My builder is asking for more money — what should I do?

The first thing to understand is that your builder asking for more money does not mean you have to pay it. Whether a claim is legitimate depends entirely on your contract, what was agreed at the outset, and whether the reason given is genuinely unforeseen. On a fixed price contract, the contractor bears the risk of their price being correct. If they have underestimated the cost of the work, that is their problem, not yours. You agreed a price and they are bound by it — unless the reason for the additional cost falls within a specific contractual entitlement. The main legitimate grounds for additional costs are: genuinely unforeseen conditions that could not reasonably have been anticipated from a pre-contract inspection, changes to the scope of work that you instructed after the contract was signed, and statutory requirements introduced after the contract date that affect the works. The most common illegitimate grounds are: the contractor underestimated their costs, materials have increased in price since they quoted, the job is taking longer than they expected, and they failed to include certain items in their original quote.

A legitimate additional cost claim — known as a variation or a variation order — should include several key elements. The contractor should explain clearly what the additional work is and why it is necessary. They should explain why it was not included in the original contract. They should provide a breakdown of the additional cost, not just a round number. And they should seek your written agreement before carrying out the additional work. If your contractor is asking for more money without explaining the reason clearly, without providing a cost breakdown, or after the additional work has already been carried out, these are warning signs that the claim may not be legitimate. Under most standard building contracts, including JCT, the contractor must give notice of a variation as soon as they are aware of it. A contractor who says nothing for weeks and then presents a large bill at the end of the project is in a much weaker contractual position than one who notified you promptly.

The most commonly cited reason for additional costs is unforeseen ground conditions — the contractor hit rock, found contaminated ground, discovered an old drain or foundation, or encountered something else that wasn't visible from the surface. These claims can be legitimate, but they are also frequently exaggerated or used as a catch-all for underestimated costs. If your contractor claims unforeseen ground conditions, ask them to show you the actual evidence — photographs of what was found, a written description of the conditions, and invoices for any additional plant or materials. A legitimate unforeseen condition claim will have clear evidence, a reasonable cost, and will have been notified to you promptly when the condition was discovered. A claim that appears weeks later, unsupported by evidence, with a round-number cost should be treated with scepticism.

Do not agree to any additional costs verbally and do not let the contractor proceed with additional work without your written agreement. The moment you say "that's fine" on a phone call, you may have created a legal obligation to pay. When your contractor raises an additional cost claim, put your response in writing immediately. Acknowledge that you have received their request, state that you require further information before you can agree, and list the specific information you need: the reason for the additional work, why it was not included in the original contract, a detailed cost breakdown, and supporting evidence. State clearly that you are not authorising the additional work or costs until you have received and agreed the information requested. If the additional work is genuinely necessary to prevent damage or progress the project, you may need to authorise it to proceed while reserving your right to dispute the cost. Once you have reviewed the information and formed a view, respond in writing either agreeing to a specific amount, making a counter-proposal, or rejecting the claim with your reasons.

Even if a variation claim is legitimate in principle, the amount claimed may not be fair. Labour rates, material costs, and plant hire all have realistic market ranges. A cost claim significantly above these ranges should be challenged. Ask for a breakdown of the costs: how many operative hours at what rate, what materials at what cost from which supplier, and what plant at what hire rate. Cross-check these against market rates. If the contractor has used their own labour and materials, they are entitled to a reasonable profit margin on top of their costs — typically 10–20% — but not more. If you dispute the amount, make a counter-proposal based on what you believe is fair. Put your reasoning in writing and invite the contractor to respond.

Handling additional cost claims well requires you to be firm about the process without being aggressive about the relationship. Your contractor is still on your site and you need them to complete the work. Being unreasonably difficult can damage the relationship and the quality of the final result. The key is to be clear, consistent, and professional. Require the right information, take time to assess it properly, and respond with reasoned positions rather than flat refusals. A contractor who is acting in good faith will respond well to this approach. One who is trying to take advantage will quickly become apparent. If a dispute escalates and cannot be resolved, most standard building contracts include dispute resolution mechanisms — adjudication under JCT, or mediation as a first step. These are significantly cheaper and faster than litigation and are worth pursuing before reaching for lawyers.