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Variations in Construction Contracts

Variation is an additional Work to your contract scope of work and it is calculated from materials, labour and overhead profit. The complexity of construction works means that it is hardly possible to complete a project without changes to the plans or the construction process itself. Construction plans exist in form of designs, drawings, quantities and specifications earmarked for a specific construction site. Changes to the plans are effected by means of a variation order initiated by a consultant on behalf of the client or as raised by the contractor.

Variation is almost an inevitable part of any construction claim. Given the competitive environment that the construction industry is usually in, many contractors probably rely on the proprietor’s variations to make a reasonable return for their contracts. In addition, variation works commonly affect the completion date and, therefore, impact on delay claims by the proprietor. This explains, to some extent, why the resolution of issues concerning variations is never easy, especially if the dispute is heard way after the building is completed and records are scarce, making physical measurement of the works completed difficult.  Under most standard forms of contract in the construction industry where Bills of Quantities are adopted the valuation of variations are generally made by Quantity Surveyors in accordance with four main valuation rules. The measured quantities of the variation may be valued in accordance with any of the following methods;

Under most standard forms of contract in the construction industry where Bills of Quantities have adopted the valuation of variations are generally made by Quantity Surveyors in accordance with four main valuation rules. The measured quantities of the variation may be valued in accordance with any of the following methods;

  1. Rates contained in the Bills of Quantities or Schedule of Rates, whichever is applicable
  2. On the basis of rates analogous to those above
  3. On the basis of a fair valuation, at fair rates or prices
  4. At Daywork rates at the prices ruling at the date the work is actually carried out

Variations may arise in any of the following situations

  • when the architect needs or wishes to vary the design or the specification;
  • when a discrepancy is discovered between any two or more of the contract documents;
  • when a discrepancy is discovered between any statutory requirement and any of the contract documents.
  • when the description of a provisional sum for defined work in the contract bills does not provide the information required by General Rule 10.3 of SMM7.
  • when an error in or omission from the contract bills is discovered