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Preparing Variations Claims Effectively – Part 2
Failing to submit Comprehensive Variation Claims would Certainly lead to delays for obtaining Approvals & Payments for those Varied Works carried out and also disrupt Contractors Cashflow.
In this Article an attempt is made to shed some light on how Contractors could Construct their Variation Claim submission effectively, In Part 1 of the Article we discussed key Contractual elements to a Variation Claim Submission, in this Part 2 we will be looking what are the key Commercial elements that the Contractors should consider to produce and include in their Claim Submission for Variation.
Commercial Substantiations to be included in a Contractors Variation Submission.
- Use any provided formats / templates in the Contract to prepare & precent the Variation Submission, should you wish to make any amendments obtain prior Approval.
- Generally follow Clause 12 Measurement & Evaluation (if Fidic type Contracts) and other relevant clauses on any other bespoke or any other standard form Contracts, and look out for Preamble section of the BOQ for instructions on computing the Measurements & Valuations.
- Generally, use Contract unit rates as long as it is same work items.
- For new rates, Provide clear Reference of how the new rates were derived– within that provide reference for each of cost line elements. i.e weather it is taken from BQ, Subcontract ref rates, or Quotation references including reference of minimum three Quotations.
- Where it is impossible to provide three Quotations provide reasonable justification why there quotations cannot be provided.
- Apply Overhead & Profits for the new rates as per what is set out in the Contract – generally profit is 5 % Overhead & Profit is 12% to 15% ( if the Contract does not provide Agree on certain % for O&P and record it on a Minutes of Meeting for future references & claiming perposes)
- Provide a clear Comparison of Cost for Original Scope Vs the Varied Works – I.e Addition, Omission or alteration.
- Include additional Prelims only if the V.O has caused or will cause additional critical delays or mobilization cost to the project completion.
- If % of Preliminaries is not provided in the Contract, agree on an acceptable % of Preliminary fee and record it in a Minutes of Meeting.
- If L.S Contract Provide re measured detailed breakdown of Quantities including references of Dwgs / locations from which the Quantities were worked out.
- Provide highlighted drawings, approved inspection reports for the completed Varied works.
- Finally consider Including a checklist & arrange all the commercial substantiations documents in an Appendix Order with references.
In Part 3 we will look at how to Comprise both Contract & Commercial Substances in an Appendix Order and percent the Variation Submission.
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