Assessing the Impact of Variation Orders on Construction Projects in Accra Metropolis, Ghana


Academic Paper, 2021

11 Pages


Excerpt

ABSTRACT

The cost of construction projects right from the commencement to the completion has greater importance in the construction industry. Changes, in many different forms, are a major part of the construction. The need to make changes in the construction project is a matter of practical reality. The purpose of this paper seeks to investigate the impact of variation orders on project performance to propose measures to reduce them. For this study, data were collected from the relevant literature review of scholars and through administering questionnaires. The findings from the research revealed that changing of plans or scope by architects and clients before and during the construction process causes for the instruction of variation orders; error and omissions in designs presented by the architect contribute to the reduction in the quality of the project. Recommendations suggested, regarding the reduction of variation orders include; clients should provide a specific brief to design teams to enable designers to produce suitable designs. Specifications should be comprehensive enough to assist contractors to deliver the quality that is expected of them by clients.

Keywords : changes, construction project, specifications.

INTRODUCTION

Construction contracts are complex because they involve many human and non-human factors and variables (Keane et al, 2010). Various shareholders within the construction industry make it complex. They usually have a long duration, different uncertainties, and complex relationships among the participants (Keane et al, 2010). One important problem in the construction industry is managing variation orders. Success in managing variation orders results in uninterrupted construction operations and agreed project costs as well as duration (Akomah et al, 2018). Changes, in many different forms, are a major part of the construction (Ibbs and Vaughan, 2015). The need to make changes in the construction project is a matter of practical reality. Despite their frequency, contractors and clients often disagree on the impact and the liability when they occur (Ibbs and Vaughan, 2015). Because variations are common in projects, project managers must confront, embrace, adapt and use variation orders to impact positively the situations they face and to recognize variation order as such (Arain and Pheng, 2006). If professionals could have a knowledge base established on past similar projects, it would assist the professional team to plan effectively before starting a project, during the design phase, and during the construction phase, as well as, to control variation orders and their effects (Arain and Pheng, 2006).

PROBLEM STATEMENT

A variation order is a work that is added to or deleted from the original scope of work of a contract, which alters the original contract amount and/or completion date (Akomah et al, 2018). According to Ibbs and Vaughan (2015) variation has a cause. Recognizing this cause is important to demonstrate, as well as using the contract documents to find who is liable for that change. The damages caused do not have to be as rigidly defined but can be estimated. To be able to successfully estimate the damages, you have to be able to recognize both the immediate losses as well as the current effects. Variations are likely to occur on construction projects, based upon different factors. These factors may include; poor client brief, bad designs, poor planning, poor specifications given, etc.

LITERATURE REVIEW

Variation orders play a significant role in construction because they have a great impact on cost, schedule, quality, safety, and productivity. According to Jadhav and Bhirud (2015) construction projects are a long process having more complicated small tasks involved in it. For the completion of large construction projects, we have to complete small construction tasks regularly. Variations occur more frequently when renovating or upgrading a construction. Arain and Pheng (2006) found that the average number of variations in upgrading projects was almost 21% more than that in new projects.

NATURE OF VARIATION ORDERS

A building construction contract is a corporate agreement that is subject to variability. Contractual clauses relating to changes allow parties involved in the contract to freely initiate variation orders within the scope of the works without alteration of the original contract. Without contractual clauses, the building contractor would have to agree to erect the building shown on the drawings and represented in the bills for a contract sum (Akomah et al, 2018).

Sun et al, (2014) reported that project variations can be classified as “anticipated variations” and “emergent variations”. Anticipated variations are planned and occur as intended. Emergent variations arise spontaneously and are not originally intended. Another way to view project variations is through their necessity. In this way, project variations can be classified as “elective variations” and “required variations”. According to Sun et al, (2014), an elective variation is where one may choose whether or not to implement; and a required variation is where there is no option but to make the variation. According to Arain and Pheng, (2006) can be distinguished two types of variation orders, namely: beneficial variation orders and detrimental variation orders.

Beneficial Variation Orders

While changes in a construction project are generally negative, requiring additional time or money, there are also beneficial changes that have positive impacts. A beneficial variation order is one issued to improve the quality standard, reduce cost, schedule, or degree of difficulty in a project (Arain and Pheng, 2006). A beneficial variation order eliminates unnecessary costs from a project; and as a result, it optimizes the client's benefits against the resource input by eliminating unnecessary costs. However, it should be noted that regardless of how beneficial a variation order might be non-value-adding costs are likely to increase as a result (Akomah et al, 2018).

Detrimental Variation Orders

According to Akomah et al, (2018) detrimental variation order has an undesirable impact on the client’s value or project performance. A detrimental variation order, therefore, compromises the client’s value system. A client who is experiencing financial problems may require the substitution of quality standard expensive materials to substandard cheap materials. This may have an undesirable effect on the total performance of the project which will lead to an increase in the running cost of the facility. Detrimental variation orders reduce the value or have a negative impact (Ibbs and Vaughan, 2015).

METHODOLOGY

This research study was purely quantitative involving the distribution of questionnaires. The population of the study was within the Accra Metropolis in the Greater Accra Region of Ghana. Professionals in some selected construction and consultancy firms were sampled to ensure that they made their respective submissions on the subject matter. In all, thirty (30) questionnaires were given out to persons found in the construction industry with questionnaires including closed-ended types. Questionnaires were used in acquiring information from professionals involving Consultants, Contractors, and Clients. The questionnaire comprises two parts thus Parts A and B. Part A questions centered on the causes of variation orders. Part B questions centered on the potential controls and measures for managing variations orders. Causes and potential control measures of variation orders will be measured based on Liker’s scale of 1 to 5 (where 1= Strongly Disagree 2= Disagree 3= Neutral 4=Agree 5=Strongly Agree). Data collected was analyzed using the Average Index Formula.

DATA ANALYSIS

Calculations

Abbildung in dieser Leseprobe nicht enthalten

Where, 1, 2,3,4,5 = variables x = Total number of respondents who tick the variables N = Total number of respondents

Calculation of Percentages

Formula: Average index/Total Average index × 100 ► 4.20/22.43= 18.72%

The average index value and percentage for change in scope/plan of the project in the causes of variation orders.

Table 1 Causes of variation orders on construction projects

Abbildung in dieser Leseprobe nicht enthalten

(Source: Field Survey, 2021)

From the analysis, it is shown that the Change in scope/plan of the project was ranked 1st, with an average index value of 4.20 generated from the calculations. Change in specifications was ranked 2nd with a value of 3.97, Change of schedule/in contract duration, 3rd with a value of 3.83. Other causes of variation orders follow according to the ranking.

Abbildung in dieser Leseprobe nicht enthalten

Figure 1; the average index values and percentages of the causes of variation orders on construction projects

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Details

Title
Assessing the Impact of Variation Orders on Construction Projects in Accra Metropolis, Ghana
Authors
Year
2021
Pages
11
Catalog Number
V1253446
Language
English
Keywords
assessing, impact, variation, orders, construction, projects, accra, metropolis, ghana
Quote paper
Isaac Yeboah (Author)Dr. Bernard Martins Arthur-Aidoo (Author)Kofi Kumi (Author), 2021, Assessing the Impact of Variation Orders on Construction Projects in Accra Metropolis, Ghana, Munich, GRIN Verlag, https://www.grin.com/document/1253446

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