Geoff Parish as at 4th August 2017

CA6812 Ex4 8-3-17 Variations + ANSWERS F:

Contract Administration CONS 6812 - Class exercise No.4 ANSWERS

This Topic is NZS 3910:2013 - Variations Thursday 3rd August 2017

The following questions all relate to Construction contracts in place with NZS 3910:2013 being the
contract conditions. Quote NZS 3910 clause references wherever relevant to your answers and fully
explain your answers.

Q1. Explain the difference between a direct instruction from the Engineer to vary the works and an
indirect Variation arising out of circumstances? A direct Variation from the Engineer under 9.1
Variations permitted reflects instructions from the Principal to change the Contract Works under
construction. An indirect Variation arising out of circumstances is a contractual device that allows
the Contract Price to be adjusted [9.1.5] and the Time for completion to be altered [10.3.1(a) and
10.3.7] for unexpected circumstances as may arise.

Q2. Give an example of what a direct Variation might typically consist of in categories 9.1.1 a) to e),
one example for each category, five in total.

9.1.1
The Engineer may order any Variations to the Contract Works within the scope of the
Contract that:
(a) Increase or decrease the quantity of any work; e.g. additional excavation etc. to take foundations lower
due to poorer load bearing capacity of subsoil than expected .
(b) Omit any work; e.g.delete the requirement for electric operation of an overhead garage door.
(c) Change the character or quality of any Material or work; e.g. install a marble kitchen unit bench top
instead of a formica laminated bench top shown on the contract drawings
(d) Require additional work to be done; e.g install stand alone air conditioning units not required by the
contract documents or
(e) Change the level, line, position, or dimensions of any part of the Contract Works. e.g. reposition the
layout of a car parking area to an office block under construction

Q3. Give 5 examples of the nature of circumstances that will produce a deemed Variation quoting
the relevant NZS 3910 clause number in each case.

2.2.5 significant discrepancies between Drawings, Specifications, and Schedule of Prices.

2.3.2 omission by error of item of work from the Schedule of Prices
2.3.4 actual quantity of an item differs from that given in the Schedule of Prices
2.7.4 Principals Drawings or Specifications ambiguous or unclear
2.7.7 late issue by Engineer or Principal of instructions, documents, or Drawings

five already and it is still only page 15.

Q4. Explain how on one contract an instruction to change rigid concrete paving to flexible asphalt
might be an acceptable Variation whilst on another contract the same instruction might fall outside
the scope of a Variation? It depends on the scope of the proposed change within the context of the
whole contract. [9.1.1 The Engineer may order any Variations to the Contract Works within the scope of
the Contract] If the paving is simply a part of the external works to a multi storey structure it could
be an acceptable Variation but if the contract is to construct rigid paving, to change that to flexible
asphalt paving is a variation to the contract itself. To quote Tony Bingham an English barrister and
regular contributor to the UK Building magazine [THE magazine to read if you want a professional
construction job in the UK] changing biscuits from Jaffas to hundreds and thousands may be a
Variation but changing biscuits to cake is a variation [or similar, it was about 20 years ago he wrote
something along those lines].

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Geoff Parish as at 4th August 2017
CA6812 Ex4 8-3-17 Variations + ANSWERS F:

Q5. The contract Engineer gives a Variation Order to the Contractor which deletes external painting
from the contract. After the Contract Works are complete and the Contractor has left site the
Principal brings a painter onto site to perform the external painting at a much lower cost than the
Contractor had priced it at. Is this acceptable under the contract? G9.1.1the Engineers power to
omit work by ordering a Variation can only be exercised where the workis no longer intended to be
carried out. Omitting or deferring work [for it to be] carried out by another contractorwould require the
Contractors agreementthere are exceptions to this general rule, andparties should seek legal advice if
this situation should arise. A NZ case involving the construction of electric cable carrying pylons confirms
this position, and one day I may remember the parties involved, but otherwise it currently eludes me.

Q6. The Engineer to the contract gives a Variation Order to the Contractor which deletes an area
of external concrete paving from the contract. After the Contract Works are complete and the
Contractor has left site the Principal brings a landscaper onto the site to lay topsoil in the area where
the paving would have been laid, and to sew grass seed. Is this acceptable under the contract and
how else could the Engineer had dealt with the situation so as not to deprive the contractor of
external landscaping work? G9.1.1 probably not, unless the Principal wanted to omit the paving and after
the Contractor had left site, only then decided to grass that area. If it had wanted to do this whilst the
Contractor was still on site it could have issued a Variation order to that effect 9.2 Variation orders. In
such situations it is hard to prove when the decision was made to substitute elements of the work.

