Assessing Scope and Cost Changes

Assessment Of Contract Variations And Claims

Any changes to the contract requiring a change to a particular section of work will lead to a Variation of Contract. A variation causes changes to the contract sum and can either be a positive or a negative amount and are generally assessed by a Quantity Surveyor and included in the monthly Progress Claim Assessments. 

Contract Variations are changes in the amount or cost of works stated in the construction contract. These can be either an increase or decrease in the work needed to be done, changing the scope of work. 

These contract variations may be instructed by the client or proposed by the contractor, which are to be agreed upon by all parties.  Better, these should be first put into writing before becoming a valid change. The change could be either in the way things are done, quality of work or in the work costs. 

Causes of Variations

Variations can happen due to unforeseen circumstances.  During construction, these circumstances could not be avoided, especially if the contract is running for a long period. Here are some situations to watch out: 

Situation

You would need to request your contractor to do additional work because you realised that the house may need another window.

Situation

You have seen that some of the tasks that your contractors have are overlapping and decide to change it to suit their designated tasks more.

Situation

You decided to change the quality of your paint that you would use for a paint job as a change of preference.

Situation

There has been changes in the project site such as sudden temperature changes that led to cost adjustments.

Situation

The ever-changing costs of construction materials, which affect the prices stated in the contract.

Summary

Whatever circumstance that led you to request a variation, you and your builder should agree on these changes first before implementing it.

Types of Variations

As a homeowner, you can request for a variation to your builder for any of these reasons:

  • Change in the quantity of work.
  • Change in the quality of work
  • Change in the costs for the work to be done
  • Change on how to do the work and
  • Change in the latent condition and risk allocation of the construction project.

It is better to raise these concerns as early as possible. If you raise these things late, your contractor might not do it immediately, thus delaying your work progress. Or for the contractor's side, they may need additional payment for any new tasks needed in the construction. 

So, it is better to deal with these matters quickly to ensure a smooth sailing construction phase.

The Process of Documenting a Variation

Variation orders are made through putting your concerns into writing. You can formally send a letter to your builder containing the changes you would like to propose. Make sure to include important details including the work description, its technical specifications, and any additional costs if any. 

But for minimal changes, you can both look over your respective copies of the contract and make handwritten changes. You can initial and date changes such as omission and addition of a few words on both copies of your contract. This applies to changing certain clauses or sections of your construction contract. 

You may want to double-check the variation clause in your contract before making a proposal. What mainly matter is that both parties agreed to it and signed to proposed changes. This formally makes the variation valid, in which both parties should comply accordingly. 

Why Should You Immediately Make a Variation Claim?

Your construction contract sets the course for the construction project until it becomes a success. How good it was constructed and followed will determine how the project go through. So, a variation could either improve it or lead you into a contract dispute. 

If you do not inform your builder of any variations, it can cause misunderstandings especially during payment time Unsaid variations could lead to a contract breach unintentionally. There may be certain times that work done might become a cause of dispute. 

So, it is important to inform your builder about sudden changes, and document it properly.