Changes In Construction Contracts, The Valuation & Other Implications

At Common Law, a change is a breach till the parties vary the contract. On the other hand, performing a construction contract up to completion without any change is an impossibility. Not unnaturally, modern construction contracts add terms allowing parties to change the scope/timing/payment obligation etc. without varying the contract.

It is vital to follow the contractual procedure to make any change effective however in the real world the parties frequently fail to formalise these changes. In England two major model forms, JCT and NEC, use the process of Variations or Compensation Events to value any change. Each prescribes standard procedures, but informal changes and their valuation is very common too.

There are of course many other consequences and implications of changes, some changes do not result in a Variation or a Compensation Event, for example a change in ground conditions, programme, change in method or even design in a Design and Build contract.

In this new series Mohammed Haque explores the terms of both NEC and JCT and considers the contractual procedures required to formally bring an effective change along with the implications for the parties to a construction contract. He will also consider the consequences of failure to follow the formal procedure.

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