Variation Request

What Is a Variation Request?

A Variation Request is a formal document used to change the scope of work in an existing contract. In the Australian building and construction industry, it is often called a "Variation Deed" or simply a "Variation." It acts as a legal agreement between a builder or contractor and a client to alter the original plans.

Under Australian common law, an original contract can only be changed if both parties agree to the new terms and provide "consideration." Consideration usually means the client agrees to pay more money for the extra work, or the builder agrees to a credit for work they no longer need to do.

In the trades, this document is a critical risk management tool. Research shows that failing to document variations properly is a leading cause of insolvency in the Australian construction sector. This often happens when businesses carry out "extra" work without getting it signed off, leading to unpaid invoices and disputes.

For residential builders, this document is not just good practice. In states like New South Wales and Victoria, the law requires variations to be in writing. Without a signed record, you may have no legal right to claim payment for the additional time and materials you used.

When to Use This Document

You should use a Variation Request whenever the work you are doing differs from what was described in the original Construction Contract. This applies to both additions and deletions to the scope of work.

Common scenarios include:

• Design Changes: The client decides they want a different type of tile, a larger window, or an extra room added to the deck.
• Unforeseen Circumstances: You start digging and find rock where soil was expected, or you discover termite damage that needs repair before you can proceed.
• Substitutions: The specific item ordered (a tap or a bath) is out of stock, and you need to supply a similar item at a different price.
• Omissions: The client decides they no longer want the landscaping included in the original quote.

In Australia, industry practice differs between residential and commercial jobs. For residential trades, practitioners sometimes use informal email confirmations. However, bodies like Master Builders Australia (MBA) and the Housing Industry Association (HIA) strongly advise against this. Verbal agreements and basic emails are notoriously difficult to enforce.

If you are working on commercial construction, strict adherence to formal protocols is required. Contracts like AS 4000 or AS 2124 usually demand that a variation be approved by the Superintendent or Project Manager before work commences to ensure you get paid.

Key Sections and Required Elements

To ensure your Variation Request is legally enforceable and compliant with Australian regulations, you must include specific details. Vague descriptions are a major source of liability.

Project and Parties Identification

You must link the variation unequivocally to the original signed contract. This section prevents confusion if the client has multiple projects running. Include the original contract date, the original contract number, the client name, the builder or business name, and the site address.

Scope of Variation

You need to define exactly what "extra work" is being done. This section should detail the new work and, if applicable, describe any work being omitted (deductions). Avoid vague terms like "extra plumbing." Instead, write specific descriptions such as "Install 10 meters of 100mm PVC stormwater piping to the rear boundary."

Financial Impact (Valuation)

This section establishes the "consideration" required by contract law. You must list the cost of the additional work in dollars. It is also crucial to list the cost of any omitted work so you can calculate the net adjustment.

You also need to address adjustments to Prime Cost (PC) items or Provisional Sums. Finally, you must clearly state if the price is inclusive or exclusive of GST. The Australian Taxation Office (ATO) requires clarity on tax components to avoid disputes later.

Time Impact

Changing the scope of work almost always affects the schedule. You must manage expectations regarding the project completion date to prevent claims for Liquidated Damages. Include the number of days added to the contract completion date.

In Victoria, the Domestic Building Contracts Act 1995 dictates that a variation must state the effect on the completion date before the work starts. This requirement is becoming standard across other states to protect both builders and owners.

Authorization and Signatures

This section creates the binding legal agreement. It should contain a statement where the client authorizes the works, such as "I/We authorize the above variation works and acknowledge the cost impact."

How to Write a Variation Request (Step by Step)

Writing a clear variation helps you get paid faster and maintains a good relationship with your client. Follow these steps to create a compliant document.

1. Describe the Change Clearly

Write down exactly what the change is. Be specific. If you are moving a wall, state the new location. If you are upgrading a fixture, list the brand and model number. If you are removing work, state clearly that it is an omission. This clarity is necessary for consumer protection under the Australian Consumer Law (ACL).

2. Calculate the Cost

Determine the cost of the variation. If you are charging a fixed price, state it. If you are charging on a cost-plus basis (time and materials), state the hourly rate and the estimated hours. Fair Trading NSW advises that the form must state the basis for calculating the cost to avoid disputes. Do not forget to include the GST amount separately if the contract is GST exclusive.

3. Assess the Time Delay

Review your program and calculate how many days this change will add to the project. Even a small delay can have a ripple effect on following trades. Documenting this protects you if the project runs over the finish date.

4. Check for Thresholds (QLD Specific)

If you are working in Queensland, be aware of the Queensland Building and Construction Commission Act 1991. If the variations increase the contract price by more than a specific threshold (often around 10 to 20 percent depending on the contract type), you must provide specific written notice. The owner may have rights to terminate if you exceed this without following the correct procedure.

