How to manage variations and compensation events
A changed task can affect quantities, sequence, resources and completion. Record the change first, then follow the process in your particular contract.
by Jack Butler-Kettle · About 4 min readShare
Before you start
Have the agreed scope, new instruction, relevant drawing revisions, contract procedures and initial resource records available.
Compare the instructed work with the agreed scope. Identify who can instruct a change, which notices are needed and how it is assessed. Extra work does not establish its own contractual entitlement or price.
Step-by-step guide
1. Describe the change against the agreed scope
Record the original requirement, revised requirement, instruction date and person giving it. Keep drawings with their revision numbers.
Separate additional quantity from changed specification, access restrictions and altered sequence. Each may need different evidence or a different contractual route.
If an instruction is verbal, create a timely written record and follow any contractual confirmation procedure. A record does not replace a required notice.
If you are instructing work, identify the authorised change and obtain the required assessment before commitment where the contract allows. Keep the original scope for comparison.
If you carry out the work, record the instruction, affected quantities, programme and resources. A site request and authority to change the contract are not necessarily identical.
2. Follow the instruction and notification procedure
JCT and NEC use different mechanisms, and their forms vary. Compare the families in JCT or NEC, then check your signed terms.
NEC treats early warning and compensation-event processes separately. An early warning can help manage risk without itself notifying a compensation event.
The NEC explanation of linked processes shows how they interact. Its main-contract roles must be adapted to your contract.
3. Record and assess time and cost effects
Keep quantities, labour, plant, materials and contract costs traceable to the changed activity. Distinguish forecast amounts from actual expenditure.
Record programme effects separately. More labour cost does not itself prove a completion delay, and more time does not automatically establish extra payment.
Explain your assumptions and avoid counting the same resource twice. Identify work avoided as well as work added.
Our Change valuation and compensation-event quotations service connects the change, procedure and valuation as work progresses. If entitlement or value is contested, Variation Recovery or NEC compensation event recovery address the disagreement using those records.
4. Update the register and track the response
Use one line per change with an identifier, instruction, notice deadline, submission, assessment and current disagreement. Link each line to its evidence.
An NEC deadline copied from a main contract may be wrong for a subcontract. NEC distinguishes their notification periods.
Check the applicable trigger, exceptions and amendments. This is general learning for the UK construction industry. Check your governing law, contract form and amendments. Statutory procedures differ across England, Wales, Scotland and Northern Ireland.
A contractor can use Change valuation and compensation-event quotations.
If entitlement or payment is genuinely contested, separate the disputed items and consider the relevant claims service. See an increased builder’s quote for the homeowner perspective.
Before you finish: Check authority, notices, valuation support and status for every item. Identify missing information before treating an amount as agreed.
Worked example
The facts
A drylining subcontractor is instructed to move a partition after first-fix work has started.
What happens
They save the original and revised drawings and record the instruction.
They separate demolition, replacement materials and labour from any claim concerning altered sequence.
They check the subcontract notices and submit their assessment with assumptions and supporting records.
What this shows
The change has a traceable account of scope and effects. Agreement on the instruction does not automatically establish the submitted price.