Uncovering the origins of variation orders

Abstract

Purpose of this paper - This paper attempts to identify the origin of variation orders in order to determine their impact on waste. The study is part of the undergoing research analyzing the impact of variation orders on project performance. Methodology/Scope - Extensive relevant literature review has been provided. A case study was done on two completed apartment complexes in Cape Town. Origin agents of variation orders were identified. Findings - An exploratory study was done on residential and shopping apartment complexes. Both projects incurred delays and time for completion escalated at 33% and 9% over the original completion time on both respective projects A and B. Arguably, numerous changes during the construction stage influenced time overruns. On project A, a contractor incurred a penalty of R923,000 amounting at 3% of the original contract sum R28,315,000. A total number of 75 and 118 variation orders averaging 8% (R2,076,600) and 4% (R 2,032,919) of the contract sum occurred on both projects. On both projects, the client and consultant combined were the predominant origin agents of variation orders. On project A, the client and the consultant combined generated 89% (67 no) of variation orders. In monetary terms these corresponded to 93% (R1,928,741) of the net total sum. On project B, the client and the consultant combined generated variation orders 95% (111 no) of variation orders. In monetary terms these corresponded 92% (R1,865,862) of the net total sum. Research limitations - The study was confined to a limited number of apartment-type construction projects. The predominant origin agent should be further investigated. Practical implications - The findings uncovered the waste associated with variation orders and revealed the predominant source of variation orders as a proactive measure to reduce them. Value - This paper explores the impact of variation orders on project performance.