CPD 25 2025: Mastering contract modifications – managing variations and scope changes in construction projects

In the dynamic world of construction, change is not just inevitable, it is a fundamental characteristic of every project. From initial design clarifications to unforeseen site conditions; client-led modifications to access constraints; construction professionals must navigate a complex landscape of contract modifications – all while maintaining legal compliance, financial control and project momentum.

The ability to effectively manage these contract variations and scope changes separates successful construction professionals from those who struggle with disputes, cost overruns and project delays.

This CPD module sets out essential principles and procedures as well as practical strategies to use when dealing with modifications in contracts drawn up using the industry’s most widely used contract forms.

Learning objectives

• Know how change is dealt with within FIDIC, NEC and JCT contract frameworks.
• Learn how to signal and document contract variations properly and prevent scope creep and disputes by identifying issues early.
• Recognise how timely notifications and disciplined governance can mitigate risks and ensure project success.

What constitutes a contract modification?

A contract modification – commonly referred to as a variation or change – is a lawful adjustment to the works, time and/or price within the contract’s general scope. Such modifications typically take several distinct forms:

• Additions or omissions to the scope of work
• Changes in quality or specification requirements
• Alterations to quantities through re-measurement or instructed modifications
• Modifications to method, sequence, access or constraints, such as working hours or possession dates.

The ‘general scope’ test: staying within contractual boundaries

The scope of a contract sets out the duties, rights and obligations agreed upon by all parties. A clearly defined scope will help prevent misunderstandings and disputes.

The “general scope” encompasses work that it would be reasonable for contracted parties to expect to have to do when entering into the original contract.

The critical question to ask when evaluating any proposed change is whether it remains within this general scope. This test will help to determine whether a modification can be processed as a standard variation – or whether it represents a fundamental alteration that could constitute a new contract entirely.

Indicators that a change will likely remain within the general scope include:

• The asset type and functional intent are maintained
• The delivery model is preserved with modifications only
• The project’s overall character and purpose are intact.

Warning signs that a change might exceed general scope boundaries include:

• Fundamentally different facility or function requirements, such as changing a building’s purpose or occupancy, introducing new operational needs, or adding functions the original design cannot support
• Wholesale redesign necessitating different expertise
• Scale or character shifts that reasonable tenderers would not have anticipated in their original pricing.

Contract-specific terminology and mechanisms

Procedures for dealing with within-scope changes vary depending on the type of contract.

FIDIC, NEC and JCT are the three most prominent suites of standard-form contracts used in the construction industry – and they each employ different terminology and procedures for managing changes.

FIDIC contracts

Under FIDIC, clause 13 of each contract allows the engineer (and only the engineer) to order changes to the work; and these changes are known as variations. (The engineer is the person or entity designated in the contract to manage it.)

If a variation affects a contractor’s costs or time for completion, the contractor cannot simply add more money or more days automatically. Instead, it must follow the established FIDIC claims procedure, set out in the contract’s claims provisions (often clause 20, depending on the FIDIC edition). And it must give notice of its claim within 28 days of becoming aware of the event (the variation). If it fails to give notice in time, it may lose its entitlement to additional payment or extension of time. This is a strict rule in FIDIC.

NEC contracts 

In NEC contracts, variations are known as “compensation events”. A compensation event is any event that changes the contractor’s cost, time or risk.

This is a broader and more proactive system than traditional variations, and compensation events are assessed contemporaneously with programme impacts. In other words, the effects of the event on time and cost must be assessed when they happen, not months later.

The mechanism for this is the contractor providing a quotation with cost and time impact based on the current programme, which the project manager agrees or adjusts at the time. This means everyone knows the consequences promptly – and should reduce disputes because issues are not left unassessed until the end of the project.

The project manager (who plays a more proactive part in NEC than the holders of equivalent roles in other contract systems) manages this process.

NEC also includes a formal early warning mechanism. This means contractor and project manager must give early warning notices of anything that could increase cost, delay the project, reduce performance or create additional risk.

This triggers an early warning meeting where the team tries to reduce or avoid the problem before it gets serious. These meetings are designed to promote collaboration, transparency and proactive problem-solving.

JCT contracts 

Under a  JCT Design and Build contract, if the employer wants to change the work, this must be done formally. The only valid way to issue a change is through what is known as an employer’s agent instruction (EAI).

