A variation (also called a change order or variation order) is any change to the original scope of work defined in a construction contract. This includes additions, omissions, or changes to the design, materials, or methodology.

Types of Variations

• Owner-directed variations — the client requests changes (e.g., upgraded finishes, additional rooms)
• Design variations — changes required due to design errors or incomplete documentation
• Site condition variations — unforeseen conditions like rock, contamination, or existing services
• Regulatory variations — changes required by building surveyors, councils, or updated regulations

How to Manage Variations

1. Document everything — never proceed with verbal instructions alone
2. Issue a written variation notice before starting the changed work
3. Include the cost impact — materials, labour, margin, and any time extension
4. Get written approval from the client before proceeding
5. Track against the original contract — maintain a variation register

Why Variations Kill Margins

The #1 reason builders lose money is unmanaged variations. Work gets done, the cost increases, but the paperwork isn’t done and the client disputes the charge after the fact. Every variation needs a paper trail.

Frequently Asked Questions

Can a builder charge for variations?

Yes. If work falls outside the original contract scope, the builder is entitled to claim the additional cost plus margin. The key is having a signed variation order BEFORE the work starts.

How much should I mark up variations?

Most builders apply the same margin as the original contract (typically 15-25%). Some contracts specify a fixed variation markup rate. Check your contract terms.

What if the client refuses to approve a necessary variation?

If the variation is required by regulation or site conditions, document the requirement in writing and issue a formal notice. If the client still refuses, seek advice before proceeding — doing the work without approval puts you at risk of not being paid.