On almost every civil project, the job that gets built isn’t quite the job that was priced. Ground conditions surprise you, the design moves, the Principal wants something different once they see it taking shape. Under NZS 3910, the mechanism that keeps those changes fair — properly authorised, properly priced, and properly paid — is the variation.
Get variations right and the contract stays healthy. Get them wrong and they become the single biggest source of disputes, cost blowouts and soured relationships on a job. This guide explains how variations work under NZS 3910 in plain English — who can instruct one, what actually counts, and how they’re valued — then walks through a full worked example with numbers.
(New to the standard itself? Start with our plain-English guide to NZS 3910, then come back here.)
What is a variation under NZS 3910?
A variation is an authorised change to the Contract Works — adding work, omitting work, or changing the nature, quality or timing of how the work is carried out.
The load-bearing word is authorised. A change only becomes a variation — something the Contractor can be paid for, or something the Principal can claim a credit on — when it has been instructed under the contract. Until that happens, extra work the Contractor does off its own bat is just unpriced risk it may never recover. This is why the paperwork around variations matters far more than people expect: the instruction is what turns a site decision into money.
Who can instruct a variation?
Under NZS 3910 there are four parties, and they’re best thought of as four independent slots: the Principal, the Contractor, the Engineer, and the Engineer’s Representative.
Only the Engineer — or the Engineer’s Representative acting within delegated authority — can instruct a variation. That has two practical consequences people trip over:
- The Principal cannot directly order the Contractor to change the works. The Principal asks the Engineer; the Engineer instructs.
- The Contractor cannot unilaterally decide to vary the works and expect payment. It needs an instruction.
This separation is deliberate. The Engineer sits between the parties and is required to act independently and professionally when valuing and certifying a variation — not as the Principal’s agent and not as the Contractor’s advocate. It’s the same independence that underpins payment certification under the standard.
What counts as a variation — and what doesn’t
It’s worth being precise, because misclassifying work is where money leaks.
Usually a variation:
- A change in the quantity of any work beyond what the contract contemplates
- A change in the quality, character or kind of the work
- Additional work the Principal wants, or work omitted from the original scope
- A change in levels, lines, positions or dimensions
- A change in sequence or timing that the Principal/Engineer imposes
- Differing physical conditions, where the contract provides for them
Usually not a variation:
- The Contractor’s own rework to fix defective or non-conforming work
- The means and methods the Contractor chose to deliver the specified result
- Correcting the Contractor’s own setting-out or pricing errors
If you can’t point to an instruction that changed the scope the Contractor was obliged to deliver, you’re probably not looking at a variation — you’re looking at the Contractor’s risk.
The NZS 3910 variation process, step by step
- Something changes, or the Principal/Engineer decides a change is needed.
- The Engineer issues a variation instruction — in writing. (More on verbal instructions below.)
- The work is priced — either the Contractor submits a quotation, or the Engineer values it directly.
- The Engineer values the variation using the valuation rules in the contract, and certifies the amount.
- The Contract Price is adjusted — up for added work, down for omissions — and the certified value flows into the next payment claim and payment schedule.
- Time impact is assessed separately — if the variation affects the programme, the Contractor may be entitled to an extension of time (EOT).
The chain that matters is instruction → valuation → certification → payment. If any link is missing — say the work is done but never formally valued, or valued but never certified — the Contractor carries a cashflow hole and the Principal carries a dispute waiting to happen.
A word on verbal instructions. Site reality is that variations often start as a conversation. That’s fine, as long as it doesn’t stay a conversation. Confirm any verbal instruction in writing promptly. “Just keep going, we’ll sort the paperwork later” is the most expensive sentence on a construction site.
Valuing variations under NZS 3910
NZS 3910 sets out a valuation hierarchy — a pecking order the Engineer works through. In plain English:
- Use the contract rates where the varied work matches an item already in the Schedule of Prices.
- Pro-rate the contract rates where the work is similar but not identical — derive a fair rate from the rates you already have.
- Use rates the parties agree where there’s nothing comparable to extend from.
- Failing agreement, the Engineer fixes a reasonable rate — which may be built up on a cost-plus or daywork basis (actual labour, plant and materials plus agreed margins).
On top of the base rate, the contract typically allows for site and off-site overheads and profit. The principle throughout is that the Contractor should be neither penalised nor windfall-enriched by a change it didn’t choose — it should be paid fairly for the work actually done.
Worked example: the “Pukenui Road Bridge” replacement
(A fictional project, used purely to illustrate the mechanics.)
The setup. A council awards a Contractor a $4,200,000 contract under NZS 3910 to replace a single-lane bridge. The Schedule of Prices includes soft/common excavation at $48/m³.
The change. During pile excavation for the new abutments, the Contractor hits hard rock that the geotechnical investigation didn’t show. To found the abutments as designed, 320 m³ of additional rock excavation is required — slower, needing different plant and methods.
