Sometimes when you are doing a job as a tradie, the scope of the work can change, so knowing how to manage changes can help you save time and money. Learn about what a variation to a contract is and what you should do to help prevent disputes between you and your client.
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Contracts are an important part of any building project. But what happens when the work changes from what’s in the contract?
When working on a building project, it’s natural for things to change over time for one reason or another.
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In this video, we’ll cover what a variation to an original contract is, and how to manage it.
First, let’s define what variation is.
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Variation refers to any proposed change to the original job.
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Changes can mean you might end up doing work that wasn’t initially planned for – meaning you put in more time and effort without getting more money for your extra mahi (work).
Because of this, it’s important to understand variations and have a plan in place for if they happen.
Here are some common examples of variations.
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Changes to the terms agreed in the contract, like when the work will be completed or when payments are due,
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Changes to the level of quality and finish for the agreed project price,
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Changes to the size or complexity of the job, or the products to be used,
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And unforeseen circumstances that lead to additional work or delays.
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So, how might you prepare for this? Well, first, if you’re working in construction, it’s a legal requirement to have a contract if the building work is valued over $30,000.
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Even if your work is under 30 grand, it’s a good idea to have one, in case any issues arise.
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Inside your building contract, there should be a section on how variations are to be dealt with. This includes how you or your client will propose the changes,
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and how they’ll be agreed on before the contract is updated.
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Even if you don’t have a contract for work over $30,000 or it’s incomplete, the law provides default contract terms, including for variations.
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To learn more about building contracts, watch our ‘How to prepare a quote’ video in this micro-course.
What’s important when it comes to contract variations is having an ongoing awareness of what’s happening on a project, including changes that stray from what was originally planned.
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You can help your client by documenting as much information as possible at the beginning and during the building process,
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and checking in with them regularly.
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If you do require a variation to be made, the first step is to make clear your proposed changes to your client.
Most variation clauses require the variation to be recorded in writing.
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This can be done in a short email, explaining that variation to your contract is needed.
Here are four steps to make a variation to a contract:
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Clearly state the specific terms of the contract that are being changed and what the new terms will be.
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Consider any changes required to other parts of the contract as a result. This may include changing the amount charged if more work is required.
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Be specific on when the variation will come into effect.
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And finally, confirm that nothing else in the contract is being amended, other than your proposed changes.
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Having clear and fair terms around variations in your contract will save you time and help prevent disputes, also helping you to look after your clients and contractors, to ensure everyone is on the same page during a project.
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Head back to the e-learning series to find more tips for tradies to help you in business.