OCBA - Contract variations

Contract variations

The terms of your contract will set out whether you and/or the builder are entitled to vary the contract. In many contracts the builder can insist on a variation depending on what work is required. In other contracts the owner may not be entitled to a variation.

Variations are changes initiated by you or the builder and agreed to by both parties throughout the project. The changes can affect the price and extend the time of the contract, but they may be inevitable, for example, in circumstances where you find unexpected requirements of the site.

Even fixed price contracts can result in price increases if you or your builder suggest changes once building work has begun.

All variations should be signed by both you and the builder (unless your contract with the builder allows some variations without your consent) and should be attached to your original contract before you instruct the builder to make them. This makes the changes legal and enables you to refer to the contract if a dispute arises about costs, details of building and finishes or
time delays.

Owner's variation
It is common for the owner to want to make variations during the building process. Be mindful of your variations and how they will affect your final payment. Have you allowed sufficient funds in your budget for the variations that either you or your builder have suggested? Ensure that your loan can be increased to cover any changes. Keep in mind that variations made by you will extend the time of the project.

Builder's variation
Whether a builder is entitled to request or make a variation will depend upon the terms of the contract. Make sure you understand your contract and whether you or the builder can ask for a variation.

Start and finish dates
It is preferable to have an actual start and finish date included in your domestic building work contract. If the builder is unable to nominate an exact starting date because, say, a building permit has been delayed, the contract should state how that date is to be determined. The builder must also do everything reasonable to ensure that the work will start as soon as possible and should be carried out with due diligence.

If the starting date is not known, the number of days required to finish the work must be stated in the contract. To ensure accuracy, a builder should allow for bad weather, weekends, public holidays and any other reasonable hold-ups within the time estimated.

Completion
Be aware that your builder is not entitled to a rise and fall clause in regard to any part of the building work performed after the end of the period stipulated for completion of the building work unless:

the contract provides for extension of the stipulated period

the delay in completing the building work was the fault of the building owner or due to some cause beyond the control of the contractor that the contractor could not reasonably be expected to have foreseen at the time the contract was made

the contractor, as soon as reasonably practicable after becoming aware of the likelihood of delay in the completion of the building work, gave notice in writing to the building owner or an agent authorised to act on behalf of the building owner extending the period for completion and specifying the cause of the delay, and

the building work was completed as soon as reasonably practicable in the circumstances.

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