Construction Variations
A variation is a change to the original construction contract, which might include altering the design, quality or quantity of work or modifying how the work is delivered.
Variations can significantly increase project costs, delay project completion and create new or modified contractual obligations. Substantial variations will invariably require adjustment to the contract sum and completion date and will trigger Extension of Time (EOT) and/or Liquidated Damages (LADs) clauses.
Variations are often instruction orally, on site, and if not properly documented, can lead to disputes in relation to enforceability and payment.
Types Of Variation
- Design, quality, or quantity of work:
- Additions – introducing new work not originally specified
- Omissions – removing elements of work, previously agreed
- Substitutions – replacing one item or method with another
- Delivery of works:
- Access – adjustments to site access
- Timing – changes to project timelines
- Sequencing – reordering and rescheduling construction works
Terminology
Contract variations are also known as a variation orders, variation instructions, change orders and compensation events. Recognising this varying terminology and responding contractually, is critical to avoiding and/or de-escalating contract variation disputes.
Instructing Variations
The starting point should always be the underlying construction contract. A well-drafted contract should clearly define how variations are issued, how they are valued and how changes to time and cost are handled.
If a contractor follows an invalid variation instruction, they risk breaching the construction contract, they might not be paid and they might incur the cost of restoring the works to the pre-variation condition.
Documenting Variations
Properly documenting contract variations is essential for protecting rights, including securing fair payment and reasonable programme adjustments.
Submitting written variation instructions and retaining detailed records of all changes to substantiate claims with cost, time and scope documentation (in relation to works, materials and labour) is critical.
Valuing Variations
The method for valuing a variation is typically set out in the construction contract. Common approaches include agreed pricing based on original contract rates and prices and independent valuations by Quantity Surveyors. Valuing variations fairly and accurately is crucial to avoiding disputes over payment.
Timing
Variations should be addressed proactively and should not left to the end of the project. Parties should avoid adopting a ‘wait and see’ approach and should act early and decisively to preserve their legal and commercial position.
Objecting To Variations
In theory, it is possible to object to a variation; however, only if contractually permitted. Any such right tends to be caveated and limited to a right of reasonable objection.
If a variation is instructed contractually and a contractor refuses to comply, the contractor will be in repudiatory breach.
If, unusually, a contract does not include a variation clause, the contractor can legally refuse a variation without penalty; however, most modern standard form construction and engineering contracts (e.g. JCT, NEC, FIDIC) now include detailed provisions for variations.
Minimising And Avoiding Variation Disputes
Effective dispute avoidance starts before the contract is signed. Parties should conduct thorough site inspections and surveys, develop a comprehensive scope of works, integrate statutory requirements (e.g. Building Safety Act 2022), identify and allocate project risks, coordinate design properly before tendering, draft clear and unambiguous variation clauses and ensure that bills of quantities, specifications and drawings are detailed and realistic.
Managing Variation Disputes
Variation disputes can arise from scope creep, ambiguity or misunderstandings. Parties should take protective steps by developing a thorough understanding of the original scope of works, complying with conditions precedent, submitting variations in line with contract procedure,
ensuring written instructions are obtained before proceeding, agreeing time and cost before commencing variation works and maintaining clear, contemporaneous records.
Legal Assistance
If you need help in relation to contract variations, including identifying and negotiating contract variations, navigating contractual variation procedures and resolving variation disputes efficiently, we can help.
We recognise that every dispute is unique and strive to offer pragmatic, tailored and creative legal solutions and to maximise outcomes for our clients.
How To Get In Contact
If you require advice on Construction Law and are interested in finding out how we can help, please contact Paul O’Donnell at paul.odonnell@culbertellis.com or call 07521 417579.
