September 21, 2022

The digital ink on my contract had only been dry around a week before I got my first inkling that I was about to get an unpleasant surprise – a contract variation. Naturally, this was to be an upward variation 

Clauses for variations are built in all HIA contracts, in mine it was in Schedule 2 of the building contract which relates to Prime Cost Items and Provisional Sums. See the excerpt from my contract below: 

Contract variation

Not long after I’d signed my contract there were emails flying back and forward between myself and my Henley administrator, *Janet (*name changed), regarding the location and condition of the council provided storm water main and Yarra Valley Water provided sewer line 

Who pays? You pay.

Due to the nature and content of the emails It became clear any costs involved in sorting out any issues with these connections would be borne by me, over and above what I was paying in my contract. These early cost blowouts were somewhat of a surprise so I decided to dig deeper into Henley’s provisions in my contract, and also their justification for hitting me with these costs outside of that contract. 

Part of my due diligence on this matter involved me requesting all available information that was used inform their conclusions be sent to me. These included arborist reports, photos the plumbers had taken from inside the pipe, letters to/from the local council and engineering drawings I’d procured of the pipework. 

After a bunch of back and forward emails between myself and Janet, most of the correspondence centered around what is termed the LPOD, or Legal Point of Discharge. 

Drain, drain , go away...

In a nutshell, the LPOD is the legal point at which your house is able to discharge your stormwater into the councils drains. These are the pipes that discharge into our creeks and rivers, then, in the case of Melbourne, eventually into Port Phillip Bay. 

Unfortunately for me, when my dodgy old house was built in the early 70’s there was either no requirement to record a LPOD, or it simply never got done. 

It's your money

Checking through my contract I noticed there was already a provision in the Tender for a licensed drainer to connect my new homes stormwater to the old LPOD (the one that never officially existed), the sum provisioned for this, $3,490. Finding that and pointing it out to Henley helped me further down the track 

Five weeks after I signed my contract Henly sent me through a contract variation to sign. Many of the items identified by the variation were fair enough. For example, Henley forgot to include the $2500 front door I’d chosen, along with a few smaller items like taps and other bathroom fixtures. No big deal. 

Other items, such as the 3-phase power I had been requesting since January 2022, really should have been picked up prior to issuing the contract. By far the largest cost identified was the LPOD. The post contract cost to complete the LPOD was $5,063 

The outcome?

Thankfully, Henley deducted the $3,490 mentioned earlier from the $5,063 cost of the LPOD, leaving me $1,573 to pay. Mind you, with the cost of the items Henley forgot to put in my contract, the variation was signed off at over $5K. 

There are completely valid reasons for your builder to issue a variation, and in the end, I paid the exact amount Henley asked me to pay. But it is more likely than not that I saved myself nearly $3.5K by asking a few questions. 

Never lose sight of the fact that your builder is spending your money.

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