Variations – How to handle variations
Australian Owner Builders Factsheet 41 AOBFS41
Australian Owner Builders have always highlighted the importance of documenting agreements during construction. The same rules apply to variations to building contracts and sub contracts as to the negotiation of the original contract.
Variations usually fall into 3 categories:
- those requested by you as the owner
- those requested by the contractor
- those which become necessary through circumstances arising from the job and which may not necessarily be requested by either the contractor or the owner
Variations requested by you as the owner builder are the most straightforward. If you ask for deletion from the works and the contractor agrees then presumably there should be an appropriate credit. If you ask for additional work then there will be an additional charge. In either case you should request either a credit note where you wish to delete some of the work, or a quotation for any additional work.
Depending upon the type of work being carried out and how extensive it is, you might also ask the contractor to advise what the change in timeframe of the works. By adding additional work you may lengthen the building process and impact on other trades.
Preferably a change to the works should not be carried out until the variation is documented and signed off by you and the contractor. Leaving the documentation to the end of the job or some months later can cause problems either because of misunderstandings, or as memories of what actually occurred fade, and/or paperwork relevant to costs etc gets lost or confused.
Variations can occur through the fault of neither party, such as additional concrete required for foundations. The building surveyor, when carrying out the footings inspection, might require additional excavation and depth in footings to reach bedrock or suitable founding material, resulting in additional concrete.
In a small job it is left to the parties to document whatever is agreed and it is this kind of situation which is difficult for the contractor who may be under time constraints to get the job done or the owner builder may not wish to hold the process up, but unless the cost implications are made clear and documented immediately, there may be a dispute later on.
Owner builders should also be aware that some contractors do not receive invoices for materials until sometime later and therefore may not know the exact quantity of concrete and its cost until later and may only be in a position to give an estimate.
Sometimes unquantifiable variations will be inevitable and if it is up to the owner builder to make sure that if the cost is likely to be too great or too serious then the work is stopped and all avenues explored before additional cost is incurred.
Disputes over variations are more likely to occur where there are complicated components of the work. In all of these situations extra components or additional works might be required either to have the necessary materials or put them together properly.
Owner builders are advised to allow within their budget a margin for variations. Single trade contracts ought to be more straight forward, such as painting, tiling etc. The key to these contracts is to make sure that the contractor or tradesman is provided with all of the relevant documentation to ensure their initial quotation is accurate and based on the correct documentation.
Almost all owner builder projects have some variations. Planning is the key to avoid variations and when they occur document them in terms of cost, time and detail, making sure that both parties sign off before all works are recommenced. Almost all owner builder projects have some variations.
Planning is the key to avoid variations…