A variation is an instruction to change the works, and most standard contracts value it using the rates you already submitted. That means the rates in your tender decide what your variations are worth, months before anyone issues one. Price a bill carelessly and you have set the price of every change that follows.
Variations are where a lot of projects quietly gain or lose their margin, and it is rarely because anyone was careless on site. It is because the mechanism that values them is misunderstood, and the moment to influence it has usually passed by the time anyone looks.
A variation is not the same thing as a claim
These get run together constantly, and they are governed by different rules and different evidence.
A variation is a change to the scope, instructed by the contract administrator. Something has been added, removed or altered. It is valued under the contract's valuation rules, normally starting from your tender rates.
A loss and expense claim arises when something the client is responsible for causes you additional cost without necessarily changing the scope at all. Late information, late instructions, disrupted sequence, restricted access. The work is the same work. It just cost you more to do it, and the reason is on their side of the line.
The practical distinction matters because the evidence differs. A variation needs measurement and rates. A claim needs records showing cause, effect and actual cost. Submitting one as though it were the other is the most common reason legitimate money is refused.
How variations actually get valued
Most standard forms work down a hierarchy. In the UK that means the JCT and NEC families; other markets use their own forms, but the underlying logic is similar.
- Where the varied work is of similar character, executed under similar conditions, and does not significantly change the quantity, the contract rates apply directly
- Where the character is similar but the conditions or quantity have changed, the contract rates form the basis of the valuation, adjusted for the difference
- Where the work is not of similar character at all, a fair valuation is made
- Where work cannot sensibly be measured, it may be valued on a daywork basis against recorded time and materials
Read that hierarchy again, because the whole argument lives in one phrase: under similar conditions. That is not decoration. It is the door out of a rate that no longer reflects reality, and it is the door most contractors walk straight past.
Your tender rates decide your variation money
Here is the trap, with numbers.
Say you tendered 300 m² of blockwork at £68 per m², against a real cost of £62. That is £20,400 in the bill and £1,800 of margin. Sensible enough.
Three months in, the client instructs an extra 120 m² of the same blockwork. Same specification, same drawing, same trade.
- Valued at the contract rate: 120 × £68 = £8,160
- What it actually costs you: 120 × £81 = £9,720
- Net effect: £1,560 out of your pocket
Why £81 rather than £62? Because the conditions changed. The scaffold came down two weeks ago and has to come back. The gang was demobilised and has to be brought in for a short visit. The work is now out of sequence, in a finished area that needs protecting. None of that was in the original rate, because none of it applied when you priced it.
The work is identical. The conditions are not. That is precisely the situation the valuation rules provide for, and you are entitled to an adjusted rate. But only if you say so before you do the work. Build it first and the argument becomes a request for sympathy.
Where the money actually goes missing
- Accepting the contract rate reflexively because the work looks the same on the drawing
- Omissions valued at your rate — if work is removed, you lose the margin and the contribution to overheads that came with it, and the prelims do not shrink to match
- Forgetting the knock-on — a variation that adds two weeks adds two weeks of every time-related cost, and those are priced separately from the work itself
- Doing the work on a verbal instruction and chasing the paperwork later
- Rolling everything into one claim at the end, by which point causation is impossible to demonstrate
- Unbalanced tender rates coming home to roost, when the client omits the work you loaded high and adds the work you loaded thin
That last one deserves attention. Loading rates to improve cashflow is common and it is not free. It hands the other side an option, and instructed omissions are how that option gets exercised.
Delay is not disruption
Two different things, two different methods of proof, and conflating them sinks otherwise good claims.
Delay is time. The completion date moves. What follows is an extension of time and, where the cause sits with the client, the prolongation cost of running the site for longer.
Disruption is lost productivity. Your labour achieves less per hour than it should because the work is impeded, re-sequenced or done inefficiently. Critically, disruption can cost you a great deal without the completion date moving at all, which is why it gets overlooked.
The standard approach to demonstrating disruption is the measured mile: compare productivity in an undisrupted part of the works against the disrupted part, and the difference is your loss. It relies entirely on having recorded output as you went. The Society of Construction Law Delay and Disruption Protocol sets out the accepted methods in full and is the reference most of the industry works to.
What to record, and when
Variation money is won and lost on contemporaneous records. Not reconstructed ones.
- The instruction, in writing, before the work starts — and confirmation in writing if it arrived verbally
- Your notice that conditions differ from those priced, submitted before you proceed
- Labour and plant allocated to the varied work, recorded daily and separately
- Photographs with dates, particularly of anything about to be covered up
- The programme impact, identified at the time rather than reconstructed afterwards
- Output rates on undisrupted work, which is what makes a measured mile possible later
The daily labour allocation is the one people skip and the one that decides most disputes. Retrospective apportionment across a whole site is nearly impossible to make convincing, and an assessor who cannot follow your numbers will not award them.
Price the bill knowing this is coming
The strongest position on variations is established at tender, not on site. Rates that reflect genuine cost plus a defensible margin survive being applied to changed work. Rates that were bent to win the job do not, and they will be applied to changed work whether you like it or not.
That is the practical case for a properly measured tender: every rate built up transparently from labour, material, plant and margin, so that when a variation lands you can show exactly what the original rate did and did not contain. A lump sum per trade gives you nothing to argue with. We have written more on how to read a bill of quantities and on the costs contractors consistently underestimate, most of which resurface at variation stage.
Who this applies to
- Main contractors
- Subcontractors
- Specialist trades
- Developers
- Project managers
FAQ
What is a variation in construction? An instructed change to the scope of the works: something added, removed or altered from what the contract described. It is valued under the contract's valuation rules, which normally start from the rates in your tender before adjusting for any change in character, conditions or quantity.
How are variations valued? Through a hierarchy. Similar work in similar conditions takes the contract rates directly. Similar work in changed conditions uses those rates as a basis, adjusted. Genuinely different work gets a fair valuation, and unmeasurable work may go to daywork against recorded time and materials.
Can I refuse a variation? Generally not, if it is properly instructed and within the scope the contract allows to be varied. What you can do is give notice that the conditions differ from those priced, and that the contract rate therefore is not the right basis for valuing it.
What is the difference between a variation and loss and expense? A variation changes what you build. Loss and expense compensates you for additional cost caused by the client where the scope has not changed at all, such as late information or disrupted access. They need different evidence and are assessed separately.
What is the measured mile? A method of proving disruption by comparing productivity in an unaffected part of the works against the affected part. The difference in output demonstrates the loss. It only works if you recorded output as the job progressed.
Do I lose money on omissions? Often, yes. Removing work at your tender rate takes away the margin and overhead contribution that came with it, while your time-related site costs carry on unchanged. Omissions deserve the same scrutiny as additions.
Where to start
If your variations keep landing at rates that do not cover the work, the problem is usually upstream in how the tender was built. We prepare tender pricing with every rate built up transparently, and fully measured bills of quantities that give you something to point at when a change arrives. Send us the documents and we will confirm a fixed fee and a turnaround date before starting.