Construction Variations NZS 3910 Guide — Step-by-Step Process

Understanding Construction Variations Under NZS 3910

Under NZS 3910, a variation means any change to the works that increases, decreases, omits, substitutes or changes the character, quality, quantity or kind of work. This definition is broader than many people realise and covers everything from design changes to method variations.

The key principle is that variations must be properly instructed and valued. You cannot simply direct a contractor to do additional work and sort out payment later. NZS 3910 has specific procedures that protect both parties when managed correctly.

Step 1: Variation Instruction Process

All variations under NZS 3910 must be properly instructed by the Engineer. Clause 40.1 is clear that variations can only be ordered by the Engineer in writing. This protects the contractor from informal directions and ensures proper cost control.

The instruction must be specific about what work is being varied. Vague instructions like "make it work" or "sort it out on site" create problems later when determining what was actually instructed and how it should be valued.

Who Can Instruct Variations

Only the Engineer can instruct variations. Site supervisors, project managers who are not the Engineer, or other consultants cannot directly instruct variations. If they need work changed, they must request the Engineer to issue a proper variation instruction.

Step 2: Quotation and Approval Process

Once a variation is instructed, Clause 40.2 allows the Engineer to request a quotation before confirming the instruction. This is good practice for significant variations as it provides cost certainty before commitment.

The contractor should provide a quotation that includes:

• Labour costs with appropriate rates
• Material costs including delivery
• Plant and equipment costs
• Time implications and programme impact
• On-costs and profit margins as per the contract

The Engineer then has the option to confirm, modify, or cancel the instruction based on the quotation. This prevents cost surprises and allows proper budget management.

Construction Variations NZS 3910 Valuation Methods

NZS 3910 provides a clear hierarchy for valuing variations under Clause 40.3. Understanding this hierarchy is essential for proper variation management.

Valuation Method	When to Use	Key Considerations
Contract rates	Work similar to contract items	Must be genuinely similar work in similar conditions
Pro rata rates	Similar work but different quantities	Adjust contract rates proportionally for efficiency changes
Daywork rates	When contract/pro rata rates don't apply	Labour, materials, plant at agreed daywork rates plus percentage
Fair rates	When daywork rates aren't applicable	Based on reasonable market rates for the work

Contract Rates — First Priority

Where variation work is similar to items in the original contract, the same rates should apply. However, "similar" means genuinely comparable work in similar conditions. You cannot use excavation rates for rock when the contract rate was for soft soil.

Pro Rata Rates — Adjusted Contract Rates

When work is similar but quantities affect efficiency, pro rata rates adjust contract rates accordingly. Small quantities of work might attract higher unit rates due to mobilisation costs, while very large quantities might justify lower rates due to economies of scale.

Daywork and Fair Rates

When contract rates don't apply, NZS 3910 moves to daywork rates if specified in the contract, or fair rates based on reasonable market pricing. These methods require more detailed cost justification and are often sources of dispute.

Time and Programme Impacts

Construction variations under NZS 3910 can impact both cost and time. Clause 40.3 specifically provides for time adjustments where variations affect the programme.

Time impacts should be assessed based on:

• Whether the variation affects activities on the critical path
• The time required to execute the varied work
• Any disruption to planned sequences
• Resource availability and redeployment needs

Not every variation justifies a time extension. Additional work that can be absorbed within existing programme float or performed concurrently with other activities may not extend the contract completion date.

Documentation and Record Keeping

Proper documentation is essential for managing construction variations under NZS 3910. Poor records lead to disputes, delayed payments, and relationship breakdown.

Essential documentation includes:

• Written variation instructions from the Engineer
• Quotations and cost buildups for significant variations
• Approval confirmations before work proceeds
• Progress records showing work completed
• Time impact assessments and programme updates
• Photographs of work in progress and completion

Many projects use variation forms or registers to track instructions, approvals, and valuations systematically. This creates an audit trail and ensures nothing falls through the cracks.

Common Mistakes in Variation Management

After managing variations across hundreds of projects, I see the same mistakes repeatedly. These errors cause cost blowouts, programme delays, and relationship damage that could be easily avoided.

Proceeding Without Proper Instructions

The most common mistake is contractors proceeding with work based on verbal instructions or site directions from people who aren't the Engineer. Under NZS 3910, this work may not qualify for variation payment if not properly instructed.

Inadequate Cost Buildups

Contractors often provide quotations without proper cost breakdown, making it impossible to verify rates or understand pricing logic. This creates disputes and delays in approval.

Ignoring Programme Impacts

Both parties often focus on direct cost impacts and ignore programme consequences. Variations that seem simple can have significant downstream effects if not properly planned and sequenced.

Poor Documentation Standards

Inadequate records make it impossible to verify what work was actually instructed, approved, and completed. This creates payment disputes and makes claim resolution extremely difficult.

Payment and Claims Process

Variation payments follow the normal progress claim process under NZS 3910. Completed variation work is included in monthly progress claims and paid according to the contract's payment terms.

For large variations or those with complex valuation requirements, consider agreeing provisional sums or account payments while final valuations are determined. This maintains cash flow and avoids payment disputes affecting project progress.

Where variation valuations are disputed, the Engineer must still certify payment for undisputed elements. The disputed portion can be dealt with through the contract's dispute resolution procedures without holding up the entire claim.