Back to Basics #31 - Schedule Two Variations Under JCT [Part 1]

Back to Basics #31 - Schedule Two Variations Under JCT [Part 1]

Schedule 2 Variation – What to Include

In the next two “Back to Basics” mailings we will consider Schedule 2 Variations under the JCT Main Contracts.

We will explain what you need to incorporate into these Variations, how to submit them, and when and how they can be implemented.

These Variations are similar in content in many ways to an NEC Compensation Event, but the processes are significantly different

Changes/Variations are common in construction projects. Prior agreement of the cost impact of any Change, along with the effect it will have on the Programme, enables the parties involved to understand the ramifications should the Change be instructed.

The JCT Standard Building Contracts 2016 (“SBC”) and the JCT Design and Build Contract 2016 (“D&B”) contain mechanisms within Schedule 2 that enable the Contractor to provide a "Variation Quotation" (SBC) or a "Contractor’s Estimate" (D&B), identifying the impact that a change will have on the project.

The Parties should be aware that the issuing of a quotation, prior to receiving an instruction to carry out a change, does not give an “automatic” right to the sums or additional time quoted.

A further point worth noting is that not all Contracts within the JCT suite of Contracts contain provisions under Schedule 2 and the giving of direction for the submission of a Variation Quotation. Clause 5.2 of the JCT Intermediate Building Contract 2016 for example, states that the value of Variations “shall be such amount as is agreed by the Employer and the Contractor or where not agreed, the amount valued by the Quantity Surveyor”. Whilst Clause 3.6.2 of the JCT Minor Works Building Contract 2016 simply recommends that “The Architect/Contract Administrator and the Contractor shall endeavour to agree a price prior to the Contractor carrying out the instruction”. Neither Contract gives guidance on how the Parties are to come to an agreement.

What is to be included

When producing a Variation Quotation/Contractor’s Estimate, it is important to review the relevant Schedule 2 within the applicable Contract, to determine what is to be included. Generally, a Quotation/Estimate will comprise:

1. The value of the adjustment to the Contract Sum, along with all necessary supporting calculations. The adjustment is to include, where appropriate, allowances for preliminary items.
2. The length of any extension of time required and the resultant change in the Completion Date.
3. The amount of any direct loss and/or expense arising from complying with the instruction, which is not included in any other quotation/estimate that has been accepted/instructed.
4. The additional resources (if any), required to carry out the Variation.
5. A method statement for undertaking the Variation.

The SBC also stipulates that the Contractor may include a fair and reasonable amount in respect of the cost of preparing the quotation.

If you need any assistance with Valuing Changes under JCT (or any other form of contract) Ramskill Martin’s Specialist Consultants can provide you with assistance and advice to help you secure your entitlement.

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