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Cost control and variations

Change control on design and build

Before tender a change is priced by several parties who want the work. After signature it is priced by one who already has it. Nothing else about the change has altered.

Why change costs more after signature

Change control on design and build works differently from change control before a contract exists, and the difference is not technical. Before tender, a variation in scope is absorbed into a competitive price. After signature the same variation is valued under the contract, by the party carrying it out, with no competitor available to test the figure.

That is not a defect in the contract. It is the price of certainty, and it is the reason procurement route and design maturity are commercial decisions rather than programme ones.

The word used in the contract is usually change or variation, and the two are interchangeable in ordinary speech. What is not interchangeable is a change instructed under the contract and work carried out because somebody asked for it. Only the first has a valuation route attached to it.

Three kinds of change, priced the same way

The first is a genuine change of mind, where the client wants something different. It is legitimate and it should be paid for.

The second is a decision that was deferred rather than taken. Nobody chose the kitchen specification, so it entered the contract as an allowance, and choosing it later arrives as a change.

The third is coordination that was not completed, where two design packages meet and neither resolved the junction. That one is often contested, because whether it is a change at all depends on what the employer’s requirements said.

The cost that is not in the quote

A valued change covers the work itself. What it frequently does not cover, until somebody claims it later, is the effect on everything else: procurement already placed, sequence already planned, and in some cases work already built that has to be undone.

Those consequential effects are valued differently from the direct work and they are far harder to establish after the event. Recording them as the change is instructed, rather than reconstructing them at the final account, is the difference between an assessment and an argument.

Keeping the list short

Most change is preventable, because most change is not a change of mind. It is deferral. Tracking which decisions are still open as tender approaches, and attaching a value to each, converts a category of surprise into a managed list.

What remains after that exercise is genuine change, and it is a considerably smaller number than most projects experience. Our scenario on late design changes describes what the pattern looks like when it is not managed.

Valuing the change itself

Contracts set out how a change is to be valued, and the hierarchy usually runs from rates already in the contract, through rates analogous to them, to a fair valuation where nothing comparable exists. The further down that hierarchy a change falls, the more discretion enters the figure and the more the outcome depends on who is doing the assessing.

That is why the pricing document produced at tender matters long after the tender is over. A priced schedule with a genuine breakdown gives a valuer something to work from. A lump sum with three lines gives them nothing, and every change then becomes a fair valuation negotiated from first principles.

The second half of the assessment is entitlement, and it comes first in sequence even though it is usually discussed second. Whether the contract obliges the employer to pay for this work at all is a separate question from what the work is worth, and merging the two produces a negotiation in which the contractor concedes on value in exchange for entitlement they may not have had.

Time is the third element and it is assessed separately again. Granting an extension of time protects the contractor from damages. It does not by itself entitle them to the cost of the extended period, and treating the two as one decision is one of the most expensive habits on a live contract.

What this means for you

Instruct changes in writing, value them before the work proceeds where the programme allows, and where it does not, state the basis of valuation in the instruction itself. That single habit moves the later conversation from entitlement to rate.

Where we hold the employer’s agent appointment this is administered as part of the role. Where we are engaged commercially without that authority, the same discipline runs through client side quantity surveyor.

A final habit worth adopting is a running change register that both parties can see, showing every instruction, its status, its assessed value and whether time has been claimed against it. Disagreement about a single change is normal. Disagreement about how many changes there have been, which is what happens without a shared register, is what turns a final account into a dispute.