DIRE DAWA University

School of civil engineering and architecture

Chair of construction technology & management

Course Title: Construction Contract & Law Course (COTM 6041)

Assignment Title: -
Variation: it’s Regulation & Management under the MDB-FIDIC (2006) &
the PPA (2011) Conditions of Construction Contracts & the Applicable Laws

Prepared by:
Name ID /No
1. Mukhtar Mohamed ……………………..…..SGS/870 /11
2. Samson Diribssa………………………….... SGS/830/11

Submitted to: Instructor Zewdu Tefera Worke

Submitted date: May 20, 2019 GC
DIRE DAWA
TABLE OF CONTENTS
LIST OF ABBREVIATIONS AND ACRONYMS ..................................................................... III
LIST OF TABLE .......................................................................................................................... III
ABSTRACT .................................................................................................................................. IV
CHAPTER ONE: INTRODUCTION ............................................................................................. 1
1.1 Background of the study ....................................................................................................... 1
1.2 Statement of the problem ...................................................................................................... 1
1.3 Objectives of the study .......................................................................................................... 2
1.3.1 general objectives ........................................................................................................... 2
1.3.2 Specific Objectives ......................................................................................................... 2
CHAPTER TWO: RESEARCH METHODOLOGY ..................................................................... 4
2.1 general ................................................................................................................................... 4
2.2 limitations .............................................................................................................................. 4
2.3 Method of Data Analysis ...................................................................................................... 4
2.4 Discussion of the Results ...................................................................................................... 4
CHAPTER THREE: REVIEW OF RELATED LITERATURE .................................................... 5
3.1 variation in construction contracts ........................................................................................ 5
3.2 Variation in Contract ............................................................................................................. 5
3.2.1 Variation of Contract by the Parties ............................................................................... 5
3.2.2 Judicial Variation of Contract......................................................................................... 6
3.3 Definition of Variation .......................................................................................................... 6
3.4 variation order ....................................................................................................................... 7
3.4.1 Types of Variation Orders .............................................................................................. 7
3.4.2 Nature of Variation Order............................................................................................... 9
3.4.3 Origins of variation orders .............................................................................................. 9
3.4.4 management of variation orders ..................................................................................... 9
3.4.5 Supplemental agreement............................................................................................... 11
3.4.6 engineer ........................................................................................................................ 11
3.4.7 Value engineering ......................................................................................................... 12
CHAPTER FOUR: INSTRUCTED VARIATION ...................................................................... 13
4.1 definition ............................................................................................................................. 13
4.2 Causes of Instructed Variation ............................................................................................ 13
4.2.1 Employer Related Changes .......................................................................................... 13
4.2.2 Consultant Related Variations ...................................................................................... 13
4.2.3 Contractor Related Variations ...................................................................................... 14
4.2.4 Other Variations ........................................................................................................... 15
4.3 Effects of Instructed Variations........................................................................................... 15
4.3.1 Delay in payment: ......................................................................................................... 15
4.3.2 Quality degradation: ..................................................................................................... 15
4.3.3 Productivity degradation: ............................................................................................. 15
4.3.4 Rework and demolition: ............................................................................................... 16
4.3.5 Logistics delays: ........................................................................................................... 16

I
 4.3.6 Tarnish firm's reputation: ............................................................................................. 16
4.3.7 Poor safety conditions: ................................................................................................. 16
4.3.8 Poor professional relations: .......................................................................................... 16
4.3.9 Additional payments for the contractor: ....................................................................... 17
4.3.10 Disputes among professionals: ................................................................................... 17
4.3.11 Completion schedule delay:........................................................................................ 17
4.4 To reduce the number and the Impact of Variations ........................................................... 18
4.4.1 Design Stage Approach to Control Variations ............................................................. 18
4.4.2 Construction Stage Approach to Control Variations .................................................... 19
4.4.3 Design-Construction Interface Stage Approach to Control Variations ........................ 21
4.5 Variation procedure ............................................................................................................. 22
4.6 Valuation of Variation ......................................................................................................... 23
4.7 Right to Vary ....................................................................................................................... 24
4.7.1 Employer’s Right to Vary through Engineer ................................................................ 24
4.8 Discussion about having no variation clause in the contract .............................................. 25
CHAPTER FIVE: APPROVED VARIATION ............................................................................ 26
5.1 introduction ......................................................................................................................... 26
5.2 Scope of Approved Variation .............................................................................................. 26
5.3 Procedure for Approved Variation ...................................................................................... 27
5.3 Result of approved variation ............................................................................................... 27
5.4 Possible Design Liability of the Contractor ........................................................................ 27
5.5 value engineering ................................................................................................................ 27
5.6 Possibility to change or not change the delivery system from DBB to DB ........................ 29
CHAPTER SIX: COMPARISON BETWEEN INSTRUCTED AND APPROVED
VARIATION ................................................................................................................................ 30
CHAPTER 7: THE ROLE OF ENGINEER ................................................................................. 31
7.1 Role of the Engineer in Construction: Overview ................................................................ 31
7.2 Role of the Engineer in Instructed Variation ...................................................................... 33
7.3 Role of the Engineer in Approved Variation ...................................................................... 34
7.4 Contribution of Design to Scope Change ............................................................................ 34
CHAPTER 8: CASE STUDY ABOUT THE VARIATION ........................................................ 35
8.1 introduction ......................................................................................................................... 35
8.2 Background of the case ....................................................................................................... 35
8.3 purpose of the project .......................................................................................................... 35
8.4 Project and contract information ......................................................................................... 35
8.5 Proposed solution ................................................................................................................ 36
8.6 discussion recommendation ................................................................................................ 36
CHAPTER 9: COMPARATIVE TABLE AND ANALYSIS ...................................................... 37
CHAPTER 10: CONCLUSION AND RECOMMENDATION .................................................. 40
10.1 conclusions ........................................................................................................................ 40
10.2 recommendation ................................................................................................................ 40
Reference ...................................................................................................................................... 42

II
LIST OF ABBREVIATIONS AND ACRONYMS

 BOQ: Bill OF Quantity

 DSS: Decision support system
 DBB: Design Bid Build
 DB: Design Build
 GC: General Contractor
 GCC: General Conditions of Contract
 MoWUD: Ministry of work and urban development
 MDB-FIDIC: Multilateral Development Bank-Federation International Des Ingenieurs-
Conseils
 PPA: Public Procurement Agency
 SA: Supplemental agreement
 SCC: Special Conditions of Contract
 VE: Value Engineering
 VO: Variation Order

LIST OF TABLE
Table 1: comparison between instructed and approved variation ................................................. 30

table 2 comparative table and analysis.......................................................................................... 39

III
 ABSTRACT
Variation is inevitable in construction projects due to the complex nature of the construction
industry. It is common in all types of construction projects and it determines the time limits and
anticipated budget of the projects. Variation order is observed as one of the most frequently
occurring issues in construction projects in Ethiopia.The main objective of this study to analyze
MDB-FIDIC (2006) and PPA (2011) condition of the contract with respect to variation. This deals
with variation to the contract terms or conditions which referred to as an amendment to the
contract. In other words, it is a change to the terms that the parties had agreed and accepted when
the contract was signed. According to FIDIC (2006), "variation" means any change to the works,
which is instructed or approved as a variation. According to PPA-2011, the term "variation" is
changed to "Modifications" and describes as, the Engineer shall have the power to order any
modification to any part of the works necessary for the proper completion and /or functioning of
the works. This study focused on the variation orders in construction projects and the right and
obligation of the engineer in a variety of works.
Keywords: variation, modification instructed variation, approved variation, contract.

IV
 CHAPTER ONE: INTRODUCTION
1.1 Background of the study
The construction projects in Ethiopia have been on fast-growing mode which plays a vital role
in the development of the country. These projects include roads, bridges residential, commercial
buildings and industries which are constructed by domestic contractors or foreign contractors, it
is common to see such contracts variations and conflicts between parties during the course of a
construction project. Whether they decrease or increase the venture’s schedule or cost, any
deletion, addition or any other revision to the terms of the project is known as variation in orders
(Assbeihat and Sweis 2015).
On the other hand, a variation is an alteration to the scope of works in a construction contract in
the form of an addition, substitution or omission from the original scope of works.
Almost all construction projects vary from the original design, scope, and definition. Whether
small or large, construction projects will inevitably depart from the original tender design,
specifications, and drawings prepared by the design team.
This can be because of technological advancement, statutory changes or enforcement, change in
conditions, geological differences, non-availability of specified materials, or simply because of
the continued development of the design after the contract has been awarded. In large civil
engineering projects,, variations can be very significant, whereas on small building contracts
they may be relatively minor.
Developing countries such as Ethiopia need to effectively eliminate this issue from the
construction sector as the country cannot afford delays and cost overruns in the projects with
any value being added to the project, hence the primary goal of this paper is to study the adverse
impacts and causes of these undesired variations, it is also focused on the discussion, First, by
highlighting what constitutes a variation and the common causes and sources of variations. This is
followed by a discussion and comparison between the local Conditions of Contract (PPA, 2011) and
the international Standard Conditions of Contract (MDB-FIDIC, 2006) and the applicable Law and
case study which is related to the variation and finally provides recommendations on how to
effectively eliminate this plague from the construction industry of Ethiopia.

