Managing Changes and Extras: How to Keep Your Project on Budget

A change typically refers to a modification to the original scope of work that was already included in the contract, such as altering the specifications of an included item. An extra refers to additional work or materials that were not included in the original contract scope. Both are variations to the contract and should be properly documented and approved in writing before work commences. Understanding this distinction is important because it affects how the variation should be priced and whether the original contract price provided a basis for the work.

Yes, you should always obtain written approval before proceeding with changes or extras. Verbal agreements can lead to disputes about what was agreed, the scope of work, and the price. Written variation agreements protect both homeowners and builders by clearly documenting what work will be performed, the cost, the impact on the completion date, and the terms of payment. Most construction contracts include specific variation clauses that outline the required process for approving changes and extras.

Changes and extras should be priced fairly and transparently, typically using one of several methods: cost-plus (actual costs plus an agreed margin), schedule of rates (pre-agreed rates for specific work types), or fixed price quotation for the specific variation. The pricing method should be outlined in your contract's variation clause. Costs should include labour, materials, site overheads, and a reasonable margin. It's important to obtain detailed cost breakdowns before approving variations, and homeowners have the right to seek alternative quotes if the proposed pricing seems unreasonable.

If a builder completes work that constitutes an extra without your written approval, you may not be legally obligated to pay for it, depending on the circumstances. However, the situation can be complex - if the work was necessary to complete the project, if you verbally agreed to it, or if you benefited from the work, you may still have a payment obligation. This is a common source of construction disputes. If you find yourself in this situation, seek specialist construction law advice immediately. The outcome will depend on your specific contract terms, the circumstances of the work, and applicable consumer protection legislation.

Once you've provided written approval for a variation with a specified cost, it becomes difficult to dispute that cost later unless you can demonstrate that the work was not completed as agreed, the quality was defective, or the builder engaged in misleading or deceptive conduct. This is why it's crucial to carefully review and negotiate variation costs before providing approval. If you believe a proposed variation cost is excessive, you should seek clarification, request a detailed cost breakdown, obtain alternative quotes, or seek legal advice before signing the variation agreement. Prevention is more effective than trying to dispute costs after the fact.

Variations often affect the contract completion date, particularly if they involve additional work, require specialist trades, or change the sequence of construction activities. Most construction contracts include provisions allowing the builder to claim an extension of time for variations. The key is ensuring that any time extension is reasonable and properly documented as part of the variation approval process. Both the cost and time impact should be agreed in writing before the variation work commences. If completion date changes are not properly documented, disputes can arise about whether delays were caused by variations or by the builder's performance issues.

You should seek legal advice about changes and extras when: variation costs are escalating significantly beyond the original contract price; the builder is demanding payment for work you believe was included in the original scope; you're being pressured to approve variations without adequate information or time to consider them; disputes arise about whether work constitutes a variation or a defect rectification; the builder has completed work without your approval and is demanding payment; or you're unsure about your rights and obligations under the variation clauses in your contract. Early legal advice can prevent disputes from escalating and protect your legal position. Contracts Specialist offers a free first consultation to assess your situation and explain your options.