the reason most often given by builders ( Contractor ) for making a claim against the owner for remuneration over and above the original contract price is that ” there was a variation “.
there is a widespread misconception in the construction industry that a contractor is entitled to be paid a fair price for any work performed.
Variation Claim is a term used to describe a variety of deferent categories of claim. The fact that the contractor did work additional to that specified does not entitle the contractor to claim additional recompense from the owner.
if the contractor wants to succeed in a claim against the owner, the contractor must make the claim fit one of the recognized legal categories.
If the contract includes a ” Variation Clause ” and the variation is one covered by the variation clause then the contractor’s claim would be under the contract.
It May be a claim for debt or claim for damages. If the contract does not include a variation clause or the variation is not covered by the variation clause then the contractor’s claim would be outside the contract and would probably be for restitution based on unjust enrichment or a claim that the work was carried out under a separate contract.
what is variation?
A variation order is a change, often in construction, that modifies all or part of an existing order. Many construction projects undergo changes, especially after the beginning of building, and the cost impact on a construction project with a variation order can be costly.
The term ” variation ” used in many different ways. They include:
1- A change which the superintendent or owner directs the contractor to make to the work described in the contract.
2- A direction which the superintendent gives the contractor with respect to the order of work.
3- A change to the contract between the owner and the contractor as distinct to a change to the work under the contract.
4- An unauthorized departure by the contractor from the requirements of the specification or drawings.
5- A retrospective acceptance by the owner of work which is not in accordance with the requirements of the contract.
6- A change to the contract price .
7- A quantity which exceeds the estimated quantity in a bill of quantities or a schedule of rates.
In UAE the term ” Variation Order ” is used to describe the change which the owner or the engineer ( the consultant ) directs ( instruct ) the contractor to make to the work described in the contract. the change may be the omission or addition of work.
Logically, any change to the work described in the contract involves an omission or an addition or both.
A direction to substitute ceramic tiles and to add marble is a clear variation order.
most standard forms of contract empower the owner either personally or through an agent ( Consultant engineer, or project management firm ), to direct the contractor to omit a portion of the work, or to do additional work.
The contract usually provides that the owner will reimburse the contractor for any additional costs caused by compliance with the direction.
The difference between the estimated quantity and the actual quantity may result in a change to the contract price but that is not a variation .
Changes in scope are very likely in many construction projects. A properly managed and organized project should have change control procedures. Often the client according to the terms and conditions of a mutual contract has right to order changes and the contractor is obliged to incorporate them. Those changes can be of different nature and may include additional works, changing material specifications, changing working conditions, design changes before, during and even after work execution and so on and so forth.
To avoid disputes and scope creep it is essential for the entire project team to know exactly what the scope of work and the requirements are. Assuming that the changes are within certain limits the project manager due to the above mentioned contractual situation cannot avoid the change order and change control in that case reduces to administer and execute the change. In order to reserve the contractor’s rights for compensation, to keep control of the ongoing works and to avoid possible disputes over disruption, extension of time, delay and increased cost, the project manager has to properly record all changes.
Read More about the construction claims.
Claims under FIDIC.
variation, claim, clause, order, direction.