A question that a lot of people new to property refurbishment ask is, what is a variation order?

A variation order (VO) is made for additional work carried out that was not in the original scope of works when contracts were signed on a project.  VO’s are very common in construction projects

Your builder will have started work for an agreed fixed price for an agreed scope of works. Once work has started issues may occur that will mean additional works are necessary or you may change your mind and want extra things installed. In this case these will be a variation to the original contract

How to deal with VO’s must be written in the contract

Your contract with the builder should state that no additional works will commence prior to the issuing of a (VO). Many people make the mistake of thinking they dont need a contract on a refurbishment project

But that is a big mistake

Each VO will contain the scope of the additional works and the cost. Careful attention must be paid to the cost of these variations as these may lead to Margin creep. The client and the builder should both sign them. You should issue a copy of each VO to the builder and keep a copy for your own records

Once work has finished

Once the contract is finished you will pay the builder the agreed contractual amount minus retention fees. It is at this point that you will discuss the additional sums outstanding for extra work carried out. These are called “extras”.

It is at this point you will need copies of the VO’s you have issued. It may well turn out that the builder has done more work then agreed. Or has spent more on materials and labour. This is when you can produce the VO’s. You should only pay the amount stated on the VO’s. Anything else the builder tries to claim for will be termed disallowed costs. That means he will have done them at his own expense

Don’t agree things verbally

Many people who are not familiar with this process just agree things verbally on site with the builder. Once it gets to the end of the project this can result in serious disagreements over what was said . The builder may try to claim substantial amounts that could wipe your profit out

This is another situation where it is a good idea to have a contract administrator dealing with the financial side of the project. A Contract Administrator will be an experienced professional , such as an Architect, QS or project Manager who will have a good understanding of, and experience with contracts. They are a very valueable team member for those with not a lot of experience


If you need advice on this or some one to administer the contract on your project please get in touch with us here  as we have extensive experience in these matters











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