FAQs for Variations

Question 1

What happens if I miss the 8 week deadline for a compensation event?

Accepted Answer

If the bar applies, the entitlement is usually gone. But check whether the event was one the Project Manager had to notify, because those escape the bar. Start with the wording, because the 8 week bar in the unamended NEC4 form does not catch everything. The bar applies to events the contractor should have notified: things like weather, ground conditions or third party interference. It does not apply to events arising from the Project Manager or Supervisor giving an instruction, issuing a certificate or changing an earlier decision, because those the Project Manager is required to notify, and the contractor's failure to notify them does not kill the entitlement. So the first salvage question is always which side of that line the event sits on: a change that was instructed but never processed by anyone is usually still alive. If the event genuinely sits on the barred side and the weeks have run, the honest position is that the contractual entitlement has lapsed, and what remains is negotiation: events already recorded in early warnings, minutes and programmes are hard for a Project Manager to pretend never happened, and many accounts settle with barred events priced at a discount rather than at zero. What does not work is silence followed by a final account surprise. Whatever the position, notify now rather than later: a late notification the other side must answer beats an event that only ever existed in your own files.

Question 2

What actually counts as a variation?

Accepted Answer

Any change from what the contract documents described, whether to scope, quality, quantity, sequence or the conditions you build under. A variation is anything that changes the work from what the contract documents described: the scope, quality, quantity, sequence or conditions of what you agreed to build. The contract documents are the drawings, specification and terms you signed up to, and they set the baseline you priced against. The obvious cases are work added or taken away, but most standard contracts also treat changes to how or when you work as variations, such as being told to build in a different order, being given more restricted access, or having working hours cut back. This matters because a variation usually carries a right to extra payment and sometimes extra time, so getting the label right is the first step to getting paid. The test is always the same: compare what you are now asked to do against what the signed documents required, and if the tender drawings showed less than you are now building, the difference is a change, whatever the instruction is called. Keep the tender documents to hand and measure each instruction against them, because that comparison decides who bears the cost.

Question 3

Do I need a written instruction to get paid for a change?

Accepted Answer

Usually yes, so treat any verbal direction as unpaid until you have confirmed it in writing yourself. Usually the contract says yes, so treat every verbal direction as unpaid until you have confirmed it in writing yourself. An instruction is the formal order to change the work, and most contracts only oblige the other side to pay for changes instructed properly, which often means in writing, by a named person such as the contract administrator or project manager, and sometimes in a set format. A verbal direction, someone on site simply telling you to do something, is not necessarily fatal to your claim. Many contracts include a confirmation procedure letting you write up a verbal instruction and treat it as valid if no one objects within a set time, and even where the contract is silent, a same-day letter or email confirming what you were told, then going unanswered, is powerful evidence the direction was really given. What loses claims is doing the work on someone's say-so and raising the paperwork months later, by which point the other side can simply deny the conversation happened.

Question 4

Is design development a variation?

Accepted Answer

Development fills in detail the contract already allowed for; a variation changes what the contract described. The label decides who pays. It depends: design development fills in detail the contract already allowed for, while a variation changes what the contract described. Design development is turning early, outline drawings into the fuller, buildable detail everyone expected would follow, without changing the substance of what was agreed. A variation, by contrast, is an actual change to the scope. The distinction matters because development is generally at your own cost as part of the job you priced, whereas a variation usually earns extra payment, which is why the other side is often keen to call a change development. The test is the contract baseline: what did the tender documents, the specification and any design responsibility clauses (the terms saying who was responsible for completing the design) require you to allow for? Detail that refines that agreed scope is development; drawings that upgrade the specification to better or more expensive materials, add quantity, or introduce new work are a change, however small each revision looks. This creep is only visible one drawing at a time, so compare every new revision against the last and flag anything beyond filling in detail before you build it.

Question 5

What is a compensation event?

Accepted Answer

NEC's mechanism for change: a defined event that can entitle you to time and cost, driven by strict notification deadlines. A compensation event is the NEC contract's name for a change that can entitle you to more time and more money. NEC is one of the main families of standard construction contracts used in the UK, alongside JCT, and instead of variations and claims it uses this single defined term. The contract lists the events that qualify, from an instruction changing the Scope (the NEC word for the description of the work you have to do) through to unforeseen ground conditions and delays caused by the employer. What makes NEC different is that these events are priced forward through quotations, meaning you submit a costed and programmed offer for the effect at the time, rather than piecing together a claim long after the work is done. The teeth are in the timetable: if the Project Manager, the person running the contract for the employer, has not already notified the event, you generally must notify it yourself within a set period, commonly eight weeks of becoming aware, or your entitlement can be lost entirely. On NEC the paperwork is not administration around the claim, it is the claim, so notify and quote promptly and to time.

Question 6

Can I refuse to carry out a variation?

Accepted Answer

Rarely. A valid instruction usually has to be carried out, with the argument about money kept for afterwards. Rarely: most contracts oblige you to comply with a valid instruction and then argue about the money afterwards. A valid instruction is one that changes the work in the way the contract allows, so refusing to carry it out is usually itself a breach, however strongly you disagree about what it is worth, and a breach can expose you to the other side's costs of getting the work done elsewhere. The real leverage sits elsewhere. First, check the instruction is valid at all: was it given by the person the contract names, and under a clause that permits it? Second, check whether your contract lets you object on specific grounds, for example where a change would affect the conditions under which you carry out other, unrelated work. Third, put your position on record in writing before you comply, so your disagreement about value is preserved. The safe sequence is to comply under protest, notify your objection, keep full records of the cost and effect, and fight about the valuation with the work already behind you rather than risk a breach by downing tools.

