Introduction

In every construction project, whether under JBCC, NEC, or any other contract type, there is a crucial figure: the contract sum. This is the agreed-upon cost for the project, and it serves as a baseline for all financial transactions. However, changes often occur, leading to cost variations. As a Quantity Surveyor (QS), it’s essential to clarify how these variations should be handled to avoid disputes and maintain transparency throughout the project.

What Are Cost Variations?

Cost variations occur when changes are made to the original scope of work. These can stem from unforeseen site conditions, design changes, or client requests. However, not all changes result in cost adjustments—only those formally recognised as contract instructions or variation orders should impact the contract sum.

Clear Communication Is Key

A major responsibility of the QS is to ensure that both the contractor and the project team fully understand how contract variations work. The contractor should know that no payment claim can be made for any additional work unless it has been formally approved as a cost variation and incorporated into the contract through a variation order, compensation event, or similar mechanism.

The Importance of Prior Approval

Any additional work undertaken without formal approval cannot be claimed in a payment application. This means contractors must obtain a variation order before executing work outside the original contract scope. Without this approval, the client is under no obligation to pay for the unapproved work, which can cause significant financial strain on the contractor.

Consultants: Follow the Right Channels

Consultants often issue new drawings, site instructions, or design changes during a project. However, it’s critical that they follow the proper process before making changes that impact costs. Any design modification with potential cost implications must first be discussed with the QS and approved by the client. Issuing instructions without QS involvement can lead to unapproved variations, creating tension between the contractor and the project team.

Conclusion

Managing cost variations effectively is crucial to ensuring that projects stay within budget and disputes are avoided. As a QS, your role is to educate the contractor and consultants on the importance of following formal processes, ensuring that all variations are approved before implementation. This will protect both the contractor’s interests and the client’s budget.

By adhering to these guidelines, your project team will maintain clear communication and avoid unnecessary financial disputes.