Variations

Why they occur and how to get paid.

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Variations (or extras) are caused when a construction project deviates from what was originally agreed.  There are 2 sources of variations.  

The first is if the customer (or architect) changes the design or plan, such as asking for a door to be put in after a wall has just been built. The second when multiple trades working on the same project. The trades typically to go in a certain order. Let’s use a plasterer and a painter as an example. The plasterer goes in and does their job. But they did such a bad job, or leave such a mess, that the painter has to spend extra time sorting these issues. So, quite rightly, the painter feels they have done work which was not estimated.

If either of these happen, there is absolutely no reason for not charging the client more money. Yet most construction companies don’t. Or at the very least they don’t have a simple system for doing so. So what happens? They end up doing the work for free, yet it cost them time and materials they didn’t budget for.

The key to getting paid for all variations is to get a watertight, legal agreement from the client before undertaking the work. With variations we always assume the worse case scenario. Which is the customer will try to find a reason not to pay after with the work has been done. So we created variations section in our Apps that is up to such a good standard, it can stand up in court as evidence on their own. Here’s how our Apps achieve this.

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Delegate It

In order to get paid for all variations, even fairly small ones, its important that the guys onsite can organise it all themselves. Our Apps work on all smartphones so anyone can create a variation from start to finish. We’ve found through experience that if you try to restrict creating variations to only managers or the business owner then a lot of the smaller variations won’t get recorded. These people are busy and aren’t available when the variations crop up. This could lead to less income for the business.

Delegate It
Document It

Document It

Before we work out what needs to be done, it’s important to document the current situation. So whether its a change to the plan or another trade causing problems, the easiest way to do this is to take a series of photos. 2-3 is usually fine, but you can have as many as you want. As these may end up in court, we’ll timestamp and GPS stamp them to prove when and where they were taken.

As well as photos, we need to include some text. This is so we are clear on either what change the customer wants or why another trade is causing us problems. Later on, we are going to get them to sign and agree to whatever we have written here.

sign it

Price It

After documenting the current situation, we need to advise the customer on the costs of resolving the variation. Where another trade has caused extra work, this could just be some text – “2hrs to rectify damage to wall £120”. But for other clients we can allow the guys onsite to choose from a list of materials and add these to the variation. As each person using our Apps can be given different permissions, we can allow people to add materials without knowing the individual cost and sale price if required. We can also upload full price lists from suppliers.

Price It
sign it

Sign It

We now need formal approval to go ahead. Most trades we talk to slip up here and accept a verbal approval. But if its a high value variation or a domestic customer, there is a temptation for them to choose not to pay later on. Or try to ‘negotiate’ the price. So getting a signature gives 4 benefits.

Firstly it tells the customer that you are a professional business operating to clearly defined systems and procedures. The implication is you’re organised enough that you’ll go to court if required.

Secondly the signature is psychological. Everyone knows a signature is the most conclusive way to signify agreement. Most people would never sign something that they might want to later back out of. So getting the signature almost guarantees you’ll get paid.

Thirdly, it simplifies the question to your guys regarding if they have to do the variation. If they get a signature, then yes, otherwise no.

Finally if your guys are working mainly on construction sites, it would be the main contractors Site Manager who would sign. So this keeps things simple for him.

Document It

Email It

After getting a signature you need to send all relevant people an email to show what has been agreed. An email goes out as a PDF attachment and contains everything show above in one document. The email gets sent to either you or the client as soon as the variation is signed.

For domestic clients it helps to reinforce the agreement and to show that you have everything you might need to take them to court if they don’t pay. But you could also use this to delay doing the work until they have paid as well. Useful if its a large variation.

For main contractors an issue is the person signing is usually the main contractors Site Manager, whereas the person who will eventually pay is the QS or Finance Dept. So in this case we’d email all 3. If nobody objects yet they later try to avoid paying, this will be looked at very unfavorably by a court.

email it
invoice it

Invoice It

One of the secrets to getting paid quickly is to get your invoices out fast. Ideally we like to automate them but we can offer 4 alternatives. The simplest is just to attach the invoice to the email we sent above. So a minute after they sign they have the invoice.

Next you could opt to have the invoice emailed to you immediately. You can then send it when you like or batch some together to send as one. We can also integrate with any current cloud based accounts software. So we could set it up whereby as soon as the variation is signed, the invoice is automatically created in your accounts package. The last option, which we don’t recommend is that our App does nothing. You manually create the invoice.

One last thing we are doing for a number of clients is integrating the invoicing of variations with a valuations system. So that at each valuation, it is clear what variations also need paying. This stops clients opting to pay for variations at the end or after a project has complete, when there is a danger of them being out of cash. If by adding multiple variations, the project goes over their budget, you can resolve this if it is noticed soon enough.

invoice it

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WHAT OUR CUSTOMERS SAY


Since we've had our App created by 1minManager we've won more business, and profits have increased.  I've also found the business easier to manage and now spend much more time working on it than in it.

- Richard Anthony, Digitech

Date published: 2018/01/16
5 / 5 stars