Most contractors would not argue with the scope of their work being increased (provided they are to be paid for the increase) but they might not be so pleased if the scope is reduced and the employer seeks to pay them less. Is the employer entitled to omit elements of the contractor’s work? What happens to the contract sum if he does?
In the ideal scenario the contract will make it clear as to whether the employer is entitled to omit works, and if so, what the time and cost consequences are of so doing. The FIDIC forms expressly provide for omissions to the works. Assuming that the base cost of the work to be omitted is a fairly straightforward calculation the FIDIC Red book (clause 12.4) is so detailed as to provide specifically that: where a variation to the works includes an omission and the value for that omission has not been agreed, then the contractor may give notice to the engineer setting out any cost he will incur as a result of the omission which will no longer form part of the contract price. However, it does not give any guidance as to how to deal with adjustments to time - i.e. the impact on the programme.
FIDIC contracts are also careful to specify that omissions are not variations where the work is to be given to a third party. The contractor has signed up to carry out the entire works for the employer. If the employer no longer needs a part of the works the contractor has signed up for FIDIC says that is fair. If the employer still wants the work but does not want the original contractor to carry them out and wants to give them to someone else, that is not fair. The employer is looking to change his bargain.
If the employer is not entitled to change the scope or if an omission is not a variation, as in the situation above, then to do so is an amendment of the contract itself (rather than a variation under the contract - within its terms). If the employer does not seek the contractor’s agreement to amend the contract in this way he will be in breach of contract if he proceeds to carry out such an action.
The term “variation” is usually taken to mean an adjustment of the scope of works either increasing or decreasing, or changing, the scope of works. If the contract is silent as to the employer's entitlement to instruct variations, under Qatari law this does not automatically mean that to vary would be an amendment of the contract (or breach of contract if not agreed). Qatari law anticipates the need to vary construction works and allows for a certain percentage of increase or decrease in scope of work to be instructed. The amount of that percentage to be found in the current version of the Qatar Construction Specifications.
This still leaves the question of provisional sums, can these be omitted? Is “not instructing” the same as “omitting”. Can provisional sums be given to a third party?
