Any change to building plans are commonly described as ‘variations’. In Victoria, the Domestic Building Contracts Act 1995 (DBC Act), sets out procedures that should be followed to allow any variations to plans or specifications in regard to a major domestic building contract.
A major domestic building contract is a contract for the carrying out of domestic building work in which the contract price is more than $10,000.00.
If a builder and/or owner wishes to vary their plans and specifications, both parties will need to ensure they follow the correct procedures. It is important that both parties are cautious when changing the scope of building plans.
Pursuant to the DBC Act, if either the builder or owner wishes to vary plans, it must be done so through a written Variation Notice.
Builder requested variations
For builder requested variations, the notice must:
- Describe the variation the builder wishes to make;
- State why the builder wishes to make the variation;
- State what effect the variation will have on the work as a whole being carried out under the contract and whether a variation to any permit will be required;
- If the variation will result in any delays, state the builder’s reasonable estimate as to how long those delays will be; and
- State the cost of the variation and the effect it will have on the contract price.
The owner must give signed consent attached to the Variation Notice before the builder’s variation can be commenced.
If the owner does not agree with the changes ordered by an authorised person (building surveyor, architect, building inspector or engineer), they must advise the builder in writing within five business days of receiving the notice.
By law, the owner and the builder must agree in writing to the variations (using a Variation Notice) and include the details and cost of the changes in the contract (including the new total price and new completion date) before the work commences.
A builder may bypass the need for written consent from the owner, if:
- A building surveyor (or other authorised person) requires the variations to be made by way of a Building Notice or Building Order pursuant to the DBC Act;
- A copy of that Building Notice or Building Order was attached to the Variation Notice provided to the owner by the builder;
- There are circumstances beyond the builder’s control; and
- The owner does not advise the builder in writing within five business days of receiving the Variation Notice that they wish to dispute the Building Notice or Building Order.
Owner requested variations
For owner requested variations, if the builder reasonably believes the variation will not require a variation to any permit, will not cause any delay, and will not add more than 2% to the original contract price stated in the contract, the builder may carry out the variation.
In any other case, the builder must give the owner either a notice that:
- States what effect the variation will have on the work as a whole being carried out under the contract and whether a variation to any permit will be required;
- If the variation will result in any delays, states the builder’s reasonable estimate as to how long those delays will be; and
- States the cost of the variation and the effect it will have on the contract price; or
- A notice that states that the builder refuses, or is unable, to carry out the variation and that states the reason for the refusal or inability.
It is important for builders to note that they cannot claim payment for a variation to the plans at any given time. The invoice for a variation must always be included in the next progress claim. Builders are not entitled to recover any money in respect of a variation asked for by an owner unless the follow the above. However, it is possible for VCAT to make an order for the builder to recover money if it is satisfied:
- That there are exceptional circumstances or that the builder would suffer a significant or exceptional hardship;
- That it would not be unfair to the owner for the builder to recover the money.
Should you find yourself requiring advice on domestic building contracts, it is important to seek legal advice to ensure your rights and entitlements are best protected.
For more information on terminating domestic building contracts read our blog here.
For all building plans variations queries please call our Director, Daniel Oldham on (03) 9640 0002, or via email email@example.com.