Construction Variations a Scourge or a Necessity

CONSTRUCTION VARIATIONS: A SCOURGE OR A NECESSITY?Authors: Address: E-mail address: Keywords: ABSTRACT Any building project is liable to variations ranging from changes of mind on the part of the clients, their consultant, to unforeseen problems raised by the main contractor or sub-contractors. From both sides, the employer and employee, on a building project, variations will therefore occur for a number of reasons ranging from finance, design, aesthetic, geotechnic, geological, weather conditions to feasibility of construction. This paper reports a study carried out to investigate the nature, causes, causers and occurrences of variations on building projects in Botswana. A questionnaire, with close-ended questions, was used to solicit opinions of architects and contractors on the issue. The paper concludes by asserting that variations are an unavoidable consequence. JK Ssegawa1, KM Mfolwe2, B Makuke3, B Kutua4 1 Civil Engineering Department , University of Botswana 1 [email protected] variations, construction industry, building project, contract INTRODUCTION The complexity of construction works means that it is hardly possible to complete a project without changes to the plans or the construction process itself. Construction plans exists in form of designs, drawings, quantities and specifications earmarked for a specific construction site. Changes to the plans are effected by means of a variation order initiated by a consultant on behalf of the client or as raised by the contractor. Legal precedents (for example, Pepper vs. Bourland, 1792; Myers vs. Sarl, 1860; Rusell vs. Sada Banderia 1862 and Galanger vs. Hursch 1899), illustrate that variations date back to time in memorial. While their occurrence is no longer an inconceivable issue, it is their effect and subsequent management that continues to challenge stakeholders of projects to this day. This happens against a background that over years, experience has been gained to handle variations in form of contract clauses and procedures, which define what constitutes a variation and how to manage them. They continue to cause undue uneasiness to the stakeholders because of their effect on the successful delivery of projects in terms of cost, time, quality and utility. Disputes and misunderstandings are still encountered when variations arise, often causing disruptions to the smooth running of projects. The type of project delivery (procurement) system and the form of contract may also compound the problem of how variations are managed. Variations are more common to the traditional procurement system (TPS) than, say the Design and Build system (Ashworth, 1998). With the TPS, the construction process is presumed to after all design work has been completed. In many instances this is a false assumption and hence the beginning of variations. Like many other construction industries (CI) in the world, variations are common in Botswana. Most of the projects are delivered using the TPS, a system frequently used by a number of Commonwealth countries. This paper is intends to highlight the perceptions held by architects and contractors regarding variations in Botswana. First, by highlighting what constitutes a variation and the common causes and causers of variations. This is followed by a discussion of the methodology used to solicit opinions from architects and contractors on issues related to variations in Botswana. A presentation of data, its analysis, and discussion of the results is included and the paper ends by summarising some important conclusions and recommendations. 1 Extent of variations The spirit in which variations are permitted is to allow the contract to proceed without re-drawing another contract to cater for the changes. Nature of variations The nature of variations is usually defined by a variation clause in the contract. In all cases. The nature of variations is well documented in literature by authors (for example. changes in quality. character. However. when initially the contract was for school buildings only. it is not say that an architect has a blank cheque to issue anything purporting to be a variation. In the BGBC/BoQ. 2001. 1998). the GC/W 98 form (Government Contract/Works. However. Usually. In furthering that spirit. level. omissions and substitutions. Turner. removal from sites of any material or goods that are not in the contracts. and the ICE form (Institution of Civil Engineers). 1995. Architects do not have the powers to vary the work to the extent of instructing the contractor to carry out extra work not contemplated by the parties at the time of signing the contract. The latter will require that the contract be rescinded in favour of writing another one if both parties are still interested. lists instances of variations and the rest are found in other clauses of the contract. opening up for inspection of any work covered up. Instructing a contractor to construct a sport field. changes which cause limitations or restrictions to site access. any standard form of building contract will contain a definition of a variation in terms of specific actions and activities. position. Trickey and Hackett. Atkinson. dimension. This includes not only changes to the work or matters relating to the work in accordance with the provision of the contract but also changes to the working conditions themselves. 1984. should only one party benefit from the variation that party should: (i) (ii) (iii) have to forego some advantage under the contract. working space or hours. 1992. variations follow negotiations for compensation for the direct loss and likely loss due to disruption. orders must be written and issued by an architect as a consultant for a building project. 