How to avoid Variations of Contract (i.e. extras)
What can be worse than doing your homework, planning the job as best as you can and saving your hard-earned cash for years only to find out that your budget doesn’t cover everything in the contract you’ve signed? This is a common occurrence and you need to be ready for it. In the building trade, there are lots of grey areas that must be clarified before the project commences, leaving this for later and deal with it last minute, might cost you an arm and a leg. We’d hate to see you hop around on one limb so here is a few helpful tips on how to prevent and handle this sort of situations.
Always quantify the contract, i.e. try to establish how much are you paying for so many fittings, tiles, appliances etc. If the sum allowed is ambiguous, say £5000 for tiling, this will be open to interpretation of each side. In other words, you might end up arguing whether this was for 10m2 or a 100.
Allow contingency and worst-case scenario. Don’t try to fool yourself that you can get a kitchen for less than it’s being sold for or you won’t need those beautiful windows you always wanted. Budget for the higher end and work your way down. It’s imperative that there is a 5-10% margin for additional labour and other expenditure.
Pick a contract that has no variations at all, which will be ‘Design and Build’. The upside is that the contractor won’t be knocking on your door with another bill, but the downside is that the contract overall value will likely be higher than if you’d choose a standard JCT or RIBA (both popular documents used in the industry).
Employ a reputable quantity surveyor or estimator who will detail a precise and comprehensive bill of quantities as well as scope of works, that will eliminate the likelihood of any extras. Having said that, variations might still appear but in far smaller quantities.
It’s important to note that you must do you research and speak with more than a few professionals in the field before embarking on any kind of property development journey, as the financial side of things can spiral out of control if you don’t mitigate the risks. Stay well informed to avoid unnecessary expenses that will ultimately burn a hole in your pocket.