Free Variation Order Generator

What a variation order is and why it matters

A variation order (also called a change order) is a formal document that records changes to the original scope, cost, or timeline of a construction contract. In Australian construction, variations are governed by the contract conditions (AS 2124, AS 4000, or bespoke head contracts) and must be documented in writing to be enforceable.

Without a signed variation order, contractors risk performing additional work that the client disputes or refuses to pay for. Clients risk scope creep and cost blowouts when variations are agreed verbally but never formalised. A variation order process protects both parties and creates an auditable trail of how the contract value has changed over time.

Worked example: design change on commercial fit-out

A head contractor on a AU$4.2 million commercial fit-out in Melbourne receives a client instruction to relocate the server room from Level 2 to Level 3. This affects electrical, mechanical, and data cabling subcontractors. The variation order documents:

The variation also requests a 5-day extension of time because the mechanical works on Level 3 cannot start until the electrical rough-in is relocated. The revised contract value becomes AU$4,235,185. This figure flows through to the next progress claim, where the percentage-complete calculation now references the updated contract sum.

Variation valuation methods

Most construction contracts specify how variations should be valued. The three common methods:

• Schedule of rates: The contract includes a pre-agreed schedule of unit rates. Variations are valued by applying the relevant rate to the measured quantity. This is the simplest and least disputed method, but only works when the varied work falls within the scheduled items.
• Cost-plus (daywork): The contractor records actual labour hours, materials, and plant costs, adds an agreed margin (typically 10-15%), and submits the total. This is used when the work cannot be accurately measured or priced in advance. Requires detailed timesheets and material dockets.
• Lump sum quotation: The contractor provides a fixed price for the variation scope. The superintendent reviews and negotiates before approving. This is common for clearly defined additions or omissions where the scope is known upfront.

Under AS 4000 (clause 36), if the parties cannot agree on the valuation, the superintendent makes a determination. The contractor can dispute that determination, but work typically proceeds at the superintendent's assessed value until the dispute is resolved.

Common mistakes in variation management

Verbal agreements without written follow-up. On site, changes are often agreed in a conversation between the site supervisor and the superintendent. If nobody documents the agreement, the contractor has no evidence when it is time to claim payment. The safest practice is to issue a written notice of variation within 24 hours of any site direction, even if the formal variation order follows later.

Not updating the contract sum after approving variations. If 12 variations are approved over 6 months but the payment schedule still references the original contract value, the percentage-complete figures in progress claims are wrong. The retention cap is also calculated on the wrong base. Every approved variation should update the contract sum in the project records immediately.

Missing the contractual notice period. Most contracts require the contractor to give written notice of a variation claim within a specified period (often 14-28 days of the direction or circumstance). Missing this deadline can bar the claim entirely, regardless of its merit. The notice requirement is one of the most litigated clauses in Australian construction contracts.

How to use this variation order generator

1. Enter the contractor and client details, including ABNs and addresses.
2. Add the project name, contract number, and site address.
3. Describe the variation: what changed, why, and who requested it.
4. Add line items with quantities, units, and rates. The tool calculates amounts and GST automatically.
5. Record the impact on the contract value and any time extension required.
6. Download the PDF for signatures and filing against the contract.

Frequently asked questions

Does a variation order need to be signed before work starts?

Best practice is to obtain written approval before starting varied work. Many contracts allow for verbal or written directions to proceed, with the formal variation order following. The risk of proceeding without a signed variation is that payment may be disputed. Check your contract conditions for the required process.

How does GST apply to variations?

GST applies to construction variations at 10% on the variation amount, the same way it applies to the original contract. The variation order should state whether amounts are GST-inclusive or exclusive to avoid confusion when the corresponding invoice is raised.

What is the difference between a variation and a provisional sum?

A provisional sum is an allowance included in the original contract for work that cannot be fully defined at the time of tendering. When the work is defined and priced, the difference between the provisional sum and the actual cost is adjusted through the variation process. The adjustment can be positive (actual cost exceeds the allowance) or negative (actual cost is less).

How do variations affect retention?

Approved variations increase the total contract sum, which increases the retention cap (typically 5% of the revised contract value). This means additional retention will be deducted from progress claims until the new cap is reached. Use the retention schedule calculator to model the impact.