Variation/Variation Order
A variation is an alteration in the scope of works in a construction contract that will include substitutions, additions or omissions. They happen for two main reasons: events occur external to the contract, or there are changes in the design, scope or circumstances.
Variations are inevitable in construction contracts. So, it is very important to understand its all provisions.
This alternation/modification may be divided into three categories.
1) Addition to the scope of work originally agreed, such as increase in quantities of work items, adding new item of work, etc.
2) Omission to the scope of work originally agreed, such as reduction in quantities of work items, deletion of any existing item of work, etc.
3) Substitution or alteration of work originally agreed.
Before proceeding for any change order, the consent of contractor should be taken.
Provision in FIDIC contract:
Variation Procedure; Sub- Clause 13.3
According to this clause, the variation shall be initiated by the Engineer in accordance of the following procedure:
13.3.1 Variation by Instruction
This Clause stipulates that the Engineer may instruct a Variation by giving a Notice (describing the required change and stating any requirements for the recording of Costs) to the Contractor in accordance with Sub-Clause 3.5.
The Contractor shall proceed with execution of variation within 28 days of receiving the instructions of the Engineer, submit to the engineer, following things:
- A description of the varied work
- A program for its execution and Contractor’s proposal, if any
- The Contractor’s proposal for adjustment to the Contract price by valuing the variation in accordance with clause 12 [Measurement and Valuation]
The Engineer shall then proceed under Sub-Clause 3.7 [Agreement or Determination] to agree or determine:
(i) EOT, if any; and/or
(ii) the adjustment to the Contract Price (including valuation of the Variation in accordance with Clause 12 [Measurement and Valuation] using measured quantities of the varied work)
13.3.2 Variation by Request for Proposal
Under this sub clause, it is stipulated that, the Engineer may request a proposal, before instructing a Variation, by giving a Notice (describing the proposed change) to the Contractor.
The Contractor shall respond to this Notice as soon as practicable, by either:
- Submitting a proposal
- Giving reasons, why the Contractor cannot comply
If the Contractor submits a proposal, the Engineer shall respond as soon as possible, stating his consent or otherwise.
If the Engineer gives consent to the proposal, with or without comments, the Engineer shall then instruct the Variation.
If the Engineer does not give consent to the proposal, with or without comments, and if the Contractor has incurred Cost as a result of submitting it, the Contractor shall be entitled subject to Sub-Clause 20.2 [Claims For Payment and/or EOT] to payment of such Cost.
Summary
Sub Clause 3.3 [Instructions of the Engineer]: The Contractor is obligated to comply with the Engineer’s instructions.
Sub-clause 13.1 [Right to Vary]: The engineer has the authority to initiate variations at any time before issuing the Taking Over Certificate (TOC) for the works. The Contractor must execute and abide by each variation.
Sub-clause 13.3 [Variation Procedure]: The Contractor is not allowed to delay any work while awaiting the Engineer’s response to the variation evaluation.
In conclusion, the contractor is expected to execute the variation order without demanding prior agreement from the Engineer regarding the determination of variation costs.
For the additional item which is not available in original BOQ or new item of works, New rate to be submitted with rate breakdown along with 3 quotations. Or make pro-rata rate if almost similar Works. Contractor can't make any delay until he get approval of Variation. If Contractor aware, he shall submit the proposal / price for the Variation within 28 days through notice. Engineer will fairly evaluate.
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