Type: Definition Essays
Sample donated: Christina Santos
Last updated: May 27, 2019
INTRODUCTION A variationclause arguably is of dual purpose.Firstly it empowersthe employer to make necessarychanges to the agreed terms and conditions in a contract and secondlyit facilitates an amendment to contractand thereby ensurespayment and other rights to the contractor. From the outset it may seem that this arrangement or provisionis a straightforward deal, however, when it comes to exercising such rights by employers or contractors the actual problems of interpretation or right and wrong arises. Variation is a broad topic and when it comes to omission or works and certain additions, it becomes very debatable. In this paper, I will discuss key topicssuch as types of variations, valuation and payment for variation, consequences of variationand review provisions for variations under UAE Law.
2. VARIATION CLAUSE AND DEFINITION IN FIDIC Most standard forms of contractprovide variation clauses. In FIDIC Red book, Variation is definedas any change to the works which is instructed or approvedas per provision in clause 13. There is further clarity attempted in cl 13.1, however there is not clear cut answer as to what all may constitute a variationand it can be said that the definition is quite genericand not very helpful1. It may be argued that is left up to the interpretation of partieswho are requiredto reach an agreement whether certain matters constitute a variationafter considering the specificsof circumstances. All such instructions may not constitute a variationorder, different categories of variations are explainedthe following sectionsof this paper. 1 TMcGoldrick, FIDIC – The Management of Variations, Construction Law, (2007)18 6 cons.
Law 17 May 2013 Page 1 of 112.1. Limitations to theright to vary A variation may be initiated prior to issue of TOC by means of direction instruction or by requesting a proposalfrom contractor for proposed additional works and then proceedingwith it2.
The contractor shall be bound bysuch instruction; converselythe only ground for non-acceptance of such instruction can be issue relatedto ready availability of goods requiredfor variation3. Other limitations to vary the contract include the requiredchanges falling outside the scope of contractor variation clause and alsotheworks not being capable of beingcarried out4. As held in Beaufort Developments v Gilbert Ash and Others, the changes to the contractshall be within the limitsthe parties have agreedto in their contract5. 3.
TYPES OF VARIATIONS There are many types of variations. These may be initiatedby the engineer or the contractor or due to requirements arisen due to unforeseen situations. Determining whether certain works constitutes varied works requires in depth understanding of contract and scope of work. Followingsection describes the types of variations usually encountered under construction contractsbased on FIDIC Red Book. 3.1.
Engineer or Employer Initiated Changes A variations clause allows the employer to unilaterally change elements of contractand this ensures ability of contractto respond to practicalneeds of the project6. These changes could be any ofthe following types. 3.1.1. Additional works or modifications Additional works or modifications related to scope change, quantitychange, regulatory change, qualityor specification change, methodology or designchange, substitution, changes related to technicalinnovation, changes to prescribed levels etc. These changeswill help adapt tothe changingrequirement of the project.
However, there are limitations to what may constitutea variation in strict contract terms: 2 FIDICRed Book (1st edn, 1999), Clause13.13 FIDICRed Book (1st edn, 1999), Clause 13.14 L C Ren, Variationin Construction contract, Construction Management Guide, http://www.
cmguide.org/archives/2634, accessed on 07 May 20135 Beaufort Developments (NI) Ltd v. Gilbert-Ash (NI) Ltd and Others 19982 All ER 778, 798j6 A V Jaeger and G S Hok, FIDIC – A Guide for Practitioner (Springer, Heidelberg 2010) May 2013 Page 2 of 11· A fundamental changeto the agreed scope of work or agreed methodologies cannotbe recognized as a true nature of variation7.· All changes to quantities do not necessary become a variation8.
3.1.2. Omissions Deletion, de-scoping etc are included in this category. A negativevariation order is issued when due to change in requirements, certainparts of scope is required to be deleted or omitted. Thistype of variationorder thus reduces the value of contract. Incase such omission is significant in quantity,the contractor may claim for loss of profit had such works been carried out9.
Omission of work shall not be with intentionof completion or works by the employer or by others10 and if this is the case, it will be a clear case of breach of contractand an invalid variation order11. Further to Wraight Ltd v P H and T Holdings12, it seems that loss of profit on omittedworks is claimableas direct loss. 3.1.3.
Acceleration order or Sequence changes. If due to unforeseen requirements, the employerwishes to completethe work prior to the agreedcompletion date, such instruction may be given.However, this may require the contractor to employ additional resources in terms of labour, supervision, overtime,equipment etc. which may substantially increase the agreedor estimated cost of works. The employer may directlyinstruct works orrequest the contractor toprovide a proposal