Limitations to the engineer’s powers under ICE conditions

Under the ICE conditions the engineer can only instruct a variation of the works which is ‘in his opinion necessary for the completion of the works’, or ‘desirable for the completion and/or improved functioning of the works’.
Thus the engineer cannot order matters which are, for instance, extraneous to The employer and his engineer 91

1Although he has no duty to act impartially, he will in practice do so, to avoid a dispute arising which the contractor takes to adjudication or arbitration.

the works or which add entirely new items; these are matters the engineer must refer to the employer who will need to negotiate with the contractor his agreement to undertake the addition (see Section 17.3).
Although the engineer is given a wide range of powers, he should not use them without reference to the parties to the contract, either of whom may wish to state his view on matters the engineer has to decide. The FIDIC conditions, for instance (see Section 4.3), specifically call for such consultation by the engineer as part of the procedure he must adopt before arriving at his decision.
However, if the employer wishes to restrict the engineer’s powers which would otherwise be exercisable under the contract, the employer must state in the tender documents the specific powers which the employer reserves for himself. Both the ICE conditions Clause 2(1)(b), and the FIDIC 4th edition conditions require this. But it is unwise for the employer to reserve too many powers for himself, because this could affect the basis of contract and reduce the benefit of having an independent engineer. Tenderers might then take a different attitude towards the contract, since a tenderer may only offer his lowest price if he is confident that an independent engineer will administer the contract. Employers should also be aware that prior approving of matters such as extension of time or claims may restrict their ability to dispute them later.
However an employer may sometimes wish to ensure that he is involved in decisions likely to cause additional expenditure above some given limit, or which alter significantly some aspect of the works. In practice, such restrictions  are unlikely to detract from the engineer’s independent position because the engineer should keep the employer advised of such matters and endeavour to agree with him what should be done. Most extra costs arise from having to deal with unforeseen conditions which must necessarily be dealt with, or from alterations required by the employer himself.
A different situation can arise if it becomes evident that the estimated final cost of the contract is approaching or likely to exceed the contract sum. In that case the engineer must forewarn the employer in good time, because an employer such as a government or local government authority, may have no authority to spend more than the contract sum, or may need to go through
a lengthy procedure to obtain sanction for any excess expenditure. In these
circumstances the employer may need to step in and negotiate with the contractor
a change to the works required, or perhaps deferment of construction
of part of the works to some later date.