Civil Engineering Project Management (4th Edition)

The problem of setting rates for new work or for omitted items, or where
a quantity change of itself justifies a new rate, can sometimes prove difficult. The
principle in these cases is, however, the same – the billed rates act as the predominant
guide when developing varied rates, because they are the basis of
contract. If this principle is departed from, it can be seen that many complications
could arise in setting new rates since, if one bill rate is not adopted because
it appears too high (or low), then either party could maintain the same applied
to other bill rates, and there would be no clear basis for setting new rates.
It should be noted that the phrase ‘Variation Order’ is not used in most
conditions of contract. Variations in the works are instructed (ICE conditions
Clause 51) and valued (Clause 52). A ‘Variation Order’ then results as a record
of the instruction and valuation.
In the United States the term ‘change order’ is used in lieu of variation order.
17.5 Variations proposed by the contractor
Variations and claims 211
The contractor normally has no right to vary the works and the terms of the
contract will specifically preclude this. But he can make suggestions as to how
the work might be varied, for his own benefit or the benefit of the employer or
both. He has no power to adopt his own suggestion; but if, say, he is unable to
purchase an item required but finds an adequate substitute the engineer would
no doubt agree. On occasion a good contractor will point out a change of design
that has advantages, and the engineer should consider this because the knowledge
of the contractor can assist in promoting a sound construction or reduced
cost (see Section 17.1).
Situations can arise where the contractor’s work does not accord with the
stated requirements. This may be by default when materials or equipment have
been ordered and delivered only for it to be discovered that they are not in
compliance with the specification. Or it may be that workmanship is found
unsatisfactory only after some work has been built, such as concrete of too low
a strength having been used in part of the structure. Under the contract the
engineer has no option but to reject the work; but it may be to the advantage of
progressing the works and preventing delay if the engineer discusses with the
employer and contractor the possibility of accepting what has been provided,
but at an adjusted price. Clearly this is not possible if the difference means the
works will be unsafe or not usable for their intended purpose, but the employer
may be able to accept a lower quality finish or the possibility of increased future
maintenance if the cost of the works is reduced.
Any substitutions offered by the contractor should be referred by the resident
engineer to the engineer, who will decide if the employer’s views should
be sought. The employer is entitled to receive what was shown on the drawings
and specified, and not something else. If any such change is to be accepted the
full terms of agreement including price and time effects must be recorded in
writing to avoid later arguments.