Identification and Valuation of Variations in Construction and Engineering Contracts

The identification and proper valuation of subcontract variations is arguably the greatest source of problems for Specialist Sub-Contractors and it is therefore important to have a clear understanding of the contractual framework governing the instruction, execution and valuation of sub-contract variations.

 

A common feature of most construction projects is that at some stage the person who has commissioned the work is going to change his mind about some element of it and will require changes to be implemented during the construction phase.

 

Parties involved in the procurement and construction of buildings, plant and the like, have long since recognised that variations are so common place that all the standard forms of contract for Main Contractors and Specialist Sub-Contractors recognise this fact and specifically provide for their introduction.

 

If his contract did not contain provisions for variations then the Specialist Sub-Contractor would in theory be entitled to refuse to deviate from what he had originally contracted to provide. However, most contracts can be varied by the mutual consent of the parties and in practice it is not usually in the best interests of the Specialist Sub-Contractor to refuse to carry out sub-contract variations.

 

Wide powers to order variations are available to Architects, Engineers and Main Contractors  under all of the standard forms of contract and as the design process is rarely completed when work starts on site, these powers are frequently exercised.

 

WHAT IS A VARIATION?