Watch the notice regime on disputed variations
Payment Notices and Pay Less Notices can decide a disputed variation for the month, whatever its merits. Check every notice against the clock before you accept its number, because a late notice or one without reasons may not count.
Updated: . By Jack Butler-Kettle, Construction Claims Consultant.
Why it matters
When a variation is undervalued, the argument goes to the merits: the hours, the rate, the instruction. But the payment cycle has its own rules, and they can decide the month whatever the merits. If your main contractor wants to pay less than you applied for, it has to say so in time, with the sum and the reasons. It does that in its Payment Notice or, later, in a Pay Less Notice under section 111 of the Housing Grants, Construction and Regeneration Act 1996.
A notice that is late, gives no reasons or comes from the wrong person may not do the job. Then the sum in your application can be the sum that stands for that month. Nobody checks this on variations, because all eyes are on the valuation. So the cheapest win on the job goes unnoticed.
How to do it
- Write down, for every application, its due date, the deadline for the Payment Notice and the last date for a Pay Less Notice.
- Check each notice against those dates as soon as it arrives, before you read the figures.
- Check it names a sum, gives the basis for it, and comes from the person your subcontract says must send it.
- Take advice the same week if any of that is missing, before the final date for payment, not after the money is short.
Example
Illustrative example. The scenario and figures are invented.
The facts
A subcontractor applies for £86,000 in month 6, including £16,000 of variations. The subcontract requires a Payment Notice within 5 days of the due date. Any Pay Less Notice must be given at least 7 days before the final date for payment. A notice arrives certifying £70,000.
What happens
- The commercial manager checks the date first: the notice has arrived 9 days after the due date.
- It also gives no basis for the £16,000 cut, beyond saying the variations are under review.
- The commercial manager writes the same day pointing out both, and asks for the full £86,000 to be paid by the final date.
- The main contractor issues a corrected notice with reasons, inside the Pay Less Notice window, certifying £80,000.
The outcome
Of the £16,000 of variations, £10,000 more is paid that month, because the main contractor had to give reasons in time. The remaining £6,000 now has a written basis the subcontractor can answer.
To have this done for you, see our Variation Claim service.