Working the hierarchy:
- Step 1 — contract rate? The schedule has a rate for soft excavation, but rock is materially different work. The $48/m³ rate doesn’t fairly apply. ✗
- Step 2 — pro-rate a similar rate? There’s no comparable rock item in the schedule to extend from. ✗
- Step 3 — agree a rate. The Contractor submits a build-up; after review the Engineer and Contractor agree $185/m³ for the rock excavation. ✓
The numbers:
- Rock excavation: 320 m³ × $185/m³ = $59,200
- Agreed on-costs (overhead and profit, say 8%): $4,736
- Variation value: $63,936
Certification and the Contract Price. The Engineer issues Variation Order No. 014, values it at $63,936, and certifies it. The Contract Price becomes $4,263,936. The certified value is included in the Contractor’s next claim (Payment Claim 7) and is set out in the Engineer’s payment schedule.
Don’t forget the clock. The rock added 4 working days to the critical path. That’s a separate question from cost: the Contractor submits an EOT claim, the Engineer assesses it, and grants 4 working days, moving the date for Practical Completion accordingly. Had the Engineer valued the cost but ignored the time, the Contractor would be exposed to liquidated damages for a delay it didn’t cause — a classic, avoidable dispute.
Variations and time: cost is only half the story
A variation can add cost, time, both, or neither. Treating them as the same thing is one of the most common — and most expensive — mistakes in contract administration.
Some variations add cost but no time (a minor extra quantity done within the existing programme). Some add time but little cost (a Principal-imposed sequencing change). Assess each on its own merits, and document the time impact at the time — reconstructing a delay argument months later, from memory, almost never goes well for whoever’s trying to prove it.
Where variations go wrong (and how to avoid it)
- Verbal instructions that are never confirmed in writing. Confirm within days, not weeks.
- Scope creep with no instruction. Work proceeds “to keep the job moving,” then no one will own the cost.
- Pricing submitted or agreed late. Agree the basis before the work proceeds wherever you can.
- Variations valued but never certified. The Contractor’s cashflow quietly bleeds.
- Poor records. No clear thread linking the instruction, the valuation, the certification and the payment claim — so at final account, nobody can reconstruct what was agreed.
- Mixing variations with defect rework. They’re paid very differently; keep them separate.
Almost every one of these comes down to the same root cause: the variation lived in someone’s head, an email thread and a spreadsheet, instead of in one auditable record.
A quick note on NZS 3910:2023
The 2023 edition of NZS 3910 updated some of the role terminology and adjusted how the Engineer’s functions are structured. The principles of how variations are instructed, valued and certified are broadly consistent with what’s described here, but check which edition your contract is written under — the named roles and some procedures differ. (Our NZS 3910 guide covers the parties and the 2023 changes in more detail.)
How Gnosis handles variations
This is exactly the chain Gnosis was built to hold together. Gnosis is your contract administration assistant: it captures a variation from the moment it’s instructed, drafts the variation order, tracks the pricing and the Engineer’s valuation, routes it through an approval workflow with a clear audit trail, and links it straight to the payment claim and the running Contract Price.
Drop in a marked-up drawing or a Contractor’s quote and Gnosis reads the numbers out for you, so the instruction never gets lost between a site conversation and the final account. It works for NZS 3910 and AS 4000, with the right terminology and tax treatment for New Zealand and Australia.
If keeping the instruction → valuation → certification → payment chain unbroken is the part of the job that keeps you up at night, that’s the part we automate. See how it works or book a walkthrough.
Frequently asked questions
Can a Contractor refuse to carry out a variation?
Generally no — the Contractor must carry out variations the Engineer validly instructs, provided they’re within the general scope of the contract. What the Contractor can dispute is the valuation. Variations that go beyond the contemplated scope are a different conversation.
Do variations have to be in writing?
The instruction should be in writing. Variations frequently start verbally on site, but you should confirm a verbal instruction in writing promptly to protect entitlement on both sides.
Who values a variation under NZS 3910?
The Engineer, applying the contract’s valuation rules and acting independently. The Contractor typically submits pricing, but the Engineer values and certifies.
What happens if the parties can’t agree on a rate?
The Engineer fixes a reasonable rate. That may be built up on a cost or daywork basis where there’s no comparable contract rate to use or extend.
Does a variation automatically extend the completion date?
No. Time is assessed separately. A variation may justify an extension of time, but only if it actually affects the programme — and the Contractor generally needs to claim it.
Written by Alexios Kavallaris, founder of Gnosis. Alexios is a civil engineer with 27 years on roading and infrastructure projects across Greece, the United Kingdom, New Zealand and Australia — including around five years with Waka Kotahi NZTA on the Waikato Expressway, administering some of the largest NZS 3910 contracts in the country. He won the 2020 Engineering Science Award and founded Gnosis in 2023 to build the contract administration tool he’d needed on every project.
