Valuing variations in construction contracts
Valuing variations in construction contracts

The following Construction guidance note provides comprehensive and up to date legal information covering:

  • Valuing variations in construction contracts
  • General rules
  • Design and build contracts
  • JCT
  • NEC
  • FIDIC
  • SCL Delay and Disruption Protocol
  • Valuing omissions
  • Extensions of time

This Practice Note deals with the procedure for assessing and valuing variations once it has been established that a variation has arisen. It focuses primarily on general rules about variations established by the courts, and also looks at the specific rules set out in the JCT, NEC and FIDIC contracts.

For an introduction to variations under construction contracts and how they arise, see Practice Note: What is a variation on a construction project?. See also Practice Note: Variation instructions on a construction project, which considers procedural requirements for instructions, circumstances in which a contractor may recover payment for changed works in the absence of compliance with conditions precedent, and provides practical tips for preventing and making variation claims.

Variations will generally give rise to additions to (or sometimes deductions from) the contract price. The valuation of variations may include not just the labour/material costs of carrying out the additional work, but also other consequent expenses (eg overheads) or impact on other works, such as costs associated with the need to re-sequence those works. Variations may also (but not necessarily) require adjustment of the completion date. The rules for valuing variations will generally be included in the particular contract being used. The appropriate method to be used will depend on the type of procurement, the form of contract and the composition of the contract