Question 7

How should a variation be valued?

Accepted Answer

By the contract's own hierarchy: contract rates for like work under like conditions, adjusted rates, fair rates, then dayworks. By the contract's own set order, which most forms lay down as a hierarchy: contract rates first, then adjusted rates, then fair rates, and dayworks last. Contract rates are the prices already in your priced document, the bill of quantities or schedule of rates, used where the varied work is like the work you priced and done under similar conditions. Where the work is similar but the conditions are not, those rates are adjusted. Where nothing comparable exists in the priced document, a fair valuation or fair rate is used. Dayworks, meaning payment for the actual labour, plant and materials used plus an agreed percentage, are the fallback where the work cannot sensibly be measured any other way. A payer will usually want the existing contract rates applied everywhere because they are lower, but a rate carries the conditions it was priced for: work done out of sequence, at night, or in occupied premises is not the same work in a different quantity, so the original rate does not fit. A proper valuation should also reach everything the change touched, including any knock-on effect on time, on preliminaries (the site-wide running costs such as supervision, welfare and plant that are not tied to a single item of work), and on other work that was not itself varied but was disrupted by the change. Identify which tier each item falls into and price the full consequences, not just the added labour and materials.

Question 8

Can I lose a variation claim by notifying it late?

Accepted Answer

Yes, where the contract makes notice a condition of entitlement, and NEC forms are built that way on purpose. Yes, where the contract makes giving notice in time a condition of being paid at all, and NEC contracts are built that way on purpose. A notice here is simply a formal written warning, given within a set period, that an event has happened or a claim is coming. The key thing to look for is condition precedent wording, contract language saying that giving the notice in time is a precondition of the entitlement itself. Where a contract is drafted that way, a claim notified late can fail on timing alone, however strong it would have been on the facts, which reflects the parties' agreement to deal with problems while they are fresh. Where the wording is softer and notice is not made a strict precondition, being late does not automatically destroy the claim, but it still costs you: it goes to how believable the claim is, and the further it sits from the event, the thinner your records and the easier it is for the other side to deny it. Because you often cannot tell at a glance which kind of clause you are under, notify first, in the form and to the recipient the contract requires, and perfect the detail afterwards, so a timing point can never be used to defeat you.

Question 9

What if my variations are only disputed at the final account?

Accepted Answer

A late dispute changes the tactics, not the entitlement, but the aged evidence makes it harder to prove. A late dispute changes the tactics, not the entitlement: the instruction and the records still decide whether you get paid. The final account is the overall reckoning of what is owed at the end of the job, and payers often hold variations back to that stage because it is where their leverage is greatest and your evidence has aged the most. The response is to rebuild each disputed variation as its own self-contained file, from the instruction through to the valuation, rather than defending one big lump sum. Check what earlier payment applications and certificates already accepted about each change, because an amount a payer has previously certified is hard to take back. A certificate is the formal document confirming how much is due for a period, so it can lock in ground you have already won. Adjudication, the fast dispute process usually decided within about twenty-eight days that construction contracts must make available, can be run on individual variations without reopening the entire account. The far better answer, though, is not to let it get this far: apply for and settle each change in the month it happens, while the facts and paperwork are fresh.

Question 10

Can they omit work from my contract and give it to someone else?

Accepted Answer

Generally no. Omission clauses let work be genuinely omitted, not taken from you and given to someone else. Generally no. An omission clause is the term that lets your contract be reduced by taking work out of it, and the courts read it as allowing genuine omissions, meaning work the employer no longer wants done at all, not as a device for stripping out your contracted work and handing it to another contractor or doing it with the employer's own people, unless the contract says so in very clear words. The reason is fairness: you priced the whole job expecting to earn from all of it, so letting the employer quietly reallocate the profitable parts would defeat the bargain. An omission dressed up as a way of giving your work to someone else is therefore usually a breach, and if it is, the measure of your claim is broadly the profit and contribution to your overheads you would have earned had you done the omitted work yourself. Read exactly what the omission clause allows, ask in writing whether the omitted work is being carried out by others, and price your loss rather than accepting the reduction. A reduction taken off your account is often called a negative variation, and you do not have to treat it as the end of the story.

Question 11

Does a variation entitle me to more time as well as money?

Accepted Answer

Usually yes, if the change affects the critical path, but the time entitlement almost always has its own notice procedure. Usually yes, if the change actually delays the job. Under most contracts an instructed variation is a recognised ground for an extension of time, a formal moving of the contractual completion date to give you longer, and under NEC a compensation event deals with the extra time and money together in a single quotation. Time only follows, though, where the change affects the critical path, the chain of activities that fixes the overall finish date, rather than work that had slack around it. The trap is that on most contracts the money and the time run through separate procedures: valuing the variation does not automatically push the completion date back, and the extension of time claim usually has its own notice requirements and deadlines. Contractors routinely claim the money and forget the time, then face liquidated damages, the fixed sum the contract says you must pay for every day you finish late, at the end of a job the employer's own changes delayed. The remedy is simple: whenever a change touches the programme, say so expressly in the same notice that records the instruction, so both entitlements are protected from the start.

FAQs for Variations, Claims & Disputes

Frequently asked questions

How variations work