A Research Project on the Impact of Variation Orders on Project

This research project delves into the impact of variation orders on construction project performance. It begins by defining variation orders and categorizing them based on the initiator, nature, and consequences. The study explores factors influencing variation orders, such as general changes, client-related changes, and contractor-related changes, and examines the implications of these variations on project costs and timelines. The research employs a mixed-methods approach, including preliminary surveys and main questionnaire surveys, to gather data for analysis. Ultimately, the project aims to identify strategies for minimizing the negative impacts of variation orders and improving overall project efficiency, offering recommendations and acknowledging the limitations of the study. Desklib provides access to this and similar research projects for students.

Research Project
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TABLE OF CONTENTS
Acknowledgements............................................................................................................................iv
CHAPTER 1 INTRODUCTION...................................................................................................1
1.1 Background...................................................................................................................................1
1.2 Problem statement........................................................................................................................1
1.3 Hypotheses.....................................................................................................................................2
1.4 Aim and Objectives.......................................................................................................................2
CHAPTER 2 LITERATURE REVIEW.......................................................................................3
2.1. Introduction.............................................................................................................................3
2.2. Definition..................................................................................................................................3
2.3. Type of Variation....................................................................................................................4
2.3.1. The parties to initiate Variation Order..........................................................................4
2.3.2. Nature of the variation....................................................................................................5
2.3.3. Beneficial variation orders..............................................................................................5
2.3.4. Detrimental variation orders..........................................................................................5
2.4. Factors Influencing the Variation..........................................................................................5
2.4.1. General Related Changes................................................................................................6
2.4.2. Client related changes......................................................................................................7
2.4.3. Contractor related changes.............................................................................................8
2.5 The Implication of Variations Order..........................................................................................9
CHAPTER 3 Research Methodology..........................................................................................14
3.1. Introduction...........................................................................................................................14
3.2. Research Process...................................................................................................................14
3.3. Research Design....................................................................................................................15
3.3.1. Research approach........................................................................................................15
3.3.2. Strategy of inquiry.........................................................................................................16
3.4. Research techniques..............................................................................................................16
3.4.1. Data collection techniques............................................................................................16
3.4.2. Preliminary survey........................................................................................................17
3.4.3. Main questionnaire survey...........................................................................................17
3.4.4. Determining the sample size.........................................................................................18
3.4.5. Sampling technique.......................................................................................................18
3.4.6. Data analysis technique.................................................................................................18
3.5. Summary................................................................................................................................18
CHAPTER 4 - Data Analysis and Interpretation..........................................................................20
CHAPTER 5 – Discussion of Findings............................................................................................31
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CHAPTER 6 – Recommendations and Limitations......................................................................33
CHAPTER 7 – Conclusion and Reflection.....................................................................................35
List of References..............................................................................................................................37
Appendix............................................................................................................................................39
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Acknowledgements
First and foremost, I would like to express my sincere gratitude to my advisor ……, for the
useful comments, remarks, guidance and engagement through the learning process of this
research.
My sincere thanks also go to my colleagues and friends cooperated in the supply of valuable
documents and sharing their experience.
Most importantly none of this could have happened without the endless love and support of
my parents. Likewise, I would like to say thank you to my family for their kind-heartedness
and continuous care.
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CHAPTER 1 INTRODUCTION
1.1 Background
A contract is a agreement between two or more parties and that will change. Contractual
provisions related to modifications allow contract parties to voluntarily initiate variation
orders within the framework of the activity without modifying the initial contract.
Modifications, additions, omissions, and substitutions in terms of consistency, quantity, and
work schedule are forms of variation orders. According to (Wainwright & Wood, 1983),
without contractual clauses, the construction contractor will be required to promise to
construction the building as per the drawings and described in the bills for a contract amount.
Any small improvements that the client or his/her engineer desired to make later would
necessitate the termination of the contract and the development of a new one.
(Willis & Willis, 1980) explained that, after a contract is signed, the condition cannot be
amended if not includes clauses for modification, and even only permissible changes are
expressly specified under the contractual terms. A provision providing for variance of works
is an integral part of any building contract and without it, the contractor is not obligated to
perform extra work or make omissions or adjustments Uff (2005). (Wainwright & Wood,
1983) have explained that, the customer has the right under contractual terms to change the
scope and quality of the contractor's results. In addition, according to (Finsen, 2005), the
contractor shouldn’t fail to carry out the varying duty, with the only recourse being an
increase in the amount to be charged for the performance, and, under appropriate cases, an
extension of time in which to carry out that performance. According to Ssegawa, Mfolwe,
Makuke, and Kutua (2002), the variation in which orders are granted is permitted by the spirit
to proceed without compressing another contract to complete the contract changes.
1.2 Problem statement
The research problem may be stated as follows:
Variation orders on construction activities have the potential to raise construction
costs unnecessarily without adding value to the project, in which case they can be considered
waste, and identifying their causes can contribute to their reduction, exclusion, and eventual
improvement in overall project efficiency.
