Variation Order

A variation order - sometimes called a change order in North American markets - is a formal written document 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 differ from what was surveyed, or when the client's requirements change after the contract is signed. A variation order protects both parties by creating a documented record before any additional work proceeds.

How Variation Orders Protect Your Margin

The process starts with a written instruction from the client or their contract administrator. The contractor prices the change - covering materials, labor, overhead, and any disruption to the programme - and submits for written approval before starting work. Pricing should reflect fully burdened costs: labor rates including overhead, and any time impact caused to other parts of the project.

In practice, contractors are often pressured to proceed on verbal instructions and sort the paperwork later. This is where disputes originate. If the client later contests the price or whether the work was ever authorized, a verbal instruction provides no protection. The discipline is straightforward: no work starts on a variation until both parties have confirmed in writing.

Variation Orders vs. Provisional Sums

A provisional sum is an allowance written into the original contract for work that cannot be fully defined at tender stage - perhaps groundworks whose extent depends on what is found on site. When that work is instructed, it proceeds under a variation order, and the provisional sum is replaced by the actual agreed cost. They are frequently confused: a provisional sum is a placeholder in the original contract; a variation order is the mechanism that converts that placeholder into a confirmed, priced instruction.