Construction Law/FIDIC RED BOOK Cl.13.3 Variation Procedure
We have received a request from our Employer to prepare a proposal for a change in the Works.
We have submitted our proposal and we claimed that this Variation will delay the completion date, because it substantially changes the sequence of the Works.
Employer approved the technical part of the Variation and also the price of the Variation, but no time extension has been granted.
Employer would like to sign a supplementary agreeement and specify there that the performance of the additional works will not affect the time for completion.
We refuse to sign the additional agreement and we do not proceed with the Variation.
Now, the Employer accuses us for delaying the works.
Should the Contractor proceed with the Variation as per cl.13.3. no matter what the case? or can the Contractor claim that the time effect of the Variation should be agreed prior to commencing the additional works?
Dear Kaan Bey,
Sorry for the late reply.
Under Redbook, Variations are covered by Clause 13. The Clause covers both the authority of the Engineer and the Employer as well as the procedures for work being added, omitted, or changed from the original contract, either by initiative of the Contractor (Value Engineering) or the initiative of the Engineer. Also the effects of any Variation order on time and money are expressly stipulated. The Engineer’s power to issue instructions which constitute a Variation is often conditional on prior approval by the Employer. However, if there is any such restriction which must have been disclosed in the Particular Conditions and the Engineer issues an instruction which constitutes a Variation, the Contractor may rely on it, because according to Sub-Clause 3.1, whenever the Engineer exercises a specified authority for which the Employer’s approval is required, then the Employer shall be deemed to have given his approval.
Variations may affect cost and time for completion. The extent to which the agreement in terms of cost and time for completion will be affected by variation orders is commonly stipulated in detail by the contract. In practice variations have some effect on the progress of the works and the method of executing the work. Variation instructions which affect Time for Completion entitle the Contractor to additional Time for Completion according to Sub-Clause 8.4 which states that any entitlement to extension of Time for Completion shall be subject to a claim in accordance with Sub-Clause 20.1.
Upon instructing a Variation, the Engineer has to proceed in accordance with Clause 12 to measure and evaluate the Variation. The Engineer has power to initiate variations either by instruction (Sub- Clause 3.3) or by a request for the Contractor to submit a proposal (Sub-Clause 13.1) as in your case. An instruction can be issued at any time to the extent that it is necessary for the execution of the Works (Sub-Clause 3.3). When the Engineer request a proposal from the Contractor (Sub-Clause 13.3). Then he will respond in writing as soon as practicable, either by giving reasons why he cannot comply or by submitting a detailed proposal in accordance with Sub-Clause 13.3.
The Contractor is bound to execute each variation, unless he promptly gives reasons with supporting particulars stating the grounds for which he is not willing to do so. However the contract gives fewer reasons for excuses. On the other hand an instruction of the Engineer is a binding instrument. The Contractor will have to execute each instruction which has been given to him.
Variation shall have a connection with the contract whilst it should not be ignored that the Contractor owes a duty to complete the whole of the works with the meaning of “scope of the works”. Thus anything in between of both limits constitutes a Variation, including but not limited to changes to the quantities, changes to the quality and changes to the sequence or timing of the execution of the Works.
If there is any instruction which constitutes a Variation a detailed procedure must be followed. Upon receiving any such instruction the Contractor shall promptly give notice to the Engineer stating any objections as covered by Sub-Clause 13.1. The Engineer shall then evaluate the Variation in accordance with Clause 12.
. If the Contractor suffers delay as a result of the Variation he may proceed in accordance with Sub-Clauses 8.4 and 20.1
Any such proposal will not constitute a firm offer which can be accepted by the Engineer. According to Sub-Clause 13.3 para. 1 the Engineer is only empowered to initiate a Variation by means of an instruction, even though he has requested a proposal. However, according to Sub-Clause 13.3 para. 2, after receiving a proposal, he shall respond with approval, disapproval or comments. Whether any such approval constitutes an instruction to proceed or not, will depend on the wording of the approval. Pursuant to Sub-Clause 3.1 any approval by the Engineer shall not relieve the Contractor from any responsibility he has under the Contract. Thus a mere approval of a proposal which has been made upon request as covered by Sub-Clause 13.3 should not relieve the Contractor from complying with the Contract. Instead it must be clear from the wording used by the Engineer that the Engineer does not only approve the Variation but that he gives an instruction to proceed in accordance with the approved design. There must be the intention to initiate a Variation with which the Contractor shall comply in accordance with Sub-Clause 3.3. Any resulting consequences as to the Time for Completion and/or Contract Price shall then be determined in accordance with Sub-Clause 3.5.
I hope the above text will help to decide your next step.If a contractor does not believe the work to be appropriate, he may challenge the Engineer's opinion under clause 20.4 (Obtaining DAB Decision), however on one side, while referring the case to the DAB, he is bound to perform the instruction issued by the Engineer.