1.2 Statement of the problem

Nowadays, variation orders have become a common problem in building construction projects.
There are many reasons why variations occur. They may be due to extra work caused by
subsurface conditions, errors in contract documents, additional quantities of works or materials,
reduction of work, or lack of proper communication between the parties. Needs of the owner
may change in the course of design or construction, market conditions may impose changes to
the parameters of the project, and technological developments may alter the design and the
choice of the engineer. The architect's review of the design may bring about changes to improve
or optimize the design and hence the operation of the project. All these factors and many others
necessitate changes that are costly and generally unwelcomed by all parties. The major causes

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of delay, disputes and sometimes generate significant cost and environmental impacts are
variation orders issued during the construction of projects. Despite the fact that changes are
inevitable phenomena in the construction projects, emphases must be given to accommodate
changes in construction contracts. A change clause has to be incorporated to define the way how
owner, consultant and contractor handle changes. Therefore, change clauses and procedures
must be set to process a change from the conceptual development until it is realized to its
material equivalent in the field.

1.3 Objectives of the study

1.3.1 general objectives

The general objective of this paper is to define & discuss the concept; types; categories
(instructed & approved variation); and management of such variations including the impacts of
the absence of variation clause; and how to mitigate the impact of variation in construction
projects; and lastly effective recommendation about variation in construction contracts.

1.3.2 Specific Objectives

The specific objective of this paper/assignment is;

a) Background Related
 To discuss the legal possibility of varying contracts
 To discuss the legal regulation of contract variation
 To identify & discuss types of variation (as textual variation & variation in the works)
and then to focus on variation in the works.
 To identify & discuss the two categories of variation in the works (instructed vs.
approved); then to discuss each separately.
b) Instructed Variation Related
 To define variation in the works or instructed variation;
 To identify & discuss the causes for instructed variation;
 To discuss the right to vary of the employer through the Engineer and its significance
in the construction industry & construction process;
 To identify & discuss the scope of instructed variation;
 To identify & discuss the grounds for the contractor, if any, to refuse instructed
variation;
 To discuss the procedure for instructed variation;
 To identify & discuss the effects of instructed variation;
 To discuss the valuation of variations in detail;
 To discuss the need for textual variation in terms of the cumulative effects of
instructed variation;
 To discuss the way to minimize the need for instructed variation.

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 c) Approved Variation Related
 To define approved variation or value engineering;
 To discuss the scope of approved variation as related to value engineering;
 To discuss the procedure for approved variation;
 To discuss the effects of approved variation/value engineering;
 To discuss the possible design liability of the contractor & the scope of such design
liability, if such approved variation were including design for the permanent works
by the contractor;
 To define & discuss the concept of value engineering & its overall process & effect
including its advantages and disadvantages, if any;
 To discuss ways to encourage approved variation or value engineering in Ethiopia;
to discuss, for example, the need for the introduction of alternative design during
tendering;
d) Instructed & Approved Variation Related
 To discuss the importance of the inclusion of a variation clause in any construction
contract from the construction industry perspective;
 To identify & discuss the possible adverse effects, if any, resulting from having no
variation clause in a given construction contract;
 To discuss the legal way how to introduce & manage variation in the project in the
absence of a variation clause in the underlined construction contract;

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 CHAPTER TWO: RESEARCH METHODOLOGY
2.1 general
This chapter presents the methodology adopted and identifies the tools and techniques employed
in conducting this study. The methodology is a plan of action that shows how the problems will
be investigated, what information will be collected using which methods, and how this
information will be analyzed in order to arrive at conclusions and develop recommendations.
This study follows some steps and procedures when conducted. Once the problem statement has
been formulated, it should become evident what kind of data will be required to study the
problem, and also what kind of analysis would be most appropriate to analyze the data. The
problem investigated in this study is the impact of variation orders on construction projects. It
is anticipated that the identification of the causes of variation orders may lead to their reduction,
possible elimination, and improvement in the overall performance of construction projects.
2.2 limitations
The current situation of the construction activity in Dire Dawa is not good, so it’s difficult for
us to compare experiences of organizations towards variations. Historical data related to
variation order is not well recorded hence getting data for this study was very difficult. The
scope of the study is under the Ethiopia construction industry, the concept of value engineering
is not exercised and not incorporated in PPA conditions of contract so it limits our discussion
on the value engineering concept.
2.3 Method of Data Analysis
This study started with problem identification which was done through unstructured literature
review and informal discussion with colleagues and professionals in the sector. Upon obtaining
the identified problems, conceptual and contextual literature reviews were conducted to have an
in-depth understanding on the issue of variation and variation order, focusing on causes and
effects and methods on how to minimize variations. The literature reviewed includes books,
dissertations, magazines, journals, newspaper, etc. Understanding the legal and contractual
aspects of variation in the international condition of contract (MDB FIDIC 2006), local
conditions of contract (PPA 2011) and in applicable law (Civil Code 1960). A case study from
one of the huge building construction projects in Dire Dawa is selected to see the management
process applied for variation works. With this, we will see the coordination between major
stakeholders of the project, the potential cause of variation and the method followed by these
parties to manage it before escalated to dispute.
2.4 Discussion of the Results
This study is divided into Ten chapters, the first chapter discusses on general introduction, in
the second chapter Research methodology, Chapter three will described Review of related
literature , Chapter four Instructed variation, Chapter five approved variation, chapter six
comparison between Instructed and approved variations, chapter seven role of the engineer,
chapter eight case study, chapter nine comparative table, and analysis Finally, in Chapter Ten

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from the analysis of result and brief discussion; conclusions and recommendations were
forwarded

CHAPTER THREE: REVIEW OF RELATED LITERATURE

3.1 variation in construction contracts
construction projects are those of projects related to the construction field who have limited time
dimensions with a specific allocation of resources, and a particular purpose. To finish
construction projects, have adhered to the boundary three obstacles are:

 Project cost (Budget): the construction project should be efficient.

 Project time duration (Schedule): the construction projects to be effective.
 Required project quality (Quality): performance must meet the required of specifications
and criteria.

The main elements that are within a project:

 Cost: finance and investment required for project completion
 Quality: the scope of the wanted quality and understandable requirements.
 Quantities: scope of the project.
 Time: how long and when it takes for the progress of the construction.
Variation is common in all types of construction projects and plays an important role in
determining the closing cost and time of the projects. It is therefore important to understand the
impact variation, but it is also important to understand the causes of variation. Before variation
can be properly handled, it is imperative to the parties involved in the construction to be aware
of the variation orders and the reason behind such orders that could possibly be encountered
during the process of executing the project. Therefore, this research shall focus on identifying
the leading causes of variation orders in public building construction projects in Ethiopia and
assessing their impact.

3.2 Variation in Contract

Variation of Contract could be done: -
 By the contracting parties, contractual variation, (as a rule); or
 By the Court, judicial variation, (as an exception);

3.2.1 Variation of Contract by the Parties

The contracting parties, in principle, are free to create & vary their contractual agreement.
Art. I675 of civil code “a contract is an agreement where two or more persons as between
themselves create, vary or extinguish obligations of a proprietary nature.
Variation of contract, under the construction contract, may result from: -
 Requirement change by the employer,
 Design change by the engineer;
 A proposal by the contractor;

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3.2.2 Judicial Variation of Contract
 Judicial variation or variation of contracts by the court is not allowed, in principle. As article
1763 of the Civil Code,, “the court may not vary a contract or alter its terms on the ground
of equity except in such cases as are expressly provided by law”
 Judicial variation of Contracts, as opposed to variation of Contract by the parties, is regulated
by the applicable law.
 Under the applicable law, the Ethiopian court may vary the terms of the contract under the
following circumstances.
o Where it is expressly provided by law;
article 1763 of the Civil Code “the court may not vary a contract or alter its terms on the
ground of equity except in such cases as are expressly provided by law
o Where a special relationship between the contracting parties exists;
Article 1766 of civil code “the court may vary a contract where the parties do not agree
and a family or other relationship giving rise to special confidence exists between parties
and compels them to deal with each other in accordance with equity”.
o Where one of the contracting parties is a state or one of its institutions; as Article 1767
“the court may vary a contract made with a public administration where the
circumstances in which it was made have changed through an official decision in
consequence of which the obligations assumed by the party who contracted with the
administration have become more onerous or impossible”
o Where it is partially impossible to perform the contract; as Article 1768 "the court may
reduce the obligations of one party where the performance by the other party of his
obligations has become partially impossible and there is no ground for canceling the
court"
3.3 Definition of Variation
There is no single definition of what constitutes a variation. The term „variation‟ as described
and/or defined by various standard forms of contract differs from one to another but in principle,,
the definition and/or meaning is more or less similar. Usually, any standard form of building
contract will contain a definition of a variation in terms of specific actions and activities. The
building contract dictionary defined variations as alterations, additions or omissions in work,
materials, working hours, workspace, etc.

