Changes to scope are an ordinary feature of construction projects, but they are also a frequent source of disagreement over valuation and entitlement.
The difficulty is often not whether additional or different work was carried out. It is whether the change was instructed in accordance with the contract, whether the person giving the instruction had authority to do so and whether the contractor preserved its entitlement to additional time or payment.
Standard form contracts, including the JCT suite, contain mechanisms for dealing with changes and variations. Those mechanisms should not be treated as an administrative formality. They determine how additional work is instructed, recorded and valued.
The position under NEC contracts is different in an important respect. NEC4 deals with change through the compensation event machinery, and clause 61.3 requires the contractor to notify a compensation event within eight weeks of becoming aware of it, failing which it is not entitled to a change in the Prices, the Completion Date or Key Dates unless the Project Manager should have given notice but did not. Under that form the notification deadline is part of the entitlement, not an administrative step that follows it.
Site practice and contractual procedure do not always coincide
Instructions are often given during meetings, by email or in conversations between members of the project team. The contractor may proceed because delaying the work would be commercially impractical, particularly where the change affects sequencing or other trades.
That can leave a significant evidential gap if the instruction is later disputed.
A contractor faced with an informal instruction should therefore consider who has issued it, whether that person has contractual authority and how the instruction should be confirmed. Where the work has implications for both price and programme, those consequences should be addressed at the same time.
Contemporaneous documentation remains particularly important. Revised drawings, site instructions, meeting minutes, correspondence, labour records and records of materials can all assist in establishing what changed and why.
The contractual position can also be affected by bespoke amendments. A provision requiring changes to be instructed in a particular form or by a particular person can materially alter the contractor's entitlement if it is not followed.
It is worth being candid about the consequence of getting this wrong. Where no valid instruction can be established, the contractor is left arguing waiver, estoppel, an implied variation or a claim in restitution. Each of those arguments is available in principle, but none is as straightforward, or as cheap to run, as an entitlement under the contract's own variation machinery.
The commercial pressure to keep work moving is understandable, but it should not result in the contractual record being left behind. Variation disputes are considerably easier to address where the documentation developed alongside the works rather than being reconstructed at the valuation stage.
Accurate at the time of writing. This information is provided for general information purposes only and should not be relied upon as legal advice.
