Variations in construction: how to record and price them

More than most people assume. A variation is not only extra work. Under JCT it covers four things.

1. 01Additions. Work added to the scope.
2. 02Omissions. Work taken out. These reduce the account, and an employer cannot omit work simply to give it to somebody cheaper.
3. 03Substitutions. A different specification, material or standard from the one priced.
4. 04Changes in conditions. Access, working hours, sequence or the order in which work must be carried out. No extra materials involved, and the cost can still be large.

The fourth is the one that gets missed. Being told to work nights, or to complete a floor out of sequence, changes the cost of work that was priced on different assumptions, and it is a variation even though the drawings did not move.

Only the person the contract names. Under JCT that is the contract administrator or architect. Under NEC it is the project manager. A clerk of works cannot instruct a variation. Nor can the employer directly, on most forms, and nor can a consultant who happens to be on site.

An instruction from somebody without authority to give it is not a variation. Doing the work anyway means arguing later that it was ratified, which is a much weaker position than holding a written instruction.

When a verbal instruction is given, most standard forms provide a route: confirm it in writing to the person who gave it, and if they do not dissent within a stated period, it takes effect. That confirmation is the cheapest document on any construction project.

The contract sets an order, and the order matters because each step down is worse for certainty on both sides.

Most disputes live at step two. The contractor says conditions changed enough to move off the contract rate; the quantity surveyor says they did not. Contemporaneous records of what the conditions actually were decide it, and they have to be made at the time to be worth anything.

NoteA schedule of rates agreed at tender makes steps one and two far quicker to settle, because both sides are reading the same numbers.

Often, and the two are usually claimed separately. A variation that adds four weeks of work entitles the contractor to an extension of time under the relevant clause, and possibly to loss and expense for the prolongation.

Valuing the work and forgetting the time is a common and expensive mistake. The measured work is paid at the agreed rate, the programme slips by a month, and the time-related preliminaries for that month come out of the margin because nobody claimed them.

Price the work, then ask what it did to the programme. Those are two claims and the second is frequently larger.

• A reference. Sequential, so gaps are visible.
• The date instructed and by whom. Name and role, not just a company.
• What changed. In terms of the contract documents: which drawing, which specification clause.
• Photographs where the condition matters. Existing state before the change, taken at the location.
• The valuation basis proposed. Which of the four rules applies, and why.
• Programme effect. Days claimed, or a statement that none are.
• Signature or acknowledgement. From whoever instructed it.

A record made on the day, with a photograph and a name against it, settles an argument that a reconstructed record six months later will lose.