Valuing variations down the chain
The main contractor recovers on one set of rates and pays on another. Where those two do not match, the difference is a real gain or a real loss.
QScope Team · 7 April 2026 · 4 min read
An instruction arrives from the contract administrator. The main contractor executes it through a subcontractor. Two variations now exist: one in the main contract account and one in the subcontract account, and they are valued under two different sets of rates.
Why they diverge
The main contract rates came from the main contract bills. The subcontract rates came from a package tender priced by a different company at a different time in a different market.
Neither is wrong. They are simply two separate agreements, and a change valued under both produces two numbers that are related only by coincidence.
The instruction has to be passed down
A variation instructed under the main contract is not automatically a variation under the subcontract. The main contractor must instruct its subcontractor, under the subcontract mechanism, in the subcontract form.
Where that step is skipped, the subcontractor has done work with no instruction behind it and the main contractor has recovered for work it cannot properly account for downstream. Both problems surface at the same time, usually at the subcontract final account.
The timing gap
Subcontractors typically price and submit quickly, because they need the cash. Main contract valuations settle slowly, because the contract administrator is assessing.
So the main contractor is frequently obliged to pay downstream before it has recovered upstream. That is a funding cost, and on a heavily varied job it is a material one.
Where the loss shows up
- Subcontract variation agreed generously to keep a package moving, then valued down upstream.
- Instruction passed down but never valued upstream, so the cost is incurred and never recovered.
- Daywork agreed downstream and rejected upstream, because the main contract requires measurement where a rate exists.
The discipline
Value every variation both ways at the same time. Recording only the subcontract figure, because that is the one being paid this month, leaves the recovery to be reconstructed later from an instruction nobody priced upstream.
Two accounts, kept in step, monthly. It is more work than one account and it is the only way to know whether a variation made money or cost it.
QScope keeps the client account and each subcontract account separately, so what is recovered above and paid below are two visible figures.