The contractor’s arithmetic is usually right. The difference is in the inputs and the method. These are the 7 places I look first.
A variation claim arrives as one number. It is never one question. Underneath there is usually a valuation question, sometimes a time question and often something that shouldn’t be in the variation at all. The contractor’s arithmetic is usually right. The difference is almost always in the inputs and the method. These are the places I go looking first.
The most valuable move I know. A contractor prices extra quantities of an existing schedule item inside the variation. More geogrid, more drainage metal, more of whatever the instruction made bigger. Check the basis of payment. If the item is measured, those quantities are paid on what is physically placed, at the schedule rate, through the monthly remeasure. The schedule quantity is not a cap. So they come out of the variation entirely.
Why bother, if it is paid either way. Because inside the variation the quantity becomes an argument. The contractor measures its extra as the difference between its model and the tender quantities. That difference is the gap between the estimate and the wall as built, not the effect of the instruction. You cannot isolate the instructed part without records nobody kept. In the remeasure there is no argument. Everything laid is paid once, against QA records. The contractor is no worse off. Say that in the assessment, set out the measurement basis so both sides measure the same way. Say expressly that nothing is carried in the variation as well.
Check the other direction too. If the same work also sits inside a lump sum item, that is a different problem and it has to be named.
Contractors sometimes value an enlarged structure as the measured increase in footprint applied to the lump sum for the original. Clients don’t like it on sight. It is valid. A rate reasonably derived from a suitable schedule item is exactly what the valuation clause allows. A lump sum for the same wall in the same place doing the same work is about as suitable as it gets.
2 conditions. The contractor proposed or accepted the method. The percentage is measured, not estimated. It is applied exactly. 8.12 percent is not 8.1192 percent. On a big lump sum that is real money. Then cross check it 3 ways in a separate attachment before it goes near the client. The contractor’s own material rates grossed up for their share of the lump sum, which is the floor. The closest schedule rate for the placed material, which is the only measure independent of the contractor’s pricing and the one to lead with. And the all in composite rate implied by the lump sum divided by the tendered volume. On one I did the percentage sat a few percent under the schedule analogue and around a tenth under the composite, so adopting the contractor’s own method was the cheaper of the 2 for the Principal. That is the sentence the client needs.
Look at how the percentages are applied. On site overheads on the subtotal, then off site overheads and profit on the subtotal that already includes the on site percentage. Replicate their arithmetic so the reconciliation ties to the cent, then state the non compounded figure and the difference. And if the variation is valued at schedule rates or a rate derived from them, the rate already carries margin. Off site overheads and profit don’t go on top.
Watch for the case where Schedule 1 says rates are inclusive of preliminary and general but the schedule of prices nominates overhead percentages anyway. They can’t both be right and it affects every variation on the job. State the allowance you made, state the strict reading and price the difference in the challenges table. Don’t leave it for someone to find later.
If the price build up says the work didn’t affect the critical path and the covering notice claims critical path delay, they can’t both be right. Put it in the assessment. The same goes for an impacted programme lodged with the claim. Check its data date, check whether it models the path as driving completion before the instruction. Look for baseline dates on activities that don’t exist in the accepted baseline.
Standing plant, idle labour, supervision. Claimed by the day, recorded nowhere. Neither side can prove its case. A nil assessment isn’t open once the variation and the delay are established. An undefended round number won’t survive either. Build the allowance from something in the record. On one job the best evidence in the file for standing plant was the hire company’s own invoice, which carried a 50 percent idle charge for the exact week claimed. The contractor hadn’t noticed it was there.
When a change is defended on the basis that the specification required something, open the specification and search it. Quote it if it is there. If it isn’t, say what you searched for and state the silence as the finding. I have had a designer’s own change notice cite a clause that did not contain the requirement. The whole entitlement turned on the specification being silent. A search that comes back empty is a result. It is never filled in from general knowledge.
One table reconciling the contractor’s submitted total to the assessed total, line by line, including the rounding. Compute the rounding line. Don’t write whatever makes it balance. And where quantities have moved to the remeasure, give the whole of position number too. The contractor wants to know what it receives across the variation and the remeasure together, not just what came out of the variation.
Work out which pattern you are in before you start. Time, or valuation and double counting, or both. Assemble the whole record before forming a number, because a number formed early makes you read the record to confirm it. Then work down the valuation order and say which limb you are on and why the earlier one doesn’t apply. And every contractual proposition carries its source. If I can’t name the document, the clause and the page, it doesn’t go in. More on how I work →
Send me the claim, the price build up, the schedule of prices and the instruction. You get back a written assessment with the reconciliation to the cent. Claim assessment →
Common questions
Usually they should not be. If the item is measured under the basis of payment, additional quantities are paid at the schedule rate through the monthly remeasure against what is physically placed. The schedule quantity is not a cap. Taking them out of the variation removes a quantity argument and pays the contractor exactly once.
Yes, where the lump sum item is for the same character of work in the same place, because a rate reasonably derived from a suitable schedule item is a recognised valuation method. Use the measured percentage exactly and cross check it from first principles before adopting it.
Not normally. Schedule rates already carry the contractor’s margin. Overhead percentages apply where the variation is valued at net cost. Even then check whether the contractor has compounded one percentage on another.
A nil assessment is not available once the variation and delay are established, but neither is a round number. Build the allowance from something in the record: diaries, camera, supplier invoices, subcontractor emails. Hire invoices often carry idle charges for the exact period.
It is ordinary contract administration, handled deliberately. Disclose where it came from, keep it as a cross check rather than the basis, keep at least one measure that uses contract rates only. Mark the attachment commercial in confidence.
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