Variations to Contract and how to deal with them

Building projects are rarely completed without some changes to the scope of works. For example, you may want to add an extra room or the building certifier might require a change to the building plans. Any change to the scope of the works (the plans and specifications) is known as a variation to contract.

Variations are unfortunately one of the most common causes of disputes between owners and builders.

The Golden Rule: Get It in Writing

The building legislation has strict rules for variations to domestic building contracts. The golden rule is that all variations and changes to the contract need to be in writing and agreed between the parties. If you and the builder verbally agree to changes or proceed without written consent, you are open to the matter dissolving into a dispute if the cost of the variation is not agreed.

The Steps a Builder Must Take

Set out below are the steps that a builder must take to administer a variation in most states of Australia. You can see from the steps involved that it can be a detailed process, but this process is in place for the protection of both parties.

The builder is required to put in writing the following details:

1. A description of the variation work to be carried out or removed;
2. The date of the request for the variation;
3. The price of the variation;
4. When there is an increase in price, when it is payable, or for a decrease, when the credit is to be accounted for;
5. The change to the contract price due to the variation; and
6. If there will be a delay because of the variation, a reasonable estimate of the delay.

A copy of the variation document must be provided to you the owner before any work the subject of the variation is started (unless the variation is required on an urgent basis to do emergency works). Builders must not start the variation works without either the owner’s signature on the variation document or written approval of the variation document. Written approval means typewritten or handwritten approval. For example, email approval is considered typewritten and is acceptable.

If You Disagree With a Variation

If you disagree with a variation then you must let the builder know. In most domestic construction contracts the builder has the right to reject an owner requested variation.

One thing to be aware of is that some of the bigger project builders will charge an administration fee for any variations that occur after commencement of works; variations to the works are in fact a lot of work for the builder and can cause delays and confusion on site.

For this reason it is important to be meticulous with your colour and material selections and be certain that the plans and specifications are the most up to date when you sign the contract. If there is any confusion as to a variation to contract then it is important to raise this with the builder immediately so as to avoid potential disputes.