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Difference Between Claim and Variation in FIDIC

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 In construction projects, claims and variations are usually misunderstood. Both of them can impact the contract price and the project management. However, claim and variation are not the same. In FIDIC, the difference between them is significantly important for the contractors. Under FIDIC contracts, understanding the difference is very important for contractors, consultants, engineers, and employers because using the wrong procedure may lead to loss of entitlement or disputes.

1-Variation:

Variation is an official change of the original scope of work under the contract. This means that the employer or the Engineer requests the contractor to execute works that are not as per the original agreement. 

This can include:

1-Adding new works

2-ommiting part of the original works

3-changing of quantities

4-changing the specification and quality

5-changing levels, dimensions, and positions 

6-changing the work sequences or timing

7-changing the design details, depending on the FIDIC book used

The FIDIC contract usually deals with variation according to Clause 13 (variation and adjustments)

For example, if the original contract specifies ceramic tile and the Engineer issues instructions to use porcelain tiles instead, this is considered a variation. And if the drawings show a tile thickness of 200mm and the Engineer issues instructions to use tiles with a thickness of 250mm, this is also considered a variation. 

2-Claim:A claim is a request by one party for entitlement under the contract. Mostly, the contractor submits a claim request for additional payment or extension time or both. However, according to FIDIC, the employer can also submit a claim against the contractor. 

Claims arises due to an event that impact the time, cost or contractual rights. The claim is not always a change in scope but it can be arises due to delays, disruption, late instructions, unforeseen physical conditions or delay in granting site access permit or change in law or any other risk events that included in the contract. The claims usually dealt in pursuant to FIDIC clause no:20.

An example of claims, if the employer delays the access to site which resulted in delaying the contract works, contractor will have the right to submit a claim of time extension and additional payment. In this case contractor is entitled to a claim, even the work scope remained unchanged. 

3-Main difference between claim and variation

variation is a modification in the work. While, claim is a request for additional time or additional payment due to event or entitlement under the contract. 

Variation usually initiated by instructions or approval of a proposal, while the claim initiated usually by a notification of the party who claiming entitlement. 

4. Can a Variation Lead to a Claim?

Yes variation can lead to a claim if it is resulted in a delay, disruption, acceleration or additional cost that is not covered under normal estimate of variation. 

For example, Engineer may request additional works, the direct cost of these additional works can be evaluated as variation, however if the additional works impact the critical path and resulted in delays, in this case, contractor may submit a claim to obtain extension of time.

So, the same event may have two effects:

1-variation effect: payment for the additional or change in works. 

2-claims effect: granting extension of time or additional payment due to delay. 

Therefore, appropriate administration of contract is significantly important, contractor should not assume that the valuation of variation automatically cover all cost and time related impacts. 

5-practical examples: 

-Example 1: Extra work scope

When the Engineer request the Contractor to built additional retaining wall not included on original scope of work. This considered as a variation as the scope of work has changed. The Contractor should follow the variation procedure and request for the valuation of the additional works. 

Example 2: (delayed drawings) 

The Contractor cant proceed with works due to delay in issuing of the drawings by the Engineer. This considered as a claim and not a variation because the scopes of work has not changed. And the delay of drawing issuance can delay the works. Therefore, the Contractor can be entitled to extension of time or additional cost. 

Example 3: (change in specifications) 

If the Contractor specifies a normal concrete and the Engineer request the use of high strength concrete. This considered as a variation because the specification has changed. If this variation has resulted in delaying of delivery of the concrete and thus delay in execution, this can support the request for extension of time. 

Example 4: (unforeseen eath conditions)

If the Contractor finds unexpected rock in contrast to soil report and the expectation. 

In this case, the Contractor can submit a claim of time extension and additional cost in pursuant to related contact provisions. 

6-Common Mistakes in Practice:

1-considering every additional cost as a variation and this is not correct, as some additional cost arise from claim event, not change in scope. 

2-excuation of a variation work without instructions. In FIDIC, contractor should obtain a valid instructions before trying ating a work as variation. 

3-failure in submitting claim notification within specified time. Usually, claims are subject to strict notification requirements. If the Contractor didn't submit his notification during the specified time, it may rejected or reduced according to contractm

4-assuming that a variation automatically grant additional time extension. Variation doesnt justify time extension only if it actually cause delay in works and impact the critical path. 

7-How to Manage Variations and Claims Properly

To appropriately manage the claim and Variation, the team should maintain a clear and precise records. This records should include instructions, drawings, daily reports, daily site notes, minutes of meetings, updated program, cost records and labor and equipment records.

The Contractor should also separate the valuation of changed work from the claim for delay or disruption. This makes the submission clearer and easier for the Engineer to assess.

A good submission should explain:

- What happened

- When it happened

- Which contract clause applies

- How the event affected the works

- Whether the impact is cost, time, or both

- What records support the request

- What amount of money or extension of time is requested 



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