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Variations to building contracts during construction are a common source of dispute between the parties. Many times clients visit site during the course of construction and request a different material or a structural change to the building plans.

Such requests pose a dilemma for the builder because under the Home Building Contracts Act any variation must be put in writing, detailing the nature and cost of work to be performed, and signed by both parties before the variation work begins. If a wall-tiler is on site and the client requests another grout colour because it has a different appearance to what they expected or the electrician is on site and the client wants another power point, it is very difficult to expect the tradesperson to stop work immediately until all the contract variation paperwork is completed at the builder’s head office.

Many builders have suffered losses by agreeing with the client’s variation request in good faith and completing the work only to find at a later date that payment is refused because the variation form was not completed before work began as required by the Act.

That is why many builders do not allow or actively discourage variations to be made after a certain time in the building process. Alternatively a significant administration fee is charged to clients seeking “last minute” variations or changes during the construction process.

The “system-building” approach of large companies generates great efficiencies and cost savings for homebuyers. However, it does not have the flexibility to deal with late and/or frequent variations to building plans and/or specifications. Hence a hefty administration charge often applies should the client insist on late changes to contract documents.

If you have a signed variation form then the builder is liable if the work is not performed. But the more usual dispute is over payment for work performed which is agreed on a handshake without the paperwork.

The best thing to do is to plan your project extremely carefully. This will avoid the pitfalls of last minute changes to contract documents.

2 responses to “Contract Variations”

  1. Donna Rowe says:
    August 6, 2014 at 11:31 am

    I have paid my final payment for a house that should have been completed on the 30/6/14 which has only just been completed 6/8/14. No variation of contract has been signed for Electical, 12m Fire Wall building licence, excavation, Rob hangers, storm water drainage (installed be me) additonal pipework for sewerage pipe but the builder has given me a typed list of costs plus builder margin of 15% and said what are you willing to pay. I have an email from the company Fortress Home Building Construction Pty Ltd saying that the contract is fully inclusive of all costs. do I need to pay all these items if I did not know or agree to them and there has been no disclosure until now about these costs. I look forward to your response in due course.