As defined in PPA (2011) conditions of contract, “variation” is described as “a modification”

which may include additions, omissions, substitutions, changes in quality, quantity, form,
character, kind, position, dimension, level or line and changes in the specified sequence, method
or timing of execution of the works.

FIDIC (2006) conditions of the contract, “variation” “Variation” means any change to the
Works, which is instructed or approved as a variation under Clause 13 [Variations and
Adjustments].

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Various authors had identified different causes of variation orders in construction projects both
on the private and public projects so in this paper two authors are considered

a variation order is written order issued to the contractor after the execution of the contract by
the owner, which authorizes a change in the work or an adjustment in the contract sum or even
the contract time (Clough and Sears, 1994).
Hayati (2006) described that each standard form of building contract has its own definition but
clearly ‘variation', in the generic sense, refers to any alteration to the basis upon which the
contract was let.

3.4 variation order

Definition: Variation order is the deviation experienced in any project from the base contract or
work scope mutually agreed at contracting time (Keane et al., 2010). It is written an agreement
between the contracting parties that represent an addition, deletion, or revision to the contract
documents, identifies the change in price and time and describes the nature of the work involved
(CMAA, 1993).

3.4.1 Types of Variation Orders

3.4.1.1 Contract variation
This deals with variation to the contract terms or conditions which referred to as an amendment
to the contract. In other words, it is a change to the terms that the parties had agreed and accepted
when the contract was signed. To vary the terms and conditions of a contract the same degree
of formality is required as was the case with the original contract. It must be in writing, signed
by the respective authorized party representatives, and in the same form as the original contract.

PPA 2011: Clause 6

Sub-clause 6.4: Amendment
No amendment, modification or other variation of the Contract shall be valid unless an
Amendment to Contract is made in writing, is dated, expressly refers to the Contract, and is
signed by a duly authorized representative of each party thereto. All the construction contracting
parties are free to create & vary their contractual agreement according to the applicable law.
Normally variation to terms and conditions could occur under the following conditions: -
 Increased costs due to inflation or higher taxation.
 The varied work is not similar in the charter or is not executed under similar conditions
to that priced in the Bill of Quantities.
 Variation order renders contract rates or prices unreasonable in the opinion of the
contractor.
All the construction contracting parties are free to create & vary their contractual agreements
according to the applicable law of Article 1675 of the Civil Code for all construction contract
variations in Ethiopia.

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3.4.1.2 Variation in Work
The more common understanding and indeed the use of the term variation relates to a variation
in the scope of works. Since the very concern of this study is more focused on the variation in
works my evaluation and the main part will elaborate with this respect.
Under MDB Harmonized Edition March 2006, Variation in work is regulated and administered
Under Clause 13.1 Right to Vary (means variation which are physical include):
 Changes to the quantities of any item of work included in the Contract (however,
such changes do not necessarily constitute a Variation),
 Changes to the quality and other characteristics of any item of work,
 Changes to the levels, positions and/or dimensions of any part of the Works,
 The omission of any work unless it is to be carried out by others,
 Any additional work, Plant, Materials or services necessary for the Permanent works,
including any associated Tests on Completion, boreholes and other testing and
exploratory work, or
 Changes to the sequence or timing of the execution of the Works.

According to the PPA- 2011 General Condition of Contract, Modifications by Change Orders is
regulated and administered under clause 15, which comply with the Applicable laws where the
site is located.
Under PPA 2011, Sub-clause 15.1: The Engineer shall have the power to order any
modification to any part of the works necessary for the proper completion and /or functioning
of the works. Such modifications may include additions, omissions, and substitutions, changes
in quality, quantity, form, character, kind, position, dimension, level or line and changes in the
specified sequence, method or timing of execution of the works.
Under applicable law, either party can ask variation in works as per the following articles of
the Civil Code.
Article 3031: Alterations required by the client
1. Right of client
The client may demand that alterations be made in the work as originally planned where such
alterations can technically be made and are not such as to impair the solidity of the work.
Article 3034: Alterations required by the contractor
(1) Where it appears necessary for technical reasons to make alterations in the work as originally
agreed, the contractor shall, except in urgent cases, give notice thereof to the client.
(2) The contractor shall give such notice notwithstanding that the proposed alterations do not
result in the client having to pay an increased price.
The contract will usually, but not always, provides a method that allows a client to make changes
to the scope of works. By signing to this the contractor effectively consents to such changes
being made.
In construction contract and applicable law, the variation is divided into two. These are discussed
below.

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3.4.2 Nature of Variation Order
The nature of a variation order can be determined by referring to both the reasons for their
occurrence and subsequent effects. Arain and Pheng (2005) distinguished two types of variation
orders namely: beneficial and detrimental variation order.

3.4.2.1 Beneficial variation orders

A beneficial variation order is one issued to improve the quality standard, reduce cost, schedule,
or degree of difficulty in a project. A beneficial variation order eliminates unnecessary costs
from a project as a result; it optimizes the client's benefits against the resource input by
eliminating unnecessary costs.

3.4.2.2 Detrimental variation orders

A detrimental variation order is one that negatively impacts the client's value or project
performance (Arain and Pheng, (2005). For example, a client who is experiencing financial
problems may require the substitution of quality standard expensive materials to substandard
cheap materials.

3.4.3 Origins of variation orders

The origin of variations refers to any of the project participants who directly initiate or suggest
variations to the project, or by reason of whose failure or inability to fulfill the requirements for
carrying out the project, causes a variation order to be issued. It also embraces factors or
conditions which though not directly linked to the participants, also cause an instruction
requiring a variation to be issued.

3.4.4 MANAGEMENT OF VARIATION ORDERS

As previously indicated variation orders are typically issued in the form of contract instructions.
According to Segawa et al. (2002),, contractual clauses state how variation orders should be
initiated. In all cases, variation orders are issued by the consultant and must be given in writing
or oral instruction should be subsequently confirmed in writing (Wainwright & Wood, 1983;
FIDIC, 1999; Finsen, 2005; JBCC, 2005; Segawa et al., 2002). "Writing" includes drawings,
faxes, e-mails, telegrams, and magnetic tapes and computer disks in which words and drawings
may have been electronically recorded and are capable of being converted to text and drawings
on paper or other similar media (Finsen, 2005). Since the contractor is not bound to comply with
the oral instructions, all oral instructions have to be confirmed in writing by either the consultant
or the contractor. Where variation orders are confirmed in writing by the contractor, the
consultant has to confirm by signature. If the contractor is agreeable with the variation order,
the works should proceed. The contractor and the consultant agree upon which method of
valuation of variation orders should be used. The valuation of variation orders, while seen as an
administrative step in the remuneration of changes effected to the contract, is, in reality, a rather
complex matter involving a thorough understanding of contractual provisions, costing principles
and an exercise of fair judgment on the part of the values (Harbans, 2003).

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The valuation of variation orders may be in the form of:
 Rates where contracted rates are adopted where the varied works are of similar character and
extent and executed under similar conditions to items in the contract bills (Wainwright &
Wood, 1983; JBCC, 2005);
 Day works which consist of the payment of executed works on a basis calculating the prime
cost of works including materials, labor, plant hire, and transport plus a percentage addition
as agreed between parties to the contract (Harbans, 2003);
 Quotation, where contractors submit a quotation to effect the work, contained in a variation
order; and
 Quantum Meruit is a miscellaneous method where negotiated or agreed rates or payment are
made on a reasonable sum (Harbans, 2003).

Ming et al. (2004) defined a generic variation management process this consists of four stages,
startup, identify & evaluation, approval, and implement & review.
 Start-Up
This contains the proactive requirements that are essential for effective variation management.
These requirements enable the project team to respond readily to variation, to manage variation
effectively, and to facilitate contingency plans for any anticipated variation.
 Identify and Evaluate
During a construction project, some variations can be anticipated while others may occur
unexpectedly. The aim of the project team is to actively seek to identify potential variations at
the earliest opportunity. This can be achieved by considering whether any of the potential
variation causes are likely to be present in a project. Once a potential variation is identified,
evaluation can be carried out in order to assist with the decision making the process. Evaluation
steps may include implications assessment and optimum selection of variation options.
 Approval
Once the evaluation step has been completed it will need to be approved by an appropriate
member of the team (usually the project manager) and maybe by the client depending on the
nature of the variation. In order to approve a variation, it is necessary for the people involved to
see the impact that the variation will have on the project. There may be several iterations during
the approval process.
 Implement and Review
Once a variation is approved, it needs to be communicated to all team members whose work is
affected by the variation. If necessary, the schedule of work needs to be adjusted and a new
schedule needs to be agreed on by the whole team. Finally, the project team should review and
learn lessons from the process of the variation event.
Both instructed and approved variations are discussed in detail in the next chapters.

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3.4.5 Supplemental agreement
A supplemental agreement (SA) is a formal agreement between the contracting parties amending
the contract.
Use a Supplemental Agreement to:
 assign the contract changes from one entity to another
 change the legal name of the contractor or
 settle disputes involving a surety.

