Mass Black Judge

Why is it that we can plan a build down to the very last brass screw, yet within the first week, someone is already asking for a change? That is the barefaced question that keeps most project managers awake at night. You have a signed contract. You have a fixed price. You have a deadline. And then, reality hits.

Here is the controversial truth: A “fixed-price” construction contract is almost never actually fixed. In the world of building and development, the original contract is merely a starting point. Variations are not just common; they are an inevitable, built-in part of the process. If you go into a project thinking nothing will change, you are setting yourself up for a massive financial headache. Knowing how to handle these shifts is the difference between a successful build and a legal disaster.

I have spent years in the trenches of construction law and project management. I have seen handshakes turn into lawsuits over the price of floor tiles. It is a messy business. Let us look at how you can protect your rights when the blueprints start to shift.

What actually counts as a variation

In simple terms, a variation is any change to the original scope of work. This could be an addition, an omission, or a substitution. It might be something the owner wants, like moving a wall six inches to the left, or something the site demands, such as discovering rock where there should have been sand.

It is vital to understand that a variation is essentially a mini-contract within your main contract. It requires an offer, an acceptance, and a clear understanding of the price and time implications. If it is not in the original scope, it is a variation. Period. Most people get into trouble because they assume “small” changes are just part of the service. They are not. Every change has a cost. It is a fundamental truth of the industry.

The trap of the verbal instruction

This is where the most common, frequent mistakes happen. You are on-site, the sun is shining, and the builder says, “Hey, we can upgrade this cladding for an extra grand.” You say, “Sure, looks good.”

Stop. Right there.

Most contracts have a strict “no verbal variations” clause. This means that if the change is not put in writing and signed by both parties, the builder might not be entitled to get paid, or the owner might be stuck with a bill they never formally approved. It is a legal minefield. Even if you have a great relationship with your contractor, you must put it in writing. An email is better than a text, and a formal Variation Order is better than an email.

The interrupted thought: What about the timeline

I should mention that variations do not just cost money. They cost time. Whenever you change the scope, you have to ask… wait, I should check the specific delay damages clause… actually, most people forget to update the “date for practical completion” when they sign a variation. If you add three weeks of work but do not change the deadline, you are effectively asking the builder to work for free under the threat of liquidated damages. This is a recipe for a fight.

When the site throws a curveball

Sometimes variations are not a choice. These are often called “latent conditions.” This is when you dig a hole and find an old petrol tank, or you pull off a wall and find termite damage that was not visible during the inspection.

As an owner, you might feel like the builder should have known. As a builder, you feel like it is an unfair risk. The contract will usually dictate who bears the cost of these surprises. Generally, if a “competent contractor” could not have reasonably foreseen the condition, it becomes a variation that the owner has to pay for. It is a hard pill to swallow, but it is better than the project grinding to a halt. Gosh, I have seen latent conditions eat entire contingency budgets in forty eight hours!

Calculating the real cost of change

How do you price a variation? Most contracts provide a hierarchy for this. First, you look at the rates already in the contract. If you are adding more of the same bricks, use the brick rate. If it is a completely new type of work, the builder usually provides a quote based on “pro rata” costs plus a percentage for overhead and profit.

Owners should always ask for a breakdown of labor and materials. Do not just accept a lump sum. Builders should ensure they include “preliminary” costs, like extra scaffolding or site supervision time. If you do not account for the ripple effect of a change, you will lose money. It is a common, redundant error to forget the hidden costs of administration and re-ordering.

The tangential aside: The designer’s ego

I once worked on a residential build where the architect insisted on changing the window frames three times because the “light wasn’t hitting the floor correctly” at 4:00 PM. Each change cost the owner five thousand dollars in restocking fees. It had nothing to do with structure and everything to do with aesthetics. My advice? Make your final design decisions before the first shovel hits the dirt. Your wallet will thank you. It is truly a lesson in discipline.

Finalising the variation order

A valid variation order should include three things: a detailed description of the work, the total cost (inclusive of GST), and the number of days it will add to the schedule. Both parties must sign it before the work begins.

If you are a builder, do not do the work without a signature. You are effectively working as a volunteer if you do. If you are an owner, do not let work proceed until you know the price. The “we will work it out at the end” approach is how people end up in the Supreme Court. It is a dangerous way to live.

Moving forward with clarity

Contract variations in construction do not have to be a nightmare. They are a tool for flexibility. If you treat them with the same level of formality as the original contract, you will avoid 90% of the disputes that plague this industry.

Stay documented, stay professional, and never assume that a handshake is enough to move a wall. It is a complex, delicate dance between what we want and what is possible. Keep your eyes on the paperwork, and the build will follow.

Handwritten note: Always keep a separate folder for signed variations so they don’t get lost in the sea of general site emails!