Variations: how to price and agree extra work without arguments

Almost every job changes once it starts. The client wants another power point, the old floor turns out to be rotten, or the tiles they chose are suddenly out of stock. None of that is a problem in itself. The problem is extra work done on a nod and a handshake, then a bill at the end that the client wasn’t expecting.

Variations handled well protect your margin and keep the client on side. Handled badly, they are where most disputes start.

What counts as a variation

A variation is any change to the work, price or timeframe that was agreed in the original quote or contract. Common examples:

• Client changes: extra work, different fittings, a change of layout or finish
• Hidden conditions: rot, asbestos, old wiring or plumbing that has to be fixed once it’s exposed
• Design or consent changes: an engineer or council asks for something different from the plans
• Omissions: something removed from the job, which should reduce the price
• Delays caused by others: waiting on the client, another trade or a late delivery the client was responsible for

If it isn’t in your written scope, it’s a variation. That’s why a clear scope with inclusions and exclusions matters so much. Without one, you can’t show that the extra work was extra.

The golden rule: write it before you do it

The single habit that prevents most arguments is simple. Agree the variation in writing before you do the work.

It’s tempting to just get on with it when the client is standing next to you and the job is open. But “I’ll sort the price out later” is how a $400 extra becomes a $400 argument. A written variation doesn’t need to be long. It needs to be clear and agreed.

In New Zealand, contracts for residential building work of $30,000 or more (including GST) must be in writing, and the contract must say how variations will be agreed before work continues. Even on smaller jobs where a written contract isn’t required, it’s good practice to set out the variation process in your quote.

What a variation should include

1. A variation number, and the job it belongs to
2. The date, and who asked for it
3. A plain description of the change, with photos if it’s a hidden condition
4. The price, broken down into labour, materials and any other costs
5. The effect on time, if any
6. Whether the price is fixed or an estimate
7. A space for the client to approve it, by signature, reply or an online accept button

How to price a variation

Price a variation the same way you’d price any small job. Don’t discount it because you’re already on site, and don’t inflate it because you can.

• Labour: the actual hours, including setting up again, extra trips and any work you have to undo
• Materials: at cost plus your usual margin, plus waste and consumables
• Subcontractors: their written price, plus your margin for organising them
• Margin and overheads: the same margin you’d apply to the main job
• Disruption: if the change throws out your sequence, stops other trades or means coming back another day, that costs money too

Small jobs added to a big one often cost more per hour than the main work, because they break up your day. Your price should reflect that. Also remember to credit omissions fairly. If the client removes something, take it off at a fair value. It builds trust and makes your extras easier to accept.

Don’t forget the time

A variation often changes the finish date as well as the price. If you agree the money but say nothing about the time, you may end up blamed for finishing late.

Put the time effect on every variation, even if it’s “no change to completion date”. If it adds days, say how many. That written extension of time protects you if the client later complains about the finish date or your contract has penalties for delay.

Getting approval

Approval needs to be clear, and you need to be able to find it later.

• Best: a signed variation form, or a variation sent electronically with an accept button that records the date and time
• Good: an email or text from the client that clearly says yes to the specific variation and price
• Weak: a verbal yes. If that’s all you can get in the moment, send a message straight away confirming what was agreed, and ask the client to reply to confirm.

If the client won’t approve a variation, don’t do the work. Explain what will happen instead, for example that you’ll leave the area as it is, or that you can’t continue until a decision is made.

Keep a variation register

On any job with more than a couple of variations, keep a simple register. One line per variation:

No.	Date	Description	Price	Time	Status
V1	3 March	Replace rotten floor joist	$640	+1 day	Approved
V2	6 March	Extra double power point	$210	Nil	Approved
V3	9 March	Swap vanity to client’s choice	Credit $150	Nil	Pending

The figures above are an example only. A register shows the client the running total so there’s no surprise at the end, and it makes your final invoice easy to check. Bill approved variations with your next progress payment rather than saving them all for the final bill. A project management tool like ProjectFlow can keep the register alongside the rest of the job, but a spreadsheet works fine too.

When there’s a dispute

Even with good paperwork, disagreements happen. A calm order to work through:

1. Go back to the documents. The quote, the scope, the variation and the approval. Most disputes are settled by showing what was agreed.
2. Talk it through. Meet on site if you can. Often the client has simply lost track of what they asked for.
3. Look for a fair middle ground on genuinely unclear items. A small concession can be cheaper than a long fight.
4. Use the formal process if you need to. In New Zealand, the Construction Contracts Act 2002 sets out a payment claim process for construction work. If a client disputes a valid payment claim, they generally need to respond with a payment schedule within the time set in the contract, or within 20 working days if the contract doesn’t say. Disputes can go to adjudication. Different rules apply in some respects to residential clients, so get advice before relying on this.
5. Get advice for larger amounts. A building lawyer can tell you quickly where you stand.

In Australia, each state has its own security of payment laws and home building rules, and some set specific requirements for variations in residential contracts. Check the rules in the state where you’re working.

Habits that prevent variation fights

• Write a clear scope with inclusions and exclusions in every quote
• Explain your variation process before the job starts
• Never do extra work without written approval
• Price variations properly, including disruption and time
• Show the time effect on every variation
• Keep a running register and share it with the client
• Bill approved variations with progress payments

Clients rarely mind paying for extra work. What they mind is being surprised by it.