The construction sector relies on contracts to deliver major projects, protecting the time, investment, safety and legal rights of all parties.
For this reason, a number of standard form contracts exist as a foundation for parties to build their working relationships on – and they can be used as-is or amended with clauses known as ‘variations’.
Due to the complexity of the field, variations to construction contracts are frequently made, allowing projects to adapt to changing circumstances without derailing the fundamental agreements between parties.
Standard form contracts
Standard form contracts are pre-prepared contract templates which are favoured for their ability to provide a tested and familiar legal framework, which helps to reduce the likelihood of disputes between involved parties.
In the UK, examples include the JCT (Joint Contracts Tribunal) and NEC (New Engineering Contract) family of contracts.
Variations
Variations are authorised changes or modifications to the works described in a construction contract. These changes can pertain to the alteration, addition, or omission of work originally specified in the contract documents.
They’re typically used after the signing of the initial contract and once the project has commenced.
When are variations used?
Variations are typically used under many different circumstances, including:
- Unforeseen delays – Unexpected issues such as ground conditions or hidden structures may delay the original plan without fault
- Client needs – Changes initiated by the client, which might include alterations to the design or specifications of materials
- Regulations – Modifications required to comply with updated laws or regulations that were not in force at the time of the contract’s execution
- Project optimisation – Enhancements suggested by the contractor or designers that can lead to cost savings or improved functionality.
Ultimately, variations may be requested by one or all parties, however, they are usually initiated by the Employer, unless the Contractor has identified a discrepancy in the design or as between the statutory requirements.
Managing variations efficiently requires a clear understanding of their potential impact and the implementation of a robust process to handle them, as outlined in the contract terms. This includes dealing with any resultant delay to the program of the works.
All parties should ensure that any changes are documented formally and agreed upon to avoid disputes over scope, cost, or time extensions.