Does a Variation Lead to One Claim or Three?

One of our distance learning students recently asked the following question: if a variation causes additional work, a delay to the completion date and leads to entitlement to the payment of associated prolongation costs, should one claim be submitted for the whole thing, because all the entitlement stems from the variation?

This is a question that I have been asked on several occasions and I am afraid that I will have to give a lawyer’s answer and say that ‘it depends’.

If the variation causes additional work, delays the completion date and therefore entitles the contractor to prolongation costs, then it is strictly speaking one claim because all this stems from the variation.

If you think about the management of the claim from both a contractor’s and an engineer’s point of view however, in most cases I would advocate submitting separate claims as follows:

Evaluation of the additional work. The quantity surveyors/cost consultants can usually be relied upon to finalise this with few problems and the evaluation of the additional work may be quickly and easily settled at that level.

The extension of time. I prefer to submit a separate claim here because different people will usually deal with it on both sides. Planners need to establish the effect of the delay and contracts people need to establish the contractual entitlement and write a more complex narrative than would usually be necessary for the evaluation and entitlement to payment for the additional work.

 Prolongation costs. Whether this is submitted separately to the extension of time claim really depends on the issue in question. If it is a large project and a long delay, I would probably submit separate claims. If the issue is less complicated, I would submit this with the extension of time claim. The costs will flow from the extension of time, so if the engineer reduces the extension of time claim, then the costs will need to be reduced accordingly, meaning a revision to the claim if submitted with the extension of time claim. On large projects, the site resources and the like that contribute to the prolongation costs may be numerous and both preparing and auditing the costs will be a time consuming matter. The definition of prolongation costs also tends to be subjective and subject to interpretation, therefore this is also a more difficult and time-consuming matter to agree. Quite often the evaluation of the costs is undertaken by different people to those who deal with the extension of time and the evaluation of additional work.

Basically, if you submit everything under one claim, it could take a long time to resolve and this may hold up settlement of the easy issues whilst the more complex matters are resolved. Submitting three discrete claims will allow each matter to be settled in turn.

Also, put yourself in the place of the person who will receive the claim. Would you prefer three small issues to deal with one-by-one, or one large complicated issue?