2001). Fellows and Fenn. He further asserted that variations relate to firstly. However. or changing the construction of one block to 2 . An excessive variation ordered by an architect would not be regarded as a variation under the contract (Fellows. changes to the work itself and secondly. which states that 'No variation required by the architect or subsequently sanctioned by him shall vitiate this contract’. line. the Permanent Secretary has the absolute discretion from time to time to issue variations (see first sentence of Figure 1). to the means of getting the work done. 1983 and Porter. This is enshrined in one of clauses. Baxendale and Schofield (1996) defined variation simply as any change to the basis on which the contract was signed. the FIDIC form (Federation Internationale des Ingenieurs-Consils). who should issue what is called a variation order. and the replacement of any person employed in connection with the contract. Contract clauses go further to state how a variation should be initiated.BACKGROUND Definition There is no single definition of what constitutes a variation. 2001. give some service. It is in the form of commentaries to various forms of contracts. 1980). Wainwright and Wood. form kind. In other words. The Botswana Government Building Contract with Bills of Quantities (BGBC/BoQ) of which an excerpt is shown in Figure 1. a point to note is what constitutes a variation in a contract is not only found in one clause but in a range of clauses. From the commentaries. specified sequence or method of timing of construction. or pay some sum of money for the benefit of the other party. The presence of such variation clauses in the contracts is close to an admission by the CI that no project is completed without changes. it may be concluded that major variations include additions. Potts. in other words. Turner (1984) clarifies that variations are 'changes within a contract' and not 'changes of the contract'. such as the JCT 98 form (Joint Contracts Tribunal 1998). Atkinson (1992) argues that. 1984). geological and geotechnical reasons (Hibbard. is carried out. 1992). Variation order renders contract rates or prices unreasonable in the opinion of the contractor. for example. Procedures prescribed by contract forms are insufficient to include a myriad of affects caused by variations during the execution of the contract. for example. some tangible and others intangible (Hibberd. It is not necessary to rescind a contract signed two months before the introduction date of 1st July 2002. Causers and causes of variations Literature survey reveals that mainly the client. contractor and other stakeholders. Normally. weather. Condition (a) should not be misconstrued to mean that any changes to the tax regime would require a new contract signed. Turner. it normally has the effect of lengthening the contract period. changing the terms and conditions of the contract will normally require to rescind the contract and replace it with a new one (Atkinson. Effect of variation on projects Variations have several effects on the project. 2001). design. While the actual work may be quantified. cause variations. Therefore. there are many reasons that may cause the mentioned stakeholders to initiate variations some of which are financial. When additional work. variation to terms and conditions could occur under the following conditions: (a) (b) (c) Increased costs due to inflation or higher taxation. the Botswana Government announced the introduction of VAT one year in advance (Mmegi. 1987 and Turner. aesthetic. 1986). changes in drawings. claiming a changed tax regime. as both parties should have contemplated its introduction. The varied work is not similar in character or is not executed under similar conditions to that priced in the BoQs. architect. 1984). 3 . In addition. 1986.Figure 1: An excerpt of the Botswana Government Building Contract Form with BOQ Source: Government Printer two blocks of flats would be deemed excessive and not a variation (Wainright and Wood. the response never (0) was ignored because it indicated that the issue is insignificant or non-existent. combining the responses of both architects and contractor was compiled. Therefore. (iii) cause and (iv) causers of each type of variations on public building projects. Trickey and Hackett (2001) identified the challenges of variations as the establishment of the value of the: (a) (b) (c) variation itself. On each close-ended question. METHODOLOGY The study methodology consisted of soliciting opinions from contractors and architects using a structured close-ended questionnaire. The questionnaire was distributed to twenty (20) firms from each group selected randomly around Gaborone City. The close-ended questions required respondents to make a ranking commensurate with the frequency of occurrence. 