VIC Variations Extensions

Members often find themselves in dispute relating to recovery for unsigned variations and delays in completing construction. These issues may be avoided by adopting better contract administration procedures. This information sheet will focus on these two common areas of dispute. It will also outline how a builder can claim for an extension of time and variation.

Extensions of time

How can a builder claim for an extension of time?

A builder can claim for an extension of time by giving written notice to an owner. An extension of time notice should include the following information:

• The period of time claimed for the extension of time, for example, 10 days.
• Reason/s for the extension of time. For example, a variation to works, a suspension of works,  inclement weather, owner/s delay or circumstances beyond the builder control. Any document supporting the reasons should also be included to show the owner that the entitlement is genuine.
• The owner/s name, address along with the job address.

Extension of time forms are available to purchase from the HIA bookshop or your local stationary supplier. The forms are called ‘Notification of extension of time’.

Service of the notice for an extension of time

This notice can be given either by:

• Delivering it to the owner in person;
• Posting it to the owner at the address which is set out in the Particulars of Contract (and the notice is deemed to have been given 2 clear business days after it was posted); or
• Faxing it (if that service is available)

See clause 6 of New Homes Contract (October 2004 version) and Alterations, Additions and Renovations (October 2004 version).

The relevant clauses in the HIA Contracts for claiming an extension of time are as follows:

1. Clause 34 - New Homes Contract (October 2004 version); and
2. Clause 37 - Alterations, Additions and Renovations (October 2004 version).

Disputes and extensions of time

An owner has 7 days (within receiving the builder’s notice) to dispute an extension of time. An owner must give the builder written notice, including detailed reasons why the owner disputes the claim. The onus is placed on an owner to dispute the extension of time being sought.

If an owner fails to respond within the relevant form and time frame then the builder can try and argue that an objections raised after the deadline are not valid.

It is prudent to communicate an extension of time in accordance with the terms of the contract as soon as being aware of a possible delay.

All documents and records of telephone conversations should be kept in the event the matter is referred to the Tribunal at some later stage.

Variations

How can a builder claim for a variation?

A variation to the scope of works (i.e. plans and/or specifications) can take place either at the request of the owner or builder. Once a request for a variation has been made the builder needs to follow up with a written variation notice. All variation requests must be signed and dated by an owner and builder prior to the works being undertaken.

If an owner refuses to sign a variation then the builder is not obliged to carry out the variation works, and can refuse to do so.

A variation notice should include the following information:

1. Detail of the work/s to be carried out or excluded from the contract, including; any additional costs and credits due to the owner.
2. The period of time claimed for the additional works to be carried out, for example, 10 days.
3. Reason/s for the variation (required only of the variation has been requested by the builder)

Variation forms are available to purchase from the HIA bookshop or your local stationary supplier. The forms are called ‘Variation document‘.

The relevant clauses in the HIA Contracts for claiming a variation are as follows:

1. Clause 23 - New Homes Contract (October 2004 version); and
2. Clause 26 - Alterations, Additions and Renovations (October 2004 version).

Variations and disputes

The other area in which disputes often arise is where a builder fails to obtain signed variations before doing the work. The only times builders may do extra works without the owner signing the variation are in the following circumstances:

• Where the works and/or materials are designated in the contract as a prime cost item or a provisional sum item (and this work is not a variation).
• Where the owner asks for a variation in writing and the builder reasonable believes that the variation will not require a variation to the building permit, will not cause any delay and will not add more than 2% to the original contract price.
• Where a builder is required out of circumstances beyond the builder’s control to carry out a variation by a building surveyor or other authorised person under the Building Act and the owner does not dispute the notice within 5 business days.

Builders options are not closed off

Where a builder has failed to obtain a signed variation a builder is still able to recover payment if there are exceptional circumstances or the builder would suffer significant or exceptional hardship and it would not be unfair to the building owner. To seek to enforce unsigned variations you must make a claim at VCAT.

Builders should naturally avoid being in such a situation and  would need a valid excuse why the paperwork was not done at the time and have irrefutable evidence that the owner knew of the exact work to be done and agreed to payment of the approximate amount payable for this work.

For more information call the HIA member Hotline on 1300 650 620

_{DISCLAIMER – the above is intended to provide general information in summary form. The contents do not constitute specific advice and should not be relied upon as such. Formal specific advice should be sought by members with respect to particular matters before taking action.}