So you've decided to build your dream home with one of the big project builders. Congratulations! Building a new house should be an exciting time. But have you thought about what happens if you want to make changes to the plans after you've signed the building contract?
Residential building contracts allow for variations, which are modifications or additions to the original scope of the works. Before you sign on the dotted line, you need to understand how variations work and how to make sure any changes you want are done properly. Otherwise, you could end up in a dispute with your builder and variations can become a nightmare. This guide will walk you through the different types of variations, how they should be administered, and what you must do to keep your building project on track. By the end, you'll feel empowered to get the home you really want.
What Are Variations in Residential Building Contracts?
So what exactly are variations in building contracts? Basically, they refer to any changes made to the original plans or specifications of a residential construction project. As a homeowner, it's important to understand variations because they can impact the final cost and timeline of your build.
- Design changes: The most common variations are alterations you request to the home's initial design, like moving interior walls, adding extra windows, or upgrading finishes. These changes must be approved in writing before the builder implements them.
- Unforeseen issues: Sometimes unanticipated problems arise during construction that require variations, such as regulatory changes or circumstances different to prevailing information at the time of contract preparation (the presence of ground water that was not evident in geotechnical engineering reports). These unforeseen variations may incur additional costs.
- Upgrades/downgrades: You may decide to upgrade or downgrade features, such as premium appliances, luxury tiling, or timber floors. Upgrades are considered variations and the additional costs should be outlined in the variation claim. Downgrades are also considered variations and an administration fee is charged and deducted from and cost savings attributed to the downgrade (often resulting in a charge and not a credit).
For any variations, it's critical to have all changes thoroughly documented in a variation claim, including detailed scope of works, timeline changes, and cost impacts. Both you and the builder must approve the variation claim in writing before the work commences. This helps avoid confusion and ensures you understand exactly what you're paying for. The QMBA residential contract (periodic payments) has a process defining variations must be agreed to within 5 days of written receipt or the matter is then subject to clause 28 - a dispute resolution process.
The key is to anticipate and plan for possible variations from the beginning of your project. Work closely with your builder to identify reasonably foreseeable variations early on, so you can make informed decisions and stay within budget. While some variations are unavoidable, being proactive and staying on top of the process will give you greater control and peace of mind during construction.
Types of Variations: Client Requests vs. Unforeseen Changes
Types of Variations: Client Requests vs. Unforeseen Changes
As a homeowner, there are two main types of variations you need to be aware of: those requested by you, the client, and unforeseen changes outside of anyone's control.
Client-requested variations are changes you want to make to the original building contract. Maybe you want to upgrade fixtures or add an extra room. To make these changes legally, you'll need to submit a written variation request to your builder detailing the specific changes. They will then provide a quotation for the additional costs involved. Once agreed upon, the changes are documented in a variation agreement, which then becomes part of your building contract.
Unforeseen changes refer to issues that arise during construction that couldn't reasonably have been anticipated - by a competent person. For example, discovering structural damage or asbestos that needs re-mediation. Your builder is obligated to inform you of any unforeseen changes as soon as they become aware of them. They will provide a variation agreement outlining the additional work required and costs. You should carefully review the details to ensure the changes are genuinely unforeseen and the costs reasonable before approving the variation.
It's important to understand the variation process to avoid nasty surprises, reduce conflict, and ensure your final home meets your needs and budget. By communicating openly with your builder and properly documenting all changes, you'll navigate the variation maze and end up with a place you're happy to call home.
The Variation Process Step-by-Step
Once you’ve agreed to a variation with your builder, there are a few steps required to properly document and implement the changes. Following the proper process will ensure your variation is legally binding and the work is done according to your specifications.
Submit a variation request
First, submit a written request to your builder proposing the specific changes you want to make to the building plans or construction. Be as detailed as possible in describing the work, materials, and any specifications. Your builder will review the request and provide either approval, denial, or a revised variation for your approval.
Sign the variation
If approved, you and your builder will both sign the final variation document. This legally binds the variation into your building contract and ensures the work will be completed as agreed. Make sure to read through the document carefully before signing.
Pay any fees
There may be administrative fees required for processing and documenting a variation. The builder can charge for the time spent reviewing requests, creating revised plans, and handling the paperwork. These fees are often specified in your building contract.
Revise plans
For major variations that affect the building plans, the plans will need to be updated to properly reflect the changes. The builder’s draftsperson will revise the plans, which you should review and approve before construction of the variation begins.
