What quantity variances do to the final cost

A quantity variance affects the budget twice. First, directly: more quantity times the unit price means more cost, less quantity means less cost. Second, through the price: beyond a threshold, under a VOB/B contract the unit price itself can be renegotiated. The first effect is visible in the arithmetic at once; the second stays open until one party asks for it.

For the forecast, the first effect counts most, because it follows with certainty from the quantity. The second is a risk in both directions and is flagged as such, not booked as a fixed amount.

The VOB/B sets a band within which the price remains unchanged. If the quantity executed for an item deviates by no more than 10 per cent from the estimated quantity in the contract, the contract unit price applies (s. 2(3) no. 1 VOB/B).

Where the excess is more than 10 per cent, a separate rule applies to the part beyond that. Section 2(3) no. 2 VOB/B: "For any excess over the estimated quantity beyond 10 per cent, a new price is to be agreed on request, taking account of the extra or reduced costs" (unofficial translation, as are all quotations here).

Where the shortfall is more than 10 per cent, the price for the entire quantity executed is considered. Under s. 2(3) no. 3 VOB/B, the unit price for the quantity actually executed is to be raised on request, unless the contractor is compensated by increased quantities in other items or in some other way.

Quantity deviation	Price under s. 2(3) VOB/B	Effect on the forecast
up to 10 per cent more or less	contract unit price	quantity times unit price, no price risk
more than 10 per cent above	new price on request for the part above 110 per cent	base quantity certain, extra quantity at an open price
more than 10 per cent below	unit price raised on request for the quantity executed, unless compensated	do not book the reduced cost in full

Three features of the rule matter to the client. It applies only "on request", so not automatically. It works in both directions: in the case of an excess, the extra or reduced costs can also lead to a lower price, for instance where the contractor's fixed costs are already covered by the contract quantity. And it applies per item, not to the contract as a whole: a contract can be exactly right in total and still deviate considerably in individual items.

The following example is entirely invented and serves only to show the arithmetic. An item for excavation is tendered at 1,200 m³ at a unit price of EUR 40 net, an item price of EUR 48,000. On the measurements of the first sections, the client expects 1,500 m³, that is 25 per cent more.

Part quantity	Quantity	Price	Amount
up to 110 per cent of the estimate	1,320 m³	EUR 40, contractual	EUR 52,800
beyond that	180 m³	open, working assumption EUR 40	EUR 7,200
Forecast for the item	1,500 m³		EUR 60,000

The forecast rises by EUR 12,000 compared with the contract item. The price for the 180 m³ is open. If a new price of EUR 36 were agreed, the item would stand at EUR 59,280; at EUR 44, at EUR 60,720. The range of EUR 1,440 is the price risk; the EUR 12,000 is the quantity effect, which occurs in any case.

This example is also entirely invented. An item for screed is tendered at 1,000 m² at EUR 50, an item price of EUR 50,000. Probably 800 m² will be executed, that is 20 per cent less.

The obvious calculation is 800 times 50, equals EUR 40,000, a saving of EUR 10,000. It is too optimistic. If the contractor requests an increase in the unit price for the 800 m² under s. 2(3) no. 3 VOB/B, because its fixed costs are spread over a smaller quantity, the saving shrinks. At an assumed new price of EUR 55, the item would stand at EUR 44,000 and the saving at EUR 6,000. Whether there is compensation through extra quantities in other items must be checked before the saving is allocated in the budget. The rule for the budget: treat reduced costs from shortfalls as freely available only once the item has been billed and the price is undisputed.

The quantity forecast comes from the Aufmaße (measurements) and the interim invoices, not from the site team's instinct. Under a VOB/B contract, interim payments are made under s. 16(1) no. 1 in the amount of the value of the contractual work evidenced in each case. Every interim invoice therefore provides a billed quantity per item, which can be compared with the item's degree of completion.

Column	Content
Item	reference number from the bill of quantities
Contract quantity and unit price	from the contract
Quantity billed	per the last checked interim invoice
Degree of completion	share of the item executed, as assessed by site management
Forecast quantity	quantity billed, projected to 100 per cent, or recalculated from the design
Deviation in per cent	forecast quantity against contract quantity
Flag	more than 10 per cent above or below, price open
Quantity effect	forecast quantity times unit price, minus the contract price of the item

A simple projection is a signal, not a measurement. If an item is 40 per cent complete and 60 per cent of the contract quantity has already been billed, that is a reason to recalculate the quantity from the design. The same applies if an item is half executed and hardly any quantity has been billed: either billing is behind or the estimate was too high.

Concentrating on a few items saves time. Often a few items in a bill of quantities carry a large share of the contract sum. These are projected with every interim invoice; the rest at longer intervals.

Not every changed quantity is a quantity variance within the meaning of s. 2(3) VOB/B. If the quantity changes because of a change to the building design or another order by the client, s. 2(5) VOB/B applies, with a new price taking account of the extra or reduced costs, to be agreed before execution where possible. That is a Nachtrag (variation) and belongs in the variation register.

The allocation is also a question of responsibility. A pure quantity variance usually shows that the estimated quantity in the bill of quantities was inaccurate. A change shows that the client or its designer wanted something different. Both increase costs, but they have different causes and teach different lessons for the next project. On the dashboard they sit on separate lines, so that the same extra quantity does not appear twice.

The 10 per cent rule is a rule of the VOB/B, not of statute. Under a construction contract governed by the Bürgerliches Gesetzbuch (BGB, the Civil Code) without incorporation of the VOB/B, how quantity variances are handled depends on what the contract provides. A unit price contract is billed on quantities executed there too; any adjustment of the unit price for large deviations then follows not from s. 2(3) VOB/B but at most from the contract itself or from general rules, whose application must be examined in the individual case.

Under a Pauschalvertrag (lump sum contract), the question shifts. Awarding on a lump sum basis in principle transfers the quantity risk for the work described to the contractor, but only as far as the specification extends. Which contract type leaves which quantity risk with the client is covered in the article on unit price, lump sum or general contractor.

Four habits keep the quantity effect visible in the forecast. First, project the large items with every interim invoice. Second, flag items above the 10 per cent threshold and carry the price question as a risk, not as an amount. Third, release reduced costs from shortfalls only after billing. Fourth, consistently move quantities that stem from change orders into the variation register.

And one habit before signing: have the estimated quantities in the bill of quantities checked before tendering. Every inaccuracy there later becomes a quantity variance, and the client's levers during construction are smaller than before it.