1996). effect of the variation on other work. A frequency of occurrence (FO) index was constructed with a minimum value of 1. required ranking from 0 (does-not) to 4 (does very often). where some question had a subset of factors which required to calculate a relative frequency of occurrence (RFO) to determine the significance of the sub-factor in the sub-set. Furthermore. from Equation 1 FO= 1n1 + 2n2 + 3n3 + 4n4 n1 + n2 + n3 + n4 Equation 1 where. and loss and expense directly experienced arising from regular progress of work having been materially affected due to the execution of the variation and for which its reimbursement is not covered by any other part of the contract. DABS oversees the planning. OBJECTIVE OF THE STUDY The objective of the study was to investigate the opinions of architects and contractors regarding the (i) frequency of occurrence. and maximum value of 4. during the data analysis. a score of < 2 would be considered not significant while the range 2 ≤ FO<3 may be considered moderately significant. The omission may disrupt the continuity of work for certain type of labour and plant. n2 – sometimes(2). However. where 'does-not' meant the stakeholder never causes such a variation. n3– often (3) and n4– very often(4). A simple frequency distribution. ranging from never (0) to very often (4). implementation and supervision of public building projects. and ∑FO is the sum of all frequency of occurrence of the construct. RFO= FO ∑ FO Equation 2 where. However. contractor and others) of variations. even when a variation of omission occurs. ranging from n1 – rarely (1). architect. FO is the frequency of occurrence/significance. design. (ii) effect.it may be difficult to quantify the effects of the lengthened contract period. both of which may become idle due to a disruption of the project programmed or sequence activities (Oxley and Poskit. n is the frequency of responses. Furthermore. three senior officers from the Department of Architecture and Building Services (DABS) were interviewed to ascertain and clarify some issues. 4 . the effect of variations on the project must be borne in mind. FO is the frequency of occurrence/significance. it may not be a simple matter of compiling the quantities and prices of respective items omitted in the BoQ. when making valuations of work done. The RFO was calculated using Equation 2. respondents had a chance to provide any comments they deemed relevant and important on the issue. Though issues relating to valuation of variations are beyond the scope of study. A question regarding the causers (client. A FO score of ≥ 3 would be considered very significant. 5 2.The results were compiled. RESULTS AND DISCUSSION Fifteen (15) contractors and twelve (12) architects out of the selected twenty (20) from each category responded.7% (28.282 0.2) was not perceived as adversely affected.7) and hence the completion time and cost (3. but not as many (2. They however. character. The two groups also concurred that variations affect the sequencing of work programme (3.275 0. They added though.8% It was interesting to note the comments made by both groups that (i) most projects have multiple variations and (ii) some variation are similar or bring similar results.5%) of the effect of variations on projects. position. both contractors and architects.14 (95%) for contractors and 10 (80%) for architects . How often do you encounter disputes? Which areas normally cause disputes? i) Ascertaining losses arising from the variations ii) Valuations iii) Acceptance of instructions iv) Final account 0. The fear of making the questionnaire lengthy and hence laborious to fill prohibited the author from defining each term.207 1.0 indicates in Table 1. the focus is on how to ascertain losses arising from variations (3. Omissions in most cases reduce costs. This was response of 75% and 60%.0 RFO Rank 3. The further commented that alterations are of three types namely additions. that in a number of cases variations occur simultaneously such that the net change in costs depended on which variation was greater.168 1.6 2. substitutions or omissions. Four of the respondents asserted that variations are alterations and are changes to the contract. indicated that when it came to costs.8 2. while additions normally increase costs. specified sequence or method of construction' were specific variations which would fall in the category of additions. Quality (2. Table 1: Effects of variations on projects Question 1. confirmed that their firms have been involved in some kind of variation on all projects they worked on as the FO value of 4. Table 2 shows how each group 5 . form. when disputes arise as it was scored with a RFO of 32. 2. dimension. This factor was perceived as the most significant aspect.000 1 2 3 4 Both groups indicated that there are disputes when variations arise. Another observation made by most respondents .1 2.216 0. respectively All 27 respondents (100%). line.is that 'changes in quality. How often do you encounter variations on building projects? How do variations affect the following? i) Project programme ii) Time iii) Cost iv) Quality FO 4. 4.328 0.6 each). it depended on the type of variation.256 0.8).1).6 3. However.9 2.1 3.6 0.2% and 27.4 11.7 3. additions or omissions may be construed as alterations. This is perhaps due to the presence of guidelines set out in contract forms and the experience gained in handling them.000 1 2 3 4 3. kind. for example. This response confirmed that no project proceeds to completion without some adjustments.2 13.275 0. analysed and are presented below. when compared to the rest. Both of these factors were considered very significant and have a combined RFO of 55. when significant disputes occur. Therefore. level. omissions and substitutions. 8).8 3.6. 6 .091 0.6 1. restrictions on working conditions of space.069 1.223 0. Table 2: Frequency of occurrence of variations to design. respectively) . and replacement of employees on the project'.g.086 0.6 Omission 0. Compared to the rest. contactors and other (e. Respondents indicated these items may be contemplated before or after signing of the contract.9) and aesthetic (3.5 Additions 0.108 0.080 1. Table 3: Frequent causes of variations 6 Reason for variation i) ii) iii) iv) v) vi) vii) Finance Design Changes in drawings Feasibility of construction Increment weather Aesthetic Geological/Geotechnic 3.4). specifications and quantities Nature of Variation FO RFO Rank Additions* Omissions* Substitutions* Removal from sites of any material or goods that are not in the contracts Opening up for inspection of any work covered up Changes which cause limitations or restrictions to site access. working space or hours The replacement of any person employed in connection with the contract 3.6 1.6) reasons.7 18.154 1.4. 