Can a Verbal Instruction Really Become a Construction Claim?

“Just go ahead and do it. We will sort out the paperwork later.”

That sentence may sound harmless on a busy construction site. But what happens when the work is completed and the contractor sends a variation claim, only for the principal to say that no variation was ever approved?

This is where a simple verbal instruction can become the starting point for a construction dispute.

Construction projects move quickly. Site managers, builders, engineers, subcontractors and principals often need to make decisions on the spot. Waiting for every instruction to be formally documented can seem impractical. The problem is that people may remember the same conversation very differently once additional costs appear.

So, can a verbal instruction really become a construction claim?

The short answer is: potentially, but it depends on the contract, what was actually said or directed, what work was carried out, and what evidence exists to support the claim.

What Is a Verbal Instruction?

A verbal instruction is a direction given verbally rather than through a formal written variation, site instruction or other documented process.

For example, a project manager might tell a contractor:

“Move that wall two metres and use the revised layout.”

The contractor proceeds with the work. Later, the contractor discovers that the change required additional labour, materials and time.

The contractor may consider this additional work to be a variation and seek payment.

The principal, however, may argue that the work was already included within the original scope.

That disagreement can quickly become a claim.

Can a Verbal Instruction Create an Entitlement to Payment?

There is no simple rule that every verbal instruction automatically creates a right to additional payment.

The starting point is the construction contract.

Many construction contracts contain specific procedures for variations. They may require instructions to be given in writing, specify who has authority to approve variations, or require notice to be provided within a particular period.

These contractual requirements can become extremely important when a dispute arises.

At the same time, the circumstances surrounding the instruction matter. The parties may need to establish what was requested, who gave the instruction, whether that person had authority, whether the contractor understood it to be additional work, and whether the principal knew the contractor was incurring additional costs.

Under NSW's Building and Construction Industry Security of Payment Act 1999, the valuation of construction work can take account of variations agreed by the parties where the contract does not otherwise provide for the matter.

This does not mean that every verbal direction will automatically be treated as an agreed variation.

The Difference Between an Instruction and a Variation

One of the most important questions is whether the instruction actually changed the contractor's contractual obligations.

Consider two situations.

Situation 1: Clarification

The site manager says:

“Install the tiles shown on Drawing A12 in the bathroom.”

If those tiles and the installation were already included in the original scope, the instruction may simply clarify how the existing work should be completed.

Situation 2: Additional Work

The site manager says:

“Install tiles in the additional storage area as well.”

If that area was not part of the original scope, the contractor may have grounds to argue that additional work was instructed.

The wording alone may not settle the issue. The original drawings, specifications, pricing documents, correspondence and project records may all become relevant.

What If the Instruction Was Given by Phone?

This is where construction records become particularly important.

A phone conversation may not leave an obvious written record. But the consequences of that conversation can leave plenty of evidence.

For example:

• A site diary may record the instruction.
• An email may refer to the conversation.
• A revised drawing may appear shortly afterwards.
• Additional materials may have been ordered.
• Labour records may show extra work.
• Progress photographs may show the changed work.
• Meeting minutes may mention the instruction.
• The contractor's variation submission may describe what happened.

Individually, some of these records may appear insignificant.

Together, they may help establish what actually happened.

What Happens When the Principal Says, “I Never Approved That”?

This is one of the common points of disagreement in variation claims.

The contractor may say:

“We were instructed to do the additional work.”

The principal may respond:

“That was only a discussion. We never authorised a variation.”

At that point, the dispute may turn into an evidence question.

Who gave the instruction?

What exactly was said?

When was it said?

Was the person authorised to give the direction?

Did the contractor immediately raise the additional cost?

Did the principal know the contractor was treating the work as a variation?

Was the work consistent with the alleged instruction?

Were objections raised at the time?

There may not be one document that answers all of these questions. The surrounding project records can become important.

Why Timing Matters?

A contractor who believes additional work has been instructed should not necessarily wait until the next payment claim to raise the issue.

The contract may contain notice requirements or procedures for variations and claims.

Waiting can create uncertainty about whether the principal knew the contractor was treating the work as additional.

For example, imagine a contractor receives a verbal direction on Monday, completes the additional work over the next three weeks and submits a variation claim at the end of the month.

The principal may then argue that it believed the work was part of the original contract.

The longer the issue remains undocumented, the harder it may become to establish what both parties understood at the time.

What Evidence Can Support a Verbal Instruction Claim?

Good project records can make a significant difference.

Depending on the circumstances, useful records may include:

• Site diaries
• Daily reports
• Emails
• Text messages
• Meeting minutes
• Site instructions
• Revised drawings
• Progress photographs
• Timesheets
• Material invoices
• Delivery dockets
• Project schedules
• Variation registers
• Cost records
• Payment claims

The purpose is not simply to collect documents after a dispute begins.

The stronger approach is to create accurate records while the project is being delivered.

What If the Contractor Completed the Work Without Written Approval?

