Variations and Additional Preliminaries

One of our Distance Learning students raised an interesting question on preliminary costs (preliminaries) and variations recently, which was:

‘If a variation causes the contractor to incur additional preliminary costs, should these be claimed as part of the variation, or should a separate claim be submitted?’

I am sorry, but I am going to have to give a lawyer’s answer. On the one hand, it could be this, but on the other hand, it could be that. By way of explanation, let’s look at a few different scenarios:

A variation is normally measured and evaluated using contract rates and prices. In most cases, the quantity surveyors would be able to carry out the exercise and this would be the end of the matter.

What if the variation requires extra preliminaries? For example, if the contractor needs to bring an item of plant to site, to carry out the variation? Possibly, as in the case of excavation, the contract rates will include for the plant time. However, it is unlikely they would include for the mobilisation and demobilisation costs. Another scenario could be where the contractor has to pay extra for shipping or freight for materials or equipment to avoid delaying the project. In such cases, I would suggest that such costs be added to the evaluation of the variation and submitted with the variation claim.

What if the variation is for a substantial amount of additional work, or is instructed at a late stage in the contract period and will delay the time for completion?

In such a case, besides payment for the extra works, the contractor would also be entitled to an extension of time. There would also be an entitlement to associated prolongation costs. This should compensate the contractor for the additional preliminaries, site and head office overheads incurred during the period of delay. In this case, I would recommend the submission of two or three claims:

  1. The claim for the additional work would form one claim. This is because an agreement would be straightforward to achieve, and would usually be agreed by the quantity surveyor.
  2. The claim for the extension of time would usually require the input of planners and contractual personnel. It might possibly need a more analytical approach, so I would submit this as a separate stand-alone claim.
  3. Similarly, the claim for prolongation costs would flow from the extension of time. Preparation and evaluation would be by different personnel, so I would submit this separately.

E-CoursesSubmit Claims for Preliminaries and Other Items Separately

The reasons that I recommend separate submissions are:

  • Firstly, different claims are often prepared and assessed by different personnel
  • Secondly, such an approach does not prevent matters that may be easily agreed in a timely manner from being settled whilst the more complicated matters are still being discussed.

This all helps to move things forward towards an agreement. Which is something that should be encouraged at all times.

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