Variation Order Management: How NEC4 Clause 60 Benefits from Gather's New Variance Categorisation Feature

In the world of project management, deviations from the plan, or variances, are inevitable. 

While some may be minor and manageable, others can have a significant impact on project timelines and budgets. This is especially true for projects governed by NEC4 contracts, where Compensation Events (CEs) play a crucial role in ensuring fair compensation for unforeseen circumstances [Clause 60, NEC4 Contract].

Our previous blog post explored the power of worklog variance categorisation and its numerous benefits for project management in general. Now, let's delve deeper and see how this feature specifically strengthens compliance with NEC4 contracts, particularly in relation to Clause 60.

NEC4 Clause 60

Clause 60 outlines the process for identifying, notifying, and claiming compensation for CEs. However, establishing entitlement to compensation requires clear justification that the event falls outside the original scope of work. This can be a complex task, often leading to disputes and delays.

Enter variance categorisation

Here's where worklog variance categorisation steps in, acting as a powerful tool for navigating the complexities of Clause 60:

• Structured Variance Capture: Pre-defined categories within the Worklog interface guide users in capturing variances in a structured way. This makes it easier to identify potential CEs that align with specific triggers outlined in Clause 60.1(1), such as changes in physical conditions or unforeseeable ground conditions.
• Clear Causation: By selecting a relevant category, the feature helps link variances to specific causes. This strengthens the contractor's position when claiming compensation by establishing a clear connection between the variance and a qualifying CE under NEC4.
• Improved Early Warnings: Timely identification of potential CEs through categorisation allows for the issuance of Early Warnings as per Clause 61. This facilitates proactive discussions with the project manager, minimising the risk of disputes later in the project.

Why categorise?

• Faster CE Processing: Structured variance data facilitates faster and more efficient evaluation of potential CEs. This minimises delays in claims processing and ensures timely resolution of contractual issues.
• Reduced Disputes: Clear categorisation and documentation of variances strengthen the contractor's position when claiming compensation for legitimate CEs. This reduces the likelihood of disputes arising from unclear justifications for deviations from the plan.
• Improved Project Certainty: By facilitating proactive CE identification and management, Worklog Categorisation contributes to a more predictable project environment. This benefits both client and contractor by minimising cost overruns and schedule delays.

Building trust

Worklog variance categorisation goes beyond just streamlining processes and ensuring compliance. It fosters a culture of transparency and accountability within NEC4 projects. By enabling clear communication of variances and their causes, the feature strengthens trust between project teams, clients, and contractors.

A win for all stakeholders

By implementing Worklog Variance Categorisation, project teams working under NEC4 contracts can navigate the complexities of Clause 60 with greater confidence. It empowers them to identify potential CEs efficiently, communicate effectively, and ultimately achieve successful project outcomes for all stakeholders.

The benefits of worklog variance categorisation extend beyond just NEC4 projects.  This structured approach within your Record Management System can be applied to any project framework, empowering teams to gain deeper insights into project execution, improve communication transparency, and ultimately, achieve greater project success.  So, regardless of your contractual framework, consider embracing Worklog Variance Categorisation and unlock its potential to transform your project management approach.

How does this work in Gather?

Worklog variance categorisation streamlines the process of capturing and analysing deviations from planned work in Gather. It introduces a new field, "Variance Category," within the Worklog interface. This field appears only when the actual quantity completed differs from the planned quantity. Users can then select a pre-defined category from a dropdown menu to explain the reason for the variance. This new functionality complements the existing free-text field that remains available for detailed anecdotal explanations.

By integrating this feature, Gather enhances its ability to support precise and transparent project management, making it an invaluable tool for teams operating under NEC4 contracts or any other project management framework.

Practical Scenarios: Identifying Compensation Events

Here are three common scenarios showing how variance categorisation helps identify compensation events before time bars expire.

Scenario 1: Unforeseeable Ground Conditions (Clause 60.1(12))

Situation: Your site team records "Additional excavation required due to unexpected rock layer. 3 days additional digging."

Without variance categorisation: This entry sits in the worklog. Three weeks later, when reviewing the CVR, someone notices the cost overrun but the 8-week notification window is already half gone.

With Gather's variance categorisation: The site engineer selects "Ground Conditions" from the variance category dropdown. Gather flags this as a potential CE under Clause 60.1(12). The commercial team receives an alert within 24 hours, giving them 7+ weeks to prepare and submit the notification.

Outcome: Time and cost recovery for 3 days additional work, properly notified within the contractual timeframe.

Scenario 2: Late Access (Clause 60.1(2))

Situation: The worklog shows "Delayed start. Area not available. Crew stood down for 4 hours."

Without variance categorisation: This looks like a minor delay. The project manager assumes it will average out. Nobody investigates whether access was the Client's responsibility.

With Gather's variance categorisation: The supervisor categorises this as "Access/Possession Issue". Gather prompts: "Was access to be provided by the Client under the Scope?" If yes, this is flagged as a potential CE under Clause 60.1(2).

Outcome: Four hours of delay costs (labour, plant standing time) notified as a CE. More importantly, the pattern of access issues is documented if it continues.

Scenario 3: Scope Change via Instruction (Clause 60.1(1))

Situation: The PM verbally instructs the site team to relocate temporary fencing to accommodate a third-party contractor. The worklog records "Fencing relocated as instructed."

Without variance categorisation: This is recorded as normal work. No cost code is assigned for the change. The variation gets lost in the monthly valuation.

With Gather's variance categorisation: The entry is tagged "PM Instruction: Scope Change". Gather prompts for the instruction reference and automatically links to Clause 60.1(1). The commercial team receives an alert to issue a formal CE notification.

Outcome: The fencing relocation is properly notified as a CE. The contractor's right to additional time and cost is preserved.

The 8-Week Time Bar: Why Speed Matters

Under NEC4 Clause 61.3, if the Contractor does not notify a compensation event within 8 weeks of becoming aware, they lose their entitlement. This is the most punishing time bar in UK construction contracts.

The problem: Most compensation events are discovered in worklogs and site diaries days or weeks after they occur. By the time someone recognises the commercial significance, precious weeks have passed.

Gather's solution: Variance categorisation creates a direct line from site records to commercial awareness. When a worklog entry is tagged with a variance category that maps to a CE clause, the notification clock becomes visible immediately.

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