Variation Order Claims in Malaysia: Is Your VO Valid and Payable?

A variation order, commonly called a VO, does not automatically become payable simply because the contractor carried out additional work. The contractor must still show that the work was properly instructed, that it fell outside the original contractual scope, that any required notice and claim procedures were followed, and that the work and its value can be proven.

Where some of those formalities were not followed, the employer's conduct may sometimes support the claim, but that is usually a fallback argument rather than something a contractor should rely on from the outset.

Why do VO claims fail even when the work was actually done?

Many VO disputes arise because site practice and contractual requirements do not always move together.

A contractor may receive an instruction during a site meeting, carry out the additional work immediately to avoid delaying the project, and only deal with the paperwork later. By the time the final account is submitted, the employer may argue that the instruction was never properly issued, that the work was already included in the original scope, or that the contractor failed to comply with the contractual notice requirements.

The fact that the work was physically carried out is therefore only part of the issue. A strong VO claim usually depends on the instruction, the contractual scope, compliance with the agreed procedure, and the evidence supporting the amount claimed.

Test 1: Was the work properly instructed?

The first question is whether the additional work was instructed by someone who had authority under the construction contract.

Depending on the form of contract, that person may be the Architect, Superintending Officer, Engineer, Project Director or another person specifically authorised to issue instructions.

An instruction from someone working on the project does not necessarily bind the employer if that person had no contractual authority to order variations.

The safest position is a written instruction from the person identified in the contract. In practice, however, instructions are often given verbally during site meetings or inspections.

In Capital Habitat Builder Sdn Bhd v Pesona Metro Sdn Bhd [2015] MLRHU 1033, the High Court considered variation works that had largely been instructed verbally. The court accepted that the absence of written instructions was not fatal because the subcontract did not require variation instructions to be in writing and the parties had regularly operated through oral instructions.

The position may be very different where the contract expressly requires written instructions.

A contractor receiving a verbal instruction should therefore confirm it in writing as soon as possible, identifying who gave the instruction, the date, the additional work involved and the contractor's position that it falls outside the existing scope.

Test 2: Is the work genuinely outside the original scope?

Not every additional cost or difficulty amounts to a variation.

The starting point is the original contract. The drawings, specifications, Bill of Quantities, scope of works and design obligations should be reviewed to determine whether the contractor was already required to perform the work.

If the work is already included within the agreed scope, the contractor will generally have difficulty claiming additional payment merely because the work became more complicated or expensive than expected.

This issue arose in Crest Realty Sdn Bhd v Sarikei District Council [2020] MLRHU 814, where the court considered whether the alleged additional works were already within the contractor's original lump-sum obligation.

A contractor preparing a VO claim should therefore explain clearly what changed. It may be a revised drawing, an increased quantity, a change in material, an increased excavation depth, or a new requirement that did not appear in the original documents.

That comparison between the original obligation and the changed requirement is often more useful than simply describing the work as "additional".

Test 3: Did you follow the contract's notice procedure?

This is one of the most important parts of a VO claim.

Many construction contracts require the contractor to give written notice within a specified period after receiving the instruction or becoming aware of the additional work. The contract may also require supporting particulars, cost estimates or other documents to be submitted within a particular timeframe.

These requirements should not be treated as administrative formalities.

In Syarikat Pembinaan Anggerik Sdn Bhd v Malaysia Airports Holdings Bhd [2022] 9 MLJ 391, the contractor's claims for certain additional costs failed because the mandatory contractual notice requirements had not been complied with within the required period.

The practical problem is that contractors often focus on completing the work first and reviewing the contract only when payment is later disputed. By then, the notice deadline may already have expired.

The notice clause should therefore be checked when the variation arises. If the contract requires notice within 14, 21 or 30 days, the contractor should comply within that period and retain evidence showing when the notice was sent and received.

Test 4: Can you prove the work and the amount claimed?

Even where a valid variation exists, the contractor must still prove the amount payable.

This can become difficult when records are incomplete or prepared long after the work was carried out.

The most useful documents usually include signed site instructions, joint measurement sheets, revised drawings, daywork records, photographs, quotations, invoices, delivery orders, labour records, machinery records and progress reports.

Joint measurements are particularly useful because they reduce the possibility of the parties later disagreeing about quantities.

In BIM Engineering & Construction Sdn Bhd v Sunway Construction Sdn Bhd [2025] MLRHU 2467, issues concerning both the contractual requirements and the supporting evidence affected claims for additional work.

