In our latest Contract Clinic, a contractor building a housing project has been told by the client to change the windows specification. Leon Harris assesses whether this is a variation
The question
We’re part-way through a residential project in Bolton and the client has decided they no longer want the original windows specified, but instead want an enhanced specification. Is this a variation under our JCT Minor Works Contract and can we claim?
The answer
The request sounds straightforward enough, but from a contractual perspective it raises an important question: does changing the window specification constitute a variation under the JCT Minor Works Building Contract 2024?
The answer is often yes, but establishing entitlement, and recovering the associated cost and time, is not always as simple as it may appear.
Variations – an everyday reality
Change is an inevitable feature of construction. Client changes, value engineering and supply chain issues can all result in alterations to the original scope of work.
However, under the JCT Minor Works Building Contract 2024,
not every instruction issued during the works will necessarily constitute a variation. Nevertheless, instructions relating to additions or omissions of work or changes
to the specification generally do. On that basis, an enhanced window specification will likely be a variation under the contract.
But how can that variation be assessed and what other aspects need considering?
The importance of defining scope
The fundamental test is whether the requested change alters the contractor’s contractual obligations. Satisfying the test requires a comparison between the instruction and the original contract documents, including drawings and specifications.
If the replacement window specification introduces requirements not included within the agreed scope, the contractor may have a valid entitlement to additional payment and, in some circumstances, additional time.
On many smaller projects, however, scope definition is less robust than on larger schemes. As a result, disputes concerning whether a change is genuinely additional work remain common.
“Client changes, value engineering and supply chain issues can all result in alterations to the original scope of work”
Informal instructions – a common source of dispute
One of the recurring issues on projects operating under minor works contracts is the prevalence of informal instructions.
A client may raise a change during a site visit or project meeting and ask the contractor to proceed immediately. Concerned about programme implications and maintaining positive relationships, contractors often comply before receiving a formal instruction. While understandable, this can create significant commercial risk.
Without a clear documentary record, establishing entitlement can become considerably more difficult.
Good contract administration remains the best defence. If a formal instruction has not yet been issued, contractors should confirm the request in writing, and seek confirmation from the contract administrator as soon as possible.
Cost is only half the story
When discussing variations, attention is often focused on additional cost. However, the programme implications can be equally significant.
A change in window specification may introduce longer manufacturing lead times, revised shop drawings, additional approvals or procurement delays. What at first appears to be a simple product substitution can quickly affect the critical path
of the project.
Where completion is impacted, contractors may also need to consider whether a claim for an extension of time should accompany the valuation of the variation. A failure to assess critical time implications may leave a contractor exposed to delay damages even where the delay stems directly from an instructed change.
Valuation starts with evidence
The JCT Minor Works Building Contract 2024 encourages parties to agree a price before the work proceeds. Where existing contract rates are applicable, they may provide a basis for valuation. In other cases, a fair and reasonable assessment will be required, supported by evidence. Typical considerations include:
- Labour costs;
- Material price differences;
- Plant costs;
- Sub-contractor costs;
- Overheads and profit; and
- Direct loss and/or expense.
Too often, valuation is postponed until the end of the project. By then, records may be incomplete, personnel may have changed and recollections of events may differ significantly. As always, contemporaneous records remain one of the most effective tools for avoiding later disputes.
“A failure to assess critical time implications may leave a contractor exposed to delay damages even where the delay stems directly from
an instructed change”
The bigger picture
Variations are sometimes viewed as administrative processes that simply need to be priced and recorded. In reality, they are commercial events capable of influencing project profitability, programme performance and contractual relationships.
For employers, contractors and contract administrators alike, the lesson is straightforward. Where the works change, the contractual consequences should be assessed immediately, not months later at final account stage.
Conclusion
In the Bolton example, a change to the window specification would likely meet the contractual definition of a variation under the JCT Minor Works Building Contract 2024. Whether entitlement is successfully recovered, however, depends largely on how the change is instructed, recorded and valued.
Effective contract administration, and prompt assessment of cost and time impacts are key. The maintenance of robust contemporaneous records remains at the heart of successful change management.
In an industry where change is unavoidable, managing it properly can make the difference between a straightforward commercial adjustment and a protracted final account dispute.
Leon Harris is a consultant at Decipher.
