Change Orders and Variations on Equipment Orders

A change order, often called a variation, is a formal written change to an equipment order after award. It can alter the scope, the design, the quantity, the delivery date or the terms, and it records the agreed effect on price and programme before the purchase order is amended. The usual sequence is: change identified, written variation request, supplier quotation, evaluation, approval, then a numbered amendment to the order.

This is general information, not legal advice.

Why this matters now

Changes agreed informally are a growing risk. In 2018 the UK Supreme Court held in Rock Advertising v MWB that a clause requiring changes to be agreed in writing is effective, so an oral variation that ignores it is invalid [1]. Meanwhile, project teams increasingly handle questions through cloud systems, and in November 2024 the Civil Engineering Contractors Association warned that an answer to a technical query can change the scope without the formal instruction it needs [2]. On equipment orders, that is how a casual email about a nozzle becomes a dispute about money.

Where variations come from

• Buyer scope changes: an extra nozzle, a material upgrade, an added test.
• Late information: a P&ID revision, a changed duty, or vendor data that reveals a clash.
• Rule or site changes: a new hazardous area classification or a different power supply.
• Supplier proposals: a cheaper or faster alternative. NEC contracts let suppliers propose scope changes that reduce the amount payable, and an accepted proposal follows the change procedure [3].
• Delay and acceleration: a request to bring delivery forward is a change too.

Request, price, approve

1. Request in writing. Reference the order, describe the change, and attach revised drawings or datasheets. Be clear whether you are asking for a proposal or instructing the change. Under FIDIC's 2017 contracts, a request for a proposal is not an instruction, so the contractor keeps working to the original design until instructed [4].

2. Ask for price and time. Set a period for the supplier's quotation. The UK Atomic Energy Authority's purchase order conditions, based on the NEC4 Supply Contract, use a two week period for reply [5].

3. Evaluate. Check the price against the agreed pricing basis and ask engineering to confirm the scope, the effect on guarantees and on the vendor document list.

4. Approve within authority. The same UKAEA conditions require its procurement representative to agree any assessment of a change event, which keeps commercial control where it belongs [5].

5. Amend and log. Issue a numbered amendment with the new price and dates, and enter it in a change register. If the order has payment milestones, say whether the change adds to a milestone or has its own.

Pricing bases

FIDIC's 2017 contracts use broadly this order: contract rates first, then rates derived from them, then cost plus profit, with a default profit of 5% unless the contract says otherwise [4]. Agreeing a similar hierarchy in your purchase order terms saves argument later.

How suppliers protect themselves

Fairness cuts both ways, and a good change process protects the supplier as much as the buyer.

• Warn early. NEC based conditions require suppliers to notify early warnings promptly, and the UKAEA form puts risks identified in the supplier's quotation straight into the early warning register [5].
• Do not start on a verbal request. If the order requires changes in writing, work done on a phone call may not be paid [1].
• Price the time, not just the work. Under FIDIC 2017 there is no separate right to time related costs, so they must be included when the change is valued [4].
• Object where you must. FIDIC lets a contractor decline a variation it cannot readily obtain the goods for, or one that would compromise health and safety [4].
• Keep queries and changes apart. A technical query is a question, not a change document; if an answer changes scope, raise a change request [6]. See our technical query template.

Practical example

In this illustrative example, a £250,000 order for a reactor skid has three changes in its first four months.

The changes add 9.8% to the order, which becomes £274,500. The buyer issues three numbered amendments, updates the delivery date in the expediting plan, and records the reason for the third change against the P&ID revision that caused it.

Where ChemCapital fits

ChemCapital lets buyers issue formal purchase orders inside the platform and track supplier confirmations. Suppliers confirm with their own reference number and dates and can flag exceptions, each order has its own message thread, and interactions and decisions are logged with timestamps and the person who made them. That gives both sides one written record of what was asked for and what was agreed.

Ready to keep every order change in writing and in one place? Start free with ChemCapital.