The employer’s agent is its official representative – the person appointed to make sure the project runs in accordance with the contract. An EAI is a written instruction issued by the employer’s agent that formally changes the works (scope, design, requirements, and so on). No EAI means no formally recognised change to the contract.

If someone on site acting for the employer gives an oral instruction – to move a wall 500mm, say, or to use a different material – then the contractor will raise a confirmation of verbal instruction (CVI). A CVI can show that a conversation happened; help avoid misunderstandings; and provide evidence of what the parties discussed. However, even if a verbal instruction is given and a CVI is issued, this still does not count as a formal change to the contract unless it is followed by, or converted into, an EAI.

This is because JCT requires written instructions from the employer’s agent to validate a change, so, as a CVI is generally issued by a contractor rather than the employer’s agent, it has no contractual authority to change time or price.

Authority and documentation: the pillars of valid instructions

Establishing proper authority

As we have seen above, only those in certain designated contract roles have the authority to issue valid change instructions, specifically:

• For FIDIC, the engineer
• For NEC, the project manager
• For JCT Design and Build, the employer’s agent.

This authority cannot be assumed – nor can it be delegated informally. Site supervisors giving instructions do not constitute valid change orders unless expressly authorised in writing in the right way.

This means that when instructions arrive verbally, or from unauthorised personnel, immediate escalation and written confirmation become essential before proceeding.

Documentation requirements

Proper documentation forms the backbone of enforceable contract modifications. When a contract is changed, the change must be documented properly and formally. If the documentation is incomplete, unclear or informal, the change may be disputed, unenforceable or misunderstood.

To avoid disputes, a proper change document needs to state: what exactly the change requires; how it affects cost; how it affects the programme; and any risks or assumptions.

The different contract forms have their own rules for how modifications must be documented, but the underlying principle is the same: if it isn’t properly documented in the required written format, it isn’t a valid change.

Change documentation should also clearly point to the exact part(s) of the design or specification being altered. For example, it should reference relevant drawings, specifications and bill of quantities items. This avoids ambiguity about  what exactly is changing.

Formal changes should have unique IDs that are logged in a change register, which is a running list of all changes issued, their status and cost/time impact.

This allows everyone to track variations/compensation events/changes in a structured way. Without unique numbering and a register, changes get lost or confused – leading to disputes.

Similarly, when drawings or specs are revised, each revision must show:

• A revision number or letter
• The date changed
• Who changed it
• What the changes were.

This creates a version history, which means everyone knows which document is current.

Meanwhile, for verbal directions, immediate issuance of a written confirmation record (e.g., a CVI under JCT) followed by pursuit of formal written authority required by the contract protects all parties’ interests.

Navigating contract-specific procedures

FIDIC approach: variations and claims integration

Under FIDIC contracts, the engineer’s power to instruct variations under clause 13 works with the broader claims procedure, which is often set out in clause 20 (depending on FIDIC edition).

To preserve their entitlement to additional time/payment, a contractor must give notice of a claim within 28 days of becoming aware of the event that gave rise to the claim (or of the point when it should have become aware of it). Otherwise, the claim becomes time barred.

After the initial 28-day notice, the contractor must later submit full detailed particulars of the claim. The deadline for this is typically within 42 days of the event, unless otherwise agreed. This detailed submission allows the engineer to assess the claim and decide on entitlement.

FIDIC requires the contractor to keep contemporaneous records of events and their impacts because claims must be proved. Without records, the engineer is unlikely to accept cost or time entitlement, and many claims fail because contractors have not kept adequate, timely records.

The engineer reviews the contractor’s claim submissions, assesses how well the claim is substantiated, examines the contemporaneous records, and then determines how much extra time and/or money the contractor is entitled to.

NEC framework: compensation events and programme integration

As noted above, NEC contracts take a more integrated approach to compensation events.

NEC clause 60 sets out the reasons a contractor can claim extra time or money. Those reasons mainly relate to changes the client makes; instructions the project manager gives; and events the client is contractually responsible for.

Under NEC, the contractor normally has eight weeks from becoming aware of an event to notify it to the project manager. Note: this is not eight weeks from when the event happened but eight weeks from when the contractor realised it was a compensation event. 

If the eight-week notification window is missed, the compensation event may be rejected. NEC is very strict on notification timing.

Under the NEC early warning system, if either party becomes aware of anything that could increase cost, delay completion, affect performance or create risk, it must raise an early warning immediately. This will see the item placed on the project’s early warning register – which is in effect the live risk list – and will trigger a risk-reduction meetings. 