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1.3 Hypotheses
The hypotheses to be tested in this study are:
 H1. Variation orders are prevalent on all construction projects
 H2. Variation orders always increase the cost of construction
 H3. All variation orders add value to construction projects
 H4. Variation orders may be regarded as waste
 H5. Variation orders may be eliminated if their causes are identified
 H6. Variation orders negatively affect overall project performance
 H7. The predominant origin agent of variation orders is the client.
1.4 Aim and Objectives
The purpose of this research is to study the impact of variation orders on project performance
and to take proactive measures to reduce them.
To achieve the goal, several objectives are defined, which are as follows:
1. To define the types of variance works that typically exist in the projects, as well as
the reasons that affect them.
2. To identify the issue that affects variance and the consequences of variation to the
construction in order to identify and prioritize the risks.
3. To determine the strategy action that can be taken to eliminate differences
beginning with the preparation stage and continuing into the construction stage.
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CHAPTER 2 LITERATURE REVIEW
2.1. Introduction
This study includes a detailed literature review that reflects on the possible causes of
variation orders, their consequences, origin agents, and strategies for monitoring potential
variation orders on construction projects.
According to (O'Brien, 1998), the need for improvements on project is a realistic fact. Also,
the most meticulously designed projects can require changes due to a variety of factors.
Similarly, Ssegawa et al., (2002) clarified that the building industry's compartmentalization
has made variance unavoidable feature and became widespread that is impossible to finish a
project without modifications to the design or the construction phase itself.
As a result, (CII, 1994b) state that, variation orders are unavoidable in the projects; the
intention of the owner, designer, or construction team is to limit the amount of such
modifications. Changes in drawings and contract papers nearly invariably result in a
reduction in contract price or contract schedule. Variations, in the past, have created
concerns with all those participating in the building process. Proper deviation order control
is thus critical for all kinds of building projects.
2.2. Definition
Regardless of the most sophisticated project management methods and strategies available,
changes have come to be recognized as an anticipated event of any project. As a result,
researchers have put in a lot of effort to identify, evaluate, and propose suitable strategies
for handling differences in various project environments.
Aa mention in the Association of project management syllabus (2000) very simply
described variation is a “A change in scope or timing of work which a supplier is obliged to
do under a contract”.
Additionally, according to John Molloy (1999) describe a more specific description as "any
alternation of the work, whether by addition, alteration, or omission of the work to be
performed under the contract by the contractor." Those modifications can be covered, but
they are needed but removed from the contract, the work is not required but is included in
the contract, extra work demanded by the client, changes in the writing scope requested by
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the client, changes in the character or nature of materials or building techniques, and
changes to accommodate site requirements, location, and so on.
Harrell Remodelling Inc (HR) points to the completed work evaluated following work
completion, which can be more or less than the tender's estimated amount. Those changes
are managing as variation order.
Similarly, Clause 51(1) of AACRA’s General conditions of contract provision (MOWUD
Dec 1994), describes variations as alterations, additions or omissions of any part of the
work to the contract documents.
For the purposes of this analysis, variance is specified as any occurrence that outcome in a
formal alteration of the original work, timing of execution, construction methodology
expense, quality or volume of work, as well as contract provisions. Before analysing the
problem, consequences, and controls of variation orders in projects, it is important to
consider the existence of variations and the factors causing the frequency of variation
orders.
2.3. Type of Variation.
There are usually three styles of combinations. Groups of variety can be categorized as per
their parameters and those are listed as follows:
1. The identity of the initiator.
2. The nature of the variation
3. The consequences or effect of the variation.
2.3.1. The parties to initiate Variation Order
A change made by one or more principal parties is classified according to the name of the
initiator. An employer, contractor, nominated subcontractors, nominated vendors, and
contract administrator are all examples of this.
An owner is one who makes decisions on behalf of users, potential occupants, and so on,
while a contractor will make decisions on his own or on behalf of subcontractors,
manufacturers, and so on. Nominated subcontractors/suppliers are in relation to their
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respective subcontract; and contract administrators; working on their own request, on behalf
of the employer, designers, regulatory bodies, third parties, and others. It is undeniable that
the majority of changes are made by the client. Changes in the contractor's specifications
after contract approval, for example, due to a rethinking of the demands, changes of
behavior, and usage of the expected or potential use of the completed works, are the
primary factors for the employer to initiate variations.
2.3.2. Nature of the variation
Aren and Feng (2005b) state that, the existence of a variance sequence can be obtained by
finding both its frequency and the causes for the resulting results, and they are classified
into two categories of variance orders: beneficial variance sequences and harmful variance
sequences.
2.3.3. Beneficial variation orders
(Arain & Pheng, 2005b) have revealed that, a beneficial VO is one that is given to increase
the production level, lower the expense, timetable, or reduce the complexity in a project. A
useful change order saves money on a project by removing extraneous costs. As a
consequence, it improves the client's aspects that contribute to the capital input by removing
additional costs. This change order implemented for value analysis purposes in order to
achieve a compromise between the cost, customization, and durability facets of a project in
order to satisfy clients.
