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Posted 24 February 2014
Category: Contracts
Often, during the course of construction work, circumstances arise which call for a change to the design, the scope of work, or the materials which the parties to the construction contract originally agreed to.
Commonly variations arise on account of unforeseen circumstances or requirements by third parties, in particular the relevant consent authorities. Otherwise, variations also arise when contract drawings are incorrect or incomplete, materials become difficult to obtain, and the owners request design changes.
Most construction contracts contain a clause (“a variations clause”) which sets out the process which the parties must undertake in order to make such changes to the contract. Where the contract provides for such a process the parties must follow that process.
Additionally, in the case of residential construction work, the Home Building Act 1989 (“Act”) imposes certain requirements on the way variations to a contract are to be implemented. The Act requires variations be in writing and must be signed by each of the parties to the contract.
The variations clause in most contracts provides that, in addition to the variation being in writing and being signed by all of the parties, prior to undertaking the variation work the builder must provide the owner with:
In my experience, inadequate accounting of variations often leads to dispute between the parties at, or close to, the completion date. Typically, such disputes arise from insufficient detail of the work varied and the omission of some part of the cost attributable to the variation. Variations on top of variations also create significant confusion if a process of managing variations is not adopted from the commencement of the work and maintained until practical completion.
Some further points to consider when a variation is required are provided below:
Points on how to complete a variation form:
***The information contained in this article is general information only and not legal advice. The currency, accuracy and completeness of this article (and its contents) should be checked by obtaining independent legal advice before you take any action or otherwise rely upon its contents in any way.