Variation order

A variation order is a written instruction that authorizes and prices a change to the agreed scope, cost or programme of a project. It is issued when work outside the original contract is instructed, when site conditions turn out to differ from the survey, or when the client changes what they want after the contract is signed. The document records what was instructed, by whom, on what date and at what price, before the work starts.

In North American contracts the same document is called a change order. The name changes; the mechanism does not.

What the contract calls it

The standard UK forms handle change through named mechanisms, and using the contract's own vocabulary is what keeps a claim inside the process rather than outside it.

• JCT contracts use the term Variations. The contract administrator or architect issues an instruction, the change is valued under the contract's valuation rules or by agreed quotation, and the contract sum is adjusted.
• NEC contracts do not use the word variation at all. Change is dealt with as a compensation event, notified within the contract's notification period, with the contractor submitting a quotation covering both cost and any effect on the completion date. Missing the notification period is a live risk under NEC in a way it is not under JCT.
• A provisional sum is not a variation. It is an allowance written into the original contract for work that could not be defined at tender. When that work is instructed, the provisional sum is replaced by the actual valued cost.

Whichever form is in use, an instruction that changes the work also usually changes the programme, and a variation priced for materials and labor alone under-recovers whenever other trades are disrupted or the completion date moves. Where the effect is prolongation or disruption rather than extra work, the recovery route is a loss and expense claim under JCT, which is a separate mechanism and a separate notice.

Getting one approved and paid

The definition is the easy part. The process - instruction, pricing, approval, execution, record, invoice - is where variations are lost, and it is set out step by step in six steps to getting a variation order approved and paid. The two failure points worth naming here are pricing before approval, and invoicing a variation as part of a lump sum so the client cannot match it to the instruction they issued.

Each variation needs its own reference, the date of the written instruction, the agreed price, and a line of its own on the final invoice. Where a business already runs formal change control, the variation order is the construction-sector instance of it. Raising each one as a works order against the job keeps the instruction, the cost and the invoice line attached to the same record.