What is Variation in construction projects?

Variation means any alteration/ or modification/ or Change/ or addition/ or substitution to the Employer's requirement in the Contract agreement which is instructed by the Engineer or approved as variation by the Engineer.


Further, variation is an important clause in construction projects. Inevitably, because at the time of bidding, both the contractor and the Engineer are unable to anticipate the actual cost and works includes in the agreed Contract. Therefore it is necessary to have a variation clause under Construction Contracts as the frequent changes in the Contracts are often required during the execution of the project.

1. Right to vary as per sub-clause 13.1 of FIDIC 1999

1.1 Contractual basis for the variation in the contract:-
  • Change in quantities of any item of work included in the contract.
  • Change in quality and other characteristics of any items of item.
  • Changes to levels, positions, alignment or dimensions of any part of work.
  • Omission/error of any work, plant, material or services necessary for permanent works.
  • Changes to the sequence or timing of the execution of the works.

1.2 Engineer instruction:-
  • Variation under the contract may initiate by the Engineer before issuance of Taking Over Certificate (TOC) either by instruction or by request to the contractor to submit a proposal.
  • The Contractor shall execute and be bound by each variation, unless the contractor promptly gives notice to the Engineer stating (with supporting particulars) that the Contractor cannot obtain the Goods required for the variation, upon receiving the notice, the Engineer shall cancel, confirm or vary the instruction.
  • The Contractor shall not make any alteration and/or modification of permanents works, unless and until the Engineer instructs or approves the variation.

1.3 Although the Engineer has the power to issue a variation instruction, but the Contractor is  
      not always to obey it.
  • Clause expression stated that '' cannot obtain the goods required for the variation ''. This implies that if any goods, material or equipment required to obtained by the Contractor to carry out the variation are not available immediately and without difficulty, the contractor is entitled to give notice to the Engineer that it does not wish to execute or be bound by the variation.

2. Value Engineering under FIDIC forms contract as per sub-clause 13.2:-

Value Engineering is a technique applied in construction projects to reduce the cost and subsequently increase the productivity and value of the products.

Value Engineering =  Value of Products
                                               Cost

 2.1 Reasons for provisions of value engineering clause in the construction contract:-
To encourage the Contractors to apply their knowledge and experience to benefit the employer and Contractor. Further,  the Contractor may benefit in two ways from a variation. Firstly, it may benefit because its cost of production is reduced and the Employer receives a product which is as good as that originally designed. Secondly, it may find a way in which it increases the value of the Final product to the Employer without incurring additional cost.

2.2 In sub-clause 13.2 of FIDIC forms, Contractor may right to submit a proposal to Employer for variation which will:-
  1. Accelerate Completion.
  2. Reduce the cost to the Employer.
  3. Maintaining operating the works and improve the efficiency or value of the works.
  4. otherwise benefit the Employer.
Further, it may be highlighted that, if the proposal requires a design change, then the design will have to prepared by the Contractor at his own cost and if the proposal is accepted,  the Engineer shall proceed with sub-clause 3.5 (Determination to agree or determine a fee). This fees shall be half (50%) of the difference between the following amount:-

1. Reduction of the contract value due to given VE option (under FIDIC 1999, sub-clause 13.7 and       sub-clause 13.8)

2. Modification of the quality, anticipated lifespan, maintenance or operational cost that should bear by the client after completion.

but if amount 1 is lesser than the amount 2, the contractor will not be entitled to any fee.

To conclude the sub-clause 13.2 of the FIDIC Contracts that the benefits resulting from the Contractor's suggested variation which increase the value of Employer by reducing the cost are equally shared between Contractor and Employer.

3. Variation Procedure :

Where the Engineer has requested the proposal the contractor is entitled to reply by advising why he cannot comply with this request ( If this is the case) or by submitting:-
  • A proposal setting out the work proposed and a programme.
  • Any necessary modification to the programme,
  • His price proposal.

The Engineer is required to respond as soon as practicable with approval, disapproval comments. The Contractor should not delay the work until the Engineer responds.