Construction projects are dynamic by nature. Evolving client requirements, design development, and unforeseen site conditions all generate the need for formal changes to the works, to the extent that even the JCT Design & Build is considered a ‘design as you build’ contract. So how do variations operate under the unamended JCT Design & Build 2024 (DB 2024), and where should parties be on their guard?
Under an unamended DB 2024, a "Change" is defined broadly. It encompasses alterations to the design, quality, or quantity of the works, including the addition, omission, or substitution of any work. It also captures changes to the obligations or restrictions imposed by the Employer; for example: amendments to access arrangements, working hours, or the order in which work is to be carried out. Crucially in a design and build context, the Contractor carries significant design responsibility. This means that the boundary between design development which the Contractor is expected to undertake at its own cost and a true Change instructed by the Employer can be blurred. Getting this distinction right is essential, as it determines who bears the risk and the cost.
The valuation mechanism under DB 2024 is for the parties to agree the price of a Change before the work is carried out, but, if not so agreed, the contract then lays out a mechanism by which the amount is valued (following the ‘Valuation Rules’). The Change is thereby valued using a fair and reasonable basis, taking into account the existing content of the Contract Sum Analysis. This is a notable feature of design and build procurement because there are no traditional Bills of Quantities, the Contract Sum Analysis serves as the primary reference point for pricing.
In practice, the absence of detailed measured rates in a design and build contract can make valuation more contentious. Contractors may argue that the Contract Sum Analysis lacks the granularity needed to value complex changes fairly, while Employers will seek to hold the Contractor to its original pricing.
The power to instruct a Change sits with the Employer, and instructions must be issued in writing. The DB 2024 continues to emphasise the importance of written communication, and Contractors who act on informal or verbal directions without seeking written confirmation expose themselves to unnecessary risk, so the maintenance of records and communications is paramount. If you can get confirmation of a Change in clear language, it helps both parties understand where they are.
Several issues recur in variation disputes under design and build contracts. The most significant is the distinction between design development and instructed Changes. If the Employer's Requirements are loosely drafted, the Contractor may find itself absorbing costs for work it considers to be a Change but which the Employer treats as falling within the original scope. Discrepancies between the Employer's Requirements and the Contractor's Proposals may also give rise to deemed Changes, and DB 2024 maintains the position that such conflicts are generally resolved in favour of the Employer's Requirements.
Beyond cost, Changes frequently impact the programme. The Contractor may be entitled to an extension of time under the Relevant Events provisions and to loss and expense where the Change constitutes a Relevant Matter. However, these entitlements depend on the timely service of proper notices. Failure to comply with notice requirements can jeopardise an otherwise valid claim, especially if the contract has been amended to include condition precedents for entitlement to extensions of time or loss and expense.
Managing Changes effectively under DB 2024 starts with robust documentation. Maintain contemporaneous records of all instructions, design decisions, and site events. Pay close attention to the drafting of the Employer's Requirements; the clearer and more detailed this document, the less room there is for disagreement over what constitutes a Change.
Variations are an unavoidable reality on any design and build project. With careful contract administration and early professional advice, they need not become a source of conflict.
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Disclaimer
The content of this article is provided for general information only. It does not constitute legal or other professional advice. The information given in this article is correct at the date of publication.
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