The Perth building industry is still buzzing like never before.
If you are currently building or are about to embark on your building journey, you may have heard the term ‘contract variations’. Today, we are exploring the topic of contract variations, and what this could mean for you.
Firstly, what are building or contract variations?
These are the official changes that are distinctly different to the previously agreed upon building contract. Variations can normally include things like changes to the design of a window, alterations to your door handle, the need to swap paint colours or the need to swap out taps due to shortages etc. .
While building variations are not uncommon in this market, the lack of thoroughness while signing a contract or not anticipating such changes can lead to a falling out between the builder and the property owner.
What is the best way to manage them?
Navigating the variations smoothly and with open communication is imperative. All parties involved have to know what is going on. This must include the changes, the new price, and the date of expected completion before the commencement of the work.
In most circumstances, you can expect additional costs to be provided by the builder, and then for a negotiation process to take place. This is where we stress the point that you should ensure that you have the paperwork documenting the changes to avoid any hassles down the road. Alternatively, negotiating a different solution or weighing the positives and the negatives of the changes have helped owners make wise building choices.
How is the variation calculated?
The prices can stack up pretty quickly when all the variations accumulate. This is for several reasons, most of them being that the calculations take into account the prime cost (PC) and the provisional sum (PS). Prime cost is undertaken for a fitting, like a tap, but the actual price of the item is not known when the contract is signed. On the other hand, a provisional sum is a reasonable estimate of the cost of carrying out the work.
How to avoid them?
Research goes a long way. The smartest strategy to minimise your variations is to plan your house down to the very minute detail. We are talking about researching the brands you want for your taps, door handles, locks, window frames and bulbs. Put everything into an excel spreadsheet, and consider small details like the coats of paint you will use, before any contract is signed. This will help you avoid any extra charges later on. Ideally, you wouldn’t want variations so think of all the things that are non-negotiable and include them in your contract prior.
At BCI WA, we ensure you receive high quality and professional building inspections in Perth. You can buy your dream home with complete confidence with our building inspection services! Let’s chat today! Alternatively, you can get an instant quote here