A contractor should therefore record the additional cost while the work is being carried out rather than attempting to reconstruct the entire valuation at the end of the project.

Test 5: Has the employer accepted or benefited from the work?

This final issue is most relevant where the formal contractual requirements were not fully followed.

An employer may have known that the additional work was being carried out, attended inspections, approved drawings, certified part of the work, paid earlier claims or used the completed works without objection.

In those circumstances, the contractor may argue that the employer's conduct prevents it from later denying responsibility for the variation.

Section 71 of the Contracts Act 1950 may also be relevant where a person lawfully does something for another without intending it to be free, and the other person accepts the benefit of that work.

Principles such as waiver and estoppel can therefore become important in the right case.

However, contractors should not treat employer acceptance as a substitute for complying with the contract. It is much easier to rely on a proper written instruction and timely notice than to prove later that the employer should be prevented from relying on missing paperwork.

The main warning signs in a VO claim

A VO claim deserves closer scrutiny where there is no instruction from an authorised person, the work already appears in the original scope, the contractual notice deadline was missed, there are no proper measurements or supporting records, or the employer consistently rejected the variation while the work was being carried out.

These problems do not always produce the same legal result, because much depends on the wording of the contract and the conduct of the parties. They do, however, explain why some apparently genuine additional works become difficult to recover.

Can an unpaid VO be claimed under CIPAA?

Potentially, yes.

CIPAA may provide a faster route for recovering payment for construction work or services under a written construction contract, including a properly established variation claim.

However, using CIPAA does not remove the need to prove the underlying contractual entitlement.

The contractor must still show that the variation was validly instructed or otherwise recognised, that the work falls within the contractual payment framework, and that the amount claimed is supported.

The payment claim itself must also comply with section 5 of the Construction Industry Payment and Adjudication Act 2012 by stating the amount claimed, the due date, the contractual basis of the claim, the relevant work or services, and that the claim is made under CIPAA.

A disputed VO can therefore be adjudicated, but CIPAA does not automatically convert a weak contractual claim into a strong one.

What should contractors do when a variation arises?

The safest approach is to deal with the contractual position at the same time as the work.

Confirm who gave the instruction and whether that person is authorised under the contract. Compare the new requirement against the original scope and identify exactly what has changed. Check the variation and notice clauses immediately and comply with any deadlines.

The contractor should also keep proper records of quantities, labour, materials, machinery and other costs as the additional work progresses. Where possible, measurements should be agreed jointly with the employer's representative.

If the original instruction was verbal, it should be confirmed in writing promptly so that there is a contemporaneous record of what was requested.

A well-documented VO claim is usually much easier to value, certify and enforce than one that depends on recollections of what happened months earlier.

Frequently Asked Questions

Can I claim a VO that was only instructed verbally?

Possibly. The answer depends heavily on the contract. If the contract does not require written variation instructions and the parties regularly acted on verbal instructions, the claim may still be enforceable. If the contract expressly requires writing, the position becomes more difficult.

What if the employer refuses to sign the VO?

Refusal to sign does not automatically determine the claim. The contractor should still give the required notice, record the instruction and preserve evidence showing the work performed and the employer's knowledge of it.

What if the extra work was already included in the BQ?

If the work genuinely falls within the original contractual scope, it will usually be difficult to recover additional payment for it as a variation.

Can I use CIPAA to recover an unpaid VO?

Potentially, yes, provided the variation gives rise to a payment entitlement under the construction contract and the payment claim complies with CIPAA.

Final takeaway

A strong VO claim usually depends on four core matters: a proper instruction, a genuine change from the original scope, compliance with the contractual procedure, and reliable proof of the work and its value.

Where those elements are incomplete, the employer's conduct may sometimes support arguments based on acceptance, waiver or estoppel, but those arguments are more fact-sensitive and should not replace proper contract administration.

For contractors, the safest approach is to document the variation while it is happening. For employers, the same records help distinguish legitimate additional work from work that was already part of the original contractual obligation.

Speak to JPP LAW

Justin, Poh & Partners, also known as JPP LAW, assists employers, main contractors, subcontractors and consultants with variation claims, construction payment disputes, CIPAA adjudication, contractual claims and construction litigation in Malaysia.

If you are dealing with a disputed VO, unpaid additional works or a contractual notice issue and need to assess whether the claim is recoverable, you may contact us to discuss the matter.

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Disclaimer: This article is for general information only and does not constitute legal advice. Variation claims depend heavily on the wording of the construction contract, the instruction given, the scope of work, contractual notice requirements and the available evidence.