Valuing variations in advance

If a contract does not expressly provide for the use of quotations in valuing variations a contractor may still provide a quotation, with a view to getting the adjustment to price agreed, ideally before the changed works are carried out. If that quotation is accepted there should be no need to value the variation after the work has been carried out.

However, the mechanisms for instructing and valuing variations on a construction contract should allow for the incorporation of changes without unnecessarily impacting the progress of the works. Any constraint on incorporating change that requires the advance agreement of adjustments to price and/or programme could lead to missed opportunities to introduce beneficial change.

The NEC does, however, include a process in clause 61.2 for agreeing price and/or programme adjustments before deciding whether or not to incorporate a change. The project manager may instruct the contractor to submit a quotation for a proposed instruction or a changed decision. If, after receiving the contractor’s quotation, the project manager decides to proceed with the change he or she instructs the contractor accordingly and the subsequent compensation event is assessed using the accepted quotation.

A further variation on this theme is captured in clause 62.1 where the project manager and contractor can jointly discuss alternative ways of dealing with a compensation event and as a result the project manager can instruct the contractor to submit alternative quotations which deal with the compensation event in different ways. This joint consideration of options may be very beneficial where there is a balance to be achieved between different employer’s objectives.