In February 2024 a collection of outstanding legal and construction experts joined us for an afternoon examining topics critical to construction in 2025. Variation and change seem to be a source of endless content for construction seminars, the seminar we hosted at the IDRC in London this February being no exception. We’re grateful to Neil MacKennon for his input on the BIM and construction technology elements of this summary.
The one thing that is almost guaranteed on any construction project is change. With no two projects being the same, projects rarely (if ever) avoid the need for change. However, it’s important to recognise the different ways to handle change, so our speakers looked at the various contracts and their approach to it.
What Does the Contract Say?
The challenges of identifying change and ensuring clear instructions are key. If working with the JCT form, Amanda John observes, it’s usually good idea to that the standard contract is carefully amended to remove confusion and ambiguity, and tailor it to the specific project. In any event, close attention to and following the contractual procedure is critical.
In NEC, there’s a system of implementing change which flows from Clause 61 of NEC. The instruction for change will typically give rise to a compensation event under Clause 60 of the NEC contract. The system’s concepts of collaboration and good management are all linked to the ‘mutual trust and cooperation’ principle of NEC. But be careful with timings of notices of quotations and responses as they are critical.
Also under NEC, it is perhaps notable that only the project manager has authority to change the scope, so valid compensation events require instructions from the right person. As with anything, but particularly under NEC, giving reasons and clear explanations are important when identifying and notifying change. Clarity and accurate demonstration of cause and effect are key.
Factors Leading to Change and Variation
Steve Woolnough notes ten significant factors that could lead to change, but there are many more. Not all necessarily lead to time and money, but all may need to be considered. These are:
- Requests by the employer
- Requests by the contractor
- Design changes
- Value engineering
- An event set out by the contract
- Statutory requirements
- Incorrect tender assumptions
- Items not available
- Additional Works
- Discrepancies
Typical pitfalls include things like rushing into a project, not preparing well, failing to record change and failing to notify of change properly. Additionally, not fully understanding scope or where liability lies and the impact of change can lead to arguments. Another risk is not following the contract in terms of valuation and measurement of change.
In terms of the impact on costs caused by change, valuation varies in different contracts and depends upon the form of each contract used, for example D&B, Options, etc. Clauses are different in each contract, so be careful when assessing those.
Some considerations when dealing with change include – getting the scope right early and ensuring it’s clear to all parties. Then, ensure you follow contract procedures for tackling change. Also, allow time for large organisations to cope with and respond to change requests – so be sure to get your information and requests in as early as possible.
A theme of the day’s proceedings cropped up time and again: If possible consider finding solutions beyond the obvious. Try and avoid conflict if possible.
Records, records, records…
As with so many scenarios in construction and disputes, records and data often hold the key. Variation and change are no exception. Also, harnessing technologies such as BIM and record management systems, if done well, can often save a world of pain when queries arise around change and cost. The team at Decipher have been working to create 4D BIM models, linking 3D models with programmes to help visualise as-built and as-planned construction sequences. This in turn helps lawyers and tribunals to visualise complex programme information with ease.
Good data is also important – ensure your figures are accurate and reflective of the time of construction. We have seen significant changes to material costs and resources in recent years, so when valuing change it’s imperative to ensure those are reflected in assessments.
Variations – contracts rarely state what a variation could or couldn’t be, so that makes things a little more challenging. However, the RICS have produced a guidance note on valuing change which is useful. That can be downloaded from the RICS website.
The message here seems clear – and as with the topic itself, there’s nothing that hasn’t been highlighted before. Ensure you understand the contract, take good advice and get the contract amended if necessary.
If you need to value and notify your employer of change, then ensure you have accurate data and good records to substantiate those notices.
A well-formed valuation and assessment should lead to the successful valuation of variation and change, and with a little luck, avoid a potential costly dispute. A stitch in time may well, save nine.