Variations Claimed in NSW Payment Claims

📅 Updated: July 2024 ⏱️ 8 min read 📋 Payment Claim Best Practices

⚠️ Compliance Warning

Incorrectly claiming or omitting variations can lead to invalid payment claims, loss of entitlement, and having adjudication determinations overturned for jurisdictional error.

1. Field Name and Definition

Variations Claimed is a critical field in NSW Payment Claims that documents all changes to the original construction contract scope. This field captures additional work, modifications, or alterations to the original contract that affect the contract price.

The field appears on Payment Claims because the Building and Construction Industry Security of Payment Act 1999 NSW (the Act) entitles contractors to claim payment for all construction work carried out, including variations to the original contract. This ensures contractors receive payment for legitimate additional work performed beyond the initial scope.

Variations typically fall into three categories:

Approved variations: Changes formally accepted by the principal or their representative.
Submitted but not yet approved variations: Changes awaiting formal approval but for which work has already been performed.
Disputed variations: Changes where disagreement exists about entitlement, scope, or value.

2. Legal Requirements

Statutory Foundation

Under Section 13 of the Act, a payment claim must identify the construction work or related goods and services to which the progress payment relates. This explicitly includes variations to the original contract scope.

Case Law Clarification

Liebe v Molloy [1906] HCA 67

Established that where contractual approval processes allow claims even without formal approval, and the contractor is aware of the subcontractor's work, an implied contractual entitlement may accrue.

Northbuild Construction v Beyfield [2014] QSC 80

Found jurisdictional error where variations were awarded without contractual entitlement at the reference date. Non-compliance with contractual provisions was fatal to validity.

Consequences of Non-Compliance

Incorrectly completing or omitting variation information can result in:

Invalid payment claims.
Loss of entitlement to claim for completed work.
Adjudication determinations being set aside for jurisdictional error.
Inability to recover legitimate costs for additional work performed.

3. Practical Guidance

Step-by-Step Instructions

Identify All Variations: Review all project correspondence, site diaries, drawing revisions, and client requests for any changes.
Categorise Each Variation: Separate approved, unapproved, and disputed items. Note the contractual approval status for each.
Gather Supporting Documentation: Collect written orders, email confirmations, meeting minutes, photos, and marked-up drawings.
Calculate Variation Values: Apply agreed or reasonable rates, including all direct costs, overheads, and profit.
Present Information Clearly: Use clear item numbering, detailed descriptions, and state the approval status and dates explicitly.

Where to Find Information

Key sources for variation details include contract variation registers, site instruction books, email correspondence, project meeting minutes, superintendent's directions, updated drawings, and site diaries.

4. Common Mistakes and How to Avoid Them

1. Failing to Distinguish Variation Categories

Mistake: Lumping all variations together without identifying approval status.
Best Practice: Clearly separate approved, pending, and disputed variations with distinct labelling.

2. Inadequate Descriptions

Mistake: Using vague descriptions like "extra work".
Best Practice: Provide specific, detailed descriptions matching site records and instructions.

3. Missing Contractual Basis

Mistake: Claiming variations without referencing the relevant contract provisions.
Best Practice: Always cite the contract clauses that permit the variations.

4. Poor Documentation

Mistake: Claiming variations without any supporting evidence.
Best Practice: Maintain comprehensive records and reference all supporting documents in the claim.

5. Risks of Not Including This Information

Risk Category	Description of Risk
Legal Risks	Claims may be deemed invalid under Section 13 of the Act, or an adjudicator may find they have no jurisdiction to rule on a variation without contractual entitlement.
Financial Risks	Failure to properly claim for variations means bearing the cost of additional work, leading to cash flow issues and severe profit erosion.
Dispute Risks	Poorly documented variation claims are more likely to be challenged by the respondent, prolonging dispute resolution and damaging business relationships.
Strategic Risks	In adjudication, you cannot introduce new evidence. A weak initial claim based on poor variation documentation significantly reduces the chance of a favourable outcome.

6. Examples

Example 1: Properly Completed - Approved Variation

Variation V001 - Additional Excavation for Unexpected Rock
Date Instructed: 15 March 2024 (Ref: SI-045)
Description: Excavate and remove 85m³ of sandstone rock encountered at grid lines A-C/1-3.
Approval Status: APPROVED (Ref: VO-023)
Value: 85m³ @ $180/m³ = $15,300 (excl GST)
Contract Clause: 36.2 - Latent Conditions

Example 2: Properly Completed - Submitted Awaiting Approval

Variation V002 - Premium for Accelerated Concrete Pour
Date Instructed: 22 March 2024 (Verbal, confirmed by email)
Description: Additional costs for weekend concrete pour to maintain program after rain delays.
Approval Status: SUBMITTED (Ref: VAR-067)
Value: $5,600 (excl GST)
Contract Clause: 35.5 - Acceleration

Example 3: Properly Completed - Disputed Variation

Variation V003 - Design Coordination Works
Date of Work: 10-14 April 2024
Description: Additional coordination due to conflicting architectural and structural drawings.
Approval Status: DISPUTED (Superintendent claims work is included in original scope)
Value: $4,800 (excl GST)
Supporting Docs: RFI-089, NCR-045, Meeting Minutes 08/04/2024

7. Frequently Asked Questions

Q1: Can I claim unapproved variations in my payment claim?

A: Yes, you can and should include unapproved variations, but you must clearly identify their status as "submitted" or "pending approval". The adjudicator will then determine entitlement based on the contract and the evidence you provide.

Q2: What if the superintendent disputes that work is a variation?

A: Include the item in your claim but clearly label it as "disputed". Provide all evidence supporting your position that the work is outside the original scope, referencing contract clauses, drawings, and instructions. The adjudicator will make the final determination.

Q3: How much detail should I include for each variation?

A: Provide enough detail for the respondent and an adjudicator to understand what work was done, why it's a variation, and how the value was calculated. Include dates, quantities, rates, and references to supporting documents. More detail is always better.

Q4: Can I claim variations if I haven't followed the contractual notice requirements?

A: This is risky. Some contracts make notice a strict precondition to payment. You should still include the variation in your claim but be prepared to argue why you should be paid despite the procedural issue (e.g., the principal was aware and implicitly approved).

Variations Claimed