15 Rules for construction variation claims and change orders

Most construction projects will change and vary from the works that were originally priced. There will be unexpected construction delays and problems.

Variations and changes occur for many different reasons, and not all of them entitle the Contractor to a claim.

Contractors that don’t claim variations or change orders they are entitled to claim will incur costs that they did not allow for in their price. Contractors that do not claim delays they are entitled to claim could finish the project late and be penalised by the Client.

Regrettably some construction projects end in long, expensive, and bitter disputes over the validity of variation claims and change orders. But, it does not have to be this way.

I have been involved with over 120 construction projects. I submitted variation claims or change orders on almost all of these projects. Some projects nearly doubled in value and some projects increased in time by up to 80%.

I settled all change orders amicably with the Client, except two projects. One had a dispute adjudication board on the project and this was used to resolve the issue. One project we employed a lawyer and declared a dispute because the Client did not respond to our claims.

I got most of the time and money I claimed. And, importantly we did further projects with most Clients, so our reputation was not tarnished with these change orders.

It is possible to submit and agree variation claims and change orders amicably without upsetting Clients.

Preparing, submitting, and negotiating variation claims and change orders is something that contractors often do badly. It's a topic close to my heart, and something I've written several articles about, which I reference below. I've also written an easy to read guide for contractors: Construction Claims: A Short Guide for Contractors.

Below are 15 simple rules to help you successfully deal with variations and changes on your construction project.
​#constructiondisputes #changeorders

15 Rules for dealing with construction variations and delays

1. Most construction projects will have changes and delays, and Contractors are usually entitled to claim for the changes and delays which were not caused by their team, and which they did not know about or could not have reasonably foreseen when they priced the project. (Read: When Contractors Can’t Claim a Delay From Their Client on Construction Projects.)
2. Failure to claim legitimate change orders could mean that the Contractor does work for free, and if they complete the project late due to delays beyond their control which they didn’t claim, they could even be penalised by the Client. (Read: Are you working for free on your construction project?)
3. The Contractor is not automatically entitled to be paid for the change, or granted additional time. The Contractor must prove the additional time and costs. They must justify why these costs and time are due. They need to show they have taken all steps to avoid the variation, and that they have provided adequate notification and if possible forewarning to the Client of the event and it's implications. As they say: There is no such thing as a free lunch! (Watch: An introduction to construction variation claims for construction project managers Video 4 - Reasons claims are rejected)
4. It’s important Project Managers take an active part in preparing variation claims, or certainly check them. It's their project, and invariably their name at the bottom of the claim. They must have the facts at hand when the Client quizes them on the claim. (Read: Should construction project managers take the lead with variation claims?)
5. The Client must be notified of delays or changes as soon as they become known. This gives Clients an opportunity to rectify issues. Change orders must be submitted when the event occurs. Early agreement of change orders is essential for the Contractor’s cashflow. (Watch: An introduction to construction variation claims video 19 -  Variation Claim Notification.)
6. All contractual correspondence must be in writing. (Watch: An introduction to construction variation claims for construction project managers video 15 - Instructions.)
7. Accurate project records are essential for proving change orders. These records must be maintained from the project start. (Read: Documents That Will Make Your Construction Variation Claim Successful.)
8. Contractors must take the time and put effort into preparing change orders. Checking that they have allowed for all impacts and costs of the event. Usually Contractors have one chance to get the variation claim right. The claims are often worth lots of money, so the time spent on them will be well worth the effort. (Read: Construction project variations – have you included all your costs?)
9. Change orders must be well thought through, accurate, logical, clear, and with supporting documentation, so that even those not familiar with the project understand them. (Read: Will your next construction variation claim be successful?)
10. Spurious and inflated change orders should be discouraged. They are a waste of time and reflect poorly on the Project Manager’s integrity, and puts legitimate claims in jeopardy. (Watch: an introduction to construction variation claims video 8 - when you can not claim extension of time.)
11. Contractors must be prepared to negotiate change orders with their Clients. This negotiation does not necessarily mean giving back time and money which the Contractor was entitled to, rather it’s about arguing the facts with the Client and persuading them of the virtues of the change order. (Watch: Negotiating a construction variation claim – read this first to improve your success 10 Tips To Submit Winning Variation Claims.)
12. Change orders should not be viewed as a way to make money. Where possible Contractors should limit change orders by forewarning Clients early of problems, and even avoiding some projects and Clients that are disorganised. Change orders are seldom the cash cows that Contractors think they are. (Watch: An introduction to construction variation claims video 17 - When variation claims aren't good for contractors.)
13. Contractors must promptly deal with change orders from Subcontractors. Where these are for the account of their Client, the Contractor should check the change order is correct and clear, then add their costs and perhaps other Subcontractor’s costs, before submitting the change order to the Client. (Watch: An introduction to construction variation claims for construction project managers video 13 - Claims by Subcontractors against Contractors.)
14. When Clients do not agree to a change order the Contractor can declare a dispute, following the processes outlined in the contract. Usually Contractors cannot stop work. (Read: Don’t you hate it when clients ignore your change orders?)
15. Before declaring a dispute Contractors should exhaust all means of resolving the issue, and consider whether the dispute will yield a positive outcome. Disputes cost time and money to resolve, with often no guarantee of a positive outcome. (Read: Avoiding disputes on your construction project.)

Winning Construction Change Orders 

It is possible to amicably agree change orders with Clients by following these 15 rules. Contractors are entitled to claim for legitimate changes and delays which they could not reasonably have foreseen or allowed for. Change orders should not end in disputes.
​#constructionclaims #constructioncontracts #constructionlaw

Other useful articles
Don’t start construction projects without a proper contract.
Can I Claim for Additional Time on My Construction Project?

​Information in this article is from the author's book ‘Construction Claims: A Short Guide for Contractors’.
​© 2021 This article is not to be reproduced for commercial purposes without written permission from the author.

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