Variation
A change to the scope of work in a building contract after signing. Variations adjust the contract price up or down based on the change. They are one of the most common sources of dispute in Australian residential construction.
Definition
A variation is a change to the agreed scope of work in a building contract, made after the contract has been signed. Variations can be additions (changing the cabinetry to a higher-end finish, adding a deck, changing tile selections) or omissions (removing a feature originally included). Each variation adjusts the contract price accordingly.
Why it matters
Variations are unavoidable in residential construction because no homeowner reviews a 60-page contract and anticipates every detail. They are also one of the most common sources of dispute because variations happen mid-build, often under time pressure, and the documentation is frequently weaker than the original contract. Owners get surprised by variation costs at the end of the build. Builders chase variation payments that owners don't believe were properly approved. Both sides have legitimate grievances when variations aren't handled cleanly.
How it works in practice
The standard process is: builder identifies a change is needed (or owner requests one), builder issues a written variation request with description and price, owner reviews and signs off, the variation amount is added to the contract price and paid as part of the next relevant progress payment.
The reality is messier. Variations often originate as verbal conversations on site, get implemented before written approval, and only get documented when the next progress claim arrives. Owners who don't carefully track variations through the build can find the final contract price 10-20% higher than the original due to accumulated variations, sometimes without remembering approving each one.
Standard contracts (HIA, MBA) include variation procedures. State-specific consumer protection legislation often imposes additional requirements, particularly that variations above certain thresholds must be in writing and signed before work commences.
Common misconceptions
Verbal variations are binding
Sometimes, but courts increasingly require written documentation for variations above small thresholds, and most state legislation now requires written variations for residential builds.
Variations are always builder-initiated
Owners initiate plenty of variations too, requesting changes after seeing the build progress. Either party can request a variation; both must agree to the price change.
Variations are limited
They aren't, structurally. Some contracts cap variation totals as a percentage of the original contract price, but most don't. Watch for variation drift on long builds.