Variation orders on construction projects: value-adding or waste?

Abstract

Purpose – This paper establishes the nature and impact of variation orders on the overall project performance in order to take proactive measures to reduce them. Methodology/Scope – Literature was reviewed on waste associated with variation orders, their origin agents and adverse impact. Quantitative and qualitative methods were adopted consisting of closed-ended and open-ended questions respectively and case studies on construction projects. Case studies consisted of the scrutiny of site instructions in order to discover those that contributed to waste. Findings – Generally it was found that a clause permitting variation orders was an essential feature of any construction project. The client was found to be the most predominant origin agent of variation orders as a result of unclear briefing and changing requirements. Inter alia, problems encountered when dealing with variation orders included time and cost determination which often could be sources of disputes between the contractual parties. The scrutiny of site instructions revealed apparent associated waste especially those involving alterations to completed work by having complete designs before work commenced on site variation orders could be reduced. Research limitations - The analysis of site instructions was done on a limited number of construction projects under construction. Practical implications - The study stimulates the debate over building activities that give rise to non value-adding costs or waste due to the occurrence of variation orders. Value - The findings of the study will increase the awareness of the impact of variation orders on overall construction project performance and will enable the development of proactive measures to reduce them.