Administering Construction Phase: Variations, Cost Fluctuations and Extensions of Time

This assessment covers the following learning outcomes:

1: Identify and apply the communication and administrative processes for the construction phase.

2: Prepare progress claims and provide costs for work executed, prepare and present costs of variations, prepare and present cost fluctuations, prepare and present time extension claims

We continue with our scenario from Assessment 1. At the start-up meeting the outstanding issues were resolved, in particular, the issues around site set-up and safety, allowing your company to commence site establishment and confirm the construction programme. Insurance certificates were exchanged by both parties, and the architect issued a copy of both the building consent and the For Construction documents.

Read the scenario and then complete the tasks to demonstrate that you can administer, prepare and present costs relating to variations, cost fluctuations and extensions of time. Where appropriate reference the:

• tender trade summary
• preliminary & general cost
• scheduled rates extract
• drawings D1- and D2
• drawing D5
• drawing D6.

a. Explain the purpose of variations. Use a bullet list (maximum 40 words) (4 marks)

b. For each of the following situations identify whether a variation between the client and the main contractor exists. Include a brief explanation to support each of your answers and state who pays for the variation.

i. Your company proceeded with procurement of the subcontract trades in the three weeks prior to the start-up meeting. Knowing that the architect wasn’t issuing the For Construction documents until the start-up meeting, you requested the structural steel subcontractor to immediately commence the shop drawings, based on the tender issue documents. You are hoping to mitigate any delay to the programme from the late issue of the For Construction documents. When you do review the For Construction drawings you notice that there is additional steel along the north elevation. You contact the structural steel subcontractor about this, and they advise that they have already completed the shop drawings for that section of the building and will need to redo the drawings. (3 marks)
ii. Setout of the phase 1 building is completed, and the excavation of the footings has begun.NRather than boxing the large foundation pads, your company has decided to pour the concrete ‘to country’, which will save time and costs as the formwork labour and materials is deleted. The engineer has approved this method of construction. (3 marks)
iii. You have received a variation price request that changes the materials to be used for lining the distribution warehouse (2 marks)

c. Identify the six major components that make up the pricing of a variation.  (3 marks)

d. In a cost reimbursement contract when could a variation be claimed? (1 mark)

e. Other than Section 9 of NZS 3910:2013, what other sections relate to pricing changes to the contract price? Provide the section number and a brief description of the section subject. (1 mark)

f. Carefully read each of the contract instruction extracts, consider the information provided. For each contract instruction prepare a variation ready for submission to the ETC. Note any communication protocols that apply. Adopt the rates from the Schedule of Rates (SOR) extract. Note the rates within the SOR are exclusive of overheads and margin. This has been agreed at 7.5%.