This is where the contractual terms need to be examined carefully.

A contractor may believe that the principal clearly instructed the additional work. The principal may rely on a clause requiring written approval before a variation can be claimed.

The outcome can depend on the wording of the contract and the facts surrounding the instruction.

There can also be questions about conduct. For example, if the principal knew additional work was being carried out, observed the work progressing and did not object, that surrounding conduct may become relevant to the dispute.

That does not mean silence automatically equals approval. It means the circumstances should be examined rather than assuming that the verbal instruction alone settles the issue.

Can a Verbal Instruction Affect a Payment Claim?

Potentially, yes.

If a contractor considers that additional work was performed under an instruction and payment is disputed, the amount may eventually form part of a payment claim, depending on the contract and applicable legislation.

Under the NSW Security of Payment framework, a payment claim must identify the construction work or related goods and services to which the claim relates and state the amount claimed.

This is one reason why contractors should keep clear records linking additional work to the instruction that caused it.

A claim becomes much easier to understand when the records show:

Instruction → Additional work → Cost → Supporting evidence

How Can Contractors Reduce the Risk?

The safest approach is to document instructions as soon as possible.

If a verbal direction is given, the contractor can consider confirming it in writing.

For example:

“Further to our discussion today, we understand that you have instructed us to relocate the wall shown on the current drawing. We understand this work is additional to our original scope and may involve additional labour, materials and time. Please advise if our understanding is incorrect.”

This creates a record of what the contractor understood.

It also gives the other party an opportunity to correct the record if there has been a misunderstanding.

The exact wording and process should always be considered against the requirements of the particular contract.

What Should Principals Do When Giving Verbal Instructions?

The issue is not only a contractor's responsibility.

Principals, project managers and contract administrators should also be careful when giving instructions on site.

If an instruction changes the scope, cost or programme, it should be clearly documented and dealt with through the contract's variation procedure where required.

A casual instruction can create uncertainty months later, particularly when different people remember the conversation differently.

Clear documentation can prevent a small site decision from becoming a much larger dispute.

When Can a Verbal Instruction Become a Serious Construction Dispute?

A verbal instruction becomes particularly problematic when it affects significant cost, time or scope.

For example:

• The contractor claims substantial additional costs.
• The principal denies authorising the work.
• The contract requires written variation approval.
• The person giving the instruction had uncertain authority.
• The contractor failed to provide a required notice.
• Project records contradict each other.
• The additional work caused further delays.
• The parties disagree about the original scope.

At that point, the issue is no longer simply about what someone said on a construction site.

It can become a question of contract interpretation, evidence, valuation, delay and entitlement.

How Can a Construction Dispute Be Avoided?

Many disputes involving verbal instructions can be reduced through better contract administration.

Before carrying out additional work, project teams should consider:

1. What exactly has been instructed?
2. Is the work already included in the contract?
3. Who has authority to issue the instruction?
4. Does the contract require written approval?
5. Is a notice required?
6. What additional cost could arise?
7. Could the instruction affect the project programme?
8. Has the instruction been confirmed in writing?
9. What records support the work?
10. Has the other party had an opportunity to respond?

These steps may appear administrative, but they can become extremely valuable if the relationship between the parties later breaks down.

Final Thoughts

A verbal instruction may take only a few seconds to give.

Proving what that instruction meant months later can be much harder.

Whether a verbal direction becomes a construction claim depends on the contract, the circumstances, the authority of the person giving the instruction, the work performed and the evidence available.

For contractors and principals, the practical lesson is straightforward: if an instruction could change the scope, cost or time of a project, do not rely on memory alone.

Put it in writing.

Good records may not prevent every construction dispute, but they can make it much easier to establish what actually happened.

Frequently Asked Questions

Can a verbal instruction be legally binding in construction?

It can potentially have contractual significance, but whether it creates an enforceable entitlement depends on the contract and the circumstances. Particular attention should be given to any clauses dealing with variations, authority and notice requirements.

What if the principal denies giving the verbal instruction?

The parties may need to examine the surrounding evidence, including emails, site diaries, meeting minutes, drawings, photographs, timesheets and other project records.

Can a contractor claim payment for work instructed verbally?

Potentially, depending on the contract, the circumstances and applicable law. The contractor should be able to clearly identify the additional work and provide evidence supporting the claim.

Is a text message enough to prove a construction variation?

A text message may form part of the evidence, but its significance depends on what it says and the wider circumstances. Other project records may also be relevant.

What should I do after receiving a verbal instruction?

Where the instruction may affect scope, cost or time, consider confirming the instruction in writing and following the variation and notice procedures contained in the contract.

Can verbal instructions cause construction disputes in NSW?

Yes. Disagreements about whether work was instructed, whether it was additional, who authorised it and whether the contractor complied with contractual procedures can all contribute to a construction dispute.

Legal note: This article provides general information only and is not legal advice. Construction contracts and disputes can turn on specific contractual terms and individual circumstances. Professional legal advice should be obtained for a particular matter.