3.4.5.1 Assignments
Under FIDIC clause 1.7 Neither Party shall assign the whole or any part of the Contract or any
benefit or interest in or under the Contract. However, either Party:
 may assign the whole or any part with the prior agreement of the other Party, at the sole
discretion of such other Party, and
 may, as security in favor of a bank or financial institution, assign it's right to any amounts of
money due, or to become due, under the Contract.
3.4.5.2 Change the Legal Name of the Contractor
When a contractor changes its legal name they must advise the department so that any
incomplete contract may be modified to reflect the new legal name. A supplemental agreement
is used to accomplish the modification of the contract.
Submit name change requests received from the contractor to Construction Division, Contract
Letting & Contractor Prequalification Branch for approval Construction Division will:
 verify the legal filing of the name change
 obtain administrative approval
 prepare the supplemental agreement
 obtain the executed agreement, insurance, and applicable bonds in the new name of the
contractor for construction contracts.
 send copies to the contractor, Finance Division, and the district

3.4.6 ENGINEER
An independent engineer, designated ‘the Engineer’ is appointed by the employer to supervise
construction, ensure compliance with the contract, authorize variations, and decide payments
due; but his decisions can be taken by the employer or contractor to conciliation procedures,
adjudication and/or arbitration. (Alan C. Twort and J. Gordon Rees 2004)
According to MDB FIDIC 2006, Sub-Clause 1.1.2.4 “Engineer” means the person appointed
by the Employer to act as the Engineer for the purposes of the Contract and named in the
Contract Data, or other person appointed from time to time by the Employer and notified to the
Contractor under Sub-Clause 3.4 [Replacement of the Engineer].
According to PPA 2011, the “Engineer” is the person named in the Special Conditions of
Contract (or any other competent person appointed by the Employer and notified to the
Contractor, to act in replacement of the Engineer) who is responsible for supervising the
execution of the Works and administering the Contract.

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3.4.7 Value engineering
Value engineering is a systematic application of recognized techniques which identify the
functions of the product or service, establish the worth of those functions, and provide the
necessary functions to meet the required performance at the lowest overall cost. (Urmila A
Mahadik, Anil B Mahadik 2015)
Value engineering has for its purpose the efficient identification of unnecessary cost, i.e., the
cost which provides neither quality nor use nor life nor appearance nor customer features. It
focuses the attention of engineering, manufacturing, and purchasing on one objective –
equivalent performance for a lower cost. It results in the orderly utilization of low-cost
alternative materials, low-cost alternative processes including new processes, and abilities of
specialized suppliers to procure items at lower costs. ( Miss Apurva J Chavan 2013)
Value engineering studies may be performed by Consultants during design development as a
contractor performed pre-construction services or by the contractor during construction. The
most effective time to conduct such studies is during design development. Some construction
contracts contain a value engineering incentive provision that allows the contractor to share in
the savings that result from approved value engineering change proposals. Value engineering
change proposals submitted by the contractor are reviewed by the consultant and owner for
acceptability. If approved, up to 50% of the savings in construction cost may go to the contractor.
The percentage split between the owner and the contractor will be stated in the value engineering
provision of the contract.
Benefits of VE
Value engineering is used :( Urmila A Mahadik 2015)
 To determine the best design alternative
 To reduce cost
 To identify problems and develop solutions for them
 To improve quality
 To increase reliability, availability, and customer
 To save time

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 CHAPTER FOUR: INSTRUCTED VARIATION
4.1 definition
The phrase "instructed variation" in construction contracts has no direct technical meaning. It is
a written order issued to the contractor after agreement of the contract by the owner, which
authorizes a change in the work or an adjustment in the contract sum or even the contract time
(Clough and Sears, 1994). In general, it can be defined as the instruction given by the
employer/engineer to the contractor in order to vary the scope of the work after the execution of
the contract.
4.2 Causes of Instructed Variation
These causes of Variations were grouped under four categories:
 Employer-related Variations,
 Consultants related Variations;
 Contractor-related Variations and
 Other Variations.
The root causes of Variations some of which are financial, design aesthetics, changes in
drawings, weather, geological and geotechnical reasons.

4.2.1 Employer Related Changes

This section discusses the causes of Variations that were initiated by the Employer. In some
cases, the Employer directly initiates Variations or the Variations are required because the
Employer fails to fulfill certain requirements for carrying out the project.

 Change of plans or scope by Employer

 Change of schedule by Employer
 Employer's financial problems:
 Inadequate project objectives:
 Replacement of materials or procedures:
 Impediment in the prompt decision-making process:
 Obstinate nature of Employer:
 Change in specifications by owner:
4.2.2 Consultant Related Variations
This section discusses the causes of Variations that were initiated by the consultant. In some
cases, the consultant directly initiates Variations or the Variations are required because the
consultant fails to fulfill certain requirements for carrying out the project.
 Change in design by Consultants:
 Errors and omissions in design:
 Conflicts between contract documents:
 Inadequate scope of work for a contractor:
 Technology change:

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  Lack of coordination:
 Design complexity:
 Inadequate working drawing details:
 Inadequate shop drawing details:
 Consultant's lack of judgment and experience:
 Lack of consultant's knowledge of available materials and equipment:
 Honest wrong beliefs of consultant:
 Consultant's lack of required data:
 Obstinate nature of consultant:
 Ambiguous design details:
 Design discrepancies (inadequate design):
 Noncompliance of design with government regulations:
 Noncompliance of design with owner's requirements:
 Change in specifications by the consultant:

4.2.3 Contractor Related Variations

This section discusses the causes of Variations that were related to the Contractor. In some cases,
the contractor may suggest Variations to the project, or the Variations may be required because
the contractor fails to fulfill certain requirements for carrying out the project.

 Lack of Contractor's involvement in design:

 Unavailability of equipment:
 Unavailability of skills (shortage of skilled manpower):
 Contractor's financial difficulties:
 Contractor's desired profitability:
 Differing site conditions:
 Defective workmanship:
 Unfamiliarity with local conditions:
 Lack of a specialized construction manager:
 Fast track construction:
 Poor procurement process:
 Lack of communication:
 Contractor's lack of judgment and experience:
 Long lead procurement:
 Honest wrong beliefs of contractor
 Complex design and technology:
 Lack of strategic planning:
 Contractor's lack of required data:
 Contractor's obstinate nature:

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4.2.4 Other Variations
This section discusses the causes of Variations that were not directly related to the project team.

 Weather conditions
 Safety considerations
 Change in government regulations
 Change in economic conditions
 Socio-cultural factors
 Unforeseen problems

4.3 Effects of Instructed Variations

Given a well-structured schedule of works, the maximum project performance could be achieved
if the work progress flows smoothly within the time frame and within the budget.
However, it is rare that a project performs according as scheduled due to several reasons such
as market conditions changes and Variations on the design drawings or contract. Therefore, the
occurrence of Variations has a negative impact on project performance. Thomas et al (2002:144)
believe that variability generally impedes project performance. Ibbs (1997:308) concluded that
Variations have a tremendous effect on the project performance as the negatively affect
productivity and cost. Arain & Pheng (2005:285) argued that Variations are the unwanted but
inevitable reality of any construction project. Hanna et al (2002:57) indicated that projects
impacted by Variations cause the contractor to achieve a lower productivity level than planned.

4.3.1 Delay in payment:

Delay in payment occurred frequently due to Variations in construction projects (CII, 1990a).
Variations may slow down the project progress, leading to delays in achieving the targeted
dateline during construction (CII, 1995). Eventually, this may affect payment to the contractors.
This delay may cause severe problems until it ends up in delays in payment to the subcontractors;
this is because the Contractors may not be able to pay the Sub- Contractors unless they get paid
by the Employer first.

4.3.2 Quality degradation:

If the occurrence of Variations is frequent, they may affect the quality of works. According to
CII (1995), the quality of work was usually poor because of frequent variations because
Contractors tended to compensate for the losses by doing "short cut" works.
4.3.3 Productivity degradation:
Interruption, delays, and redirection of work that are associated with Variations have a negative
impact on labor productivity. These, in turn, can be translated into labor cost or monetary value
(Ibbs, 1997b). Hester et al. (1991) argued that the productivity of workers was expected to be
greatly affected in cases where they were required to work overtime for prolonged periods to
compensate for schedule delays. Thomas and Napolitan (1995) concluded that Variations

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normally led to disruptions and these disruptions were responsible for labor productivity
degradation. The most significant types of disruptions were due to the lack of materials and
information as well as the work out of sequence. Lack of material was reported as the most
serious disruption, because labors could not continue their works and end up idling while waiting
for the materials to be available. Hence, to manage Variations, one needed to manage these
disruptions. However, the disruptive effects could not be avoided in many instances.

4.3.4 Rework and demolition:

Rework and demolition is frequent occurrences due to Variations in construction projects
(Clough and Sears, 1994). Variations that are imposed when construction is underway or even
completed, usually lead to reworks and delays in project completion (CII, 1990a). Rework and
demolition is potential effects of Variations in construction, depending on the timing of the
occurrence of the Variations. These effects are to be expected due to Variations during the
construction phase. This is because the Variations during the design phase do not require any
rework or demolition on construction sites.

