‘Variations’ are simply additional costs on top of the contract (quoted) price, and they may take the form of materials and/or labour costs. Under the provisions of most building contracts, a variation occurs when work outside the scope of the original contract is introduced, or when items within the contract are adjusted, which includes our friend’s prime costs and provisional sums. Generally speaking, if the cost of a variation is a result of the client changing their mind or altering the scope of work, the client will be exposed to being charged a variation and a builder’s margin of up to 20 per cent.

If the variation is due to a miscalculation or mistake from the builder, then the builder will be responsible for the variation and will need to absorb the costs. In the case of unforeseen costs that cannot reasonably be accounted for at the time of quoting (more likely with extensions and renovations than new builds), the client will generally need to pay the variation.

Here are six key examples of how variations may be applied:

1. If the builder has miscalculated the number of roof tiles required to complete the new roof of an extension and needs an additional 220 tiles, the builder will be responsible for the additional costs and a variation and margin cannot be charged to the client, as the drawings and scope of work have not changed. The additional cost must be absorbed by the builder as it was his error in quoting.

2. If you ask the builder to install terracotta roof tiles for an extension instead of the concrete roof tiles shown on the drawings, a variation and margin can be charged for the difference in the cost of roof tiles, as the drawings stated concrete tiles and they were what the builder quoted.

3. If you request two garden taps to be installed on the external walls, a variation and margin can be charged if the taps were not indicated on the drawings. However, a variation and margin cannot be charged if these taps were included as required in an inclusions schedule.

4. If the electrician finds that, upon commencing a renovation project and exposing the electrical wiring,it does not comply with current standards, he is bound by law to replace and upgrade the wiring throughout the house. In this case, a variation and margin can be charged as the requirement to replace the wiring was not known at the time of quoting and no allowance was made in the quote for such work.

5. If the bricklayer has increased his laying rate and the builder wishes to pass that additional cost on to the client, a variation and margin cannotbe charged, as the quote included the laying of bricks as shown in the drawings.

6. If the electrician has increased his cost to install each light point by 10 per cent and the builder wishes to pass on this cost increase, a variation and margin can be charged if the builder has noted a cost per light point as a provisional sum in the quote. However, a variation and margin cannotbe charged if the cost per point is not nominated as a provisional sum in the quote.

You can see the important role that understanding industry terminology has in ensuring high-quality and sufficiently detailed documentation, ensuring you and your builder are on the same page. Thoroughness and transparency are critical.