Valuing variations the Engineer will certify

Change is constant on site, and every change that touches the works is a variation waiting to be valued. The discipline in New Zealand is to price it early, get it into the payment claim, and let the Engineer to the Contract assess it in the normal cycle rather than parking it for the end.

Start with the instruction

Under NZS 3910:2023 a variation flows from an instruction by the Engineer to the Contract. The first thing the quantity surveyor checks is that the instruction exists and covers the work being priced. Work done in anticipation of an instruction that never lands is work at risk, and it will not carry through a payment claim cleanly.

• Contract rates first. Where the schedule holds a rate for the same work, that rate applies.
• Pro rata rates next. Where the work is similar but not identical, the contract rate is adjusted for the difference.
• Fair valuation last. Where nothing comparable exists, the work is valued on a reasonable basis, with dayworks records where the character of the work calls for it.

Get it into the claim, not the account

The temptation is to hold variations back and settle them all in the final account. That is a cash flow mistake. Interim payment claims are cumulative and on account, so a priced and instructed variation belongs in the very next claim. The Engineer assesses it, the payment schedule reflects it, and the money moves months earlier than it would at the end.

GST sits on top

The variation is priced net, then GST at fifteen per cent is added on the claim like every other line. Keeping the variation net until the tax is applied at claim level avoids the double counting that creeps in when people gross up individual items.

Records are the valuation

Where a variation is valued on a fair basis or on dayworks, the records are the argument. Labour, plant and materials logged against the instruction as the work happens will survive an Engineer assessment, and if it ever reaches adjudication under the Construction Contracts Act 2002, the same records are what an adjudicator will look at.

The discipline

Tie every variation to its instruction, price it against the contract rates in order, add it to the next payment claim, and keep the records live. A variation valued in the month it is instructed is a variation half won.