4.3.5 Logistics delays:

Logistics delays may occur due to Variations requiring new materials and equipment (Fisk,
1997). Hester et al. (1991) observed that logistics delays were significant effects of Variations
in construction projects. Logistics delays were experienced in construction projects where
Variations in the construction phase required new materials, tools, and equipment.

4.3.6 Tarnish firm's reputation:

Variations are referred to as a major source of construction claims and disputes (Fisk, 1997;
Kumaraswamy et al., 1998). The claims and disputes may affect the firm's reputation negatively,
due to unable to solve sever Variation cases. Variations also increase the possibility of
professional disputes. Conventionally, Variations present problems to all the parties involved in
the construction process.

4.3.7 Poor safety conditions:

Variations may affect the safety conditions in construction projects (O'Brien, 1998) as for
changes in construction methods, materials and equipment may require, therefore additional
safety measures are needed during carrying out the construction phase.

4.3.8 Poor professional relations:

A construction project is not a mere brick and mortar brought together. Rather, it creates
professional relationships between parties to the contract. Each project successfully completed
constitutes an added experience to participants and their reputation builds up. But disputes may
arise between parties to the contract owing to the occurrence of Variations. The
misunderstanding may arise when the Contractor is not satisfied with the judgment of the

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consultant in terms of a fair valuation of a variation. Bower (2000:264) argued that parties to a
contract have been left to argue over the cost, time effects and due compensation of a variations.
Since the contractors are pessimists of the outcome of the negotiations, they usually allow higher
value than the real cost incurred. Bower (2000:264) opined that this causes the contention
between parties as to the contractor continually push the client to settle the claim for
additional costs while invariably feeling that the reimbursement has been insufficient. As a
consequence, this can be very damaging to the relationship between all parties' representatives
(Bower 2000:264). Charoenngam et al (2003:197) remarked that disputes between the Employer
and the contractor can occur if the Variations undertaking is not managed carefully. Harbans
(2003:42) warned that unless a mutually acceptable solution is agreed by the parties, the
valuation of variations would remain at the forefront of disputes and claims making their way
ultimately to arbitral tribunals or the corridors of justice. Ssegawa (2002:92) revealed that more
than one-third of disputes occur pertain to how to ascertain losses arising from variations. The
excessive occurrence of variations due to design errors or omission may undermine the
professionalism of the designer. Furthermore, workers get demoralized when they demolish a
portion of work that has already been done.

4.3.9 Additional payments for the contractor:

Additional payments for the contractor can be a potential effect of Variations in construction
projects. Variations are considered to be a common source of additional works for the contractor
(O'Brien, 1998). Due to additional payments, the contractor looks forward to variations in the
construction project because the contractor benefits from the additional profit on variations.

4.3.10 Disputes among professionals:

Like poor professional relations, disputes among professionals are also potential effects of
frequent variations in construction projects. The disputes over variations and claims are
inevitable and the variation clauses are often the source of project disputes (CII, 1986a). Clear
procedures presented in the contract and fair allocation of risks can help in resolving disputes
through negotiation rather than litigation (CII, 1986a). Frequent communication and strong
coordination can assist in eliminating the disputes between professionals.

4.3.11 Completion schedule delay:

Various authors agree that variations could be one of the reasons behind project time overruns
or delays (Chan &Yeong 1995:467, Mohamed 2001:1). It is said that a project that finished
within the shortest time could, achieves some monetary savings.
Unfortunately, each additional day due to the occurrence of Variations on a project implies
additional money. Variations issued during any various phases of construction gives negative
affected to both project's completion time and cost increase (Koushki 2005:292). Hanna et al
(2002:63) revealed that the more the variations occurrence the more significant productivity
losses. The productivity is the amount of output over a unit of time.

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4.4 To reduce the number and the Impact of Variations
Controls for Variations and Variation Orders have been suggested by many researchers
(Mokhtar et al., 2000; Ibbs et al., 2001). Below are 30 approaches identified from a literature
review to reduce the number and the impact of Variations. These approaches were categorized
into three categories: Design stage, Construction stage and Design-Construction interface stage.

4.4.1 Design Stage Approach to Control Variations

Review of contract documents
Comprehensive and balanced Variation clauses would be helpful in improving coordination and
communication quality. Conflicts between contract documents can result in misinterpretation of
the actual requirement of a project. (CII, 1994a)
Freezing design
Variations in design can affect a project adversely depending on the timing of the occurrence of
the changes. Therefore, freezing the design is a strong control method. Many owners freeze the
design and close the door for variations after the completion of the drawings.
(CII, 1990a)
Involvement of professionals at initial stages of the project
The involvement of professionals in design may assist in developing better designs by
accommodating their creative and practical ideas. These practices would assist in developing a
comprehensive design with minimum discrepancies.Practical ideas that are not accommodated
during the design phase may affect the project adversely. Variation during the construction phase
is a costly activity as it may initiate numerous changes to construction activities. (Arain et al.,
2004) (O'Brien, 1998).
Employer's involvement at the planning and design phase
The involvement of the Employer at the design phase would assist in clarifying the project
objectives and identifying noncompliance with their requirements at the early stage. Hence, this
may help in eliminating variations during the construction stage where the impact of the
variations can be severe (Fisk, 1997)
Involvement of contractor at the planning and scheduling process
The involvement of the Employer at the design phase would assist in clarifying the project
objectives and identifying noncompliance with their requirements at the early stage. Hence, this
may help in eliminating variations during the construction stage where the impact of the
variations can be severe. (Fisk, 1997).
Thorough detailing of design
A clearer design tends to be comprehended more readily. This would also assist in identifying
the errors and omissions in design at an early stage. Eventually, thorough detailing of design can
eliminate variations arising from ambiguities and errors in design. (O'Brien, 1998)
Clear and thorough project brief
A clear and thorough project brief is an important control for Variations in construction projects
as it helps in clarifying the project objectives to all the participants. Eventually, this

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may reduce the design errors and noncompliance with the Employer's requirements. (O'Brien,
1998)
Reducing contingency sum
The provision of a large contingency sum may affect the construction team' working approaches.
This is because the designer may not develop a comprehensive design and would consequently
carry out the rectifications in design as variations during the later stages of the construction
project. Therefore, reducing the contingency sum would be helpful in ensuring that the
professionals carry out their jobs with diligence.

4.4.2 Construction Stage Approach to Control Variations

Clarity of Variation Order procedures
Clarity of Variation Order procedures is an integral part of effective management of variation
Orders. Early in the project construction stage, the procedures should be identified and made
clear to all parties. Clarity of Variation Order procedures would help in reducing the processing
time and other mishandling issues. (Mokhtar et al., 2000) (Ibbs et al., 2001).
Written approvals
Any variation in the work that involves a change in the original price must be approved in writing
by the employer before a variation can be executed. Any party signing on behalf of the employer
must have written authorization from the employer. It is difficult to prove the right for
compensation if there is no such authorization from the employer. In the hectic environment of
construction, many verbal agreements can be forgotten, leaving the Contractor without any legal
proof to get compensation for the variations works.
(CII,1990a; Hester et al., 1991; Cox, 1997).
Variation Order scope
A well-defined scope can assist the professional team in recognizing and planning appropriately
to minimize the negative impact of the variation. The original scope should be clear and well
defined to distinguish between a variation of scope and a variation due to design development.
It is common that there is disagreement between parties in a project was about defining the
variation scope. Thus, the effective definition of the scope of work helps us to identify and
manage variations. (Ibbs et al. 2001).(CII ,1994b)

Variation logic and justification

Variation logic and justification for implementation was one of the principles of effective change
management. This principle required a change to be classified as required or elective. Required
changes were required to meet the original objectives of the project while elective changes were
additional features that enhanced the project. Knowing the logic and justification behind the
proposed Variations assist the professionals in promoting beneficial variations and eliminating
non-beneficial variations. Proposed by (Ibbs et al. 2001).

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 Appointment Project manager from an independent firm to manage the project
The involvement of a project manager from an independent firm would assist in eliminating
variations that arise due to the lack of coordination among professionals. This practice may assist
in reducing design discrepancies through early reviews of the contract documents and drawings.
(Arain et al., 2004)
Restricted pre-qualification system for awarding projects
A restricted pre-qualification system for awarding projects would act as a filter to select only
the capable Contractors for project bids. (Chan and Yeong, 1995; Fisk, 1997)

Employer's involvement during the construction phase

The involvement of the employer during the construction phase would assist in identifying
noncompliance with the requirements and in approving the variations promptly. The
involvement of the employer during the construction phase allows to keep him aware of ongoing
activities and assist in prompt decision making. (Ibbs et al., 2001).
Avoid the use of open tendering
Competitive open tendering usually encourages the contractor to price very low to win the
contract, especially in bad times when they are in need of jobs. This practice would give rise to
the contractor trying to claim more to compensate for the low price award. Avoiding the use of
open tender would help in eliminating the risks of unfair bids. This may also help to reduce
Variations that may arise due to the contractor's bidding strategy. (Chan and Yeong, 1995)
Use of project scheduling/management techniques
To manage a variation means being able to anticipate its effects and to control, or at least
monitor, the associated cost and time impact. The most known scheduling techniques in the
construction industry are CPM, PERT and Gantt chart; Microsoft Project These techniques are
helpful in identifying the critical path of any Variations on subsequent construction activities.
Well planned and close monitoring on the schedule plan will be to reduce the Variations effects
on the project. (Hester et al., 1991) (Clough and Sears, 1994). (Mokhtar et al., 2000).
Comprehensive documentation of variation order
Through timely notification and documentation of variation orders, participants will have kept
their rights and thereby their option to pursue a subsequent claim or to defend against a claim.
One of the most aggravating conditions is the length of time that elapses between the time when
a proposed contract modification is first announced and when the matter is finally rejected or
approved as a variation order. Documentation of variation and claims had assisted in tracking
the effects of the Variation and claim events on time and cost. A documented source of
knowledge about previous Variation instructions would be helpful in making decisions
concerning the appropriate handling of variation instructions. (Cox, 1997; O'Brien, 1998).

