Construction Contract Variations
To alter the terms and conditions of a construction contract, apply the same level of formality used in preparing the original contract.3 min read
The term construction contract variations refers to changing the terms of an agreement. This type of change is also described as an amendment to the contract. To put it simply, it's a change of terms from those on the original contract. Involved parties have two ways to vary contract terms, and those are by a contract terms variation or by changing the scope of the construction work. Changing the scope of the construction work is the more common type of variation.
Varying Construction Contract Terms and Conditions
To alter the terms and conditions of a construction contract, apply the same level of formality used in preparing the original contract. To be a valid contract, it has to be written, signed by the involved parties or their authorized representatives, and it has to be in the same form the original contract, such as executed as a deed or signed by hand.
Clients Altering the Scope of the Work
Construction contracts usually include a way for clients to alter the scope of the work, though not always.
- When a contractor signs it, he or she agrees to allow for this type of change from the employer.
- Some construction contracts also allow the contractor to suggest changes, however, the employer can turn down the proposed changes and the contractor doesn't have the right of redress.
- A more common type of variation provision lets the employer make changes in the scope of the work, and notes that the contractor is to be compensated for extra costs and given extra time to complete the job.
When a contractor requests extra compensation for changes in the scope of the work, it's common to request an extension of time to complete the job, but the employer does not always grant the request for extra time. Sometimes, the time extension may be approved by the employer without an agreement to provide any extra financial compensation.
The Bill of Quantities
The bill of quantities is the section of a construction contract that establishes details about payments the contractor may receive when a variation occurs. The contractor has to provide proof of the need for changes to the contract or notice of intention to claim a contract variation within a time period arranged in the original contract. The employer may reject the request for a variation if the necessary information is not provided by the contractor.
If the original contract imposes a limit on how long a contractor has to provide documentation when requesting a variation, and the contractor doesn't provide the information in the allotted time period, the employer may reject the request, even if it is a valid one. The original construction contract may also assign a supervising engineer to receive the notification, documents, and any other information the contractor provides when requesting a variation.
Under contract law, the contract terms may give the supervising engineer the right to approve:
- Assessment of compensation.
- Time extensions.
It's common for a contract to include a provision for the first occurrence of a variation in a construction contract, with the approval of the employer. The supervising engineer may also deliver a formal decision if the contract terms allow for it. Sometimes, contractors need to know if they are entitled to payment if they undertake a contract variation when they haven't been given a formal decision.
- Many times, yes is the answer to that concern.
- However, if the contract doesn't include a variable mechanism giving the contractor the right to receive additional payment for one occurrence of a variation, the contractor can't go ahead without receiving a formal decision first.
The Difference Between Contractual Instruction and Permission
When a contractor receives permission to change the scope of the work, it isn't always a contractual variation. The contractor needs to understand the difference between a contractual instruction and a permission. A contractor receiving contractual instruction has the right to be paid under the contract's terms. A contractor who is given a permission is allowed to change the scope of the work without breaching the original contract but is not necessarily entitled to be paid for the work. A common reason for denying a contractual instruction but allowing for a permission is an error on the part of the contractor.
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