Changes to the original scope of works in a residential building project are common. Whether they are initiated by owner’s preferences, unforeseen site conditions, or regulatory requirements, the variations are a standard part of the home building process. However, managing these variations correctly is critical for avoiding disputes and ensuring that the legal and financial interests of both parties are protected.

This article explores the types of variations, how they are processed, and the key legal and contractual considerations every homeowner and builder should understand.

What Are Variations?

A variation is a change to the scope of works originally agreed upon in a building contract. Variations can either add to, reduce, or otherwise alter the contracted work, and may be requested by either the homeowner or the builder. Variations will generally directly result in the change of duration of the project, the completion date and the original contract price. 

Types of Variations

  1. Optional Variations by Owners

These are usually changes made by choice of the homeowner which reflect aesthetic or design preferences. Common examples include the upgrading of kitchen benchtops from laminate to marble, replacing tiled floors with hardwood, or adding skylights or custom cabinetry. Such variations are entirely discretionary and are typically initiated by the owner during the course of construction.

  1. Mandatory Variations

These variations are required due to circumstances that arise during the project, key variations may occur such as:

  • latent site conditions, such as unexpected rock or soil issues;
  • regulatory requirements imposed by local authorities;
  • incomplete or inaccurate design specifications; or
  • corrections needed to ensure the work is completed properly and safely.

These are not optional and often mandatory. The mandatory variations may be initiated by either party when the concerned circumstance became apparent to either party. Importantly, the builder is generally not liable for costs where variations are required due to design errors or omissions because the builder is contracted to perform construction works based upon a complete design. 

Written Requirements 

For a variation to be enforceable, it must typically be:

  • in writing;
  • signed by both the homeowner and builder; and
  • specifying the scope of work, any changes to price, and the expected impact on timeframes.

Failure to record a variation properly can render it unenforceable and expose both parties to future disputes.

Who Can Initiate Variations?

Owner-Initiated Variations

Homeowners can request variations at any stage of the build. However, they must:

  • follow the contractual requirements and procedures;
  • be prepared to cover the additional costs; and
  • understand that variations can impact timelines and final project costs.
Builder-Initiated Variations

Builders may also request variations due to site conditions, regulatory issues, or unforeseen circumstances. However, builders cannot increase the contract price if the variation is required due to their own negligence or fault. 

Emergency Exception

If a variation is required to prevent imminent danger to persons or property, the usual written requirements may be waived temporarily. Builders can take immediate action but must properly document and communicate such emergent variations as soon as practicable.

Key Legal and Practical Considerations

  1. Legal Validity

Improperly documented variations can be unenforceable. Always ensure variations are signed and contain all necessary details before any work begins.

  1. Cost and Time Management

Variations often increase project costs and can extend timelines. Homeowners should carefully consider the financial and scheduling implications before approving a change.

  1. Design Deficiencies

Some variations arise from flaws or omissions in the design, not from the builder’s conduct. In such cases, the builder is generally not responsible for the associated costs, especially if the contract is based on owner-supplied plans or an independent architect’s drawings.

  1. Builder Protections

Builders may seek confirmation of the owner’s ability to pay for requested variations, especially where high-value or multiple changes are proposed. This is a reasonable contractual safeguard.

 

Variations are a normal part of most construction projects, but they require careful handling to avoid legal and financial pitfalls. Ensuring variations are properly documented, costed, and agreed upon by both parties is crucial to keeping a project on track and preserving your legal rights.

Feel free to contact Damin Murdock at Leo Lawyers via our website, on (02) 8201 0051 or at office@leolawyers.com.au. Further, if you liked this article, please subscribe to our social media accounts.

DISCLAIMER: This is not legal advice and is general information only. You should not rely upon the information contained in this article and if you require specific legal advice, please contact us.