Variation clause or Work Change clause – customer-friendly

Model clause organising a variation (or work change) in the agreed specifications for a Work, Milestone or Deliverable in a Statement of Work.

If a service provider and a customer agree on the development of a certain ‘work’, a milestone or other deliverable then, as the contract performance proceeds (a) a further detailing of the specification is usually desirable, or (b) a deviating from the agreed specifications may become necessary. Such detailing or modification is called a ‘variation’ or ‘work change’. This model Variation clause or Work change clause provides for a simple formalisation of the work change procedure.

The customer wants to prevent that each such proposed variation inadvertently results in extra costs. And of course, where a variation or work change implies a significant deviation, extra work or costs are probably inevitable. Extra costs can then be justified where the initial cost base changes, where such variation requires extra effort (or higher expertise), or where part of the agreed work is already realised. But often, the customer’s instructions are merely a further-detailing that should not result in extra costs.

Conversely, a supplier or service provider may seek a deferral of the agreed time schedule. Potentially, each post-agreement or post-SOW communicated specifications constitutes an argument for the service provider to justify a deviation from the initial agreement. Anyhow, both parties wish to have certainty and control over all deviations from the scope of an agreed statement of work (SOW).

The model clause Variation or Work changes clause addresses these aspects. Where such variation or work change might result in disputes or disagreement, it is not in the interest of the parties to initiate a full fledged arbitration or court proceedings (and this should not be necessary either). Therefore, the model clause Variation provides for the involvement of an (independent) expert who will provide a binding advice. A binding advice (expert) procedure is less ‘heavy’ than arbitration (and could avoid involvement of attorneys on both sides).