Do you think that builders want variations? Do you think that builders are looking for ways to “screw” their clients? Do you think builders will do anything to make that extra dollar out of their clients?
These are all very interesting questions. I’m going to give you my thoughts on these.
I don’t believe that builders want variations or that they are looking for ways to “screw” their clients or make that extra dollar. You might not agree but from my building career and time on the client side I think I have a reasonable handle on both sides of this issue.
Variations create problems for builders. For starters, are they really variations? Argument one just started. What is the actual extent of additional or reduced works? Yes, reduced; not all variations are additional works. Argument two just started. What is the real value of the variation works? Argument three just started! And so it goes on.
The last thing I wanted when I was a builder was variations. I just wanted to get stuck into my project and get it finished before the date for Practical Completion and for less than the budget. I did everything I could to support the design consultants and to get my requests for information (RFI) answered as quickly as possible.
Of course if it didn’t look like we were going to meet budget, then we had a problem. How do we meet budget? Many builders will quickly look for savings from their subcontractors and suppliers and become very argumentative in relation to variations to their subcontractors. Of course, if the opportunity arises to seek variations from the client, a builder will do so. Let’s face it this is business.
Building contracts are a “big game”; it’s about positioning your company to have the upper hand in a final project wrap-up/negotiation. Variations are a great way for a builder to protect themselves from the threat of liquidated damages.
Consider a builder has submitted a number of variations which have been rejected and the builder is going over time; technically liquidated damages are due to apply. But the builder claims that the rejected variations are reasonable and that the additional time these variations took to complete should extend the date for Practical Completion and therefore the builder finished on time.
At this point a client has a decision to make; negotiate or litigate.
What would you do?
The answer is very simple; negotiate!
The rest is up to you. If things can’t be worked out then you can always litigate. Sometimes the difference of opinion is so far apart that there is no other alternative; wrong! I would try to avoid litigation wherever possible and even look to give money away to be able to move on.
Litigation costs a lot of money but even worse it costs a lot of time and defocuses you completely from your core business. Think about this very carefully.