TECHNICAL NOTE ON VARIATIONS VS CLAIMS

A. VARIATIONS:
Construction contracts are of such nature that it is almost impossible to design and construct a project such that the
final product is identical in every way when compared with the original design which formed the basis of contractors
bid. Changes to original design and/or details that may come about either due to:
a)
b)
c)
d)
e)

a revision to the plans or;

Change in quantities;
Change in timing of execution;
Inclusion of a new item to scope of work
or because of technical reasons such as unsuitable ground conditions or other practical, aesthetic or financial
implications which are beyond control of the contractor and could not be contemplated at the bidding stage

In either of these cases, the contractor is no longer obliged to execute the work unless or until these changes (which
are termed as variations) are regularized by mutual consent of the parties and the Contract Price is adjusted
accordingly.
Purpose of Variation:
i.

Valuation of variations are generally intended such that an element of profit can be recovered on the extra
costs to be incurred on executing that variation.

B. CLAIMS:
Whenever there is delay, disruption, encounter with adverse circumstances, it is followed by an effect in terms of
additional time or cost which is to be borne by either of the parties. Where there is a breach of contract or there is a
provision in the contract to claim loss or damage, one party may lodge a claim against the other one.
Purpose of claim:
i.
ii.
iii.

Basic purpose of claim is to reinstate the claimant in the same financial position in which he would have been
if the compensation event would not have occurred. Therefore, in most of the circumstances, the provisions
for claims limit reimbursement to cost / expense without inclusion of any profit
The insertion of claim provision in the contract is also intended to empower the contract administrator (which
is supposed to be a neutral entity) to make payment of damages to the contractor without a variation being
ordered.
Claims arising out of a breach of contract by one of the either parties is a remedial action (provided by law)
for the other party

C. DIFFERENCE BETWEEN VARIATION & CLAIM:

Apart from the major difference (concerning valuation of variation and claim) stated at Sr. No. (i) under headings
Purpose Of Variation and Purpose Of Claim and bearing in mind the wide rules for valuing variations where there
are changes instructed in circumstances, Variation provisions appear to be intended to deal with consequential effects
of the Engineers instructions on the work while on the other hand, Claim provisions are to deal with the delay /
disruption and involvement of additional time and cost on account of any disturbance in the regular progress of works
that may come about due to variety of reasons.