How does JCT section 5 work?
Section 5 of SBC/Q 2016 says what a Variation is and how it is valued: by agreement, by quotation, or from the bill rates outwards.
Updated: . By Jack Butler-Kettle, Construction Claims Consultant.
For the valuation order in plain terms on a subcontract, see how variations are valued under a JCT subcontract.
The answer
Clause 5.1 defines a Variation in two parts. The first is a change to the design, quality or quantity of the Works. That includes additions, omissions and substitutions, a change in the kind or standard of materials or goods, and the removal of work. The second is imposing, adding, changing or removing obligations or restrictions on access, working space, working hours or the order of the work. Clause 5.2 sets the order of valuation. First comes agreement between the Employer and the Contractor. Next is a quotation from the Contractor under Schedule 2, where the instruction asks for one. Otherwise the Quantity Surveyor values it under the Valuation Rules. Clause 5.6 covers work that can be measured. Work similar in character to the Contract Bills, the priced bills of quantities, is valued at the bill rates. That applies where it is done under similar conditions and the quantity has not changed significantly. Similar work done under different conditions, or in a significantly changed quantity, is valued on the bill rates plus a fair allowance for the difference. Work not of similar character is valued at fair rates and prices. Omissions are valued at the bill rates. Clause 5.7 allows daywork where the work cannot properly be valued by measurement. Clause 5.9 lets other work be revalued where a Variation substantially changes the conditions it is done under. Clause 5.10 bars any allowance for loss and expense that another clause of the contract would pay. So prolongation and disruption, the cost of the job running longer or being disrupted, stay out of a Variation valuation. Four things go wrong most often. Fair rates are used when a bill rate applies. The fair allowance is ignored when the quantity has changed enough to affect the rate. Daywork sheets go in for work that could have been measured. And loss and expense gets buried in the rate.
Example
Illustrative example. The scenario and figures are invented.
The facts
A Variation adds 400 square metres of the same floor screed already billed at £18 per square metre. It also moves 150 square metres of billed screed from a ground floor pour to a third floor with no crane access.
What happens
- The added screed is similar in character, conditions and quantity, so it is valued at the bill rate: £7,200.
- The third floor screed is similar in character, but the conditions differ, so the bill rate is the basis for its value.
- A fair allowance of say £4 per square metre is added for hoisting and double handling, giving £3,300 rather than £2,700.
- A further instruction to hand dig around a live service, which no bill item describes, goes to daywork because it cannot properly be measured.
- Any disruption to adjoining trades is claimed as loss and expense and kept out of all three figures.
The valuation in figures
| Item | Basis | Amount |
|---|---|---|
| Added screed, 400 square metres | Bill rate of £18 | £7,200 |
| Moved screed, 150 square metres, at the bill rate alone | Bill rate of £18 | £2,700 |
| Moved screed with the allowance | Bill rate plus £4 | £3,300 |
The outcome
The added screed is valued at £7,200 and the moved screed at £3,300 with the allowance. The hand digging goes to daywork, so each item is valued on its own basis under section 5.
To have each variation valued under the rules your subcontract actually sets, see our Variation Claim service.