1. Field Name and Definition

Variations refers to an itemised list of all approved changes to the original scope of works in a construction project, including a clear description, approval reference, and all associated costs.

In a Cost Plus Payment Claim, variations represent additional or changed work that was not part of the original contract scope but has been formally approved by the principal. These modifications can include:

• Additional work requested by the principal
• Changes to the original scope due to unforeseen circumstances
• Alterations to specifications, materials, or design
• Deletions from the original scope (negative variations)

Variations appear on a Payment Claim because they represent additional value that the contractor is entitled to claim, beyond the original contract price.

2. Legal Requirements

Relevant Sections of the Building and Construction Industry Security of Payment Act 1999 (NSW)

While the Act does not specifically mention "variations" by name, they fall under the broader definition of "construction work" in Section 5 and "related goods and services" in Section 6. The Act creates a statutory entitlement to claim payment for all construction work carried out under a construction contract, including approved variations.

The process for claiming variations must comply with Section 13 of the Act, which requires that payment claims identify the construction work, indicate the amount claimed, and state that the claim is made under the Act.

Case Law Clarifications

Consequences of Incorrectly Completing or Omitting This Field

Failure to properly document variations in a payment claim can have serious consequences:

1. The respondent may reject the entire claim or just the variation component.
2. In adjudication, poorly documented variations may be determined as invalid.
3. The statutory right to payment for the variations may be compromised.
4. The claimant may need to resubmit the claim, potentially missing critical reference dates.

3. Practical Guidance

Step-by-Step Instructions for Completing This Field

1. Compile a comprehensive list of all variations that have occurred since the last payment claim.
2. For each variation, include:
   • A unique identifier or item number.
   • A clear description of the additional or changed work.
   • Reference to the approval documentation (e.g., variation approval number, date of approval).
   • The agreed cost of the variation (excluding GST).
   • If applicable, the percentage of the variation work completed in this claim period.
3. Present in a clear tabular format for maximum clarity.
4. Include subtotals for all variations claimed in the current period and ensure they flow to the claim summary.

Where to Find This Information

This information can typically be found in:

• Contract administration files and variation registers.
• Site instructions or variation orders from the principal or superintendent.
• Email correspondence confirming variation approvals.
• Meeting minutes where variations were discussed and approved.
• Progress reports documenting the status of variation works.

4. Common Mistakes and How to Avoid Them

Claiming Unapproved Variations

Error: Including variations that haven't received formal, written approval. Verbal approvals are difficult to enforce.

Solution: Maintain a master variations register and ensure every claimed item has a corresponding written approval document. Follow up verbal instructions with an email confirmation immediately.

Inadequate Descriptions or Missing References

Error: Providing vague descriptions (e.g., "Extra work") that don't clearly identify the scope or failing to include specific references to approval documents.

Solution: Write concise but comprehensive descriptions and always include the specific document reference (e.g., "VO-023", "Email approval 24/04/2025").

Double-Claiming or Calculation Errors

Error: Claiming the same variation work in multiple payment claims or making mathematical errors in calculating percentages.

Solution: Implement a system to track previously claimed percentages. Have a second person check all calculations before submitting the claim.

5. Risks of Not Including This Information

Omitting or incorrectly documenting variations poses significant risks that can impact your project's financial health and legal standing.

6. Examples

7. Related Fields

The Variations field is interconnected with several other parts of the payment claim. Ensuring consistency across these fields is crucial for a compliant and defensible claim.

• Original Contract Sum: Variations must be clearly distinguished from the original contract works to show how the total contract value is adjusted.
• Summary of Claim: The total amount claimed for variations must flow through accurately to the payment claim summary.
• Previous Claims: This field must reconcile with variation amounts and percentages claimed in previous payment claims to prevent duplication.
• Supporting Documentation: All referenced approval documents (e.g., VO-087) must be included as attachments to substantiate the claim.

8. Frequently Asked Questions