For many African small and medium enterprises (SMEs), the pressure to please a client often leads to a costly mistake: executing extra work on a project before securing a written agreement.
This eager approach frequently results in delayed payments, squeezed profit margins, and severe cash flow crises.
When an SME performs additional tasks without a signed variation order, they assume all the financial risk.
The client may refuse to pay, claim the work was part of the original scope, or delay settlement indefinitely.
The financial risk of verbal agreements
Consider a boutique office fit-out firm in Lagos contracted to renovate a corporate headquarters.
Midway through the project, the client asks for premium Italian floor tiles instead of the standard local options initially agreed upon.
The contractor agrees via a quick WhatsApp chat and purchases the premium materials immediately using their own working capital.
When the final invoice is submitted, the client’s internal audit department rejects the extra cost, citing a lack of formal procurement approval.
The contractor is left to absorb the cost of materials and extra labour, wiping out their entire profit margin on the project.
To protect your cash flow, you must put variation order before doing extra work.
A variation order is a formal amendment to your original contract that legally binds the client to pay for the changes.
The five essential elements of a watertight variation order
A professional variation order must contain specific details to prevent disputes during final billing.
Make sure your document includes these five critical components before any extra work begins.
- Clear description of the new scope: State exactly what is being added or removed from the original contract. Avoid vague terms and use specific measurements, brands, or technical specifications.
- Detailed cost breakdown: State the exact financial impact of the variation. Itemise the costs for materials, labour, equipment hire, and your overhead markup.
- Schedule and timeline impact: Extra work almost always takes more time. Specify the exact number of additional days required to complete the variation and how this shifts the final project delivery date.
- Payment terms for the variation: Specify when the payment for this variation is due. For high-cost variations, require an upfront deposit before purchasing new materials.
- Authorised signatures: Ensure the document is signed and dated by the client’s designated representative who has the legal authority to amend the contract.
Practical steps to enforce a variation culture
Transitioning to a strict variation policy requires a shift in how your project team interacts with clients.
Establish a clear company policy that no employee is permitted to purchase materials or execute tasks outside the original contract without an approved variation order.
Provide your site managers and team leaders with a standardised, simple variation template that they can fill out on-site or send digitally.
Educate your clients at the start of the project about this process, explaining that the system keeps the project organized, transparent, and on schedule.
Your immediate next step is to review your current active contracts and draft a standard variation order template for your business.
Train your team to use this template immediately whenever a client requests a change, ensuring that you put variation order before doing extra work on any project.
