A question I am often asked during CPD talks and claims training courses is, “Is it necessary to submit claims for a variation?” Unfortunately, I have to give a lawyer’s answer to this and say, “It depends.” However, there are essential elements to a successful claim.

If the party responsible for administering the contract follows the procedure set out in most forms of contracts for instructing variations, then the answer is “no,” because the variation has been acknowledged. It will either be measured and evaluated as part of the remeasurement on a remeasurable contract or as a separate evaluation leading to a change in the contract price of a lump sum contract.

When Consultants Don’t Do What They’re Obliged to Do

We all know that, in many cases, consultants do not formally issue instructions for variations to the contract and often give instructions that are not acknowledged as being variations. Examples can often take the following forms:

• Issue of revised drawings;
• Comments on shop drawings that require changes to the contract drawings;
• Comments on materials submittals that change the specification;
• Instructions given during site meetings;
• Verbal instructions given on-site as the work is being carried out.

Very often, the above are a result of design errors or omissions. If, as is often the case, the consultant responsible for contract administration is also the designer, they understandably may not wish to draw the employer’s attention to their failings. They especially do not want to have to advise the employer that, because of these failings, the project is going to cost more and/or be delayed.

Bearing in mind that most forms of contract oblige the contractor to comply with instructions, the contractor has no choice but to proceed with the varied works. But what should the contractor do if they consider that the instruction comprises a variation, although no formal acknowledgement has been made?

5 Tips for Success

1. First, they should consider whether the variation is going to result in significant additional cost and/or delay. If not, it is probably something that may not be worth pursuing for the sake of good relations.
2. Is the contract remeasurable or a lump sum? If remeasurable, payment will be picked up in the remeasure, and unless the variation will delay the time for completion, there is no need for a claim. If, however, the contract is a lump sum, there must be a mechanism for increasing the contract price, so a variation needs to be established.
3. If they decide to pursue the variation, it is vital to send a notice to the contract administrator stating that the instruction constitutes a variation under the contract and that the contractor intends to claim additional payment, an extension of time, or both. The contractual time frames for the submission of notices should be respected to avoid any time bars. This notice is vital to allow the contract administrator or employer to revoke any instruction they may have previously considered had no time or cost implication, or at least to make provisions against it. Hopefully, at this point, the contractor will receive an acknowledgement of the variation. However, in my experience, contractors should not hold their breath while waiting for this.
4. If no acknowledgement is forthcoming, the contractor should submit a claim for the variation. The claim should follow good practice for claims and should set out the following as a minimum:
   • Establish that an instruction has been given.
   • Establish why the instruction comprises a variation. This can usually be achieved by comparing the works included in the contract to the work that has been varied by the instruction.
   • Establish the contractual provisions for variations and demonstrate that the instruction comprises a variation leading to additional payment or time.
   • Quantify and evaluate the variation—whether additional payment, an extension of time, or both—and explain how all calculations have been carried out.
   • Substantiate everything.

Claims Class followers will know that the above comprises the essential elements of a successful claim, which are:

• Cause,
• Effect,
• Entitlement, and
• Substantiation.

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