HOW TO AVOID VARIATION PITFALLS
There is nothing more daunting than embarking on a new project and finding out down the track that your variation pitfalls cause unbudgeted expense.
You need to learn how to avoid these pitfalls but firstly we need to understand what a variation actually means. The term “variation” means changes to what has been agreed upon in a signed building or design contract.
When you choose a certain style let’s just say it is the tiles in the bathroom and those specific tiles have been written in your contract. Later you might find that they are not the ones you really want to use you have made a mistake. The same goes for commercial premises. It could be the basins ordered for the hair salon, they are not quite what you had in mind. At that point you contact your builder and let them know your latest news. What does this actually mean?
This is what is termed as a variation in your contract. The builder might have already sourced and bought those tiles, bathroom taps and the list goes on which in turn will mean they can charge you more for the same job.
AVOID AND MANAGE VARIATIONS SO YOU DO NOT BLOW THE BUDGET
When considering any type of renovation especially a home one it is best to live in it for a while so that you plan carefully and know exactly what you want. When you sit down to discuss this with your architect, designer and then builder you will be prepared and it is all in the contract. The same can be said for your commercial premises.
Asking for a fixed price contract from your builder can guarantee that the contract will not change. When choosing your builder you will have to invest in one that takes their time to do a proper due diligence. This will include everything from a building scope of work, finalizing selections and reports so that it is all included in the final fixed price.
When you want a variation to your contract your builder will more than likely provide a quote. This then is a matter of agreeing to changes and costs in writing, sitting down and negotiating a different solution to the problem at hand or simply biting the bullet and proceeding with the original plans. Open communication with your builder at all times will prove beneficial.
Avoiding variations means being thorough when it comes to planning and you will not sign a contract until you are absolutely sure. Going through the contract and ticking things off like brand and model for toilets, taps, power points, door handles, locks, tiles, pavers, floorboards, ceiling lights, mirrors the list is specific to your renovation whether commercial or residential.
Your contract is the key to getting the job done right so include and make sure everyone is listed that needs to do the job. This could involve contractors, local building regulations or restrictions, consulting your builder, designer or architect, any product deviations from what has been specified already.
CHANGING YOUR MIND IS INEVITABLE EVEN WITH A CONTRACT IN PLACE
Minimising the impact on your budget will mean timing is everything. Give your builder as much time as possible with changes so that you minimise the impact to your budget or schedule. A simple edit like changing paint colour can prove costly if your timing is out.
UDERSTANDING KEY CONTRACT TERMS HELPS IN THE LONG RUN
Critical contract terms:
- The prime cost trap (PC) is when you realize that you have settled for the builder to purchase items that are unspecified products. The budget only covers for basic options when you really want upgrades. No name brand bathroom basin as opposed to a branded item. You need to be thorough and wary at all times.
- The fixed price contract – this is the way to go as I have previously discussed this is the total price specific to the scope of work that has been nominated and signed off. You have planned and discussed this with your builder.
- A provisional sum is an allowance that is included in a fixed price contract that gives permission for the contractor to not price an item of work at the time of entering the contract.
- Rise and fall is an agreed method of adjusting the costs to allow for variations in labour and material costs during the entire construction period. Next to the prices you will notice the words “estimate” or “price may change”.
- Cost plus contract has no agreed price but the actual cost of the work is charged plus an agreed margin or percentage. Entering into this type of contract is not ideal and rarely works out well for the owner. Usually there are incentives for the builder to have the cost of the project increase.
Even the builder can request a variation because there might be an issue with the plans or something has come up during the construction phase. Open communication and discussion will make the project continue to run smoothly. Everything you discuss and agree with your builder needs to be in writing and must be signed off.
Choosing Makka Constructions as your builder will ensure that variations in contract can be resolved through open communication, agreeing and signing off.