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4.4.3 Design-Construction Interface Stage Approach to Control Variations
Prompt approval procedures
One of the most aggravating conditions is the length of time that elapses between the time when
a proposed contract modification is first announced and when the matter is finally rejected or
approved as a variation. However, the longer the period between recognition and
implementation, the more costly the change will be. (Fisk, 1997).

Ability to negotiate Variation

The ability to negotiate variation is an important factor for the effective control of variations.
Effective negotiation can assist the professional team in minimizing the negative impacts of the
variation. There are certain skills required for effective negotiation of variations, i.e., the
knowledge of contract terms, project details, technology, labor rates, equipment, methods and
communication skills. (Clough and Sears, 1994), (Cushmanand Butler, 1994)

Valuation of indirect effects

Consequential effects can occur later in the downstream phases of a project. Therefore, it is
essential to acknowledge this possibility and establish the mechanism to evaluate its
consequences. Professionals should thus evaluate the total overall effects a change may have on
the later phases of a project, in order to manage the variations effectively. (Ibbs et al., 2001).
A team effort by employer, consultant, and Contractor to control Variation
Coordination is important in a multi-participant environment as in most construction projects
detrimental variations, which affect the projects negatively, can usually be managed at an early
stage with due diligence in coordination. (CII, 1994a; Assaf et al., 1995).

Utilize work breakdown structure

A work breakdown structure (WBS) is a management tool for identifying and defining work. A
Contractor should consider using this as an evaluation tool, especially on large projects. If a
Variation involves work not previously included in the WBS, it can be logically added to the
WBS and its relationship with the other WBS element can be easily checked. Domino effects
can also be traced by the use of WBS. (Hester et al., 1991; Mokhtar et al., 2000).

Continuous coordination and direct communication

Coordination, and frequent communication are essential to reduce miscommunication among
team members, hence reduce the chances of occurring variations. (Assaf et al.,1995).
Control the potential for Variations to arise through contractual clauses
Selection of the appropriate standard contract form (JKR, PAM2006, etc) with the necessary
and unambiguous Variation clauses would be helpful in the management of variations. Clear
procedures presented in the contract and fair allocation of risks can help in resolving disputes
through negotiation rather than litigation. (Cox, 1997)

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 Comprehensive site investigation
Comprehensive site investigations assist in proper planning for construction activities. Differing
site conditions are an important cause of delays in large building projects. Therefore, a
comprehensive site investigation would help in reducing potential Variations in a project. (Fisk,
1997).

Use of collected and organized project data compiled by Employer, consultant and
Contractor
The Variations works should always be documented for future references. Hence, better controls
for Variations were achievable by sharing a database compiled by all the team members
(Fisk,1997).

Knowledge-base of previous similar projects

From the outset, project strategies and philosophies should take advantage of lessons learned
from past similar projects. If professionals have a knowledge-base established on past similar
projects, it would assist the professional team to plan more effectively before starting a project,
both during the design phase as well as during the construction phase, minimize and control
Variations and their effects. (CII, 1994b).

Comprehensive analysis and prompt decision making through computerized

Knowledge-based decision support system A Decision Support System (DSS) approach for
management decisions seems to be the ideal approach to follow. The system would be helpful
in presenting an example scenario of the causes of variations, their relevant effects and potential
controls that would assist in decision making at the early stage of the variations occurring.
(Miresco and Pomerol, 1995).

4.5 Variation procedure

A Change Order is a written instrument prepared by the Architect and signed by the Owner,
Contractor, and Architect (Libor et al, 2003).
A variation order is a formal document that alerts some conditions of the contract documents.
The word 'formal' implies legal binding and as such all variations should be in writing and verbal
variations should be avoided( Edward 1998). Although, there is no mandatory form, owners
usually have their own forms and procedures that must be followed to process a variation.
The complexity of procedures is a problem in large organizations. Too many control systems
and technical department approvals become barriers to an efficient variation order procedure.
The inefficiency cost could be quite enormous. In addition, the level of trust between the parties
has a direct impact on the simplicity or complexity of the variation order procedures. The less
the trust, the more cumbersome is the procedure.

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If the Engineer requests a proposal, prior to instructing a Variation, the Contractor shall respond
in writing as soon as practicable, either by giving reasons why he cannot comply (if this is the
case) or by submitting:
(a) a description of the proposed work to be performed and a program for its execution,
(b)the Contractor’s proposal for any necessary modifications to the program according to Sub-
Clause 8.3 [Programme] and to the Time for Completion, and
(c) the Contractor's proposal for the evaluation of the Variation. The Engineer shall, as soon as
practicable after receiving such proposal (under Sub- Clause 13.2 [Value Engineering] or
otherwise), respond with approval, disapproval or comments. The Contractor shall not delay any
work whilst awaiting a response. Each instruction to execute a Variation, with any requirements
for the recording of Costs, shall be issued by the Engineer to the Contractor, who shall
acknowledge receipt. Each Variation shall be evaluated in accordance with Clause
12[Measurement and Evaluation], unless the Engineer instructs or approves otherwise in
accordance with this Clause.
4.6 Valuation of Variation
Construction contracts are complex both in nature and the process required to realize the finished
product. So variation is common on construction projects. Variation orders are typically issued
in the form of contract instructions. Once a variation order has been instructed and works are
carried out, the employer has to reimburse the contractor for the same. This obligation of the
employer involves certain activities or stages for the measurement of works, valuation of the
varied works and payment for the varied works.
Under Sub-Clause 13.5 of MDB FIDIC 2006, Provisional Sums, it is stated that;
Each Provisional Sum shall only be used, in whole or in part, in accordance with the Engineers
instructions and the Contract Price shall be adjusted accordingly. The total sum paid to the
Contractor shall include only such amounts, for the work, supplies or services to which the
Provisional Sum relates, as the Engineer shall have instructed.
For each Provisional Sum, the Engineer may instruct work to be executed (including Plant,
Materials or services to be supplied) by the Contractor and valued under Sub-Clause 13.3
[Variation Procedure];
Valuation of Variation can also be done in day work bases MDB FIDIC 2006 Sub-Clause 13.6.
As per the Clause 15.5 of PPA 2011, the prices for all modifications ordered by the Engineer in
accordance with GCC Clause 15.2 and 15.4 shall be ascertained by the Engineer in accordance
with the following principles:
Where work is of similar character and executed under similar conditions to work priced in the
bill of quantities or price schedule it shall be valued at such rates and prices contained therein;
Where work is not of a similar character or is not executed under similar conditions, the rates
and prices in the contract to be agreed through negotiation between the Engineer and the
Contractor shall conform to the prevailing market price;
If the nature or amount of any modification relative to the nature or amount of the whole of the
contractor to any part thereof shall be such that in the opinion of the Engineer any rate or price

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contained in the contract for any item of work is by reason of such modification rendered
unreasonable, then the Engineer shall fix such rate or price as in the circumstances he shall think
reasonable and proper.
4.7 Right to Vary
The employer’s right to vary derives from the contract and therefore it must be exercised in
accordance with the express restrictions and procedures set out in the contract. This section also
discusses the way in which implied terms may restrict the power to vary the works. Generally
speaking, the power to vary the works under a construction contract is drawn very widely. It is
of considerable benefit to the employer to have no, or limited, restrictions on its right to vary. If
unexpected problems arise on a project the employer will want as much flexibility as possible
to vary the works so as to achieve its objectives. This power will often allow the employer not
just to change the permanent works, but also many other aspects of the conditions on site and
how the works are undertaken.

