Agreeing a price on variations

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When I first entered the world of subcontracting, I found it strange that a customer can request that we undertake work, and we are contractually obliged to undertake this work, but the customer is not obliged to agree a price with us before the work has been started or completed. I don’t know of any other industries where this takes place.

I’m specifically talking about variations with contracted works. If the works are deemed to fall within our package, we are legally obliged to carry out these variations and site instructions, but the main contractor or agent is not obliged to agree to the price we offer before carrying out these works. They can, and regularly do, instruct the works and negotiate the price at a later date when they have all of the power in the negotiation.

I was given the following piece of advise to deal with this kind of situation by a very experienced contracts manager.

If you’re dealing with a main contractor who likes to employ these kinds of tactics, when they give you a site instruction, give them a delayed date for which you can start the variation works. If you need to bring in new materials, explain that it will take four weeks for materials. Or, if you need new tradesmen, that these tradesmen are working on a different project at present.

You have met your contractual obligation by agreeing to the site instruction. You can bring the dates forward, but there is an additional cost to do that, and you give your price. If the main contractor wants to work with the earlier dates, they need to agree to your price in writing before commencing with the variations.

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