VARIATIONS

FIDIC 1999 standard defines the variation as “any change to the works, which is instructed or
approved as a variation” the standard contain description of the variations such as changes of
work quality, work omission, changes in work sequence and time and others. In other words
Variation in construction means modification of design, changes in quality, quantity of work including the
alteration of standard of materials or goods to be used in the work and the removal from site any kind of
material not in accordance in the contract.

In construction, variation often occurs when changes are made to the original design after a contract has
been signed. It could be additional work or omission needed for hidden problems that were not
apparent at the time of the contract.

Disputes, time overrun, cost overrun and misunderstandings are the outcome when variations arise.

identified financial challenges, aesthetics, changes in drawings, weather, geological and geotechnical as
some of the reasons leading to variations.

Construction industry has a lot of examples of the variations. One of the most famous project
that included numerous variations and significantly overrun the initial budget and finish date is
Scottish Parliament Building Project. Project is characterized by numerous design changes that
led to the changes in work scope and duration.
Variations includes omission of work, changes in materials and characteristics that are no longer vital for
the owner. Thus the variations may lead to the reduction of project duration and cost.

The needs of the client may change in the course of the design or construction stage and market
conditions may impose changes to the parameters of the contract, and technological developments may
alter the design and choice of the method of construction

There are two approaches of the variation planning.

 The first approach is based on the quantity and measurements. It assumes that some
measurements can be lost or not taken into account on the tender stage and contractor
knows about it in advance but keeping silence in order to give the best tender price
expecting that the profit will be achieved by the additions in the contract on the further
stages.

 The second approach is based on the work programme. According to this method the
work programme is planned to achieve the maximum cost of delays. In some cases it
becomes a tender strategy for the contractors and they are focused on the tenders
where it is possible to get higher profit from the wrong estimation.
Among others reasons of variations are lack of planning because of rush to start the project sooner.
However, it should be mentioned that due to the complexity of the construction projects it is practically
impossible to plan everything in advance and changes in construction projects are inevitable.

Following reasons for the variation occurrence:

• To clarify contract plan or method and value of payments and changes in contract time.

• To change specification

• To match the arrangements regarding to the consequence of work, including possible changes in
payment or contract conditions

• To administrate the unpredicted circumstances such as determination of the additional work payment
or extra work to finish planed tasks

• To effect cost decrease motivation offer (value engineering proposal)

• To effect expense caused by claims settlement

VARIATION ORDER
Factors influencing the occurrences of variation orders in three main factors which include nature of the
project, complexity of the project and procurement methods which include the traditional and the non
traditional methods.

Sum up the effects of variation to include the following: increase in project

cost, hiring new professionals, increase in overhead expenses, and delay in
payment, quality degradation, productivity degradation, procurement
delay, rework and demolition, logistics delays, tarnished firm’s reputation,
poor safety conditions, poor professional relations, additional payments for
contractor, disputes among professionals and completion schedule delay.
In order to manage variation orders, proper guidelines must be followed.

Project performance measurements

The Earned Value (EV) method is built on the performance result
measurements and assessment of the performance with respect to the
utilized resources. This tool stands for the objective measurement and
assessment of predefined project elements. It reduces subjectivism in
assessment of the project performance in terms of time and cost. This method takes into the account all
project variables that are cost, scope and time.

Minimization of variations
1. PM may explain to the contractors that there is simply no possibility to increase budget after the
approval. That would probably motivate contractors to develop work programme more
accurately and do not expect additional profit from the variations. It is significant to create this
 attitude in the beginning of the project to give a message to the contractors that they would not
be able to get additional profit from the variations and let them give the proper cost offers

2. Comprehensive site investigation should be organized in order to control the work progress and
have the opportunity to detect and correct the works before they lead to the variations. Site
investigation may be completed by external specialists such as topographic-surveys or
geotechnical.

3. The project brief is essential for the project success and should be developed from the earliest
stages of the project. It will allow to capture the client’s decisions and educate the client in the
same time.

4. The inaccurate design is the reason of the one third of variations. The accurate and detail design
has critical importance in the design bid build procurement. Nevertheless, the detailed design
and specification is important for the cost control under all procurement systems.

5. Awarding the proper contractor. As it was mentioned before the lowest price in tendering can be
achieved by contractors that are expecting to return profit by claims and variations. Thus the
evaluation of the contractor should be done with respect not only to cost but also consider time
performance.

6. Different procurement systems assumes the different rate of the risks for stakeholders. Some of
contract types such as guaranteed maximum prise reduce variations but in the same time reduce
flexibility for the client.

7. Cost control is important part of the project. Cost management allows to guarantee the
completion of the project in budget. Cost manager should act independently as a financial
consultant.

8. To facilitate communication in projects the good quality documentation should be developed.

Contract documentation should be as comprehensive as possible in order to reduce any
uncertainties.

9. Poor communications and bad relationships among stakeholders may lead to the variations.
Contrary, good relationships may prevent the errors and facilitate solving problem without
claims and disputes.

Whilst some variations are unavoidable, it is wise to minimise potential variations and

subsequent claims by ensuring that uncertainties are eliminated before awarding the contract.

This can be done by:

 Undertaking thorough site investigations and condition surveys.

 Ensuring that the project brief is comprehensive and is supported by stakeholders.
 Ensuring that legislative requirements are properly integrated into the project.
 Ensuring that risks are properly identified.
 Ensuring that designs are properly coordinated before tender.
 Ensuring the contract is unambiguous and explicit.
 Ensuring the contractor's rates are clear.
 Preparing concise drawings, bills of quantities and specifications, providing for all situations which are
reasonably foreseeable.

Conclusions
Variation is almost an inevitable part of any construction claim. Given the competitive environment that
the construction industry is usually in, many contractors probably rely on the proprietor's variations to
make a reasonable return for their contracts.

Project manager has one of the most significant roles in the managing variations. Despite PM is usually
an owner’s representative he should act independently and reasonable for all stakeholders. PM is a
person that should be responsible for the creation of the good culture within the project from the very
beginning. The leader role of the project manager cannot be overstated.

Variations may lead to the significant overruns of cost and time. Therefore Variations should be
accurately manage during the project. It is proposed to utilise VAC, CPI and SPI in order to assess the
risks from variations on the project success.