Anyone in the construction or field service industry knows firsthand that projects don’t always go as planned. Mistakes, along with unforeseen factors like harsh weather conditions, can hold back the progress needed to complete a job in the time frame originally laid out in the contract. If you’ve ever had to do extra work as a result of changes like these, you’re probably familiar with variation claims.
Despite the prevalence of variation claims, there are a handful of common mistakes that keep the client from agreeing to pay the full amount you requested on the claim, causing your bottom line to sink. Here are the things you can do to take your variation claims from passable to foolproof.
The difference between variation claims and change orders
First things first, it’s important to know the difference between variation claims and change orders. In most construction contracts, the client and the contractor agree on how additional work or alterations will be compensated. When a variation claim happens, it means the contractor is demanding these existing provisions set up in the contract be enforced.
On the other hand, a change order is requesting an entirely new set of accommodations to be set up for compensation and added into the contract. Simply put, a change order is an alteration of a contract while variation claim is the contractor or client claiming the other party must uphold what was already agreed upon.
#1. Do: Be sure you can submit a variation claim in the first place.
Because a variation claim is a request to uphold a part of your construction agreement, you as the contractor must make sure your contract allows for variation claims at all. Prior to starting your next construction project, be sure you add in information on claims if they’re not in the documentation already.
Because a variation claim is a request to uphold a part of your construction agreement, you as the contractor must make sure your contract allows for variation claims at all.
In addition to seeing if it’s in your contract, you also need to make sure the reason you’re submitting the variation claim is, in no way, your fault. In order to successfully file a variation claim, the reason behind it must be the fault of the client, the client’s team, or uncontrollable forces (weather, ground conditions, etc.).
#2. Don’t: Make math mistakes.
This should go without saying, but it happens more times than it should: make sure your math is correct. If you can’t add up the amounts correctly in a document as important as a variation claim, the client could begin to lose faith in your team, or at least begin to second-guess your attention to detail. Take the time to be 100% certain the amount you’re requesting isn’t higher or lower than what you have on the claim.
#3. Do: Include all costs in your claim.
You can never be too detailed in a variation claim. Remember, you’ll more than likely only get one chance to convince your client to approve your claim and make it valid, so don’t leave anything to chance here. Include all of the details on the lost time due to weather, on the additional equipment cost for rework, on newly discovered environmental conditions the client didn’t disclose prior to starting the contract, and more. Be as meticulous as you can so you can get back the amount you deserve.
#4. Don’t: Submit a claim if you were the party at fault.
Again, variation claims cannot be your fault or anyone on your crew’s fault—it needs to be because of the client or uncontrollable causes. In order to have the best odds of landing the compensation for the claim, you need to be able to prove there’s nothing else you could’ve done to prevent the delay or extra work from happening.
#5. Do: Be sure you can prove all the amounts in your claim.
Creating variation claims can get dull and monotonous—fast. Because of this, many contractors will cut corners by putting rounding numbers or giving approximate costs for services or materials in their claims. This should be avoided whenever possible. If the client discovers the cost to rent a piece of equipment doesn’t match what you originally put on the claim, they’ll naturally begin to second-guess the integrity of the rest of your claim—decreasing the chances they’ll sign off on it.
You’ll more than likely only get one chance to convince your client to approve your claim and make it valid, so don’t leave anything to chance.
#6. Don’t: Submit a variation claim that looks unprofessional.
Lastly, be sure your claim looks good. The more professionally you can present your variation claim, the better. It’s only natural to perceive things that have great design, error-free grammar and are structurally sound as more authoritative. If you aren’t completely familiar with how to make a variation claim, you can check out the templates provided here by SiteMate.
#7. Do: Notify the client in a timely manner.
Most construction contracts will specify an amount of time the contractor has to make a claim and how long in advance they must inform the client of the change. Be mindful of this if you’re considering making a claim. As a general rule, more time is always better. The longer you give the client to look through the documentation provided, the less hurried they’ll be in making their decision.
Avoiding common mistakes on your variation claims could mean the difference between you and your team getting the money you deserve or striking out. This year, be sure your claims are bulletproof so your bottom line can reflect it.