Variations

In this video, Mark Harris from Stroud Homes explains the five types of variations (building contract changes) that may occur during the home building process.

Video Transcript

Kia ora. Mark Harris here again from Stroud Homes. Let’s talk about variations. They can be a sticky issue but we really don’t need to be afraid of them. Variation just means a change. So, a contracted specification lives in text. When we make a change to it, we need to have that in text also, and that’s what a variation is.

There are five types of variations, but the most contentious is the post-contract variation because it attracts a fee. The reason for this fee is this, up to a certain point in the process, the parts of your home have not been ordered yet. After they’ve been ordered, the information is all out with the suppliers, the subcontractors, and it becomes very difficult to change. Changes while we’re already building a home usually result in us having to reschedule deliveries, amend our building programs, and reduce momentum, which, of course, has a cost associated with it.

Let’s go back and look at the five types of variations. First, we’ve got the post contract variations we’ve just discussed.

Secondly, pre contract variations are the ones that happen before we order the materials. There’s no fee associated with them. That’s still the decision-making time and they are fine. Plan well, build well.

The third type of variation is what we call a clarification variation. So sometimes when we build your home for you, there’ll be a few bricks left over, and the supervisor might have a quick chat with you and decide that we’re going to leave the bricks there so that you can build something with them yourself, maybe use them for some gardening edging, or something when you do landscaping or even a letterbox perhaps. We will need to get that on paper so that everyone knows what arrangements have been made and that’s called a clarification variation.

Credit variations are number four. Credit variations are simply used to credit back some money for something that’s in the contract that is no longer required. So this includes allowances for things like an upgrade that you might not want anymore.

And the fifth type of variation is just an adjustment allowance variation. So now, let’s say, for example, we use rock. If you’re building a new home in an area where you expect to hit rock, we might allow, say, $5,000 for that rock excavation. We finish the work and it only costs us $2,000. We give you a variation credit back for $3,000 that we didn’t need.

So that’s the story on variations. I hope this information helps make your building experience smooth and enjoyable.