Schedule & complete the work
Finally, the variation work can be scheduled and completed by the builder’s contractors and tradespeople. The builder will coordinate all work to ensure it’s done according to the revised plans and variation documentation. It’s a good idea for you to inspect the work at completion to make sure it’s satisfactory before making your final progress payment.
Following these steps carefully for each variation will help give you peace of mind in knowing your changes are properly approved and documented according to your state’s building laws. Be actively involved in the process and don’t hesitate to ask your builder any questions you may have along the way.
Protecting Your Interests: Tips for Homeowners
When building a new home, you want to make sure your interests are protected during the process. Here are some tips for homeowners:
Get everything in writing
Any changes to the building plans should be documented in a written variation agreement or notice of proposed variation before work commences. Verbal discussions or instructions are not legally binding. Make sure all correspondence refers to your building contract number for reference.
Understand the variation process
Familiarise yourself with the specific procedures for variations outlined in your building contract. Typically, a variation must be requested in writing by either you or the builder, specifications and a cost estimate should be provided, and written approval must be obtained from both parties before the work can begin. Know your rights and don’t feel pressured into approving a variation before you’re ready.
Check the cost and timeline impact
When considering a variation, ask about how it may impact the final contract price and completion date. Get a detailed cost breakdown in writing for any additional work. Make sure any delays that result from the variation do not extend beyond the final completion date in your contract.
Reasonably foreseeable
Variations should only be approved for work that was not reasonably foreseeable at the time the contract was signed. If additional work arises from an error or omission in the building plans, the builder should be responsible for the cost. You should not have to pay for variations due to the builder’s mistakes or lack of planning.
Check out this article as well where we delve into what reasonably foreseeable means in terms of contract costing READ IT HERE
You can say no
As the homeowner, you have the right to refuse any requested variations. Don’t feel obligated to approve variations for the builder’s convenience or to cut costs. Only approve changes that you consider necessary or beneficial. If needed, seek legal advice regarding your options.
Protecting your interests during the building process will help ensure you end up with the home you want, on time and on budget. Stay informed, get everything in writing, and don’t be afraid to ask questions every step of the way.
FAQs on Variations: Your Top Questions Answered
So you’re building a new home and variations have come up. Don’t worry, you’re not alone! Variations are common in residential construction, but for first-time home-builders, they can bring up a lot of questions. Here are some of the most frequently asked questions about variations answered:
What exactly is a variation?
A variation is any change to the original building plans or specifications in your contract. This could be upgrading flooring, modifying the facade, adding an extra room, etc. Variations allow you to customise your home during construction.
Do I have to pay for variations?
Yes, variations typically incur additional costs. The builder will provide a variation price based on the specific changes. It’s best to get variation prices in writing before approving the work. Some variations may be at no cost if they don’t impact the builder’s costs or workload.
How are variations administered?
Variations should be formally requested in writing, either via email or a variation form provided by your builder. The request should detail the specific changes you want to make. The builder will then review your request, determine any impacts, and provide a final variation price for you to approve before the work commences.
What if there are delays from variations?
Variations can sometimes impact the construction schedule. It’s best to submit variation requests as early as possible to minimise delays. If delays do occur, the builder may charge additional fees. Check your contract for details on delays and extensions of time.
Do I need permits for variations?
Some variations may require additional council permits or approvals, especially if they affect the structure of the building. It is the homeowner’s responsibility to ensure all necessary permits are obtained. Your builder can advise if permits are needed for your requested variations.
Following the proper procedures for variations will help ensure your customisations are implemented smoothly. Don’t hesitate to ask your builder any other questions you may have about variations for your new home build.
Conclusion
You now have a good overview of the ins and outs of variation agreements. While the process can seem complicated, the key is making sure you understand your rights and responsibilities. Do your homework, ask questions, and get advice if needed. Protect yourself by keeping records of all changes and ensuring proper approval is obtained. Know that reasonably foreseeable means changes that could have been anticipated based on the original plans and specs. Don't feel pressured into variations you're not comfortable with. But also don't be afraid to make changes that will turn your house into your dream home. If you go in with your eyes open and stand up for yourself, the variation process doesn't have to be a nightmare. So take a deep breath and enjoy this part of the building experience. The results will be well worth it!
Further Reading
Anthony Painter
