Variations or Extra Work
Contractors are entitled to be paid for extra work required during the execution of the Contract. Extra work or variations shown on drawings are generally picked up in the course of re-measurement if the Contract Price is re-measurable. However, variations may also arise from changes or modifications to the Contract, from site instructions or late revisions to drawings. The Project Manager should be aware of the implications of these and obtain understanding from the Engineer, at the time when the instruction is issued, the method of payment for the works in question.
The Project Manager must be aware of the items in the Bill of Quantities and importantly their descriptions in order to understand if the varied works are covered by re-measurement or requires a new rate. Typical items requiring new rates are grade, type, thickness or finish of materials shown on the drawings varying from those given in the bill of quantities, depths of excavation greater than those billed, class of material differing from that billed (e.g. rock), varied heights of propping to formwork, etc.
It has long been my view that the full cost of variations are generally not recovered by Contractors, despite that most forms of Contract provide for this. Contractors should give special attention to the impact of variations, in so far as proper extension of the contract time is concerned. So often Engineers will not concede an extension of time in respect of varied work as the item is valued under the bill rates. This is not the case as the same rates can only be used if works are of similar character, executed under similar conditions and not interfering with the original planning.
In such an event or when a new rate is applicable the Project Manager must notify the Engineer in writing within 14 days (variation notice template) of receipt of the instruction or variation and prior to commencing with the work of his intention to claim extra payment, a new rate or varied price.
When there is doubt as to whether an item is an extra or not, or if the Engineers Instruction is verbal, the Project Manager must detail the work or instruction on a Confirmation of Verbal Instruction (CVI Template) form prior to implementing such work and agree this with the Engineer. The Project Manager should not commence with any extra work until he has received a signed instruction.
In order to avoid disputes at a later date, the Project Manager must submit a schedule of Variations / Instructions with every monthly progress report and monthly valuation application with a clear record indicating its status (approved/disapproved, day works, existing rates, new rate, whether claimed, etc.).
Under some forms of Contract, a site instruction will not entitle the Contractor to payment. Only a formal Variation Order or Engineers Instruction can do this. The Project Manager must then ensure that all agreed extras, Site Instructions, Confirmation of Verbal Orders and Dayworks are covered by an official Variation Order or Engineers Instruction where required.
The importance of understanding variations and its impact is therefore critical in order to successfully deliver a Project as well as be fairly compensated.