Variations: what they are and how to avoid them

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Variations 

Changing your plans after the contract is signed can easily cost you an arm and a leg.

You may have heard people discussing ‘variations’ when they talk about building and renovating (probably while swearing under their breath). If you haven’t, it might be a good thing that you’re reading this article.

Variations can easily be the cause of a lot of unbudgeted expense and regret for the uninitiated, and they’re often completely avoidable if you know what you’re doing.

 

What are ‘variations’?

The term ‘variations’ refers to changes to what’s been agreed upon in signed building or design contracts – or any contracts, for that matter.

Let’s say, for example, that you’ve settled in a hurry on a certain style of tiles for your bathroom, and that the style you’ve chosen has been written into your building contract. At some point during the project, your significant other finds out that you’ve chosen the most hideous tiles in the catalogue, has a meltdown and insists that the bathroom can’t possibly be built using these awful tiles.

If you choose to tell the builder you need to change to a different style of tiles, you’ll normally be liable for a variation to the original contract – and the builder can rightly charge you a lot more for it… especially if they’ve already bought the original tiles.

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Why are building variations expensive?

There are several reasons that variations to contracted work cost so much. The first is that a building contract is a legal document – and to get it changed may require the services of a lawyer.

Other things that can contribute to costs in variations are:

  • Cost differences between specified work / products and updated requirements
  • Pre-agreed penalty clauses for variations
  • Extra material costs (especially if materials have already been bought)
  • Added labour or work costs - particularly if work has already started, if variations require alterations to completed work or plans, or if there’s a need to call back tradespeople to the site
  • Added engineering, drafting or approval expenses – especially for revisions to structural work, which can easily cost three or four times more than just materials and labour

A bit of variation wiggle room’s usually necessary on a project as big as building a house, but if there is a scope of allowed variations, it’ll also need to have its limits and conditions. To be clear, builders often need to request variations too, where original plans mightn’t turn out to be the best, most practical or most sensible option.

 

How to properly manage variations

If you want to request variations to what’s in your contract, your builder will usually provide a quote for the cost of the variations. It’s then a matter of:

  1. agreeing to changes and costs (in writing),
  2. negotiating a different solution or
  3. biting the bullet and continuing with the original plans.

Insist that prices and all the details of variations required are put in writing and signed off by both parties before work is done.

There’s a difference between being friends with your builder, and having a good professional relationship. Many bitter disputes begin with the assumption that everyone’s chummy enough to put the paperwork aside till later. It’s in everyone’s best interests to ensure that there’s absolute clarity and a well-managed paper trail when it comes to anything to do with contracted work and payments.

Depending on what’s being requested, you’ll need to remember that variations can have a very significant impact on deadlines and completion dates too.

 

Why do people need to request variations?

When it comes to homeowners, the need for variations is usually the result of miscommunication, misunderstanding or rushing in without being thorough enough with contracts.

Disputes often arise over what’s been agreed upon, and whether or not what’s being asked actually constitutes a ‘variation’, or a fair interpretation of what’s stated on the contract.

Lack of clarity or detail in contracts and briefings is a very familiar culprit when it comes to variations and disputes – particularly when people realise that they’ve accidentally settled on very basic items, or a set ‘prime cost’ (PC) budget for the builder to purchase unspecified products.

A good example of the PC trap: people very often realise halfway through their building or renovation project that the $100 allocated for bathroom taps will only be enough for the most basic options, when they’d far prefer the $400 chrome options. You can never be too detailed in planning…

The more common variations people request include:

  • variations in design
  • variations in quantities
  • variations in models and styles of products
  • variations in quality
  • variations in the order in which things are constructed

And as we’ve already mentioned, sometimes it’s the builder who needs to request variations, perhaps because there’s an issue with the original plans, or an unforeseen issue with the site. Make sure your contract’s very clear about the need for the builder to submit detailed requests for variations in writing, along with any changes to proposed costs.

 

How to avoid variations

The best way to avoid expensive variations is to be well prepared. Be very thorough, careful and involved when it comes to planning – and never sign a contract until you’re certain it’s absolutely specific about everything you want.

This means making sure your contract includes things like:

  • brand and model names for things like toilets, taps, power points, door handles, locks, rangehoods, light bulbs etc.
  • specific detail on the number of coats of paint to be used, texturing / application preferences etc.
  • specific colours, shades and products to be used

It’s also worth ensuring that your contract is very clear about any work that’s going to be done by other contractors, about local building regulations or restrictions, and about the need to consult you, or your building designer or architect (if they’re acting as contract administrator) on any product choices or deviations from what’s been specified.

If you have engaged a building designer or architect and they’re not going to work with you through the project, it’s probably a good idea to get them to look over your contract and make sure everything’s properly detailed and provisioned for anyway, if you can.

 

Is it true that variations are used by builders to trick unwary customers?

Builders rely on word of mouth for business, and it’s in most builders’ interests to avoid disputes and make sure their customers are happy. It’s also true that for most builders, variations are a potential source of trouble so if they’re diligent they’ll normally do their best to make sure there’s no misunderstanding on your part.

There are instances where cowboy builders prey on less informed customers though, by low-balling quotes and then pushing up their margins by charging mercilessly for the variations you’ll inevitably have to request.

The best way to avoid this is to be very thorough about what you want, research and choose a builder you know you can trust, and always be suspicious of unusually low prices.

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