5. Present and Obtain Signatures

Present the document to the client before the extra work begins. In most residential cases, the law requires the client to sign the variation before you start the work. If it is an emergency, such as a burst pipe, you can usually proceed immediately, but you should still document the variation and get it signed as soon as possible afterward.

Common Mistakes to Avoid

Many Australian tradies lose money simply because they handle variations casually.

Proceeding Without Written Approval

The biggest mistake is starting the work before getting a signature. Under the Home Building Act 1989 (NSW), a variation to a residential building contract must be in writing and signed by the homeowner to be valid. If you proceed on a handshake and the client refuses to pay, you have little legal recourse.

Vague Descriptions

Writing "Additional electrical work" is not enough. If a dispute ends up in court or adjudication, an adjudicator cannot enforce a claim for undefined work. You must describe the quantity, type, and location of the work.

Ignoring the "Omissions"

If a client removes items from the scope to save money, you must record this as a credit variation. This keeps the financial ledger accurate and transparent. It also proves that you are adhering to the contract terms.

Forgetting the Time Extension

Failing to claim an extension of time when you claim the extra money is a common error. If you do not extend the date, you are legally liable for Liquidated Damages for every day the project runs late, even though the delay was caused by the client's variation.

Digital Signature Errors

With the rise of project management apps, many businesses now use digital signatures. This is legally valid under the Electronic Transactions Act 1999 (Cth). However, ensure your digital platform captures the time and date of the signature and the client's IP address if possible, to prove they actually signed it.

Legal Considerations (AU)

Using a Variation Request is not just about paperwork; it is about compliance with Australian law. Different states have specific requirements that you must follow.

Security of Payment

Under various state Security of Payment Acts (SOPA), such as the Building and Construction Industry Security of Payment Act 1999 in NSW, a variation claim is not valid for payment unless the variation was properly authorized and documented according to the contract terms.

If you end up in adjudication, the adjudicator will look strictly at whether the variation followed the contract procedures. Verbal agreements are extremely difficult to enforce here. Note that the Commonwealth Security of Payment Act (2024) is coming into effect, which will create a uniform national scheme for construction contracts. This makes correct documentation even more important.

Unfair Contract Terms

The Australian Consumer Law (ACL), found in Schedule 2 of the Competition and Consumer Act 2010, protects consumers from unfair contract terms. A variation clause that allows you to unilaterally increase the price without the client's specific consent may be considered void.

You cannot force a client to pay for a variation they did not agree to. The consideration must be mutual. The client must agree to the new scope and the new price for the variation to be binding.

Privacy Act 1988

If your variation request collects client signatures or personal details, you must ensure compliance with the Privacy Act 1988. You have an obligation to store this information securely and only use it for the purposes of the contract. If you are using a digital platform, check that they comply with Australian privacy standards regarding the storage of personal information.

Workers Insurance and WHS

While the variation request is primarily a commercial document, it has implications for Workplace Health and Safety (WHS). If a variation introduces new risks (for example, working at heights where there was none before), you may need to update your Safe Work Method Statement (SWMS). Under WHS laws, you must consult with workers about changes that affect their health and safety.

Frequently Asked Questions

Can I charge for a variation if the client asked for it verbally but refuses to sign?

In most residential cases, no. Legislation like the Home Building Act 1989 (NSW) and the Domestic Building Contracts Act 1995 (VIC) mandates that variations must be in writing and signed. If the client refuses to sign, you should stop the extra work immediately and revert to the original contract scope.

Does a variation need to be on a specific form?

While some standard forms like AS 4000 or AS 2124 are used in commercial construction, there is no single mandated form for all domestic work. However, HIA and MBA provide standard forms that are widely accepted. The key is that the document contains all the required elements: description, cost, time impact, and signatures.

What happens if I forget to add GST to the variation?

If your contract is GST inclusive, you should generally make the variation GST inclusive to avoid confusion. However, the ATO requires that if the price is exclusive, you must state the GST amount clearly. If you fail to charge GST when required, you may still be liable to pay the tax to the ATO out of your own pocket.

Is a text message confirmation legally binding?

While text messages can be used as evidence of an agreement, they rarely satisfy the strict requirements of state legislation for residential building work. Most state laws require a written document signed by the homeowner. A text message is risky and should be followed up with a formal document immediately.

Do I need a variation for Provisional Sum adjustments?

Not necessarily. A Provisional Sum is an allowance for items that cannot be costed exactly at the start of the contract. When the actual cost is known, you simply provide the invoice. However, if the client decides to change the scope of that item (for example, choosing a more expensive air conditioner than the provisional allowance), the difference is a variation.