10 Tips for minimising variations on your New Home Build
Worried about variations blowing out your build budget? Fair enough, I get it!
There are things you can do to limit and in some cases avoid variations on your new home build - but first, let’s chat about what a variation actually is…
What is a Building Variation?
A variation is any change to your builder's scope of works after your building contract has been executed.
Variations incur additional costs (or credits!) to the build price agreed with your builder. They may also impact the building period your builder has agreed to complete your build within.
Here is a list of common variations I see on New Home Builds:
Increased site setup costs (excavation and groundwork)
Provisional or PC Sum overspend
Permit fees
Design errors or omissions
Material change due to supply chain shortages
Compliance works
Design changes
Will changes to my New Home Build design be a variation?
The rule of thumb with home building variations is that:
Changes made before the contract is signed won't be a variation.
Changes made after the contract is signed will be a variation.
After your contract has been signed, try to avoid making changes at all costs. Even the slightest change, entitles your builder to request an extension of time to increase the building period, plus payment of the additional costs to complete the variation.
If you make the change before signing your contract, triple-check that the change is reflected clearly in your building contract before you sign.
Pro Tip: If there is something you know needs to change, incorporate it into the agreement with your builder before signing the building contract. If that’s not possible, let your builder know about the anticipated change and ask for written advice on what the cost, and time impacts will be to make the change after the building contract is signed.
When are variations paid?
Depending on your bank your variations will either be funded by your bank (loan) or out of your own funds (cash).
Your building contract specifies when variations need to be paid, which is usually within the following progress payment after the change has been made.
How to minimise variations during your build?
These tips to minimise variations during your home build are a small part of what we go into the details of when I do personalised reviews of clients home building contracts. This service is called a Building Contract Health Check where I do a one on one consult with you after reviewing the details of your Building Contract. I share education on what you need to know about your building contract, what you need to look out for and how to keep cost down during your build.
Here are my tips to minimise unwanted variations during your new home build:
Seek out education on what’s in your building contract before signing through a Building Contract Review
Have a list ready to go of ‘nice to haves’, these are things you are willing to remove from the build to achieve a cost-neutral offset against the new variation cost. Some credit variation ideas include:
Blinds
Curtains
Cabinetry fit-outs (wardrobes / linen)
Fencing / outdoor works
I’ve recommended these as they can be easily DIY’d or completed in the future after handover.
Look at your drawings carefully before signing the building contract - even the slightest change after signing can have a big time and cost impact on your build.
Set aside 5-10% of your total budget as an emergency fund for variations during the design and build. It’s there for security when variations crop up throughout the build. If you don't end up needing it by the end of your build, well done!!
Ensure plans and specifications are as detailed as possible before signing the contract
Request materials to be ordered early, especially items with long lead times like windows, doors and custom items
Have regular communication with your builder about potential variations or extensions of time
Keep a contingency budget of 5-10% for unexpected issues
Create a scope reduction list to offset new variations costs when needed
Document all discussions about costs and get variations in writing before work proceeds
How to proactively avoid variations by your Builder
Over half of all homes built in Australia end up costing more than they were originally budgeted for. It's really important that when you start a new build, you understand that there will be variations that come up and the reasons for these variations are all documented in your building contract.
One of the smartest things you can do is dive into the details of your building contract so you know exactly what is in there—what has been excluded, what to be aware of, and to be wary of. This is what I go through in detail during my personalised home Building Contract reviews. During these reviews, I educate clients on what's in their building contract so they can sign with confidence. We also discuss tips to avoid variations specific to the details of their new home build.
Building Contract reviews for New Home Builds & Renovations
If you're looking for a personalised review of your Building Contract at a reasonable price, you can find out more information about my Building Contract Health Checks here.
I support clients with their HIA and Master Builders Home Building contracts from all states in Australia, including Victoria, ACT, Queensland, New South Wales, Tasmania, WA, and the Northern Territory.
Building Contract reviews with me are for people who want to understand their contract better before they sign.
If you're a person like me who wants to dive into the details, wants education on what makes a good contract, and what to look out for - then you're a great match for a Building Contract Review with me.
Ultimately, I want you to walk away from our session with education on how to reduce variations, minimise costs and avoid delays.
I hope these tips help you on your new home-building journey.
Thanks for reading and catch you on my next post 🙂
Annelyse
Construction Management | M. Construction Law
