The Contract Rarely Says Nothing
When a contractor on an international project says the scope has changed and the contract does not clearly say who carries the cost, the first move is not to accept that premise. John E Wells, whose advisory work spans more than 30 years of international construction and infrastructure delivery, treats the gap as a question to be tested rather than a fact.
John E Wells is an independent international Board and Commercial Adviser with more than 30 years of experience in major construction and infrastructure projects across the UK, Middle East and Asia-Pacific. Having held senior responsibilities on both the contractor and client sides, he brings engineering, contractual and executive commercial perspectives to complex project decisions. His independent practice supports boards, developers, contractors, investors and law firms in commercial governance, bespoke international contracts, claims, dispute avoidance and project recovery.
He said "I would first challenge the assumption that the contract does not allocate the risk." On major international projects, particularly those operating under heavily amended standard forms or bespoke contracts, he noted that "the answer is rarely found in a single variation clause."
Instead, he starts by establishing the original contractual bargain: what the contractor was obliged to deliver, the information on which the price was established, and which risks were expressly or implicitly accepted. That means examining scope, specifications, drawings, employer's requirements, pricing assumptions, tender qualifications, contractual hierarchy and the correspondence leading to agreement.
The distinction between a genuine change and the development of an existing obligation is, in his words, fundamental. Contractors sometimes describe additional work as a variation when it was already within their contractual responsibility; employers frequently characterise substantial changes as design development or clarification to avoid recognising additional entitlement. He said "Neither position should be accepted without examining the underlying obligations."
He then looks at who instructed the work, whether the instruction was contractually authorised, what the parties knew at the time, and how they subsequently behaved. Governing law matters here too. Contractual interpretation, good faith, implied obligations, prevention, waiver and the legal consequences of instructions can differ considerably between common-law and civil-law jurisdictions. His concern, he said, is "not simply whether a contractor can produce a variation claim" but whether the original allocation of responsibility has actually changed and what legal and commercial consequences follow.
What the Standard Guidance Leaves Out
Much published guidance on construction claims concentrates on notices, contemporaneous records, substantiation, delay methodologies and compliance with contractual procedures. Wells does not dismiss these. But he argues they do not necessarily explain why a dispute developed or why it became so expensive.
What is frequently overlooked, he said, is "the commercial reality behind the contractual documentation" and "the progressive loss of commercial control." A contractor may continue performing disputed work because stopping would jeopardise the programme, damage relationships or create exposure elsewhere in the contract. The employer may continue accepting that work while avoiding a formal determination of entitlement. Months later, both parties have accumulated substantial financial exposure without resolving the underlying allocation of responsibility.
A second recurring problem is the separation of engineering decisions from their contractual and financial consequences. An instruction that appears technically reasonable may alter construction methodology, productivity, sequencing, access arrangements or the contractor's ability to perform other obligations, yet the resulting claim is often assessed as though it concerns only the direct cost of the instructed work. He called that "a serious analytical weakness."
Claims are also frequently treated as isolated contractual events when, commercially, they are interconnected. A change in access may affect sequencing; revised sequencing may alter productivity; reduced productivity may extend the programme; and prolongation may generate additional financing and overhead exposure. The challenge is establishing those relationships through credible factual and technical analysis rather than simply assembling larger claims.
He has also encountered disputes where the contractual position was reasonably clear but the parties lacked the commercial independence or management discipline to address it. By the time lawyers, delay analysts and quantum specialists become involved, the project team may already have made decisions that cannot realistically be reversed. Claims guidance, he said, rarely gives sufficient attention to that earlier failure of governance.
The Decision Made Too Quickly
Asked which early decision project teams tend to make too fast, Wells pointed to proceeding with disputed work before establishing its contractual and commercial consequences.
There are legitimate circumstances where immediate performance is necessary; major infrastructure projects cannot always wait for every contractual disagreement to be resolved. But he draws a firm line: "proceeding with the work and surrendering control of the commercial position are two entirely different matters."
He has seen project teams accept instructions, revised programmes, restricted access, accelerated working arrangements and altered construction sequences without properly establishing who has authority to direct the change, whether the instruction changes the contractual obligation, or how the resulting consequences will be measured. The usual justification is that commercial issues can be resolved later. In his experience, later is often when the evidence has deteriorated, the original resources have dispersed, the programme has changed repeatedly and the employer and contractor have developed fundamentally different accounts of what happened.
The financial consequences can extend beyond the original instruction: unrecovered direct costs, disruption, prolongation, financing costs, loss of productivity and substantial expenditure on dispute resolution. The most damaging consequence, however, is often the loss of negotiating leverage. A contractor that has completed substantial disputed work without preserving a clear contractual position may find itself negotiating recovery from a position of considerable weakness.
His advice is not to stop projects whenever a disagreement arises, but to establish a disciplined decision-making process before the consequences become irreversible: identify the contractual basis, record the instruction, assess the technical and programme implications, preserve the relevant rights, and ensure senior management understands the financial exposure being accepted.
He summarised the principle plainly: "Good commercial management is not about producing better claims after a project has gone wrong. It is about preventing ordinary project decisions from becoming extraordinary financial disputes."
Practical Takeaways
- Test the premise that the contract is silent before treating a scope change as unallocated risk.
- Reconstruct the original bargain: scope, pricing assumptions, tender qualifications, hierarchy of documents and pre-contract correspondence.
- Distinguish genuine change from development of an existing obligation, and examine both contractor and employer characterisations with equal scepticism.
- Check who instructed the work, whether the instruction was authorised, and how the parties behaved afterwards.
- Treat engineering decisions and their contractual and financial consequences as one analysis, not two.
- Map the links between access, sequencing, productivity, programme and prolongation rather than assembling isolated claims.
- When proceeding with disputed work is unavoidable, preserve the contractual position and escalate the financial exposure to senior management at the time, not later.
Through his independent commercial and construction advisory practice, Wells provides focused contractual reviews, independent project assessments, executive commercial support and assistance to legal and arbitration teams. His approach emphasises identifying financial exposure early, testing contractual positions against the actual project evidence and helping senior management make commercially defensible decisions before disputes become entrenched.
More detail on Wells's advisory work across bespoke international contracts, commercial governance, dispute avoidance and project recovery is available at johnewells.com. For background on how standard forms allocate risk, see the FIDIC suite of contracts; on the common-law and civil-law divide in interpretation, the International Institute for the Unification of Private Law (UNIDROIT) publishes comparative materials; and for general context on construction dispute resolution, the Chartered Institute of Arbitrators provides neutral guidance.