Variation Order in Construction Projects
A variation order is a formal document issued by the contractor or client for changes in the project scope, design, completion date, contract price, etc.
Any deviation from the scope of work agreed in the contract is considered as a variation in a project. The variation order must be clear and detailed without leaving important information related to the description of the work, pricing and timing missing.
Change order format must be prepared carefully within the planning phase of the construction of the project. To be able to protect the project from the unforeseen extra costs and disputes with the contractors, variation orders should be carefully prepared carefully.
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What is a construction variation?
Construction variations and change orders are the fallbacks which companies and projects rely on to make changes. A variation is an alteration to the scope of works laid out in a construction contract.
Inevitable variations result from the complexity of construction works and the vast number of moving parts. Actual variations stem from factors such as external forces beyond the control of contractors and subcontractors, the intricate nature of the project, and the many components involved in the design process. Variations can involve the substitution or complete omission of parts.
What does a good construction variation process look like?
A good variation process is one which is clear and understood. You should be able to create and edit this form from a master variation form template.
Once the form is complete and issued, it’s up to the participants to agree to the changes and costs. You will want to streamline this process as much as possible so that you can push through changes and move forward with projects quickly and legally.
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How can you easily improve your variation and change order process?
Software solutions enable you to streamline your variation process from start to finish. These tools take care of form creation and completion, as well as record-keeping for photos and signatures.
Real-time analytics show how many variations have occurred by project, function, team, and team member. You can also create automated workflows with internal and external parties, ensuring that variations move quickly between parties and nothing gets missed or forgotten.
Try a smart template below and start improving how you manage the process with the help of the software. These tools will keep your change orders and variations consistent and organised.
Looking for a quick win with your variations? Contact us to try the template and start improving your change order process.
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Why are construction variations used, and why are they important?
Construction variations make projects more dynamic, leading to better asset delivery. Variation forms ensure that all work outside the contract scope is properly documented and paid for contractually.
Variations can quickly blowout project budgets and frustrate contractors and subcontractors who don’t have the bandwidth and resources to move their teams around and give a few days here or there.
Without the contractor’s consent, variations cannot change the scope of the original contract or the project’s entire structure. Contractors or subcontractors may be unable to pay for additional hours and supplies.
Impacts of Variation Orders
Variation orders serve as escape points from the contract when changes are required. These changes may satisfy the client’s needs for the overall project, address problems encountered during the construction phase, and enable project completion with maximum efficiency.
Variations can be divided into two categories: beneficial and detrimental variations. If not handled carefully, variation orders can cause significant problems throughout the project.
Negotiation of Variation Orders
The negotiation process is a challenge with variation orders, as it extends the time required for approval. Cost determination, the impact of the variation order on the schedule, and necessary time extensions are common problems encountered in the negotiation process.
A variation order can take time to reach an agreement between both parties and may require lengthy discussions for approval. In many cases, the negotiation of terms is detailed until an agreement is reached.
Disagreements between parties over the length of the work specified in the variation order and its impact on the overall project schedule are common issues encountered during the negotiation process.
Submission of Variation Claim
Contractors must submit their variation claim when they submit their progress claim. They must also provide the necessary documents and details to support their claim. In situations where contractors receive instructions to carry out work under daywork, they must inform the Project Manager, Qauntity Surveyor, or another of the respective client’s representative when the work is being carried out. Generally, this is how valuation of variations is conducted.
It is the contractor’s responsibility to submit their claim with all necessary details to get the payment certified within a reasonable time period. These conditions and methods of evaluating claims can differ depending on your contract.
Causes of variations
Variations to the contract can occur due to changes in the original scope of work. Such changes can impact project cost and completion time. For specific projects, refer to the contract document to find relevant terms and clauses.
Consulting the contract for specific projects should guide you on how to address variations that arise during a project. Variations can be in the form of additions or omissions and are due to various factors.
How to perform Valuation of Variations
Contractor’s variation claim should include all cost implications in detail. Valuation of variations plays a crucial role in the variation claim procedure. The contractor is required to submit their proposal to the consultants or client for evaluation. Contractual provisions differ in various countries and can vary according to your contract agreement.
Refer to the contract agreement and related variation clauses to understand how valuation of variations is carried out in different countries. The most common practices in valuation of variations are outlined below.
Who can issue a Variation Order?
Contractors should write to the architect or superintending officer to obtain approval for extra work. The authority figure has the power to issue instructions to carry out any extra work. Contractors need to write to the architect or authority figure within the time frame stipulated in the contract.
The authority figure could be an architect, project manager, QS or contract administrator. The contractor should have a proper understanding of the variation clause in their contract agreement to make a valid variation order and write to the architect or superintending officer within the time frame of the agreement.
The Process of identifying and valuation of variations
Variations are common in construction projects, followed by variation order claims. Variations significantly impact the cost management of any construction project. Often, contractors struggle to obtain fair valuation for their variation claims, as their expenses for the extra work exceed the amount they are paid.
Consultants aim to deliver their projects within the stipulated budget while looking for ways to save money and avoid cost overruns. Sometimes, main contractors pass their losses from performing variations to their subcontractors.
Occasionally, these variation instructions result in contract disputes. The process of handling variations involves several steps, as mentioned below.
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