4.7.1 Employer’s Right to Vary through Engineer

The employer has the right to vary the work through the engineer. The engineer is able to issue
an instruction to the contractor to vary the works which are described in the contract. A change
in scope of the project, the introduction of different materials, revised timing and sequence are
all usually provided for by the variations clause. Inapplicable law of Ethiopia
Under MDB FIDIC 2006: The employer has the right to vary through the engineer.
Under Sub-Clause 13.1; it says that “Variations may be initiated by the Engineer at any time
prior to issuing the Taking-Over Certificate for the Works, either by an instruction or by a
request for the Contractor to submit a proposal.”
The contractor shall execute any of the variations unless he/she is promptly noticed to the
engineer by stating that either the materials or goods which are required for the variation are
unavailable or such a variation causes a great difference on the progress of the work. The
engineer has the right to cancel the variation order, confirm and vary the instruction as well. The
contractor has no right to make any kind of changes, addition or omission to the progress of the
work unless told by the engineer to do so. [Sub-Clause 13.1]
Under PPA 2011: The employer has the right to made modification by change order through
the engineer.
Under Sub-Clause 15.1; The Engineer shall have the power to order any modification to any
part of the works necessary for the proper completion and /or functioning of the works. Such
modifications may include additions, omissions, and substitutions, changes in quality, quantity,
form, character, kind, position, dimension, level or line and changes in the specified sequence,
method or timing of execution of the works.
Under the Civil Code (Applicable Law)
Article 3031 - Alterations required by the client. 1. Rights of the client.
The client may demand that alterations be made in the work as originally planned where such
alterations can technically be made and are not such as to impair the solidity of the work.

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Article 3284(1) – 2. New work
The administrative authorities may, against payment of additional remuneration, require the contractor
to perform works which were not mentioned in the contract.

4.8 Discussion about having no variation clause in the contract

Variation clauses are not always expressly called “variation clauses”. When considering any
proposed variation, it is important to first review all of the documents that make up the contract.
If it is still unclear whether or not there is a clause covering a particular variation, seek
appropriate advice.
If there were no provision in the contract for varying the work to be done, then any attempt by
the employer to vary it would require the agreement of the contractor. The lack of a provision
for variations would effectively enable the contractor to negotiate a new price for the whole
contract every time the employer tried to make a change. This apparent difficulty is not as
rigorous as it sounds. The absence of a variations clause undoubtedly makes it difficult to vary
the terms of the contract but it is at least possible that the courts would imply a term allowing
minor variations to be made. In any event, it would, of course, be most unusual for a contractor
to attempt to refuse to carry out small changes and even less likely that the contractor would go
to court over an attempt to impose them.
By inserting a clause allowing for changes to be made to the works as they are being built, the
employer, through the contract administrator, can alter the works as and when necessary. The
purpose of the variations clauses is to allow such changes to be made, and also to permit any
consequential changes to be made to the contracts.

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 CHAPTER FIVE: APPROVED VARIATION
5.1 introduction
The contractor normally has no right to vary/alter and/or modify of the permanent works and
the terms of the contract. But he can make suggestions as to how the work might be varied, for
his own benefit or the benefit of the employer or both. When the contractor submits his proposal
by his own opinion or by a request of the engineer for the Contractor to submit a proposal and
approved by the engineer we call it an approved variation.
The Contractor shall not make any alteration and/or modification of the Permanent Works,
unless and until the Engineer instructs or approves a Variation. (MDB FIDIC 2006, Sub-Clause
13.1)
If the variation is needed by the contractor it is required to submit a proposal to the engineer for
his approval.
The Contractor may, at any time, submit to the Engineer a written proposal which (in the
Contractor’s opinion) will, if adopted, (i) accelerate completion, (ii) reduce the cost to the
Employer of executing, maintaining or operating the Works, (iii) improve the efficiency or value
to the Employer of the completed Works, or (iv) otherwise be of benefit to the Employer. (MDB
FIDIC 2006, Sub-Clause 13.2).
Therefore, if such a written proposal is approved by the engineer, the variation due to it is called
an approved variation.

5.2 Scope of Approved Variation

As per MDB FIDIC 2006, Sub-Clause 13.2: Value Engineering, the scope of approved variation
is limited to;
To Accelerate Completion: The contractor may wish to complete the project earlier than
planned. When this is out of value engineering scope and for reasons completely attributable to
contractors benefits such as allocation of resources to another project after completing the
subject project, the employer is not under any obligation to assist with it. However, if the
employer wishes to proceed with such acceleration, then the question about the allocation of
extra cost arises. If the employer's approval is excluding any extra cost, the contractor shall bear
costs related to additional resources, equipment, overtime, etc. including the extra cost for
supervision which is under the scope of engineer or employer. Such a change in completion date
and additional cost approved, if any shall be executed under a variation order.
Reduce the cost of the Employer: If the need for approved variation is to reduce the cost of the
employer of executing, maintaining or operating of the work. This may be attained by providing
alternative designs by the contractor that may satisfy the employer or engineer.
Improve the efficiency or value to the Employer of the completed Works:

The benefit to the Employer: When the proposed variation benefits the employer.

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5.3 Procedure for Approved Variation
As per MDB FIDIC 2006, Sub-Clause 13.2 and 13.3, the procedure for an approved variation
shall be as follows;
 The proposal shall be prepared at the cost of the Contractor and shall include the items listed
in Sub-Clause 13.3 [Variation Procedure].
 A description of the proposed work to be performed and a Program for its execution,
 The Contractors proposal for any necessary modifications to the Program, according to
Sub-Clause 8.3 [Program] and to the Time for Completion, and
 The Contractors proposal for the evaluation of the Variation.
 The Engineer shall, as soon as practicable after receiving such a proposal respond with
approval, disapproval or comments.
 If the proposal approved, the contractor proceed to perform the work
 If this change results in a reduction in the contract value of this part, the Engineer shall
proceed in accordance with Sub-Clause 3.5 [Determinations] to agree or determine a fee,
which shall be included in the Contract Price.
In the case of PPA condition of contract, there is no clause that states the procedure of variation
5.3 Result of approved variation
If the Contractor has a proposal which would reduce its costs without reducing the value to the
Employer, According to MDB FIDIC2006, Sub-clause 13.3 The Contractor is required to submit
its proposal for the benefit of both employer and contractor by way of improving efficiency or
cost of operating or maintaining the works and if such value engineering under MDB FIDIC
2006, Sub-Clause 13.2 (c) In that case the Engineer is required to make a determination under
Sub-Clause 3.5 of the reduction in value to the Employer. If the reduction in value is less than
the reduction in cost to the Employer, the benefit is split 50/50.
5.4 Possible Design Liability of the Contractor
As per MDB FIDIC 2006, Sub-Clause 13.2; if a proposal, which is approved by the Engineer,
includes a change in the design of part of the Permanent Works, then unless otherwise agreed
by both Parties: The Contractor shall design this part and sub-paragraphs (a) to (d) of Sub-Clause
4.1 [Contractor’s General Obligations] shall apply.
That means the contractor shall be responsible/liable for this part and it shall, when the Works
are completed, be fit for such purposes for which the part is intended as are specified in the
Contract. (Sub-Clause 4.1 (c))
5.5 value engineering
Value Engineering (VE) is a management technique that seeks the best functional balance
between cost, reliability, and performance of a product, project, process or service.
Value engineering is a powerful problem-solving tool that can reduce costs while maintaining
or improving performance and quality requirements. Value engineering can improve decision-
making that leads to the optimal expenditure of owner funds while meeting the required function

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and quality level. The success of the VE process is due to its ability to identify opportunities to
remove unnecessary costs while assuring quality, reliability, performance, and other critical
factors that meet or exceed customer's expectations.
The construction industry uses the concept of value engineering to improve a project by coming
up with alternatives to design, processes and materials. All of this hinges on understanding the
needs of the owners, users and the spirit of the project.
The intention of Value Engineering is to encourage Contractors to apply their knowledge and
experience to the benefit of both the Contractor and the Employer. A Contractor may benefit in
two ways from a variation it proposes. It may benefit because its costs of production are reduced
but the Employer receives a product which is as good as that originally designed. Alternatively,
it may find a way in which it increases the value of the final product to the Employer without
incurring additional costs.
As per MDB FIDIC 2006, Sub-Clause 13.2: It is the Contractor’s written proposal (with his
opinion) submitted to the engineer for his approval if adopted, the proposal accelerates
completion, reduce the cost to the Employer of executing, maintaining or operating the Works,
improve the efficiency or value to the Employer of the completed Works, or otherwise be of
benefit to the Employer.
As per PPA 2011, Clause 75: When the Public Body wants the Contractor to finish before the
Intended Completion Date, the Engineer will obtain priced proposals for achieving the necessary
acceleration from the Contractor. If the Public Body accepts these proposals, the Intended
Completion Date will be adjusted accordingly and confirmed by both the Public Body and the
Contractor. (Sub-Clause 75.1)
If the Contractor’s priced proposals for acceleration are accepted by the Public Body, they are
incorporated in the Contract Price and treated as a modification. (Sub-Clause 75.2)
The effects of value engineering are as follows; (MDB FIDIC 2006)
Value engineering is under the control of the contractor since it is restricted to his opinion on
the matter. (Sub-Clause 13.2)
The contractor costs additional costs in preparing a proposal. (Sub-Clause 13.2)
It benefits both parties if the reduction of the cost being the case of value engineering.
The contractors will seek different alternatives to gain the advantages of value engineering if it
is properly habited in the construction industry.
If designing part of the works in the contract is constituted in value engineering, the contractor
will be liable for this part. Thus, the obligation of the contractor increased.
Determination of fee for approve variation will be done as per Sub-Clause 3.5 and at this Clause,
the estimation of what is reasonable is left to the discretion of the engineer that may lead to
dispute when the parties disagreed.

