Contract documents

May 24, 2023

So, it’s midweek and the weekend is in sight. It’s your job to find something fun for the family and your mind is racing. Out of nowhere, an idea stops you dead in your tracks. The wife and kids have been begging for a picnic in the park and the time has come to grant their wish!

The weekend arrives and you gather up all the good stuff, pack it up, turn the key and out of nowhere raindrops begin falling. The family cringes, hoping the rain stops, but instead of stopping those drops become buckets and all hopes of a fun-filled day in the park are gone. The situation and circumstances have changed, but the family is still depending on you.

Right then, you come up with another brilliant idea. Since picnicking in the park is off the table, you spread out a blanket right there in the middle of your living room. You unpack the snacks, fill up the plates, and fun abounds. Problem solved.

Sometimes situations and circumstances arise in our personal lives beyond our control and warrant a change in plans. The same thing happens in construction; when it does, you must revise the contract to realign it with the current state of affairs. The result will be the same. How it happens is where the changes occur – it’s where Contract Variations occur.

What are Contract Variations?

A Contract Variation is simply defined as a change to terms to the construction contract that parties originally agreed to.  There are two ways to make the changes. First, you can make changes to the contract terms variations. The second, and most common option is to change the scope of the construction work.

Term Variations

 Term Variation means you’re essentially re-creating the same contract only this time, with new terms. As such the same principles and philosophies apply and parties are expected to review and agree to the terms better the document is executed by signature. Once executed, the document is considered a binding instrument to be used to guide the legalities of the project.

Scope Variations

 As mentioned before, Scope Variations, also referred to as Scope Changes, are the variations most commonly seen. These instances are more common because they deal directly with the work being done in an industry where external factors exist. Construction plans and blueprints are living documents. They only come to rest once a project is complete. Until that day, several things can occur beyond the control of anyone involved in the construction process. When these things happen, the scope of a project changes, which is where the variation comes into play.

 The Key to Contract Variations

 Contract variations happen and over time they’ve come to be seen as part of the construction process. But just because they’re widely accepted as the norm, that doesn’t mean you shouldn’t be prepared to handle them. Here are a few tips to guide you.

1. Have a process in place: Don’t get caught unprepared when it comes to variations. Build a process including forms, approval authorities, and work processes to help the requested changes happen with minimal damage to the project.
2. Make sure everyone is onboard: Any change to the scope or language of a contract is a team effort. With that, before any type of variation can begin, make sure all parties are in agreement on the portion that needs changing.
3. Be proactive: No matter what role you play in the project, if you see a variation coming down the line, sound the alarm as quickly as possible. Get the ball moving because the quicker you do, the quicker the project will get moving again.
4. Communicate, communicate … and then communicate some more: It’s the same project, but once there’s a variation, things are different. Variations are not the time to live by assumptions, so make it a point to build an environment where excellent communication exists.

Let’s face it, in life, things can happen that are beyond your control. When you’re facing a situation that alters your plans, you don’t quit; you find another way to finish the task. This same principle holds for a construction project in the form of a contract variation. Construction projects can take months, sometimes years to complete. The odds of everything going perfectly are small which means you’ll more than likely use a variation at some point.

Prepare yourself and your team and by all means, communicate to ensure everyone involved in the project understands how the changes will impact their duties. Remember, things happen in life and construction that you can’t control. You can, however, control how you react and with this in mind, you solve any problem.

To learn more about how AIA Contract Documents can help you with your business, visit https://aiacontracts.com/.

AIA Contract Documents has provided this article for general informational purposes only. The information provided is not legal opinion or legal advice and does not create an attorney-client relationship of any kind. This article is also not intended to provide guidance as to how project parties should interpret their specific contracts or resolve contract disputes, as those decisions will need to be made in consultation with legal counsel, insurance counsel, and other professionals, and based upon a multitude of factors.