The Problem With Construction Variations
A casual ‘yes’ on the site can spiral into a heap of issues down the line. Picture this – you agree to a variation, get to work, and then, come payment time, there’s a problem. No formal agreement was made, no signatures collected. The person who gave you the go-ahead may have left the company! Suddenly, you’re left with unpaid invoices for work you’ve unquestionably completed.
The Importance of Change Orders
Enter the Change Order, also known as a Variation Order. This essential document serves as a record of any changes made to the original contract, agreed upon by both parties. It includes specifics about the change – its nature, rationale, impact on cost, and potential alterations to the schedule. It’s an agreed-upon amendment that leaves no room for future discrepancies.
Solid Foundations: A Cautionary Tale
(yes, it’s totally made up… but all too real!)
This is the unfortunate story of “Solid Foundations Construction,” a small, family-run construction company. Solid Foundations prided themselves on their flexibility and commitment to their clients.
One of their significant projects was a residential complex in the heart of the city. During the project, the client, a reputable property developer, requested some notable design alterations. These changes included adding an entire floor to the building, modifying the layout of several apartments, and installing a more advanced heating system. Solid Foundations, eager to please their client and confident in their ability to handle these modifications, agreed to the changes verbally during an on-site meeting.
Construction went ahead with the new design alterations. Solid Foundations’ team worked tirelessly to incorporate the changes, bringing the new vision to life. The client frequently visited the site, expressing satisfaction with the progress.
However, when the time came for the revised invoice, the client baulked at the additional costs related to the variations. Citing a lack of formal, written agreement for these significant changes, they refused to cover the extra expenses. Solid Foundations found themselves in a precarious position – having already paid for the materials and extra labour out of their own pocket, they were now facing a substantial financial loss.
Despite numerous negotiations, the client stood firm, and the dispute escalated to a full-blown legal battle. While the proceedings dragged on, Solid Foundations had to deal with delayed payments, causing a serious blow to their cash flow. This, coupled with the mounting legal fees, put the company in a financial strain. Their reputation was also affected as the legal dispute became known within their industry network, causing a strain on their business relationships.
This sobering story of Solid Foundations Construction underlines the essential role of proper variation documentation in the construction industry. It’s a reminder that no matter how small or large the variation might be, getting a signed agreement beforehand is not just good practice, but a necessity.
The Solution: Best Practices for Managing Construction Variations
So how do we avoid falling into the trap of poorly managed variations? Here’s a simple yet effective approach:
- Document Everything: Before you start any variation work, get a signed Variation Order. This could be an email, a piece of paper, but it must be signed by someone authorised. This will be your protection when it’s time for payment.
- Keep Communication Lines Open: Ensure everyone involved is on the same page about the changes. Misunderstandings can lead to disputes, so be clear about what’s being altered in the project.
- Use Technology: Numerous project management tools can help you keep track of variations and ensure everyone stays informed. They provide a centralised location to manage changes and keep all parties updated.
- Engage Effective Project Management: A competent project manager who understands all aspects of the project, including changes, is invaluable. They ensure all stakeholders are informed and all variations are properly documented.
Properly managing your variations does more than just prevent disputes. It helps your projects stay on schedule, controls costs, and maintains healthy relationships with clients. At the end of the day, it fosters a more efficient, harmonious work environment.
Contingency Planning
And remember, have a plan B…Construction projects are complex and can be unpredictable. Having contingency plans in place gives you a safety net when unforeseen changes occur. This might mean budgeting for potential overruns or having backup resources on standby.
The Bottom Line
Variations don’t have to be the monster under the bed for construction projects. With clear, well-documented agreements, open communication, and good project management, you can effectively manage them.
Remember, get that signature before you start, and you’ll save yourself a heap of trouble down the line.
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