Variation and change – are they the same thing in construction?

The simple answer to this question is, ‘no’. A variation has a very specific contractual implication for a construction project, writes Guy Jackson, founding partner of Overford.

A change might not be a variation, even though a variation is almost always a change. No matter whether your involvement in a project is as designer, administrator, or contractor, you will likely have to deal with change.

At the outset

In construction contracts, various documents will set out, in some detail, what the project requirements are. These include the specification, bills of quantities, and contract documents. During the course of the project, and as the architect, employer, or some other party determine, more detail may come to light.

For example, the specification of a type of ironmongery may not have been decided at the outset. Certain details, such as ceiling levels may not have been clear at the start of the project. Materials expected for use may become unavailable and/or on extremely long lead times, meaning other materials are needed to replace them.

Unexpected change

As the project progresses, the contractor will encounter all manner of unexpected change. Whether it is possible to define, or more importantly, approve the changes as formal variations to the original plan, will depend very much on the detail of the contract.

As an example, it may be necessary for a contractor to create an infill element if a ceiling isn’t level. If not spotted at inception, it may not be anticipated in the design or specification. But, if the contract states that the contractor accepts responsibility for measurement and checking such items, then that will not be a variation for which compensation is available. It may, however, not stop them from submitting a claim for it. Understanding what can and cannot attract compensation is crucial.

Equally, there may be scenarios where a contractor can recover money for items that do not cost them anything. For example, on a project in Hong Kong, a contractor recovered costs for plant standing idle because of a change to the project. This was despite the fact that the idle plant did not cost them any money.

What does the contract say?

The trick here is to keep an eye on the contract. Whether you’re administering it or subject to it, the devil will always be in the detail. Whether a change counts as a variation will be identified in the contract. If it’s not identified, then there will be a discussion and a negotiation to be had around what the contract means. A well-drafted contract should try to cover most bases when it comes to who bears the risk on various elements of potential change.

Ultimately, change happens in construction. There’s always something slightly different, whether it’s a change of mind on the part of a client, a lack of availability of materials or some other change to the plan. The key to success is to try and ensure fair balance of risk allocation, so nobody bears an unfair burden when something changes. Which is where good advice and careful planning come in.

Should you want to know more about this or related subjects, contact the team at Overford today.

• Guy Jackson is founding partner at Overford