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construction contracts are made between two parties the principal and the contractor at its most basic form the contractor is agreeing to build something and the principal is agreeing to pay them for it when using fixed fee lump sum contracts the contractor will only get paid a fixed costs regardless of how much it actually costs them and must complete the works in a set period of time the contractor will estimate this fixed fee and duration while responding to the tender based on the information provided by the principal this will be done competitively against other potential contractors the principal and contractor will then sign a contract agreeing on this therefore if during project delivery the circumstances and conditions change upon which this fixed fee was estimated it is only fair that this fixed fee and schedule be adjusted thats what a variation is an adjustment to the contract value and completion date due to a change in circumstances
