Variation in Quantity Claims Explained

Why Unit Rates and Lump Sums Do Not Automatically Move, and When the Contract Must Respond

Variation in Quantity Claims Explained

Introduction

Quantity disputes rarely originate as disputes. They develop gradually during execution, while drawings continue to evolve and quantity estimates remain provisional rather than final. Construction proceeds before design has fully settled. Unit rates or lump sums are agreed. Work advances. Quantities adjust quietly, discipline by discipline and interface by interface.

For a period, these changes appear benign. Payment continues. Progress is achieved. No obvious failure of performance is evident.

Commercial discomfort tends to surface later, when recovery no longer reflects effort, overhead absorption weakens, or margins erode without any identifiable inefficiency. At that stage, attention often turns to the quantities themselves.

Why did the quantities change?

That question, while natural, is incomplete. The more important enquiry is contractual rather than arithmetic.

When quantities change, what does the contract actually permit to move with them?

Quantity Variation Is Not a Valuation Error;

It Is a Question of Risk Allocation

Under FIDIC and bespoke EPC contracts, quantity variation is not an anomaly. It is an anticipated feature of projects tendered before full design maturity. Bills of Quantities, schedules of rates, and lump-sum pricing mechanisms exist precisely because final quantities cannot be fixed with certainty at the point of contract formation.

Quantity movement alone does not create entitlement. Entitlement arises only where contractual risk allocation, valuation mechanisms, and principles of equity intersect.

This is not a novel proposition. As Keith Pickavance has observed in the context of valuation disputes, pricing mechanisms are designed to operate within the risk structure agreed at contract formation, not to correct commercial misjudgement after the fact. Quantity movement, by itself, does not disturb that structure unless the contract expressly provides for such an outcome.

Accordingly, instinctive repricing arguments, based solely on volume deviation, rarely survive scrutiny. Disciplined contractual reasoning does.

Why Quantities Diverge from What Was Tendered

Quantity divergence follows identifiable and recurring causal patterns.

First, design maturity. Under remeasurement, design–build, and EPC contracts alike, construction frequently begins before all drawings are Approved for Construction. Quantity estimates are therefore derived from preliminary layouts, conceptual routing, and unresolved interfaces. As engineering develops, quantities adjust, sometimes materially, without any breach by either party.

Second, employer-driven optimisation. Post-award value engineering and optimisation are common. Employers revise designs to improve constructability, reduce lifecycle cost, or rationalise systems. These changes often present themselves as remeasurement effects, but their origin lies in design choice rather than measurement error.

Third, interface growth. Quantity growth frequently occurs at interfaces rather than within isolated line items. Civil, structural, mechanical, piping, and electrical quantities expand cumulatively as coordination resolves. No single activity explains the increase. The growth is systemic.

Fourth, latent physical conditions. Subsurface conditions, obstructions, and unforeseen ground behaviour may materially increase quantities beyond tender assumptions. In such cases, quantity growth is not the cause of cost escalation. It is a symptom of divergence between tender information and physical reality.

Finally, commercial assumptions. Unit rates and lump sums embed assumptions regarding productivity, overhead absorption, sequencing, and scale. Quantity reductions may undermine overhead recovery even where execution is efficient. Quantity increases may alter the cost structure in ways not priced into the contract.

As Roger Gibson has consistently cautioned, where tender assumptions fail for reasons that were foreseeable in principle, the commercial bargain is expected to hold. It is only where those assumptions are defeated by events outside reasonable contemplation that valuation mechanisms begin to strain.

Quantity variation is neutral in itself. Entitlement depends on why the variation occurred, not merely on its magnitude.

What Quantity Variation Actually Does to the Project

Quantity movement affects projects in ways that are often misunderstood.

An increase in quantity does not merely increase payable volume. It may extend trade durations, increase preliminaries, dilute productivity through congestion or prolonged exposure, and alter critical path logic. Where quantity growth concentrates in critical activities, time impact may arise even where pricing mechanisms remain unchanged.

Conversely, quantity reduction can be commercially more damaging than growth. Reduced quantities may prevent recovery of fixed overhead, distort cost absorption, and erode margins despite efficient execution and apparently adequate unit rates.

A critical distinction must be drawn between quantity variation that remains within the contemplated scope of work and variation that alters the nature or cost structure of execution. Where additional quantities require different methods, logistics, sourcing, or sequencing, the relationship between quantity and cost ceases to be linear.

