Variation Orders: Managing Project Changes the Right Way
When working on a project, especially those involved in constructing gardens, it is all too easy
to lose control of sound working practice once the customer decides they require ‘extras’;
additions or alterations to the original project contract. These can be very disruptive to your
works programme, as people often forget that contactors have future projects organised. In
order to maintain order in your company, a financial managerial device may be required.
Variation Orders, known shortly as VOs, are a form of adjusting a written contract to take
into consideration any substantial difference between a set of circumstances, values or agreed
materials or specification if deemed necessary during the working progress of a project. In
the case of a landscape or construction company, these are usually alterations to a written
programme of works or working techniques.
A VO is a written, signed, numbered and dated instruction, issued by the contractor, to be
signed and agreed by the customer, whenever an amount, type, quality, execution or change
to an order of schedule of the works covered and included in an original contract is required.
There are two types of VO; namely Beneficial and Detrimental. (Both should be triple
duplicated – one for the office records, one for the customer and one for the CDM File.)
A Detrimental VO may be an increase in costs for a particular element of a project – a change
in the quality of a type of paving or timber for example, which will show an increase in the
cost of the total project due to additional costs. Another example may be the alteration for any
reason to change the progress of a project, to allow other contractors to complete unforeseen
works, necessitating a hiatus in your contracted works. All additional costs, including hired-in
equipment will require to be included in a VO assessment.
A Beneficial VO may be an increase in the cost of a project due to an instruction from the
customer to increase the size of plants due to be supplied for example, where additional costs
will be incurred by the contractor, not only for the actual plants, but perhaps transport and
handling costs/larger tree pits/more compost/tree anchors etc.
A Variation will normally alter the permanent works, and may include the discovery of
unforeseen and unknowable ground condition found during works progress. An example of
this type of VO would be the unearthing of a WW2 air-raid bunker, buried in the ground
where a pond may have been planned as part of the landscaping scheme. A decision may be
made to either remove the bunker, including all related costs including machinery hire, to
move the pond elsewhere (requiring a fresh set of written instructions by the client) or remove
the pond from the scheme altogether.
There is no legal obligation for either Party to agree to, or accept, Variation Orders. They are
subject to express terms (not implied) in order to implement them. In other words, if both
Parties cannot agree the terms of a VO, it should not stand unless and until a new contract is
written, signed and agreed.
Even ostensibly minor alterations to specification that do not involve any change in the price of a scheme should be recorded as VOs and placed in the CDM Plan, as they may have an unforeseen impact on the project at a later date. A change from stainless steel hinges to brass for example, may result in staining of red cedar cladding due to chemical reactions, and a claim made against the contractor, who will have agreed to make the change without a waiver under the VO.
Because VOs will normally have cost implications, reasonable time for making assessments
and valuations should be allowed, and not simply signed off as agreed without due examination
of the full implications. For this reason, recognising the potential requirement for VOs should
be planned as far in advance as possible.
In the case of making urgent decisions on site – for example, the discovery of underground
streams or water courses requiring pumping equipment – such examples should be covered
in the contractors Standard Terms and Conditions. Variation Orders are rarely suited to
emergency works and decisions.
The issuing of VOs as a general practice greatly reduces – removes – the problems associated
with agreeing ‘Extras’ at the end of the project, as there should be no need for any such list to
be produced and evaluated, everything having been agreed and costed, in writing, at the time
of the request.