2.3.4. Detrimental variation orders
(Arain and Pheng, 2005) have state that, an adverse change order is one that has a negative
effect on the client's value or project efficiency. For e.g., a client who is facing financially
difficulty can necessitate the replacement of high-quality, costly materials for low-quality,
cheaper materials.
2.4. Factors Influencing the Variation
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Unfortunately, several influences affected the variations order. It can be arising at the tender
stage and construction stage. Main reasons that affect the inconsistency are attributable to
the state of any changes in the design, the client's demand, end-user, poor management, and
the contractor's order.
2.4.1. General Related Changes
 Site Condition
At the tender stage when update the preliminary investigation, if client not update the
latest conditions in the drawings and specification or cannot be determined. At the
construction time contractor identify any changes between in the provided document and
real condition such an unexpected existing structure or any structure under the ground
level etc. the contractor shall promptly notify the client or client representative.
This allows the client to include the necessary instructions as defined in the contract form
(clause 51 of FIDIC). This section contains the instruction, which is deemed to be a
change to an unexpected condition, and the contractors are entitled to claim the costs.
 Design
Many researches concludes that variation occur during the construction period. Mainly the
variation arsing by client, designer, project management even contractor as well as. The
main reason from client-side client failed to complete the design, poor design, failed to
review the document before award the contract, etc. After start the project if contractor
find any issues with the design, unhappy with structural design it may cause structural
failure can be happen in this situation it may cause life loss or injury.
 Client Requirement
Most of the variation were raised be the designer time to time to satisfy the clients as per
they are request and change the ideas. Some clients not capable to finalize hoe to be their
requirements. At the tender stage client must be clear idea with their requirements and
final design. Therefore, client must provide complete information to designer to minimize
risk of misinterpretation by designer and provide the output to owner.
 Discrepancies Between the Works and Statutory Requirement
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Another factor influencing instruction of variations is the disparity between the works and
the statutory requirements. The contract includes a clause that requires the Provider to
make improvements that conform with regulatory and municipal government
specifications. In the case of compliance with a regulatory mandate, the consultant could
be able to obtain a exemption and thereby reduce the fee, or a measure of re-designing
that achieves the same purpose.
 Requested by the Contractor
This is unusual for the construction companies to seek instruction in relation to work that
they want to change. The variance demanded by the contractor occurs at all times during
the project ongoing stage. The contractor demanded the variation for the following
reasons:
a. The Contractor identifies that due to some changes of the work and there will be
some convenience and advantages in the construction.
b. Requesting redesign for the material or proposing potential design.
c. The BOQ rate for work item is not practical and therefore applies it to be examined.
As stated above, the contractor must seek permission in writing and recommend the
variation. The expert who recommends the variation must also have written approval.
The contractor could then carry out the variance work as required and approved by the
consultants.
2.4.2. Client related changes
The reasons of variations initiated by the owner are client-related changes. In certain
situations, the owner initiates the variations personally, or the variations are necessary
because the owner fails to satisfy such project specifications. Client-initiated updates
include:
 Change of plans or scope: Changes in project scope or schedule are one of the most
frequent causes of variance in building projects (CII, 1990b), which are typically the
result of inadequate preparation at the project definition period, or of the owner's lack
of participation in the design process (Arain et al., 2004). This source of variance has a
significant impact on the project's later phases.
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 Change in schedule: According to (Fisk, 1997; O'Brien, 1998), a change in schedule
during the project construction process can result in substantial resource reallocation.
Time has a monetary counterpart. When the scheduling changes, the contractor can
either have extra services or leave certain resources unused. For all scenarios, extra
expenses are incurred.
 Financial difficulties of the owner: (Clough and Sears, 1994; O'Brien, 1998) they have
listed the facility's owner can face tough financial circumstances that require him to
make adjustments in order to cut costs. The financial problems of the owner have an
impact on the success and performance of the project. Proper preparation and control of
project cash flow will help to solve this problem.
 Inadequate project objects: According to (Ibbs, 1997), inadequate project objectives
are significant sources of variance in development programs. Owing to insufficient
project priorities, the architect will be unable to create a detailed plan, resulting in
various changes during the project development process.
 Change in specifications by owner: According to (O'Brien, 1998), Changes in
specifications are common in creating projects with adequate project objectives.
Changes in the owner's needs during the construction process may require significant
variations and changes in project planning and procurement practices in the multi-
player system, as with any construction project.
 Replacement of materials or procedures: According to (Chappell and Willis, 1996),
replacement of materials or procedures can result in significant changes during the
construction process. Variations of application approaches are used in protocol
substitution. As a result, if protocols vary, an amendment to the initial contract value is
expected.
2.4.3. Contractor related changes
In certain situations, the contractor may recommend improvements to the project, or the
changes may be necessary because the contractor fails to satisfy certain project
specifications. The below are the contractor-related changes:
 Involvement of the contractor in design: Involvement of the contractor in design can
help in designing better designs by accommodating his innovative and realistic ideas
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