Once quantity growth alters execution methodology or cost structure, valuation based purely on unit arithmetic becomes unreliable.

Effect must therefore be established in time and cost terms before valuation mechanisms are engaged.

Why Pricing Mechanisms Do Not Automatically Adjust

Pricing mechanisms are intentionally resilient. They do not operate identically across contract forms, and quantity risk does not sit in the same place under all contracts.

Reimbursable Contracts

In genuinely reimbursable contracts, quantity risk does not exist in the commercial sense. Payment adjusts arithmetically with actual cost. Overhead and profit recovery are not dependent on volume assumptions embedded in pricing. Variation-in-quantity disputes do not arise as a matter of entitlement, because the payment mechanism absorbs quantity change by design.

Remeasurement Contracts

Under remeasurement contracts, including those based on the FIDIC Red Book, quantities are measured and paid as executed, but unit rates remain fixed. Those rates embed assumptions regarding scale, productivity, and cost structure. The employer bears the risk of paying for increased quantities. The contractor bears the risk that its unit rates no longer reflect its costs when quantities diverge materially from those contemplated at tender.

The mere fact that quantities change does not entitle either party to revisit pricing unless the contract expressly permits that outcome. Stability of rates is a feature, not a flaw, of remeasurement contracts.

Exceptional adjustment mechanisms exist precisely because rate adequacy risk remains with the contractor.

EPC and Design–Build Contracts

Under EPC and design–build contracts, including the FIDIC Yellow Book, Silver Book, and most bespoke EPC forms, quantity risk is of a fundamentally different order. The contract price is fixed. Quantities are priced into a lump sum.

Remeasurement is not the default position.

In this environment, quantity growth does not test rate adequacy. It challenges the scope and price foundation of the contract itself. Entitlement turns on whether the quantity increase represents absorbed design development risk or a departure from the scope and risk allocation the contractor priced.

Lump-sum contracts allocate risk by design, not by hindsight. Quantity growth does not reallocate risk unless it crosses the boundary of what the contractor can fairly be taken to have assumed at tender.

In practical terms:

• Reimbursable contracts eliminate quantity risk

• Remeasurement contracts moderate quantity risk at the rate level

• EPC contracts concentrate quantity risk at the price and scope level

What Must Be Proven, and Why the Burden Changes

This is where most quantity claims fail.

Not because quantities are disputed, but because the wrong evidenti burden is applied to the wrong contract type.

Entitlement is not established by arithmetic deviation but by disciplined linkage between cause, effect, and the contractual mechanism said to respond.

Under remeasurement regimes, the contractor must prove that quantity deviation caused a cost differential attributable solely to scale. Volume alone is insufficient. Robust substantiation requires cost isolation, separating base scope execution from change-driven cost and excluding contractor-responsible inefficiencies. Global or total cost approaches rarely withstand scrutiny in this context.

Under EPC and design–build contracts, the contractor is not required to prove rate inadequacy. The evidenti burden shifts to demonstrating that quantity growth lay outside the risk priced into the lump sum and altered scope, execution method, or cost structure. Substantiation focuses on causation, scope boundary, and contractual risk allocation rather than arithmetic comparison.

Across all contract forms, time entitlement does not arise from quantity change alone. Critical path impact, disruption, or prolongation must be demonstrated. Quantity arithmetic does not extend time. Impact does.

When Quantity Mechanisms Yield to Other Remedies

Quantity provisions do not operate in isolation.

Where quantity growth arises from latent physical conditions, differing site condition provisions may prevail, shifting valuation to actual cost plus reasonable overhead and profit.

Where the employer directs work beyond what was contemplated, variation mechanisms apply, subject to degree and magnitude tests. Where quantity error arises from negligent estimates or failure to disclose material information, equitable relief may arise notwithstanding exculpatory language.

Tribunals do not enforce clauses in isolation. They seek to understand how the contract operates when confronted with reality. Remedy follows substance, not label.

Tailepiece

Quantity disputes are rarely about numbers.

They reveal how tender assumptions respond to site reality. They test whether contracts allocate risk coherently when estimates fail. They reward structure over instinct.

Pricing mechanisms are not fragile. They are deliberately robust.

They move only when the contract, properly construed, requires them to move.