Valuing a variation the way the Superintendent will

Under AS 4000 and AS 2124 a variation is a change the Superintendent directs, and the same contracts tell you how to value it. There is a hierarchy, and reaching for the last step first is the most common way to lose the argument.

The pricing order

Work down the list, not up it.

• Priced rates. If the schedule of rates or the priced bill covers the varied work, those rates apply.
• Analogous rates. Where the work is similar to priced work, the contract rates are used as the basis, adjusted for the difference.
• Reasonable rates. Only where nothing comparable exists does the Superintendent set a reasonable rate or price.
• Daywork. Where directed and where the work does not lend itself to measurement, valued on records of labour, plant and materials.

The point of the order is predictability. A variation priced from the contract rates is hard to argue with. A variation priced from a fresh quote invites a line by line challenge.

Direction before valuation

Value nothing that was not directed. AS 4000 gives the Superintendent authority to direct a variation, and a contractor who prices extra work carried out on a site conversation is exposed if the direction was never confirmed in writing. Get the direction, then price it.

How it enters the claim

An agreed variation is measured work like any other. It joins the cumulative progress claim at its agreed value, and because that claim is also a payment claim under the Security of Payment Act, the variation carries the same statutory weight. Keep claimed variations that are not yet agreed on a separate line so the payment schedule can address them on their own footing rather than dragging down the certified value of settled work.

GST and retention still apply

A variation is valued net. GST of ten per cent sits on top of the taxable amount, and retention is deducted on the certified value of the variation at the same percentage as the rest of the works. None of that changes because the work arrived by direction rather than by the original scope.

Records win the marginal ones

Most variations settle on the rate. The contested ones settle on the records: the direction, the quantities, the daywork sheets signed at the time. Build the valuation while the work is fresh, because a variation reconstructed six months later from memory is a variation you will discount to close.