Variation order: pricing and recording a change before it costs you

A variation order is a written instruction changing the scope of work under a contract — an addition, an omission, a substitution, a change in sequence or in the conditions under which work is done. It matters because it is the mechanism by which the contract sum and the completion date legitimately move. Work done outside it is work done at your own risk, however clearly somebody on site asked for it.

That is where contractors lose money, and they rarely lose it by mispricing. They lose it by starting on a verbal instruction, finishing the work, and raising the paperwork weeks later when the person who gave the instruction has a different memory of the conversation and the certifier has already valued the account.

What a variation order records

• A unique reference and the date of instruction — not the date somebody typed it up.
• Who instructed it, and their authority to do so under the contract. Not everyone on site has it.
• The change itself, described so a stranger could price it: what is added, omitted or substituted, with drawings or specification references.
• The reason: client request, design development, unforeseen conditions, statutory requirement. The reason often decides who pays, and it is where a variation differs from an internal change request: one adjusts a contract, the other asks for a decision.
• The price, or the basis for pricing it — contract rates, pro rata, dayworks, or agreed lump sum — and whether the price is agreed or provisional.
• The effect on the programme, including any extension of time claimed, stated separately from the money.
• Approval signatures from both sides, and the date.

Time and money are separate claims

A variation that adds three weeks of work does not automatically add three weeks to the completion date, and it will not unless the extension is claimed and granted. Contractors routinely agree the value of a variation and say nothing about the programme, then meet liquidated damages for a delay they were instructed into. State both consequences at the same time, even when the time effect is nil — recording "no effect on the programme" is a position; saying nothing is not.

Never start on a verbal instruction without confirming it in writing the same day. A short confirmation of verbal instruction, sent by email and referencing who said what and when, converts a conversation into a record. If it is disputed, you find out immediately rather than at final account.

Keep a register, not a pile

By the middle of a project the variations are numerous, some priced, some provisional, some instructed but not yet valued, some disputed. A register with a row per variation — reference, date, description, status, value claimed, value certified, time effect — is the difference between a final account that settles in a fortnight and one that runs for months. Ettex Records holds the register with the instructions and correspondence attached to each entry, Ettex Sheets carries the valuation and the running effect on the contract sum, and Ettex Docs keeps the confirmations of verbal instruction and the covering letters, with version history so what was sent is not in doubt.

To be plain: this is record keeping, not contract administration software and not legal advice. What counts as a valid instruction, who may give one and how a variation is valued are set by your contract form, and the difference between standard forms on exactly these points is substantial.