Variations Orders Management

Changes in scope occur as projects progress from design through practical completion. In fact, initial site works can be in motion long before all necessary planning permits have been obtained, designs have been finalized and construction contracts have been negotiated.

Design and construction teams follow a number of interdependent processes to communicate changes and variations in project scope. Many of these processes have been standardized throughout the industry as commonly accepted tools for raising, clarifying and resolving issues.

 Examples include construction change orders, requests for information (RFIs), instructions, and variation requests.

Industry research indicates that approximately 40% of all construction projects undergo more than 10% change, as measured by the ratio of final project costs to estimated project costs. When change is limited to 5%, productivity exceeds planned rates on approximately 60% of projects. However, when change exceeds 20%, productivity falls below planned rates.

Research data also points to a correlation between productivity and performance to schedule and budget. As the percentage of change increases, productivity declines, and this leads to schedule delays and cost overruns.

Effective change management is critical to mitigating project risk. The larger and more complex the project, the higher the risk – and the greater the imperative to manage change.

Project teams should agree up front on standard processes for communicating changes and variations and managing their impact on workflows. Accountability and timelines for initiating, processing and approving change should be transparent across the team.

A change order or variation request identifies a possible change in scope from what is documented in the project contract. Each request should succinctly state the extent and implications of the change in design or scope of works. This provides a clear baseline for the ensuing discussions between project participants.

Change orders most often originate with the project manager or design team and are directed to the project owner. Variation requests come from the contractor or subcontractors and go to the design team, and from there to the owner. It’s not uncommon for variation requests to follow change orders as contractor responses to alterations in design or project scope.

Change orders can result from design reviews and other project processes involving the owner and/or the design and construction teams. Changes can also emerge from the RFI process, due to missing information, inability to build as specified, or procurement issues in sourcing a required product.

Typically, the lead consultant is responsible for notifying the contractor of any changes. The lead consultant may be an architect, an engineer or a project or construction manager. Change requests are named accordingly – architect’s instruction (AI), engineer’s instruction (EI), project manager’s instruction (PMI), or construction manager’s instruction (CMI).
After receiving an instruction regarding a change, we collaborate with the other primary disciplines – structural or civil, mechanical, electrical, and plumbing – as well as the quantity surveyor or cost control consultant.

Together, this team reviews the potential impact of the request on the project’s technical feasibility, schedule and budget. We then summarizes the findings and recommendations for the owner.

After the owner approves the expected project impact, oure design team revises the project documentation as needed, and then packages and issues it to the contractor as an instruction. The contractor reviews the instruction and replies within a contractually specified period of time, including implications for feasibility, timelines and cost.

Documents related to these instructions are either attached directly or issued separately under a transmittal that is cross-referenced to the instruction.

The instruction to the contractor may state that the scope changes aren’t expected to have any impact on project timing or cost. In the event of a disagreement, the contractor can respond with a variation request or notice of a time extension or claim. Depending on the contract, the contractor may file a claim for time-related costs.
Here are our practical tips for managing changes and variations in construction projects:
  • Within the collaborative culture of the project, any participating organization that identifies a change in the contracted scope of works is expected to report that change and provide evidence to support it.
  • The change order should be submitted to the appropriate consultant, contractor or subcontractor for project impact assessment and approval before it goes to the owner.
  • Project documents that have already been registered and issued to the team shouldn’t be updated and circulated until the change order has been approved by the owner. Erroneous document revisions and distributions could compound project risk, leading to schedule delays and cost overruns.
  • All registered documents should reflect approved changes resulting from change orders. Details of the approved changes – such as date, request number and description – should be recorded within the relevant documents, and the updated documents should be transmitted to the appropriate project team members

We do file up all implications of variation orders management on behalf of contractors