we explain the following:-

• Introduction - What are Early Warnings?   
• How to draft an Early Warning
• How to Create an Early Warning
• How to Save or Send a Draft Early Warning
• How to Print an Early Warning
• Finding your way around the Early Warning Register
• Adding Actions and Resolving the Status of a Early Warning
• Training Video: How to create and manage Early Warnings

Introduction - What are Early Warnings?   

The Early Warning process is meant to be a proactive mechanism for both Parties to identify potential problems to the project and try to avoid or minimise their impact before they happen. The contract emphasises that both Parties are obliged to notify the other as soon as they become aware of a matter that could affect time, cost or quality. Traditionally, it is the Contractor that tends to raise more Early Warnings, largely because they are the one doing the work and more likely to identify the issues first. However, the Project Manager should be equally motivated to give Early Warnings in order to maximise the time available to consider the problem with the Contractor and to increase the likelihood of finding the best solution to meet the Client’s interests in a given situation. The Project Manager could, for example, raise an Early Warning if they feel the Contractor does not have sufficient resources to meet the Programme. Once a matter is notified, these are discussed at an “Early Warning” meeting and the matters recorded onto an Early Warning Register. These matters are then subsequently discussed at each Early Warning meeting until they are closed out, with each meeting recording the current action/progress regarding each matter.

The Early Warning system is a very simple yet very important aspect of the contract.  In simple terms, it places a requirement on both Parties to notify the other if they become aware of any matter that could affect time, cost or quality. Once formally notified, the parties can review firstly if it is an issue or not, and if it is an issue then how it can be managed in order to avoid or minimise the effect on the project. This process should NOT be considered a commercial tool but be recognised as a proactive management tool.

An Early Warning should be written constructively and concisely so that it is well received by the other Party which will either then lead to a precise response if the issue is clear or be discussed in an Early Warning meeting. The Early Warning Register will then record the status and action owner of that matter progressively until it is concluded. Only the Project Manager can update the actions on the Early Warning Register.

If a Contractor fails to notify an Early Warning as soon as they became aware of this event and it eventually becomes a Compensation Event, the lack of Early Warning could be taken into account when the Project Manager assesses its impact. This is because the Employer has lost the opportunity to be able to mitigate that event had they known earlier.  Equally, if the Project Manager fails to notify Early Warnings of potential Employer issues to the Contractor who then had not been able to offer mitigation for those they might have been able to do, a Compensation Event could be raised.

How to draft an Early Warning

In this article, we will show you how to create and manage an Early Warning based on an NEC3 ECC Contract and flag any specific differences from other forms of NEC Contracts. This workflow can be used for NEC3 ECC, NEC3 ESC, NEC3 PSC, NEC3 TSC, NEC4 ECC, NEC4 ESC, NEC4 PSC, NEC4 TSC and also the short version of the contracts. Whilst there isn't an Early Warning process in JCT or FIDIC Contracts, it could also be adopted to suit if required.

To create a new Early Warning you can either click the green “Create new" button at the top of the page or navigate to the "Early Warning Register" for your role in the contract and press “Create new” and then follow through the form.

Here's how you do it from the home page:

Here's how you do it from the Early Warning Register:

The Early Warning form requires the following mandatory information:

• Subject title
• Date became aware – hopefully, a fairly recent date or this is not an Early Warning!
• What the Early Warning could affect – and it can be more than one tick box so tick all relevant
• Description of the Early Warning
• If a meeting required – options to say no or yes, and if a proposed meeting is required it will prompt details of who/when/where for the meeting
• A chance to score the risk in terms of likelihood/severity to give it a score and an indication (only) of urgency

How to Create an Early Warning

Once you have clicked the "Create new" button this will take you to the Early Warning template.  In an  Early Warning template, the types of risks that need to be notified and the register name are slightly different between different versions of the NEC Contract. These template variables can also be edited for different contracts, secondary options or Z clauses.

Fill out all the fields and click the "Create Early Warning Draft" button at the footer of the form which will take you the draft Early Warning page.

How to save or send a Draft Early Warning

At this point you will be displayed a draft of the Early Warning which can still be edited with any changes and then saved by clicking the blue Save Changes button. Once you’re happy with the Early Warning, click the green Communicate Early Warning button to notify the Early Warning to the other Party.

If this green communicate action button is missing, it is because you only have permission to draft the notice and don't have permission to communicate it. Contact your line manager to see if you should have this permission.

How to Print an Early Warning

Once an Early Warning has been notified, no changes can be made to it. The Notification will automatically be added to the Early Warning Register and you will be able to print by selecting the Print Early Warning button or Print Early Warning Reply button

Finding your way around the Early Warning Register

From a notice you can navigate back to the Early Warning Register by clicking the "Back to Register" button or by clicking the breadcrumb navigation.

 

The Register shows all the information that the NEC Contract requires it to show and also lots of other useful information to help you manage the Early Warnings in your contracts. By default there are 3 different versions of these registers:- one for each Party and a combined Early Warning Register showing all Early Warnings.  By default the Early Warning Register shows:-

• ID
• Subject
• Notified Date
• Notified By
• Reply Required
• Reply Received
• Reply Status

But the following additional data fields can be added to the Register using the column chooser

• Meeting
• Priority
• Action Owner
• Resolved
• Status
• Reply By
• Reply Draft By
• Description
• Reply
• Action

The Register also allow you to search, filter and export.

Adding Actions and Resolving the Status of an Early Warning

This Register shows a summary of each Early Warning. Under this example of an NEC3 ECC Contract, only the Project Manager has the contractual right to update the Register.

To update or close an Early Warning, click on the line item of any of the open Early Warnings in the Register, the line item will go grey which then brings up the Reply and Risk Management tabs against the Early Warning.  User actions can be added and updated and the risk resolved.  

If you wish to confirm final action carried out before closing, select ‘Update Risk’ one final time and do this BEFORE you mark the risk as resolved. By default you will not be able to update this Early Warning entry in any way once it is closed.

These Risk Management tab only appears once the Early Warning has been communicated. If it is still in draft, updates can only be made to the Early Warning.