Managing Claims and Variations in Construction Contracts

Variations and claims decide whether a project makes or loses money. On almost every Perth project the scope changes somewhere along the way: a design revision, a latent condition in the ground, a client request or a delay outside the builder’s control. Handling those changes well is one of the most valuable things a quantity surveyor does. This guide explains what variations and claims are, how they are valued, and how a quantity surveyor helps both sides get to a fair, documented result.

Variations vs claims: what’s the difference?

A variation is a change to the work under the contract: an addition, omission or change in quality, quantity, sequence or timing. It is usually directed by the principal or Superintendent.
A claim is a request for more time or money that the contractor says it is entitled to. Examples are extensions of time (EOTs), delay and disruption costs, latent conditions and unpaid variations.

Why variations happen

Design changes or incomplete documents at tender.
Client-requested changes to finishes, layout or scope.
Latent conditions. On the Swan Coastal Plain these include buried limestone, groundwater, uncontrolled fill and acid sulfate soils.
Authority requirements that change during the job.
Value engineering or substitution of unavailable materials.

The variation process step by step

Identify: spot that the work differs from the contract documents.
Notify: give written notice within the contract time bar. Under AS 4000, a contractor who believes a direction is a variation must say so in writing.
Price: prepare a quotation with measured quantities, rates and time impact.
Approve: get a written variation order before doing the work, wherever possible. For home building work in WA, variations must be in writing under the Home Building Contracts Act.
Record: add it to the variation register with status (submitted, approved, rejected, disputed).
Claim: include approved variations in the next progress claim.

How variations are valued

Most standard contracts set a hierarchy for valuing variations:

Prices or rates in the contract, such as a priced bill of quantities or schedule of rates, where they apply.
Reasonable rates or prices derived from contract rates or market costs, where they don’t.
Daywork: actual labour, plant and materials plus the agreed margin, used where the work can’t be measured.

Omissions are valued the same way, as a deduction. Margin and preliminaries apply only if the contract allows.

Worked example (illustrative only)

A client asks for a 6 m × 4 m concrete patio slab, 100 mm thick, to be added to a home under construction:

Concrete volume: 6 × 4 × 0.10 = 2.4 m³, plus 5% wastage = 2.52 m³ (order 2.6 m³).
Mesh, edge formwork, sand bed and labour are measured from the plan.
Each item is priced at the contract rates if they exist, or at current supplier quotes if not. Margin is added as the contract allows.
Programme impact is checked: does it delay practical completion?

Try our free concrete calculator for the volume part.

Extensions of time and delay claims

An EOT claim must usually show:

a qualifying cause of delay under the contract (for example a variation, a principal’s act, or inclement weather if the contract allows);
that the delay affected the critical path to practical completion;
that the notice was given on time, in the required form.

Delay costs, such as extended preliminaries and site overheads, are recoverable only if the contract provides for them. An approved EOT usually also protects the contractor from liquidated damages for that period.

The quantity surveyor’s role

A QS brings independent measurement and valuation to both sides:

For contractors: measuring and pricing variations, preparing EOT and delay claims, and making sure claims are substantiated and lodged within time bars.
For principals: checking quantities and rates, testing entitlement and preparing fair assessments for the Superintendent.
For both: keeping the variation register, reconciling it against the cost report and agreeing the final account.

Payment claims and the WA Security of Payment Act

Approved and claimed variations flow into progress claims, so the Building and Construction Industry (Security of Payment) Act 2021 (WA) matters:

a respondent must give a payment schedule within 15 business days (or the shorter contract period) if it will pay less than claimed;
payment is due no later than 20 business days (principal to head contractor) or 25 business days (to subcontractors) after the claim;
disputed amounts can be taken to adjudication, a fast interim process.

Best practice

Read the variation, notice and EOT clauses before work starts. Make a one-page summary of the time bars.
Never proceed on a verbal direction without confirming it in writing.
Price variations promptly, while the facts are fresh.
Keep photos, diaries and marked-up drawings for every change.
Reconcile the variation register with the cost report every month.

Common problems

Late identification: work is done before anyone realises it is a variation.
Weak substantiation: claims without quantities, rates or records are easy to reject.
Missed time bars: entitlement can be lost entirely.
Global claims: lumping delays together without cause and effect rarely succeeds.

Frequently asked questions

Can a builder refuse a variation?

It depends on the contract. Many standard forms let the contractor object to variations outside the general scope of the works. Check the variation clause.

What if a variation is done without written approval?

Payment becomes much harder to recover and may be barred altogether. Confirm directions in writing before starting.

Who values variations under AS 4000?

The Superintendent values them under the contract’s valuation rules, which start with any applicable contract rates and prices. Need a variation priced or a claim assessed? Call Measure Manage on 0498 202 445 or see our quantity surveying services. General information only, not legal advice.Variations and claims decide whether a project makes or loses money. On almost every Perth project the scope changes somewhere along the way: a design revision, a latent condition in the ground, a client request or a delay outside the builder’s control. Handling those changes well is one of the most valuable things a quantity surveyor does. This guide explains what variations and claims are, how they are valued, and how a quantity surveyor helps both sides get to a fair, documented result.