When a compensation event occurs, NEC requires it to be assessed at the time it happens, based on current prices, the current programme, and current understanding of the situation. This avoids long, messy final accounts.

Contractors must include both cost and programme effects in their quotation. In other words, when a contractor submits a compensation event quotation, this must include how long the delay will be, and how it affects the planned completion date. This is different from other types of contracts, where programme and cost can be handled separately. 

If contractor and client cannot agree, under NEC the project manager is empowered to make the assessment.

Under NEC, it is not enough for a contractor to submit a programme; it must be accepted by the project manager. Once accepted, it becomes the official programme against which the project is managed, measured and assessed. 

This is very different from many contracts where the programme is just “for information”.

NEC requires the contractor to submit updated programmes regularly (often every four weeks), and each one needs to be accepted by the project manager. Each new accepted programme becomes the baseline for decisions on:

• The project’s logic – the relationships between activities (the order in which tasks must happen)
• The critical path – the longest sequence of activities in the programme, which determines the overall completion date of the project (the chain of tasks that, if delayed, will delay the whole project)
• Delays
• Early warnings (see above)
• Compensation events (see above)
• Float – the spare time in the programme
• The completion date.

JCT Design and Build: EAI gateway and valuation hierarchy

JCT contracts require formal EAIs as the gateway to changes. To avoid renegotiating every variation from scratch, JCT says variations should be valued according to the following rules:

1. If the change is similar to work already in the contract, use the existing contract rates and prices.
2. If no suitable rate/price exists, the change must be reasonably valued, often based on current market rates or agreed build-up. This is called a fair valuation.
3. If the work cannot be measured easily, is genuinely unforeseeable, or is instructed to be valued as dayworks, then the contractor should be paid based on actual labour hours, actual plant use and actual materials, all at the daywork rates in the contract.

Time-related preliminaries (such as supervision, welfare, site management) must also be added where the change affects the duration of preliminaries. 

JCT separates time entitlement from money entitlement. Extension of time comes from relevant events. A relevant event is something that justifies extra time. Examples include:

• Variations
• Exceptionally adverse weather
• Late information from the contract administrator
• Force majeure (in older editions)
• Employer’s instructions causing delay.

If a relevant event occurs and causes delay to completion, the contract administrator grants an extension of time.

A relevant matter, meanwhile, is something that entitles the contractor to additional cost. This might be:

• Employer interference
• Late instructions
• Late information
• Variations (again).

JCT consciously keeps time and cost in separate silos. Relevant events and relevant matters overlap but are not identical. Not all relevant events are relevant matters; and not all relevant matters count as relevant events.

So, for example, a variation is both a relevant event and a relevant matter (affecting time and money). Exceptionally adverse weather is a relevant event only (time but not money). Disruption due to employer delays is a relevant matter only (money but not necessarily time). 

Practical implementation: a systematic approach

Early identification and triage

Effective change management begins with early identification of potential triggers, such as:

• Design clarifications and specification changes
• Unforeseen site conditions
• Access and permit modifications
• Interface complications
• Client-initiated adjustments.

Each trigger requires immediate triage assessment: does it fall within general scope? What are the likely time, cost and quality impacts? Who holds authority to act?

Timely notification procedures

Contract compliance demands adherence to specific notification requirements:

• FIDIC – requires claims notices within 28 days of awareness 
• NEC – early warnings must be notified immediately and compensation events must be notified within eight weeks of realising they are a compensation event 
• JCT – notices should be issued within contract-specified periods.

Notification content should include:

• Clear description of what changed and why
• Timing of your awareness of the event (or its status as a variation/compensation event)
• Initial assessment of time and cost effects
• Immediate mitigation measures undertaken.

Contemporaneous assessment methodology

Under traditional variation-based contracts (such as JCT and FIDIC), objective assessment requires systematic evaluation of both time and cost impacts:

• Cost assessment – in determining costs, follow the contract’s valuation hierarchy (for example, under JCT and FIDIC : 1) existing rates/prices; 2) fair valuation; 3) dayworks. Attach supporting documentation including supplier quotes, subcontract pricing, labour and plant logs and delivery confirmations.
• Time assessment – conduct impact analysis on current programmes, examining logic changes, float erosion and critical path effects. Document resequencing options and acceleration possibilities.
• Disruption capture – record time-related preliminaries and demonstrable disruption where contracts permit, maintaining contemporaneous evidence through diaries, photographs and access logs.

