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How to request a variation

Variations are a fact of life for the building industry. Variations usually arise because of a client-requested change to the nature or scope of works, but when a builder encounters problems with a project he or she may also need to request a variation to the contract in order to ensure that the job can be completed.

Depending on the cost and nature of the project, the Home Building Contracts Act 1991 (WA) regulates the manner and form under which a variation should be requested.

The information below outlines the formal process for documenting a builder-requested variation, including the builder’s obligations under the contract and the legislation.

When does the Home Building Contracts Act 1991 apply?

The Home Building Contracts Act regulates contracts with any person undertaking home building or associated work for a homeowner valued between $7500 and $500,000, including contracts between a builder and owner-builder. However, it excludes contracts between trades/sub-contractors and a builder.

HIA has a range of contracts available that comply with the Act.

When can a builder request a variation?

There would usually be two scenarios by which the builder is permitted to initiate a variation: 

  • Following any written direction lawfully given by a building surveyor or other person acting under a written law, or 
  • In circumstances that could not reasonably have been foreseen by the builder at the time when the contract was entered into.

How does the builder request a variation?

Firstly, the builder needs to give to the owner a statement setting out the reasons and the cost to be incurred on account of the variation and a copy of any direction from the building surveyor (or other person).

This statement must be given by the builder to the owner within 10 working days after the builder received notice of the direction or alternatively within 10 working days of becoming aware (or should reasonably have become aware) of the unforeseen circumstances.

In the event the owner disagrees with a variation necessitated by ‘unforeseen circumstances’, then they may make a complaint to the Western Australian Building Commission. However, this complaint would need to be made within 10 working days after the statement was given to the owner. 

HIA sell a Form 1 Variation Document (which comes in a pad of 30 in triplicate), which can be used by the builder for the purposes of variations between the builder and owner.

When might other variations apply?

The HIA contracts also entitle the builder to issue a variation document in certain circumstances, such as: 

  • resolving any discrepancy or error in the contract documents where the contract documents have not been prepared or caused to be prepared by the builder 
  • in order to comply with relevant statues, regulations and local laws and any lawful orders or directions made under them 
  • for changes in site conditions in circumstances where the builder has any reasonable doubt as to the accuracy or true position of the boundaries of the site and consider that it is necessary to engage a licensed surveyor to survey and adequately peg or delineate the site 
  • to make good the owner’s obligations with respect to owner-supplied materials and unfixed materials onsite. 

Please check the exact clause in your contract or check with your Workplace Advisor if you are unsure of your rights and obligations in these circumstances.

Risks of non-compliance

If you do not comply with the above requirements then you expose yourself to a number of risks, including: 

  • being fined under the Act 
  • not being paid by the owner for any additional costs incurred in respect of carrying out the work that is the subject of the variation 
  • breaching your building permit and being fined by the relevant permit authority in the event that the new works fall outside the scope of your building permit. 

Furthermore, in all likelihood you may end up with an unhappy client, which would pave the way for subsequent disputes of other issues.

It is therefore best practice to ensure that you obtain your client’s written authorisation before carrying out any variation to the contract or the scope of works.

To find out more, contact HIA's Workplace Services team

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