A systematic approach to the evaluation of indirect costs of contract variations

Abstract

A mechanism is proposed for the evaluation of compensation due in the event of a variation order under contracts for construction work. It demonstrates how the indirect costs of a variation can be derived by the use of influence curves. Commonly it is accepted that such costs are very difficult to evaluate systematically, and hence the parties to the contract have been left to argue over the cost and time effects of a variation and the compensation due. The technique suggested provides a simple solution to this problem.