Risk management: preventing scope creep

Scope-creep indicators

Scope creep represents one of the most significant risks in construction projects, often manifesting through:

• Ambiguous authority structures allowing unauthorised “instructions”
• Proceeding on verbal directions without formal confirmation
• Late or absent formal notices
• Treating design development as compensable variations retrospectively. Contractors may look back at normal design evolution and try to reclassify parts of it as variations, claiming extra time or money after the fact. This retrospective approach is problematic and creates disputes.

Prevention strategies

Effective scope-creep prevention requires:

• Clear authority definition – explicitly state who can instruct changes and require written confirmation for all directions
• Change-control protocols – pre-agree forms and timelines, and register maintenance procedures
• Contemporary pricing – price changes as they occur, linking updates to programme and certification processes so that each change is priced promptly, gets reflected in the accepted programme (NEC) or updated programme (JCT), and appears in the next payment certificate
• Escalation procedures – convert informal requests to formal instructions promptly, following the “no instruction = no change” principle. 

Learning from experience

Case study 2: marine quay realignment – FIDIC challenges

A marine project’s informal quay wall repositioning proceeded on verbal direction without written engineer’s instruction, and this was followed by a weak claims notice that failed to meet contractual requirements, leaving the claim vulnerable to rejection. The resulting dispute escalated to the dispute adjudication board, consuming time on procedural rather than substantive issues.

Key learning: FIDIC entitlement rests on three pillars – proper authority through the engineer’s written instruction, timely 28-day notice, and substantiated particulars. Compromising any of these elements risks recovery.

Best practice for professional excellence

Documentation and record-keeping

Successful project management requires the maintenance of comprehensive audit trails including:

• Live variation/change registers with unique identifiers
• Instruction logs and compensation event trails
• Quotations and build-ups (breakdown: labour hours, plant, materials, rates, prelims, overheads) with supporting evidence such as timesheets, plant logs, delivery notes, subcontract quotes, rate calculations, correspondence
• Daywork sheets and photographic records
• Programme updates cross-referenced with change identification.

Communication and governance

Change management will be facilitated by the implementation of structured communication protocols, such as:

• Weekly change board reviews covering ageing notices (notices that were issued a long time ago but have not been progressed, for example a compensation event was notified but for which no quotation has yet been submitted, or a variation that was instructed but that remains unpriced), missing evidence, pricing status and programme impacts
• Standard templates for instructions, notices and valuation sheets
• Clear approval thresholds for values and time impacts
• Supply-chain flow-down mirroring notice and valuation rules (making sure that the subcontracts’ notice requirements and valuation rules match – or are compatible with – the main contract’s).

Integration with project controls

It is also a good idea to link change management to broader project-control systems:

• Update programme logic, float and critical path for each change
• Reflect changes in cash flow projections and interim applications
• Integrate new or modified risks into risk registers
• Schedule early-warning and risk meetings as required.

Conclusion: building professional competence

Mastering contract modifications, variations and scope changes represents a fundamental competency for construction and built-environment professionals. The complexity of modern construction projects and the legal and commercial implications of change management demand systematic understanding and disciplined application of contract-specific procedures.

Success in this domain requires more than theoretical knowledge; it demands practical competence in identifying triggers, serving timely notices, conducting contemporaneous assessments, maintaining comprehensive records and integrating changes into broader project-control systems.

The distinction between authorised and unauthorised changes, the importance of proper documentation and the prevention of scope creep through disciplined governance separate competent professionals from those who struggle with disputes and cost overruns. 

As the case studies above demonstrate, procedural compliance directly impacts commercial outcomes. Whether operating under FIDIC’s variation and claims framework, NEC’s compensation event system or JCT’s EAI gateway, the principles remain consistent: early identification, proper authority, timely notification, contemporary assessment and comprehensive documentation.

As construction projects increase in complexity and stakeholder expectations rise, the ability to manage change effectively becomes ever more valuable. Professionals who master these competencies position themselves for career advancement while contributing to project success and industry standards elevation.

The investment in developing these skills will pay dividends throughout your career, from avoiding disputes and protecting cash flow to maintaining client relationships and delivering successful project outcomes. In an industry where change is the only constant, those who can manage it effectively will continue to thrive and lead.

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