1.8 1. respondents believed that substitutions are caused by almost all factors mentioned in Table 2 except for the increment weather.204 0.0 3.8 3.8 and 3.0 2.103 0. architect. hence are manageable and avoidable. respectively. to investigate reasons that cause them to make variations.191 0. 1. respondents perceived them to account for 45.188 0.6. access and hour.000 (1) (2) (6) (3) (7) (5) (4) 2.4 1. space and hours) are more frequent in civil and roads construction work as compared to building work. respondents indicated that they occurred because of mainly design (3.074 0.2 2.9 2. Table 4 is an extension of Table 2.7% of all variations on building projects. Figures 3.3 16.20 0.2 17. Additions and omissions are the most common variations on projects with a FO of 3. client.3 2.6 2.000 (1) (2) (3) (5) (6) (7) 5 i) ii) iii) iv) v) vi) vii) For additions. from both groups.183 0. Furthermore. Geological/geotechnic and aesthetic reasons came second as a group with a FO of 2. inspection for work covered up. Substations came third and constitute 17.2 0.9 20.responded to the frequency of occurrence of various variations with the exclusion of those mentioned above.6 1. Geological/geotechnic and feasibility of construction caused fewer additions. Column 3 shows the average FO.105 0.5 Substitutions 0.3. respectively. In any case. four of the contractors indicated that restrictions and limitation of (sites.except the stakeholders are brought into play.2. which they scored at 1. design (3. drawings.145 1.3% of variations 'Removal from sites of any material or goods that are not in the contracts.8 3.6 1.054 0. 4.170 0. further illustrate the responses regarding causers and causes of variations. were ranked very low in occurrence (1.118 0.099 0. which was used to rank the variations in descending order while column 4 shows RFO.000 (3) (1) (4) (6) (5) (2) (7) 3.173 0.7 and 2.6 2.4 3.149 0.2 1.4 1. The stakeholders considered are mainly.222 0. regulatory bodies).8 3.8 3. 5 and 6 obtained from Table 4.138 0. Respondents indicated that the main cause of omissions is for financial (3.6 1.5 2.7.7 1.206 0.000 (1) (2) (7) (5) (6) (3) (4) From the FO scores. respondents ranked each cause differently as shown in Table 3 and also illustrated in Figure 2. these variations are tilted towards the side of the client and architect.069 0.5) and feasibility of construction reasons (3.4 and 1.160 0.235 0. When it came to the causes of variations. Other Finance Design Changes in drawings Feasibility of construction Increment weather Aesthetic Geological/Geotechnic Finance Design Changes in drawings Feasibility of construction Increment weather Aesthetic Geological/Geotechnic Finance Design 21 25 12 24 22 24 24 6 3 25 22 5 4 6 16 21 11 17 5 3 2 5 20 1 16 6 5 6 2 3 3 6 2 5 Total 27 27 27 27 0 0 0 27 27 27 0 0 27 0 27 27 27 27 0 27 27 Substitutions Additions Omission Changes in drawings Feasibility of construction Increment weather Aesthetic Geological/Geotechnic 7 .5 1 O missio n A d d it io n s S u b st it u t io n s Variations Figure 2: Frequent causes of variations Variation Table 4: Frequent causers of variations and reasons for causing variations Causers of Variations (Responses) Cause of Variation Client Arch.Fin a c e Fe a sib ility o f c o n st G e so te c h n ic 4.5 2 1.5 3 2.5 4 De sig n We a th e r Dra win g c h a n g e s A e sth e tic Respeonses 3. Contract. they are a necessary evil that must be accommodated by providing provisions and procedures in the contract and administration of the project. 8 . Co n tra c t. architects and contractors cause substitutions. design and changes in drawings reasons. CONCLUSION The study has highlighted that additions and omissions are the most common variations in building projects.25 20 15 10 5 0 Clie n t A rc h i. clients and architects cause most of the omissions due to financial reasons. C o n t ra c t . For additions. while for the contractor it is the feasibility of construction. for which both the client and the contractor must be prepared to negotiate. Architects reasons are varied but design and change of drawings are the major causes. Finance and aesthetic are the issues for clients. design aesthetic and feasibility of construction reasons. They are frequently caused by financial. other 25 20 15 10 5 0 Financ e Design Changes in dr awings Feasibilit y of c onst r uc t ion Inc r em ent weat her A est het ic Figure 4: Reason for and frequent causers of addition variations C lie n t A rc h i. other 30 25 20 15 10 5 0 Figure 5: Reason for and frequent causers of substitution variations From the responses in Table 4. Since variations are encountered on most of the building projects. Clients and architects acting individually or collectively are the most causers of variations. C o n t ra c t . o th e r Figure 3: Reason for and frequent causers of Omission variations C lie n t 30 A rc h i. clients and architects are the main causers of this variation due to financial. design and changes in drawings and feasibility of construction. Mainly clients. Standard Contracts for Building. -2nd Edition. R. Botswana Oxley. E & FN SPON. Baxendale A T and Schofield T J (1986). and Poskitt. George Godwin. Mmegi (2001). Collins. 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