Variations: the three questions a board should ask before approving one.

Why variations are where the money goes

A building contract prices the work described in the drawings and specification on the day it was signed. Everything that changes after that day is a variation: the board decides it wants a bigger bar, the fire engineer finds the sprinkler layout needs revising, the demolition uncovers a slab that is not where the drawings said, the gaming floor supplier changes its base plate. Each is priced separately, usually by the builder, usually after the event, and usually while the venue is waiting for the work to finish.

On a well-run project variations might total a few per cent of the contract sum. On a badly run one they can exceed the contingency several times over, and the board finds out when the final account arrives. The difference is rarely the quality of the builder. It is whether anyone on the owner's side was asking the right questions at the right time.

Question one: is this actually a variation?

Not every extra cost the builder presents is a change to the work the owner is obliged to pay for. Before anything else, the superintendent asks whether the item was already inside the contract.

• Was it in the drawings or the specification? If the specification calls for a fire-rated door and the builder priced a standard one, the fire-rated door is not a variation. It is the builder's pricing error.
• Was it reasonably inferable? Under AS 4000 the works are the whole of the work to be carried out and completed in accordance with the contract, and the builder must supply everything necessary for the proper performance of its obligations, even if not every element is drawn. The builder cannot claim a variation for the obvious.
• Is it a latent condition? Physical site conditions that differ materially from what a competent builder could have anticipated are dealt with under their own procedure, with their own notice requirements, not as a general variation.
• Is it the builder's own change? A substitution the builder proposes for its own convenience, or a fix for its own defective work, is not a variation the owner pays for.

A surprising number of "variations" fail this question. The ones that pass are genuine changes, and they deserve to be paid for. The ones that fail were never the owner's cost.

Question two: was it directed before it was built?

Under the general conditions, a variation is something the superintendent directs. The builder is not entitled to be paid for extra work it decided to do on its own, and it is obliged to carry out a variation the superintendent properly directs. That sequence, direction first, work second, is the owner's single most important protection, and it is the one most often lost on site.

What actually happens is that a problem arises at nine in the morning, the site manager and the club's operations manager agree a fix by ten, the work is done by Friday, and the price arrives a month later. Nobody directed anything. The builder argues the owner's representative agreed to it. The owner argues nobody with authority did. The superintendent is asked to value work nobody scoped.

The discipline is simple to state and hard to keep: nothing is built as a variation until the superintendent has directed it in writing, and the direction records what is changing, the basis on which it will be valued and, where it can be known, its effect on time. Owners should give their staff one instruction on day one: you cannot approve a variation, only the superintendent can, and the builder knows that. It protects the staff as much as the club.

Where the fix genuinely cannot wait, the direction can be issued the same day. What cannot be recovered is a direction that never issued.

Question three: what is it worth, and who says so?

The general conditions set an order for valuing a variation: by agreement if the parties can reach one, otherwise by the rates and prices in the contract where they apply, otherwise by reasonable rates and prices, with a reasonable allowance for profit and overheads, which special conditions often fix as a percentage. The builder's quote is the starting point of that process, not the end of it.

The superintendent's valuation looks at four things.

1. Scope. Does the quote price the change that was directed, or something larger? Quotes have a habit of including work that was already in the contract.
2. Quantities and rates. Are the quantities measured, and are the rates the contract rates where the contract has them? A builder's rate for a variation is often higher than its tendered rate for the same work.
3. Omissions. If the change removes work as well as adding it, the removed work is credited. Quotes rarely volunteer the credit.
4. Time. Does the variation carry a claim for an extension of time, and if so is it assessed under the extension of time procedure rather than buried in the price?

The valuation is issued in writing and entered in the variation register against the direction it responds to. The register carries the approved, the pending and the anticipated variations, and it is reconciled to the cost report every claim cycle so that the board sees the forecast final cost move as the project moves, not at the end.

What good looks like at the board table

A board that is being properly served sees, each month, a variation register with three columns of value: approved, pending and anticipated; the contingency remaining against the anticipated total; and a forecast final cost that already includes what is coming. It sees variations above an agreed threshold before they are directed, with the superintendent's recommendation. And it never sees a variation for the first time in a progress claim.

That is not a heavier process than the alternative. It is the same work, done in the right order, by someone whose job it is.

This article is general information about the treatment of variations under Australian Standard general conditions of contract. It is not legal advice. The executed contract and its special conditions govern any particular variation.

Sources. AS 4000-1997 General conditions of contract, incorporating Amendments 1 to 3 (Standards Australia). Checked against the current versions on 9 September 2026.