How should a variation be valued?

By the contract's own set order, which most forms lay down as a hierarchy: contract rates first, then adjusted rates, then fair rates, and dayworks last. Contract rates are the prices already in your priced document, the bill of quantities or schedule of rates, used where the varied work is like the work you priced and done under similar conditions. Where the work is similar but the conditions are not, those rates are adjusted. Where nothing comparable exists in the priced document, a fair valuation or fair rate is used. Dayworks, meaning payment for the actual labour, plant and materials used plus an agreed percentage, are the fallback where the work cannot sensibly be measured any other way. A payer will usually want the existing contract rates applied everywhere because they are lower, but a rate carries the conditions it was priced for: work done out of sequence, at night, or in occupied premises is not the same work in a different quantity, so the original rate does not fit. A proper valuation should also reach everything the change touched, including any knock-on effect on time, on preliminaries (the site-wide running costs such as supervision, welfare and plant that are not tied to a single item of work), and on other work that was not itself varied but was disrupted by the change. Identify which tier each item falls into and price the full consequences, not just the added labour and materials.

Picture a flooring subcontractor whose priced bill has a rate for laying vinyl during normal daytime hours in empty rooms. Midway through a hospital upgrade, the client instructs an extra ward's worth of the same vinyl, but it must be laid overnight, in short bursts, around live wards that cannot close. The client's quantity surveyor simply multiplies the extra area by the existing bill rate and calls it settled. The vinyl is like the priced work, so the contract rate is the starting point, but the conditions are not alike: night working, broken shifts and dodging occupied wards all make it slower and dearer, so the rate should be adjusted upward rather than applied flat. On top of that, the valuation should pick up the knock-on effects the surveyor ignored, such as extra supervision and the delay to other rooms held up while the crew worked nights. By naming which tier each part sits in and pricing the full consequence, the contractor turns a thin flat-rate figure into a valuation that reflects what the change really cost.