Variation

A variation usually starts with a written direction from the superintendent, or a request from the contractor that the superintendent approves. Under many contracts the superintendent can first ask the contractor to price a proposed variation, so both parties can agree the cost before the work is done.

If the parties cannot agree a price, most contracts fall back to a valuation method. A common order is prices or rates in the contract first, then rates that are reasonable for the work, plus a margin for overheads and profit. A variation that delays the works can also support a claim for an extension of time.

Once valued, the variation is added to or deducted from the contract sum and claimed in the next progress claim.

• Every standard Australian contract has a variations clause. Check how directions must be given, who has authority to give them and how quickly you need to price them.

• AS 4000-1997. Clause 36, Variations.

• AS 2124-1992. Clause 40, Variations.

• Your contract. Check special conditions that cap the value of variations, require principal approval above a threshold or bar claims made outside a time limit.

• Added work. Extra scope the drawings and specification did not include.

• Omitted work. Scope the principal removes. Many contracts limit omitting work just to give it to someone else.

• Changed work. Different materials, finishes, levels or dimensions from those in the contract documents.

• Changed method or sequence. A direction to do the work in a different order or way, where the contract did not already require it.

Under the standard Australian contracts, the superintendent directs variations on behalf of the principal. Directions from anyone else, such as the principal's project manager, a design consultant or a tenant, may not be valid directions under the contract unless the contract gives them that authority.

Before acting on an instruction, check who gave it and whether they have authority under the contract. If an instruction looks like a change but is not called a variation, many contracts let the contractor ask the superintendent to confirm it in writing as a variation. Do that before carrying out the work, so there is no argument later about whether it was a direction or the contractor's own choice.

Keep a variation register that records each direction, its date, who gave it, the price submitted, the amount approved and any time claimed.

• Doing the work without a written direction. Verbal instructions on site are hard to prove later. Get the direction in writing before you start.

• Pricing too late. Many contracts set a deadline for pricing a variation. Miss it and the superintendent may value it for you.

• Forgetting the time impact. If the change delays the works, claim an extension of time as well as the cost.

• Not flowing it down. Issue matching variations to affected subcontractors so your costs and theirs line up.