Managing Variations

# Chapter 17: Managing Variations  Variations are going to be part of every project you work on, that's just the reality of construction. Understanding how to manage them properly isn't just about following procedures; it's about protecting yourself professionally while keeping projects moving forward. ## **Understanding Variations vs Claims** Here's a distinction that trips up many graduates: variations and claims are fundamentally different beasts. A variation happens when your client decides they want changes, different materials, altered layouts, additional scope. They're initiating the change and accepting the cost and time implications upfront. Claims, on the other hand, come from the contractor seeking compensation for something unexpected, latent conditions, delays, or disputed instructions. In Victoria's current market, with material shortages and price volatility affecting nearly every project, this line has become increasingly blurred. The key difference lies in who bears the initial risk. With variations, your client accepts the change before work proceeds. With claims, the contractor performs work and then seeks compensation, creating potential disputes about entitlement and quantum. ## **Your Procedural Obligations** Under Victorian contracts, whether you're using ABIC, AS 4000, or government contracts, you'll need to follow strict procedures. Written instructions must come before any work starts. This isn't just best practice; it's a contractual requirement that, if breached, can trigger professional liability claims. The Robinson v Kenny case saw an architect hit with a $2.47 million judgment partly because variation procedures weren't properly followed. Your typical process should run like this: identify the potential variation, document the scope change clearly, obtain the contractor's quotation (including time impacts), assess the quotation independently, get your client's written approval, then issue formal variation instructions. Skip any of these steps, and you're exposing both your client and yourself to significant risk. ## **Material Substitutions, The Current Reality**  Material substitutions dominate variation requests right now. When assessing these, you're balancing multiple factors: performance equivalence (does it meet the NCC requirements?), aesthetic impact (will your client accept the visual change?), sustainability considerations (embodied carbon, recyclability), and cost implications (not just initial cost, but lifecycle considerations). The VBA requires that any substitution affecting a performance solution needs formal reassessment. You can't simply swap materials without checking whether the compliance pathway remains valid. Document your assessment process thoroughly, photograph samples, keep technical data sheets, and record your rationale for approval or rejection. ## **Pricing Assessment Challenges** Fair pricing assessment requires both commercial awareness and contractual understanding. Under AS 4000:2025, you'll follow a clear hierarchy: agreed rates first, then bill quantities rates, followed by rates for similar work, and finally, reasonable rates including margins. Contractors are entitled to reasonable compensation, typically 10-15% overhead and 5-10% profit, but the current market has seen some attempting to exploit shortages through excessive pricing. When prices seem inflated, don't just reject them outright. Get comparative quotes, consult your quantity surveyor, and check industry databases like Rawlinsons. Document your assessment process because if disputes arise, you'll need to demonstrate you acted reasonably and impartially. ## **Time Impacts Often Exceed Costs** Here's something that catches many architects off-guard: the time impact of variations often costs more than the direct work itself. A seemingly minor design change might affect the critical path, triggering liquidated damages far exceeding the variation's value. With current construction programmes already extended due to labour shortages, averaging 30% longer than pre-2020, additional delays compound quickly. Always assess programme impacts alongside costs. Get the contractor to demonstrate critical path effects using proper delay analysis methods. Under most Victorian contracts, you'll have 14 days to assess extension of time claims, and missing this deadline can make you liable for the contractor's delay costs. ## **Documentation as Professional Protection**  The statistics are sobering: poor documentation causes 60-90% of variations and adds 10-15% to project costs. Your variation register isn't just an administrative tool, it's your professional protection. Track every variation from identification through completion, including who raised it, when it was identified, cost and time impacts, approval status, and completion confirmation. Photographic evidence has become crucial. Before, during, and after photos with proper date stamps and location references can resolve disputes months later. Store these systematically, you might need them years down the track if claims arise within the 10-year limitation period. ## **Practical Tips for Success** Set up your variation management systems during project establishment, not when the first variation arises. Create project-specific templates, establish approval authorities (who can approve what value?), and implement regular review cycles. Monthly variation meetings with your contractor and client keep everyone aligned and prevent surprise claims at project end. With the Security of Payment Act reforms removing restrictions on variation claims, expect contractors to be more aggressive in pursuing variations. The new provisions protecting against unfair time bars and extending claim periods mean thorough documentation becomes even more critical. Remember, when you're assessing variations, you wear two hats. As your client's agent when giving instructions, but as an independent certifier when assessing claims. This dual role creates inherent tension, navigate it by being transparent about your obligations to both parties. **Key Terms:** - **Variation**: An owner-initiated change to contract scope, accepted before work proceeds, altering the original contract requirements - **Claim**: A contractor-initiated request for additional payment or time, typically for unforeseen circumstances or disputed entitlements - **Critical path impact**: How a variation affects the longest sequence of activities determining project completion date - **Excluded amounts**: Victoria's unique SOP Act restriction (being removed) preventing claims for variations, damages, and latent conditions - **Time bar**: Contractual deadline for notifying claims, missing it can void entitlement regardless of merit - **Dual role**: Architect's obligation to act as client's agent for instructions but independent certifier for assessments - **Extension of time (EOT)**: Formal adjustment to contract completion date due to qualifying delays including approved variations