Variations can be defined as changes to the design, quality, or quantity of the works set out in the original scope of works under the contract. Therefore, normally it will result in either increase or decrease from the contract sum.
Variations are to be instructed by the Engineer (depending on the provisions of the contract). And the Contractor shall execute and be bound by each variation.
- (ICTAD/SBD/1 – in Sri Lanka – Clause 39.1 – Variations may be initiated by the Engineer at any time before issuing Certificate of Completion for the Works, either by instruction or by a request for the Contractor to submit a proposal).
- (ICTAD/SBD/1 – Clause 39.3 – The Contractor shall execute and be bound by each Variation unless the Contractor promptly gives notice to the Engineer with supporting documents to establish that he cannot obtain the necessary Equipment, Materials, Plant and Temporary Works or any of them as appropriate, required for the Variation. Upon receiving this notice, the Engineer shall re-confirm, vary or cancel the instruction).
Variations will normally consist of one or more of the following: (ICTAD/SBD/1 – Clause 39.4)
• Alteration or modification to the design, quality, or quantity of the works;
• Additions, omissions, or substitution of items of work;
• Confirmation of the expenditure of Prime Cost or Provisional Sums;
• Changes to sequence, method, or timing of the works;
• Changes to the line, level, position, or dimension of part or the whole of the works; or
• Any additional work, plant, Materials, or services necessary for the Permanent works.
Limit on Variations
(ICTAD/SBD/01 – Clause 39.2 – Variations may be ordered by the Engineer provided the cumulative value of all such variations issued does not exceed a sum specified in the Contract Data. Any variations ordered above this limit would need the prior approval of the Employer).
All such instructions for variations from the Engineer must be in writing. If the contractor carries out any variations involving him in additional expense, and the variation has not been subjected to a written Engineer’s instructions, the contractor then runs the risk of being unable to recover the extra cost involved in the variation.
However, the Contractor is protected, when any instructions being given orally. The Contractor can send, within seven days, a written request asking confirmation for any oral instructions given by the Engineer. Then the Engineer has the opportunity during seven days following receipt of that request to dissent or differ; otherwise, the instruction becomes effective immediately.
The Project Quantity Surveyor must satisfy himself, before giving financial effect to any variation whether written instructions have been given by the Engineer ordering the variation. Or else, he must see whether the contractor claims to have confirmed oral instructions that the Engineer does not dissent from such confirmation.
Anyhow, the Project Quantity Surveyor has no authority to adjust the Contract sum in respect of a variation, which has not been put into the form of the Engineer’s written approval.
It is important to complete an early evaluation of the issued variations and then communicate these to the Contractor as soon as possible.
It will help;
(a) to assess the possible final contract sum;
(b) to identify any impending claims arising from variations;
(c) to provide the Contractor with the QS’s assessed amount of the variation; and
(d) to expedite the settlement of the final account.
As shown above, in (c), the Contractor then knows how much he would be paid for a particular variation. Then, if necessary, he can settle rates with a Subcontractor. It helps to control his cost more effectively. This will make the finalization of final accounts much easier.
Standard Method of Measurement rules used for the preparation of Bills of Quantities should apply equally when measuring variations.
Valuation of variations
All extra or additional work done or work omitted by order of the Engineer shall be valued at the rates and prices set out in the Contract, if the same can be applicable. (for works of similar character in similar conditions). (ICTAD/SBD/1 – Clause 40.2)
If the contract does not contain any rates or prices applicable to the extra or additional work, then suitable rates or prices shall be agreed upon between the Engineer and the Contractor. (ICTAD/SBD/1 – Clause 40.2)
Following methods also can be used for fixing rates other than the one mentioned above. (for the dissimilar character in dissimilar conditions)
– calculating proportionate rate (pro-rata)
– using standard Schedule of Rates
– using day works
In the event of disagreement about rates, the Engineer has the power to fix rates or prices, in his opinion, are reasonable and proper. (ICTAD/SBD/1 – Clause 40.3)
The Engineer may order in writing that any variation shall be executed on a Daywork basis. The Contractor shall then be paid for such work under the conditions set out in the Daywork Schedule included in the contract and at the rates and prices affixed there by the contractor in his tender. (ICTAD/SBD/1 – Clause 53.1)
In respect of all works executed on a Daywork basis, the Contractor shall deliver each day to the Engineer’s Representative an exact list of the names, occupation and time of all workmen employed on such work and a statement, commonly called “Daywork sheets”, showing the description and quantity of all materials and plant used. One copy of each list and statement will, if correct, be signed by the Engineer’s representative and returned to the Contractor. (ICTAD/SBD/1 – Clause 53.2)
At the end of each month, the Contractor shall deliver to the Engineer’s Representative a priced statement of the labour, materials, and plants used. However, if they are accepted and the hours and quantities shown on them are considered to be excessive, the Project Quantity Surveyor should reduce them to reasonable amounts.
The rates and prices used for valuing day work should be those current at the time the work was carried out, not those current at the date of tender. The rates of labour used in valuing day work should be based on standard wage rates.
Under the pretext of variation, the Engineer cannot change the nature of works. For example, if the contract provides for secant pile shoring, they cannot ask for diaphragm wall shoring as it will entirely change the nature of the work.
If the Engineer omits work from the contractor’s scope under variation order, such an omission must be genuine. The work omitted must be omitted from the contract entirely. Omissions cannot be used to take work away from the contractor to give to another.
Also, the Engineer is not allowed to order variations to help the contractor, when the works are too difficult or expensive for them.
Extension of time
Many construction contracts allow the construction period to be extended when there are delays that are not due to the contractor’s fault. This is termed as an extension of time (EOT).
Sometimes, variations may (but do not necessarily) create relevant events that can merit an extension of time and thereby adjustment of the completion date. (ICTAD/SBD/1 – Clause 28.1)
Generally, variations are sources of disputes. It may be during the valuing the variation, or agreeing whether it is a variation at all. Then, it can cost a lot of time and money during the course of a contract.
It is true that some variations are unavoidable in constructions. But, it is wise to minimize potential variations and subsequent claims from variations. It can be done by ensuring that uncertainties are eliminated before awarding the contract.
This can be done by:
- Undertaking comprehensive site investigations and condition surveys.
- Ensuring that the project brief is complete and is supported by stakeholders.
- Ensuring that legislative requirements are properly incorporated into the project.
- Ensuring that risks are properly identified.
- Ensuring that designs are properly coordinated before tender.
- Ensuring the contract is unambiguous and explicit.
- Ensuring the contractor’s rates are clear.
- Preparing concise drawings, bills of quantities and specifications, providing for all situations which are reasonably foreseeable.