Change Procedures - Managing Variations

Question 1

What are the three methods of valuing variations?

Answer 1

Lump sum quotations from contractor

Price Measurement Items

Day works

Question 2

How are lump sum costs obtained?

Answer 2

Minimum three quotations to show market value.

Base principals: all the work associated with that piece of work. Prelims, plant, labour, equipment, material and quantities, trades involved, site supervision, overhead and profit, disposal.

Question 3

How are costs for pricing measurement items obtained?

Answer 3

If you’ve got a rate in the bill of quantities, use rate and multiply e.g. BQ allows £ x m2 for external rendering at ground level.

If the variation has no relationship to BQ rate then unit rates are built up that reflect labour, plant, materials, overheads and profit for the variation. Known as Star rate.

Question 4

How are costs for dayworks obtained?

Answer 4

Typically used where rates cannot be measured.

Usually costs client more and favoured by contractor.

Should be benchmarked using day rates or hourly rates for main trades – request from contractor.

Question 5

What is a variation account/schedule?

Answer 5

A variation account schedule should be compiled containing all variations

The ideal format is a Scott Schedule

Question 6

How can variation related disputes be avoided?

Answer 6

1. Ensuring variations are instructed correctly.
2. Valuing variations using methods identified.
3. Keep detailed records to assist valuation.
4. Keep Scott schedule up to date.
5. Communicate with the contractors QS.
6. Meet regularly to agree value of variations.

Question 7

How should the client be updated on change?

Answer 7

It is important to develop an agreed change process with the employer or PM and the quantity surveyor. Submissions for change should be formal and consistently arranged, as the writing-up and assessment of the change will both be more efficient if the structure and content are similar for each document.

The change or variation register should be updated at least once a month.

Question 8

What are the steps for handling variations orders?

Answer 8

1. Check that the VO is fair
   - ensure that the claimed items do not come under original specification of works.
2. Check costs
3. Question contractor
   - Where you are unsure if a cost is fair then we will need to question the contractor. This is where you will need to request ‘formal quotes’ or breakdown of the costs so that you can accurately check the costs.
4. Confirm costs / negotiate with contractor
5. Obtain client approval
   - Update the client with requested VO’s and ask for approval noting any impact on the adjusted contract sum.
6. Instruct contractor
   - using formal Contract Administrators Instruction form and update variation tracker.

Question 9

When might the CA issue instructions?

Answer 9

To vary the works

Remedy workmanship not in accordance with the contract

Expenditure of provisional sums

Opening up works for inspection

Question 10

What is a provisional sum?

Answer 10

An estimated allowance that is inserted into the tender document for a specific element that is not yet defined in enough detail for tenderers to accurately price, or that the employer may not wish to have carried out.