What NSW law requires
For contracts covered by the Home Building Act 1989 (NSW), Schedule 2 says any agreement to vary the contract, or its plans and specifications, must be in writing and signed by or on behalf of each party. NSW Government guidance also says the variation should explain the cost and its effect on the overall contract price, and show how the price change was worked out rather than just a dollar figure. Sources: Home Building Act 1989 (NSW) Sch 2 cl 1(2); NSW Government, Contracts for residential building work (checked October 2026).
Working out the price
- List each cost, excluding GST: materials, labour, subcontractor quotes, hire, disposal.
- Subtract credits for any work or items you no longer supply.
- Add your markup or margin. They are not the same (see the example).
- Add GST at 10% if you are registered and your contract price includes GST.
- Show the new contract price: the previous contract price plus this variation.
Worked example
| Step | 20% markup | 20% margin |
|---|---|---|
| Costs (materials $900 + labour $500), excl. GST | $1,400.00 | $1,400.00 |
| Markup / margin | $280.00 (20% of cost) | $350.00 (20% of price) |
| Variation price excl. GST | $1,680.00 | $1,750.00 |
| GST 10% | $168.00 | $175.00 |
| Variation price incl. GST | $1,848.00 | $1,925.00 |
Our free variation price calculator does this for you and writes a summary showing the calculation, ready for both parties to sign.
Extra time
If the variation adds working days, say so on the form. When it is signed, add the days to the program so the linked tasks after it move, and tell the trades. A Gantt app like Construction Gantt moves the chain automatically when you lengthen one task.
Keep a register
Number every variation (V01, V02…), record its status (draft, sent, approved, rejected) and keep a running contract price. Progress claims should use the current price. The free NSW Builder Admin Pack has a variation form and an Excel variation register.
FAQ
Does a variation have to be in writing in NSW?
For contracts covered by the Home Building Act 1989 (NSW), yes. Schedule 2 says any agreement to vary the contract, or its plans and specifications, must be in writing and signed by or on behalf of each party.
Is 20% markup the same as 20% margin?
No. Markup is added to your cost: $1,400 cost plus 20% markup is $1,680. Margin is a share of the price: a 20% margin on $1,400 cost is $1,750, because $350 is 20% of $1,750. Say in the variation which one you used.
Do I add GST to a variation?
If you are registered for GST and the contract price includes GST, show the variation price excluding GST, the GST (10%) and the total including GST, and the new contract price.
What if the variation adds time?
Write the extra working days on the variation, get it signed, and update your program so every linked task moves. Keep the signed variation with your site diary for any extension of time claim.
General information only, not legal, tax or financial advice. Check your contract’s variation clause and get advice for your situation.