Why manage contract variations?
Contracts may need to change during the life of the contract. Managing these changes ensures:
- the intention of the contract is met
- costs are controlled
- budget is maintained
A contract variation:
- may increase scope – an addition
- may vary scope – an alteration
- may reduce scope – a deletion
- may vary the length and/or value
- may vary another contract term or condition
- must be within the general scope of the contract
Provisions for varying a contract are set out in the contract. Ensure that these processes are followed.
Changes to a contract may be initiated by:
- the Agency
- the service provider
- external bodies, such as regulators
- as a result of changes in law or policy
How to vary contracts
Step 1: Specific variation procedures
Are there specific variation procedures set out in the contract?
- If yes:
- follow contract specific processes
- ensure Steps 6 and 7, and 11 and 12 are followed
- If no, go to Step 2.
Step 2: Document variation proposal
Document the variation proposal. Use local Agency templates where available.
Step 3: Seek views on variation proposal
Discuss the variation proposal with:
- subject matter experts
- users
- stakeholders
- project sponsor
Step 4: Determine if the variation proposal is acceptable
Is the variation proposal acceptable?
- If yes, go to Step 5.
- If no, either:
- revise the variation proposal, and go to Step 3
- abandon the proposal and advise the service provider.
Step 5: Seek service provider views on variation proposal
Discuss the variation proposal with the service provider.
Does the service provider agree with the variation proposal?
- If yes, go to Step 6.
- If no, either:
- revise the variation proposal, and go to Step 3
- abandon the proposal and advise the service provider.
Step 6: Seek scope approval for the variation
Seek approval for the variation following local Agency processes. Use local Agency templates where available.
Step 7: Seek financial approval for the variation
Seek approval to commit funds, if needed, following local Agency processes. Use local Agency templates where available.
Step 8: Confirm the variation
Exchange letters with the service provider confirming the variation.
Prepare a new or revised purchase order, if needed, following local Agency processes.
Step 9: Disclose variations to the contract
Update details of the contract in the Agency’s contract management system, where one is used.
Disclose variations to the contract on the Contract Publishing System if required.
For construction, see Disclosure of contracts and variations to contracts (Instruction 5.2).
For goods and services, see Contract disclosure - goods and services guide.
Step 10: Implement the variation
Implement the variation.
Update the contract management plan if needed.
Consider:
Manage probity and conflicts of interest
Manage probity – consider issues raised at Probity issues by stage and task.
Conflicts of interest can arise during this task. Identify, declare and manage these.
Address Agency rules
Consult Agency procurement team for advice on meeting:
- procurement rules and policies
- Agency specific rules and policies related to varying contracts
Follow Agency specific rules on when to seek an approval and who can give the approval.
Follow Agency specific rules for recording decisions and storing records.
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