Commercial & Contract · Mandatory · Construction

Variation Quotation

A quotation for the cost and time implications of a proposed variation.

Last reviewed: 29 March 2026 — This guide reflects UK law as of this date. JCT / NEC / Contract remains current with no amendments enacted as of 29 March 2026. Next scheduled review: 29 March 2027.

Legal basis	JCT Standard Building Contract 2024 (Clause 5.6) + NEC4 Engineering and Construction Contract (Clause 62 & 63) + Express contract terms
JCT valuation rules	Variations are valued using contract rates where applicable, fair rates where contract rates do not apply, or daywork where measurement is not practicable
NEC4 quotation period	The contractor must submit a quotation within 3 weeks of a compensation event instruction — the Project Manager then has 2 weeks to respond
NEC4 deemed acceptance	If the Project Manager does not respond to a quotation within the 2-week period, the quotation is deemed accepted at the contractor's submitted figure
Best practice	A well-prepared quotation with detailed measurement and analysis is agreed faster and with less dispute than a lump sum figure with no supporting breakdown

1. Variation Quotation

A variation quotation is the contractor's priced response to a variation instruction. It sets out the cost of carrying out the changed work, including direct costs, preliminaries, and any programme impact. The purpose of the quotation is to agree the price of a variation before or shortly after the work is carried out, avoiding the disputes and uncertainty that arise when variations are left unpriced until the final account.

Under JCT 2024, the valuation rules in Clause 5.6 establish a hierarchy for pricing variations. Where the varied work is of a similar character and executed under similar conditions to work in the contract bills, contract rates apply. Where the character or conditions differ, the contract rates form the basis of a fair valuation. Where the work cannot reasonably be measured, daywork rates apply. The Contract Administrator values the variation, but in practice will seek the contractor's quotation as the starting point for negotiation.

Under NEC4, the process is more structured. The contractor must submit a quotation within 3 weeks of the compensation event instruction. The quotation must be based on defined cost (actual or forecast cost of the work) plus the fee percentage stated in the contract data. The Project Manager has 2 weeks to respond — accepting the quotation, requesting a revised quotation, or making their own assessment. If the Project Manager does not respond within the 2-week period, the contractor's quotation is deemed accepted. This mechanism incentivises both parties to deal with variations promptly.

Prepare substantiated quotations with full supporting analysis

A quotation that is supported by detailed measurement, rate analysis, material costs, labour build-ups, sub-contractor quotations, and programme analysis is far more likely to be agreed quickly and without dispute. A single lump sum figure with no supporting information invites challenge and delay. The time invested in preparing a thorough quotation is repaid many times over in faster agreement and improved cash flow. Include all relevant documents — revised drawings, specification clauses, supplier quotations, and programme extracts.

2. Content

A variation quotation must provide a complete and transparent breakdown of the cost of the varied work. The following table sets out the essential content of a variation quotation document.

Field	Detail
Quotation reference	Unique sequential reference number for the quotation (e.g. VQ-001). Must cross-reference the variation instruction number to maintain a clear audit trail between instruction and quotation.
Date	Date the quotation is submitted. Under NEC4, the quotation must be submitted within 3 weeks of the compensation event instruction — the date is critical for compliance with contractual time limits.
Variation description	A clear description of the varied work being priced, consistent with the variation instruction. Any assumptions or qualifications should be stated explicitly to avoid ambiguity.
Measurement	Detailed measurement of the varied work in accordance with the contract measurement rules (e.g. NRM2 for JCT contracts). Quantities must be clearly set out with dimensions, calculations, and references to drawings.
Rates applied	The rates used to price the measured work — contract rates where applicable, adjusted rates where conditions differ, or new rates where no comparable item exists. The basis of each rate must be stated.
Labour	Labour costs broken down by trade, number of operatives, hours, and rate per hour. Include any additional supervision costs. Under NEC4, labour is valued at defined cost (actual cost to the contractor).
Plant	Plant and equipment costs including hire rates, transport, fuel, and operator costs where applicable. Plant should be itemised with rates and durations.
Materials	Material costs supported by supplier quotations or invoices. Include delivery charges and any wastage allowance. Material costs should be net of any trade discounts.
Sub-contractor costs	Quotations from sub-contractors for their element of the varied work. Sub-contractor quotations should be attached to the variation quotation as supporting documents.
PC / overhead / profit	Percentage additions for preliminaries/general costs, head office overheads, and profit. The applicable percentages should be stated and should be consistent with the contract. Under NEC4, the fee percentage covers overheads and profit.
Total variation cost	The total direct cost of the varied work (labour + plant + materials + sub-contractors) before preliminaries, overheads, and profit additions.
Programme impact	An assessment of whether the variation affects the programme, including any extension of time claim. Under NEC4, the quotation must include the programme impact — changes to the planned completion date and any effect on key dates.
Preliminary costs	Additional preliminary costs arising from any programme extension caused by the variation — site management, welfare, scaffolding, hoarding, insurance, and other time-related costs.
Total quotation	The total amount of the variation quotation including all direct costs, preliminaries, overheads, and profit. This is the figure the contractor is seeking agreement on.

3. Common Mistakes

Submitting a quotation without supporting analysis

The most common failing in variation quotations is submitting a lump sum figure with no supporting measurement, rate analysis, or breakdown. A quotation that simply states a total figure invites the Contract Administrator or Project Manager to challenge it, request further information, or make their own assessment at a lower figure. The contractor loses control of the valuation process. Every quotation should include detailed measurement with dimensions and drawing references, a rate build-up showing labour, plant, and material components, sub-contractor quotations where applicable, and a clear statement of the basis of valuation. The effort required to prepare a substantiated quotation is significant, but it is the single most effective way to achieve agreement and avoid disputes at final account stage.

4. Frequently Asked Questions

Under NEC4, what happens if the Project Manager does not respond to a quotation in time?▾

Under NEC4 Clause 62.6, if the Project Manager does not respond to a quotation within the 2-week reply period, the contractor may notify the Project Manager that the quotation has been treated as accepted. This is one of the most powerful mechanisms in the NEC4 contract for the contractor. It means that if the Project Manager fails to act within the contractual time limit, the contractor's quotation — including both cost and any programme impact — is deemed to be the agreed assessment of the compensation event. In practice, this mechanism incentivises the Project Manager to deal with quotations promptly. Contractors should track all quotation submission dates and follow up precisely at the expiry of the 2-week period if no response has been received. The deemed acceptance applies to the full quotation including any changes to the completion date, so it can have significant commercial and programme consequences.

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