Most construction projects will have changes, additional work and experience delays. Where the change or delay couldn’t be anticipated, or allowed by the contractor, they can usually claim a variation and request additional time and money from the client to recompense them for the event.
But, the success of a variation claim isn’t guaranteed, and it’s up to the contractor to explain the cause of the variation, why they couldn’t have expected the event, and then quantify the impacts of the event.
Now, this might seem simple and straightforward, but, regrettably, variation claims which are legitimate are frequently rejected by the client, or the contractor only receives part of what they are entitled to get.
So where does it go wrong for contractors? Is it just because the client is being difficult or unfair? Occasionally, yes the client is being unfair and then there are usually legal steps that contractors can take when a legitimate and well thought through and presented variation claim is rejected. But, unfortunately, many variations claims lack substance and supporting documentation to justify the claim and the client has every right to reject the variation claim.
Variation documents – what’s required
Most contractors only think about supporting documentation when there’s a variation claim. By then, often the project has been going for several months. Much of the supporting documentation must come from events and days past, in fact from before the start of the project. Missing documents, or documents that are incorrect or faulty, will be of no use to support the variation claim.
There are a number of supporting documents:
The contract document forms the basis of the variation claim. It sets out the rights and obligations of the parties and it informs the contractor of the steps to be taken when a variation claim arises. Unfortunately, some contractors only read their contract documents when there’s a problem. Usually, by then it’s too late.
Some contract documents are poorly written with conflicting and ambiguous clauses, while some documents unfairly put undue risks on the contractor and remove the contractor’s rights. Contractors must remember that the contract document outlines the project rules. These must be checked to ensure that they are fair before the contract document is accepted and signed – it’s too late to find partway through the project that the rules are unworkable, or unfair, or weren’t what the contractor thought they should be.
Contractors must understand what their rights and obligations are, as well as the client’s rights and obligations. The contractor must make sure that everyone plays by the rules.
The construction schedule is the yardstick against which any delay will be measured. The construction schedule should be a reasonable and logical assessment of how the project will be constructed and it should be in sufficient detail so that construction progress can be monitored and the impact of delays assessed. It should clearly indicate when the client must supply access, information, and materials.
The contractor must follow the construction schedule. A poor construction schedule will make it difficult for the contractor to quantify the delay, while the contractor not following the schedule and using other construction methods could invalidate the variation claim.
Weather records are essential when the contractor claims for delays caused by adverse weather. Generally, normal weather events are a risk which the contractor must accept and they can’t claim for weather events which are the norm, or the average for the project location.
So, how much rain did the project receive and was this more than average? If the contractor hasn’t maintained accurate weather records from the start of the project they might not be able to prove the exact amount of rain that fell on the project site unless there’s a weather station near the project.
Daily logs or diaries
Often clients request the contractor maintains a daily log. But, even if they don’t, it’s good practice to maintain the diary. This log must be accurate and include the weather records, the resources on the project, delays and major events. Regrettably, many of these logs are not accurate and may not support the contractor’s variation claim. When did the delay start, when did it end, what did it impact?
Project meeting records
Project meeting minutes (records) often provide a record of progress and problems on the project. These minutes are often written by the client or their representative, and they frequently leave out information which is detrimental to them.
It’s important to check that the meeting minutes are an accurate representation of what was discussed at the meeting and reflect the actual status of the project. If there’s an error or omission in the minutes then the minutes should be rectified at the time, or the issue should be addressed in writing to the client. Contractors can’t wait until they are preparing their variation claim to find that the meeting records don’t support the facts in their claim.
Project staff often keep personal diaries recording the events on the project. These diaries can be subpoenaed by either party should a dispute arise. They may provide valuable information to support or refute a variation claim. These diaries should be an accurate reflection of events.
Request for information or engineering queries. From time to time the contractor will have questions for the client’s team. This could include missing, conflicting, unclear, or inaccurate information on drawings. All questions should be in writing so that there’s a record of the issue and when the matter was raised. The answer should be in writing with a date when it was received. Missing information and errors on drawings are a leading cause of delays on projects.
Photographs provide a valuable record of the status of the project. They can be used to record equipment used for a particular task and also lack of access and problems on the project. It’s very difficult to refute a photograph with a date. Of course, the client can also use photographs to record the contractor’s errors, bad quality and poor production, which could be used to refute claims.
Drawings and documents provided when the project was priced. All information provided to the contractor when they priced the project forms the basis for the contractor’s price. If the actual project conditions and construction drawings are different, there may be the reason for a variation claim.
It’s essential the contractor safely keeps all correspondence and documentation received when the project was priced and refers back to these documents in the course of the project to ensure that they claim for any changes which add time or costs to the project.
Drawing registers should record when drawings were received by the contractor. Regrettably, some registers record when the drawing left the client’s office, which could be a day or two before the contractor received the drawing. Drawing registers are essential to prove the quantum of a delay caused by late information from the client’s team.
Clients and designers frequently revise drawings. This could even entail the contractor having to redo completed work or order additional or changed materials. It’s essential that revised drawings are kept (clearly marked as revised so they aren’t accidentally used for construction) so they can be referred to if the new drawing has resulted in a delay or additional work.
Which includes emails, instructions, memos, and letters. All instructions of a contractual nature (which ask for additional work, changes, or impact progress) must be in writing. Unfortunately, clients often have poor memories when it comes to money and additional time. These instructions and letters must have a date when they were received. The correspondence must be clear and unambiguous. Where necessary it may be necessary to, in writing, ask for clarity.
Other documents could include, test results, handover and acceptance documentation, project reports, etc. All documents must be an accurate representation of the facts and the status of the project and have a date.
As can be seen, an accurate documentation trail is essential and starts from when the contractor receives the pricing documentation from the client. It’s too late to start looking for documents or reading documents when a delay or variation event arises. By then it’s too late to pick up that there are missing documents, or that documents are incomplete, inaccurate or contradictory.
Contractors must understand the contract document and specifications. They must ensure that accurate documents are kept on the project. They must make sure that they use all documentation to support their delay and variation claims.
Poorly supported variation claims could be rejected by the client. Once rejected it becomes more difficult to change the client’s mind, so it’s important to get the variation claim right the first time, using all the available documents to support the claim and it’s quantum.