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21 May 2025
In the world of construction change is not just likely – it’s inevitable. Whether due to unforeseen site conditions, client-driven alterations, or regulatory requirements, variations are a fundamental part of managing a project.
Understanding how these are dealt with under standard form contracts such as JCT and NEC is essential for maintaining control, minimising disputes and keeping projects on track.
In construction contracts a Variation or Change refers to a modification to the originally agreed scope of works. This can include additions, omissions, or substitutions to the work and changes to design.
Both the Joint Contracts Tribunal (JCT) and the New Engineering Contract (NEC) provide mechanisms for managing such changes, but in notably different ways.
JCT contracts include a relatively traditional and well-established approach to variations. The Employer (typically through the Employer’s Agent or Contract Administrator) has the power to issue instructions that vary the works.
A key feature of the JCT approach is its reliance on written instructions. For a variation to be valid it must be issued in writing.
Contractors are generally not entitled to payment for varied works carried out without such formal instruction, even if the Employer has given verbal approval.
This procedural requirement underscores the importance of clear communication and robust record-keeping throughout the project.
Once a variation is properly instructed, a contractor may be entitled to:
Importantly, contractors must notify the Employer of potential time and cost impacts promptly.
While the JCT framework provides a structured process for dealing with changes, disputes often arise when instructions are unclear, informal, or poorly documented.
Successful management of variations under JCT contracts depends heavily on timely communication, procedural compliance, and comprehensive project records.
NEC contracts adopt a more proactive and collaborative approach through the use of compensation events. Under NEC4, a change to the scope of works, known as the “Scope” (previously known as “Works Information” in NEC3) is treated as a compensation event under Clause 60.1(1).
This clause covers changes instructed by the Project Manager that alter the scope, quantity, or quality of the works, or the method and timing of performance.
Unlike JCT, which primarily values variations retrospectively, NEC requires a prospective assessment of both the time and cost implications of a change at the time it is identified.
This process begins when the Project Manager issues an instruction that changes the Scope. The Contractor is then required to submit a quotation, which includes:
This quotation is assessed and either accepted, amended, or rejected by the Project Manager. Importantly, there is a tight timeframe, typically within three weeks, for the Project Manager to respond.
If they fail to do so, the Contractor’s quotation may be deemed accepted, incentivising timely decision-making by the Employer and the Project Manager.
Central to the NEC philosophy is the early warning mechanism which requires both parties to notify each other as soon as they become aware of any matter that could impact cost, delay, or project performance. This is intended to encourage collaborative problem-solving and risk mitigation before issues escalate.
Variations under NEC are therefore not treated as one-off instructions but as part of an ongoing, dynamic management process.
The aim is to avoid disputes by ensuring that both parties understand and agree on the consequences of changes before the work is carried out, reducing uncertainty and promoting transparency.
As highlighted above, variations are a staple of construction projects. However, a recurrent and often overlooked issue is the tendency of instructed variations, particularly those initiated by agents of the Employer, to go beyond the legitimate adjustment of scope and veer into the territory of unagreed contract amendment.
This blurring of boundaries between variations and renegotiations introduces considerable risk. A variation is intended to modify the works, not the working relationship. Yet, in practice, instructions often alter payment mechanisms, completion obligations, or risk allocations under the guise of a “simple variation.”
A common flashpoint is when a variation changes the sequence of work or introduces commercial terms that affect delivery or compensation. Whether subtle or direct, these shifts can lead to disputes over whether the original contract terms still apply, or whether they’ve been implicitly renegotiated.
To mitigate these risks, two core strategies deserve emphasis:
NOM clauses require written agreement for any contract change, helping prevent unauthorised or informal amendments. Their strength lies in consistent enforcement – ensuring that everyone, including agents, knows their limits.
Teams should be trained to distinguish scope variations from contractual amendments. Instructions that touch on time, risk, or payment should trigger legal review. A checklist or internal approval process can help catch overreach early.
Ultimately, variations are a valuable mechanism – not an invitation to renegotiate. Keeping that distinction clear protects both the contract and the project.
While both JCT and NEC contracts allow for variations, their methods reflect different philosophies. JCT focuses on defined procedures and retrospective valuation, while NEC champions collaboration and forward-looking assessment.
For employers knowing how each form handles change is key to ensuring variations are managed fairly and efficiently.
Just as importantly, it’s essential to understand what constitutes a true variation – so that legitimate scope changes do not inadvertently become disguised renegotiations of the contract itself.
Variation is the only constant in construction – what matters is how well you manage it.
This article is for general awareness only and does not constitute legal or professional advice. If you would like further advice and assistance in relation to any issue raised in this article, please contact us by telephone or email [email protected].