Q7. What is the difference between a Variation Order and a Change Order? No difference at all
except the US prefers plain English i.e. Change instead of vary/Variation.

Q8. Whilst carrying out excavation work for foundations old reinforced concrete bored piles from a
previous development are found below ground level. What criteria must apply if these are to
represent a Variation? 9.5 Unforeseen physical conditions 9.5.1 [1] artificial obstructions or conditions
that occur as a result of weather away from the Site:.9.5.2 [2] that an experienced contractor could not
reasonably have foreseen when tendering; and [3] will substantially increase its Costs.

Q9. If the Contract Works included of two identical blocks of apartments, Block A and Block B and
the Contractor planned to commence Block A and upon its completion to construct Block B, would
the Engineer have the power to require the Contractor to reverse the order so the Contractor first
constructed Block B and upon its completion constructed Block A? 9.1.2 The Engineer maychange
the order in which the work is to be carried out. And 9.1.1 the blocks are identical and seem to be within
the scope of the Contractso probably yes.

Q10. If the Contract Works included of two identical blocks of apartments, Block A and Block B and
the Contractor planned to commence Block A and upon its completion to construct Block B, would
the Engineer have the power to require the Contractor to construct Block A and Block B in parallel so
they were started and finished at the same time? To have to carry out work concurrently that was
first programmed consecutively would strain a contractors and subcontractors resources and
significantly increase costs. If the work had been required to be carried out concurrently from the
outset, the Time for Completion would have been significantly reduced to avoid unnecessary
expenditure. The proposed change arguably falls outside the scope of the Contract 9.1.1.

Q11. What particular practical difficulty would be encountered by the Contractor if after starting the
Contract Works it was required to change the order in which the Works were constructed? Getting
subcontractors agreement to the change, Q9. No problem, Q10. major problem.

Q12. What action can the Contractor take if it thinks that circumstances have caused a Variation to
arise which have not been identified by the Engineer as a Variation. 9.2.2 Where an instructionby the

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Geoff Parish as at 4th August 2017
CA6812 Ex4 8-3-17 Variations + ANSWERS F:

Engineernot in writing ornotstated to be a Variation, and Contractor considersinvolves

Variation, the Contractor shall give written notice toEngineer to that effect. and 9.5.2 If during the
Contract the Contractor encounters on the Site physical conditions inform the Engineer and see also Q3.
above re deemed Variations, basically if anything appears it should be a Variation, write to the Engineer
and state the fact i.e. the following circumstances may constitute a Variation. The need to do this without
delay is to allow the Engineer to examine the circumstances and make his/her own decision on the matter.

Q13. If the Engineer performs his/her duties negligently and that causes the Contractor additional
cost should the Contractor sue the Engineer for negligence to recover its losses? No, case law
establishes that the Engineer has no duty of care to the Contractor, the Engineers duty is to the
Principal. 6.2.4 If the Contractorincurs additional Cost byfailureof the Engineer to carry out properly
his or her duties [it] shall be treated as a Variation. Effectively the Principal pays for its Engineers
negligence as its agent, and takes whatever action the Principal thinks appropriate to recover its loss
from the Engineer. Because the contract makes provision for the Engineers negligence any claim
made by the Contractor on the Engineer would be certain to fail.

Q14. If a Schedule of Prices is available in the contract what relevance does it have to Variations? 9.3
Valuation of Variations 9.3.5 Where the Contract includes a Schedule of Prices which contains prices or
rates applicable to the circumstances and nature of the work, or part of the work, the Base Value shall be
determined by applying those prices or rates.

Q15. What is the nature of a discrepancy in the Schedule of Prices that will give rise to a Variation?
2.2.4discrepancy shall mean: (a)inconsistency betweenDrawings or SpecificationsandSchedule
of Pricesas to measurement or description; (b) omission or inaccuracy in the compilation, preparation
or copying of the quantities 2.2.5 a significant discrepancyshall be treated as a Variation.

Q16. Can the Engineers clarification of an ambiguity in the Contract Documents give rise to a
Variation, and if so under what circumstances? 2.7.4 WhereContract orDrawings or Specifications
ambiguousEngineerissue explanationsIf compliancedelay[s] completion ofContract Works or
additional CostContractor could not reasonably have foreseentreated asVariation.

Q17. Does the late supply of information by the Engineer to the Contractor automatically constitute
a Variation? No, 2.7.7 treated as a Variation. If Contractor suffers delay in completion of the Contract
Works or incurs additional Costandnot reasonablyforeseenwhen tendering.