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Change orders and variations

Instruct, price and agree changes to the scope, and update the contract sum.

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Output: Approved change order or variation with valuation and time effect
Module: Change, variations and claims
Documents: Change order
Variation instruction
Compensation event quotation
Change register
Standards and references: NEC4 section 6
FIDIC 2017 clause 13
AIA G701
VOB/B §2

What it is

A change order or variation is a formal alteration to the scope, quality, quantity or timing of the work after the contract is signed. Changes come from client instructions, design development, site conditions and errors in the documents. Each change has to be identified, notified, valued, agreed and recorded, with its effect on both price and time.

Change is normal on construction projects; uncontrolled change is what damages them. Unvalued or unrecorded changes erode the contractor's margin and the client's budget at the same time, and they are a main source of disputes at the final account. A clear change register, prompt notices and valuation by the contract rules keep both parties informed and make settlement of the final account far simpler.

Who does it

Contract administrator or engineer: Issues instructions and determines the value of changes under the contract.
Contractor's quantity surveyor: Notifies changes, prepares quotations and records daywork and measurement.
Planner: Assesses the effect of change on the programme and completion date.
Client: Decides whether to proceed and approves the cost and time effect.
Site team: Identifies changes on site and records the facts as they happen.

How it runs

Identify the change
Recognise when an instruction, drawing revision or site condition differs from the contract scope.
Notify in time
Give written notice under the contract within the required period.
Record the facts
Keep measurements, daywork sheets, photos and correspondence as the change is carried out.
Prepare the valuation
Price the change using contract rates where they apply, otherwise fair rates or actual cost as the contract allows.
Assess time effect
Show how the change affects the programme and whether an extension of time is due.
Approve and instruct
Obtain formal approval and a written instruction before or as work proceeds.
Update budget and forecast
Add the agreed change to the contract sum, budget and cost forecast.

How it differs by country

United Kingdom: JCT contracts deal with Variations and their valuation under the Valuation Rules. NEC4 treats change as compensation events, with quotations assessed on the effect on defined cost and the programme.
Germany: § 1 Abs. 3 and 4 VOB/B give the client the right to order changes and additional work, and § 2 VOB/B sets how the price is adjusted. For BGB construction contracts, §§ 650b and 650c set the procedure for change orders and their pricing.
France: Under the CCAG-Travaux the client can order changes by ordre de service, and new prices (prix nouveaux) are agreed where the contract prices do not apply. In public contracts significant changes are limited by the rules on modification of contracts (avenants).
United States: AIA A201 provides for change orders signed by owner, contractor and architect, construction change directives where agreement is not yet reached, and minor changes. AIA G701 is the standard change order form.
International: FIDIC 2017 Clause 13 covers variations, which may be instructed by the Engineer or proposed by the contractor. Valuation follows Sub-Clause 12.3 using contract rates where appropriate.

Common mistakes

Carrying out changed work on a verbal instruction and trying to recover the cost months later.
Valuing the direct cost but ignoring the time and disruption effect.
Missing the contractual notice period for change or claims.
Keeping the change register separate from the cost report, so the forecast is wrong.
Agreeing many small changes informally until they add up to a significant sum nobody approved.

In OpenConstructionERP

Module: Change, variations and claims

OpenConstructionERP manages change through the Change Orders module for scope changes, cost impact and approval workflow. Variations & Site Measurements covers the route from notice to variation order, with site measurement and daywork. Management of Change handles engineering or scope changes with an audit trail from proposal to implementation. Change Intelligence shows across the change family what is waiting on whom, and Claims Evidence assembles the record when a change becomes a dispute.

Change Orders · Variations & Site Measurements · Management of Change · Change Intelligence · Claims Evidence

The app runs at openconstructionacademy.com/app for course learners.