As in life, change is inevitable on construction projects. Even the smallest changes can have an impact on the budget or programme and someone will be responsible for covering these additional costs. As a project progresses, it is important to effectively manage change so you can minimise the risk of disputes later on.
Change or variation?
A variation is a change, but not all changes are variations. A variation is defined as any change to the scope of works as defined in the contract. The term comes from the JCT suite of contracts. The NEC uses the phrase “compensation event” to describe a contractual change. You will also likely be familiar with terms such as “change order”, “instruction” “design change” etc in relation to such contractual change.
Regardless of what you call it, if making a change you’ll need to follow the appropriate change procedure as set out in your contract. If you don’t, there may be contractual penalties that apply, such as missing out on entitlements or not being able to claim for things due to ‘conditions precedent’ to entitlement.
What to do when change occurs
Every contract is different, and it is important you understand how variations should be dealt within your contract. However, the general (and much reiterated rule applies: Records Records Records!
If you are instructed to carry out works that are not in accordance with the contract, you may want to ask for formal written instructions. In reality, on a busy site when we are all working to get the job done, it may be that instructions are given verbally. In those cases, put something in writing as soon as possible. Ideally an email to the other parties confirming your conversation.
How to claim for variations
The first step is to go back to the contract and check your entitlement. As we said above, not all changes are variations. You contract will set out whether a change gives you entitlement to time, money or both.
Then, the process for claiming variations should be set out in the contract. It should tell you when and how you should notify. Be wary of time bars, if these exist, you might lose your entitlement if you don’t notify in time.
Make sure you notify the right person, in the right format. You may have had a verbal conversation but if you don’t notify in the way set out in the contract, you might find the verbal conversation is not enough.
Check the level of detail required in the notice. Is it enough just to state that a variation has occurred or are you required to include certain records in your notice? You will probably need to provide some level of substantiation if you are claiming for costs. If you are claiming for an extension of time, you’ll need to show the impact on the program and in particular how the project has been critically delayed.
Once you’ve provided the notice, wait for a written instruction and acceptance before you undertake the work. Keep this paper trail clear, so should a dispute arise later on, you’ll have the records you need.
Seek advice
As always, if you are unsure of your obligations under the contract you should seek advice. We can help you set out a procedure for managing change and review your project to make sure you do not miss out on your entitlement. If you are looking for help or advice, get in touch via our website.
