Variation valuation under the JCT forms follows a defined order. Contract rates first where the work is of similar character executed under similar conditions. Then contract rates adjusted, where character is similar but conditions have changed. After that, then fair rates and prices, where neither applies. Dayworks only where the work cannot properly be measured.
That hierarchy is the whole subject. Almost every argument about a variation is really an argument about which step applies, conducted by two people who have not said which step they are using.
Rule one, contract rates
Where the varied work is of similar character to work already in the contract, and is executed under similar conditions, and does not significantly change the quantity, the contract rates apply.
This binds both ways. A contractor who priced an item keenly cannot escape that rate on additional quantities. A client who secured a low rate cannot be charged more for the same work. That predictability is the point of having rates at all.
The conditions attached matter. Similar character is about the work itself. Equally, similar conditions is about how and when it is carried out. The same item of work executed out of sequence, in a confined area, or after the rest of the trade has left the site is not being executed under similar conditions, and that is a legitimate basis for moving to the next rule.
Rule two, rates adjusted
Where character is similar but conditions or quantity have changed significantly, the contract rate forms the basis and is adjusted for the difference.
The adjustment should be explained rather than asserted. A rate uplifted because the work is now in small parcels needs a statement of what that does to productivity. A rate reduced because quantity has increased needs the same treatment.
This is the rule that produces the most negotiation, because the adjustment is a judgement. The way to keep it defensible is to state the basis in writing at the time, so that the reasoning survives the arrival of new people on both sides.
Rule three, fair rates and prices
Where the work is genuinely different in character, contract rates do not help and a fair rate has to be built. That means a rate constructed from labour, plant, materials and the appropriate additions, supported by evidence.
Fair means fair to both parties. It is not the contractor's preferred rate and it is not the lowest rate the client can find. Where a comparable quotation exists it is strong evidence; where it does not, a build up from first principles with stated outputs is the next best thing.
The common failure is to reach this rule too quickly. Anything valued as a fair rate is being valued outside the competitive tension of the original tender, which is why the hierarchy exists and why the earlier rules are tested first.
Dayworks, the last resort
Dayworks apply where work cannot properly be valued by measurement. That is a narrow category and it is routinely stretched, because dayworks are simpler for everybody involved on site.
The commercial problem is that dayworks reward time rather than output. A day of low productivity costs the client more than a productive one, which inverts the incentive that measurement provides.
Where dayworks are used the records decide everything: signed sheets recording labour, plant and materials, submitted within the contractual period, and signed as a record of resource rather than as agreement of entitlement. Sheets signed late, or not at all, are the most disputed documents on any project.
The instruction has to exist
Before any of this applies there has to be an instruction. Work carried out without one is not a variation, whatever anybody intended, and recovering it depends on provisions about confirmation that are easy to miss.
Verbal instructions are the usual problem. Most contracts allow a contractor to confirm one in writing, with the instruction taking effect if the client does not dissent within a stated period. That mechanism protects the contractor and it is frequently not used.
The habit that prevents this is unglamorous: confirm on the day, in writing, every time. It is covered further in instructions given verbally and paid for twice.
Value while the evidence exists
A variation valued in the month it arises is a measurement exercise carried out by people who can still see the work. Valued a year later it is an argument about what happened.
That is the entire case for monthly discipline. The cost of leaving items open is not the delay in payment, it is the loss of the facts that would have settled them cheaply. What that costs when it is left is set out in variation claim exposure.
Where an account has already reached the point of dispute, the work becomes forensic, and that is a different exercise described under commercially contentious.
What this means for you
When a variation is disputed, ask which rule the other side is applying. In a surprising number of cases nobody has said, and stating it resolves the argument or at least narrows it to something specific.
Then check the instruction exists and the records support the valuation. Those two questions decide most variation disputes long before anybody reaches the rate. Our approach sits under cost control and variations.
Sitting on variations nobody can agree?
Send the instructions and the contract. We will tell you which rule applies to each item and what the evidence supports.