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An analysis of the impact of variation orders on project performance
Author(s)
Ndihokubwayo, Ruben
Date Issued
2008
Type
Thesis
Publisher
Cape Peninsula University of Technology
Abstract
This study investigated the impact of variation orders on project performance in
order to take proactive measure to reduce them. The study had the following objectives,
namely (1) to investigate the prevalence of variation orders on construction projects; (2)
to determine the cost impact of variation orders; (3) to examine to what extent variation
orders added value to construction projects; (4) to determine whether the activities
associated with variation orders may be regarded as waste; (5) to identify the
predominant origin agent as well as the causes of variation orders; and (6) to establish the
nature and extent of the impact of variation orders on overall project performance.
Literature relative to the research area was extensively reviewed. The data
gathering approaches included an exploratory study on costs of variation orders on two
construction projects, interviews with three top management personnel in construction
contracting companies, the audit of site instructions with regard to waste and their value-addedness and self-administered questionnaires. A purposive sampling method was
followed to identify participants into the study.
The audit of site instructions revealed that most variation orders were beneficial.
However, 14% of site instructions had waste associated with them. It was possible to
quantify apparent waste associated with variation orders by means of an ‘origin-cause
matrix’ designed for that purpose. Problematic situations arising from the occurrence of
variation orders included discrepancies between the claimed and certified amounts.
Variation orders impacted project performance with regard to cost and time overruns and
disputes between parties to the contract. Most variation orders involved additional works.
The complexity of works was the most predominant factor influencing the occurrence of
variation orders. The reduction of the occurrence of variation orders was traced back to
the pre-contract stage given that the most predominant origin agent of variation orders
was the client and then due to an unclear brief of works to be executed. Suggestions
regarding the reduction of variation orders include (1) adequate planning in advance is
required by all involved parties before works start on site, (2) consultants should do a
thorough concluding design and working drawings and contract documents should be
complete at tender stage, (3) clients should provide clear brief, (4) enhance
communication and all parties should be proactive at all times, (5) works should be
supervised with an experienced and dedicated supervisor and (6) consultant should
ensure that the design/specifications fall within the approved budget and the budget team
should be appointed and participate during the design phase. The study suggests further
investigation regarding the development of a more equitable basis of valuation of cost
recovery which was beyond the scope of this research.
order to take proactive measure to reduce them. The study had the following objectives,
namely (1) to investigate the prevalence of variation orders on construction projects; (2)
to determine the cost impact of variation orders; (3) to examine to what extent variation
orders added value to construction projects; (4) to determine whether the activities
associated with variation orders may be regarded as waste; (5) to identify the
predominant origin agent as well as the causes of variation orders; and (6) to establish the
nature and extent of the impact of variation orders on overall project performance.
Literature relative to the research area was extensively reviewed. The data
gathering approaches included an exploratory study on costs of variation orders on two
construction projects, interviews with three top management personnel in construction
contracting companies, the audit of site instructions with regard to waste and their value-addedness and self-administered questionnaires. A purposive sampling method was
followed to identify participants into the study.
The audit of site instructions revealed that most variation orders were beneficial.
However, 14% of site instructions had waste associated with them. It was possible to
quantify apparent waste associated with variation orders by means of an ‘origin-cause
matrix’ designed for that purpose. Problematic situations arising from the occurrence of
variation orders included discrepancies between the claimed and certified amounts.
Variation orders impacted project performance with regard to cost and time overruns and
disputes between parties to the contract. Most variation orders involved additional works.
The complexity of works was the most predominant factor influencing the occurrence of
variation orders. The reduction of the occurrence of variation orders was traced back to
the pre-contract stage given that the most predominant origin agent of variation orders
was the client and then due to an unclear brief of works to be executed. Suggestions
regarding the reduction of variation orders include (1) adequate planning in advance is
required by all involved parties before works start on site, (2) consultants should do a
thorough concluding design and working drawings and contract documents should be
complete at tender stage, (3) clients should provide clear brief, (4) enhance
communication and all parties should be proactive at all times, (5) works should be
supervised with an experienced and dedicated supervisor and (6) consultant should
ensure that the design/specifications fall within the approved budget and the budget team
should be appointed and participate during the design phase. The study suggests further
investigation regarding the development of a more equitable basis of valuation of cost
recovery which was beyond the scope of this research.
Additional information
Thesis (MTech (Construction Management))--Cape Peninsula University of Technology, 2008
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