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5.6 Possibility to change or not change the delivery system from DBB to DB
The Contractor has the right to submit proposals for variations which may accelerate completion,
reduce the cost either of completing the Works or of their ultimate maintenance or operation,
improve the efficiency or the value of the Works or otherwise benefit the Employer.
The proposal is provided at the Contractor’s cost and must include a description of the proposed
changes and a program, details of any modifications necessary to the pre-existing program and
the Time for Completion and the proposed payment.
If the proposal requires a design change, then, unless otherwise agreed, the new design will have
to be prepared by the Contractor, according to MDB FIDIC 2006 sub-clause 13.2
If the Contract specifies that the Contractor shall design any part of the Permanent Works, then
unless otherwise stated in the Particular Conditions, the Contractor shall be responsible for this
part and it shall, when the Works are completed, be fit for such purposes for which the part is
intended as are specified in the Contract, according to MDB FIDIC 2006 sub-clause 4.1(c).
Therefore, if the contractor prepares his proposal to redesign the whole permanent work for the
benefit of both employer and contractor and approved by the engineer, then the contractor shall
redesign and responsible for the whole permanent works. This means the responsibility will be
transferred from the designer/consultant to the contractor. But the project delivery method shall
not be changed from DBB to DB.

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 CHAPTER SIX: COMPARISON BETWEEN INSTRUCTED
AND APPROVED VARIATION

Instructed variation Approved variation

 instructed variation is initiated by an  The Contractor may, at any time, submit to

engineer in the form of instruction or request the Engineer a written proposal.
to the contractor.
 The proposal should be prepared at the cost
 the instructions should be given writing of a contractor.
form

 the contractor shall not make any alteration  The proposal should include
of permanent work unless and until the  Description of proposed work to be
engineer instructs or approves the variation. performed and program for its
execution.
 The contractor's proposal for the
 For work of minor nature, the engineer may evaluation of the variation.
instruct that a variation shall be executed on
a day work basis if a day work schedule  If a proposal which is approved by the
includes a contract. engineer, includes a change a change of
permanent works the contractor should
design this part

Table 1: COMPARISON BETWEEN INSTRUCTED AND APPROVED VARIATION

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 CHAPTER 7: THE ROLE OF ENGINEER

7.1 Role of the Engineer in Construction: Overview

MDB FIDIC 2006 sub-clause 1.1.2.4 defines
“Engineer” means the person appointed by the Employer to act as the Engineer for the purposes
of the Contract and named in the Contract Data, or other person appointed from time to time by
the Employer and notified to the Contractor under Sub-Clause 3.4 [Replacement of the
Engineer].
PPA 2011 Clause 1.2 (n) defines "Engineer" means a person named in the Special Conditions
of Contract or appointed as such by the Public Body and notified in writing to the Contractor to
act as the representative of the Public Body to supervise and inspect works and to test and
examine the materials employed and the quality of workmanship, including any authorized
representative of such person;
MoWUD clause 1 (c) defines "Engineer" the Engineer is a natural or juridical person designated
as Engineer in writing by The Ministry of Works and Urban Development (MoWUD) Addis
Ababa, Ethiopia.
According to MDB FIDIC 2006 clause 3 subclause 3.1
The Employer shall appoint the Engineer who shall carry out the duties assigned to him in the
Contract. The Engineer’s staff shall include suitably qualified engineers and other professionals
who are competent to carry out these duties.
The Engineer shall have no authority to amend the Contract. The Engineer may exercise the
authority attributable to the Engineer as specified in or necessarily to be implied from the
Contract. If the Engineer is required to obtain the approval of the Employer before exercising a
specified authority, the requirements shall be as stated in the Particular Conditions. The
Employer shall promptly inform the Contractor of any change to the authority attributed to the
Engineer. However, whenever the Engineer exercises a specified authority for which the
Employer’s approval is required, then (for the purposes of the Contract) the Employer shall be
deemed to have given approval. However, whenever the Engineer exercises a specified authority
for which the Employer’s approval is required, then (for the purposes of the Contract) the
Employer shall be deemed to have given approval.
Except as otherwise stated in these Conditions:
a) Whenever carrying out duties or exercising authority, specified in or implied by the Contract,
the Engineer shall be deemed to act for the Employer;
b) The Engineer has no authority to relieve either Party of any duties, obligations or
responsibilities under the Contract; and
c) Any approval, check, certificate, consent, examination, inspection, instruction, notice,
proposal, request, test, or similar act by the Engineer (including absence of disapproval) shall
not relieve the Contractor from any responsibility he has under the Contract, including
responsibility for errors, omissions, discrepancies, and non-compliances. Any act by the
Engineer in response to a Contractor’s request except otherwise expressly specified shall be
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notified in writing to the Contractor within 28 days of receipt. The following provisions shall
apply:
The Engineer shall obtain the specific approval of the Employer before taking action under the
following Sub-Clauses of these Conditions:
a. Sub-Clause 4.12: Agreeing or determining an extension of time and/or additional cost.
b. Sub-Clause 13.1: Instructing a Variation, except;
i. in an emergency situation as determined by the Engineer, or
ii. If such a Variation would increase the Accepted Contract Amount by less than the percentage
specified in the Contract Data.
c. Sub-Clause 13.3: Approving a proposal for Variation submitted by the Contractor in
accordance with Sub-Clause 13.1 or 13.2.
d. Sub-Clause 13.4: Specifying the amount payable in each of the applicable currencies.
Notwithstanding the obligation, as set out above, to obtain approval, if, in the opinion of the
Engineer, an emergency occurs affecting the safety of life or of the Works or of adjoining
property, he may, without relieving the Contractor of any of his duties and responsibility under
the Contract, instruct the Contractor to execute all such work or to do all such things as may, in
the opinion of the Engineer, be necessary to abate or reduce the risk. The Contractor shall
forthwith comply, despite the absence of approval of the Employer, with any such instruction of
the Engineer. The Engineer shall determine an addition to the Contract Price, in respect of such
instruction, in accordance with Clause 13 and shall notify the Contractor accordingly, with a
copy to the Employer.
According to PPA 2011 clause 12: Engineers and Engineer representative Sub clause
12.1Except where otherwise specifically stated and subject to any restriction in the SCC, any
action required or permitted to be taken, and any document required or permitted to be executed,
under this Contract by the Public Body or the Contractor may be taken or executed by the
Engineers named in the SCC. Except as expressly stated in the SCC, the Engineer shall not have
the authority to relieve the Contractor of any of his obligations under the Contract. 12.2Any
notice, information or communication was given to or made by an Engineer shall be deemed to
have been given or made by the Public Body means the Employer. 12.4The role of the
Engineer’s representative shall be to supervise and inspect works and to test and examine the
materials employed and the quality of workmanship. Under no circumstances will the Engineer's
representative be empowered to relieve the Contractor of his obligations under the contract or –
except where express instructions to that effect are given in the SCC – order works resulting in
an extension of the period of performance or additional costs to be paid by the Public Body or
introduce variants in the nature or scale of the works.
Generally, Engineers have the role of:
A. Construction Supervision
With respect to Construction supervision, once work starts on the project, to supervise or to
Inspect the work carried out by the contractor in order to ensure conformity with the design
requirements.

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B. Contract administrator Especially the role of the consultant as a contract administrator divided
into the following distinct role.
Agent Role
When the engineer act as an agent it has its own power and function
The following are some of the important powers of the consultant.
 If it is authorized by the client it has the Power to make contracts.
 If it is authorized by the client it has the Power to instruct variations,
 If it is authorized by the client it has the Power to order a suspension of the performance
of the works,
The following are some of the important functions of the Engineer advising the employer;
 on costs of the project;
 on the appointment of particular contractors;
 On the appointment of subcontractors;
 Contract documents;
 Contract drawings;
 and any other amendment thereof (BOQ);
 Professional or independent Role;
 Consultative role;
Professional Role
The independent role of the consultant may be expressed in the following professional functions.
Certification function; the consultant may certify & issue the following certificates under the
terms of the construction contract.’
 Interim Payment Certificates;
 Final Payment Certificate;
 Event Recording Certificates;
Consultative Role Undertaking Consultation both with the employer & the contractor, under the
relevant construction contract, before making any determination.

7.2 Role of the Engineer in Instructed Variation

The roles of the engineer in instructed variation are as listed below;
According to MDB FIDIC 2006;
 Initiates variation by instruction or by requesting submission of the contractor’s
proposal. (Sub-Clause 13.1)
 If the engineer requests a proposal of the contractor prior to instructing variation, upon
receiving the proposal from the contractor, he responds it with approval, disapproval or
comments. (Sub-Clause 13.3)
 Issues any requirements for the recording of costs. (Sub-Clause 13.3)
 Evaluates the variations

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Under PPA 2011 GCC:
 Have the power to Order any modification to any part of the works necessary for the
proper completion and /or functioning of the works in writing by notifying the
Contractor of the nature and form of such modification (Sub-Clause 15.1, 15.2 & 15.3)
 If the contractor submitted the proposal about the variation after engineer’s notification,
the Engineer shall, after due consultation with the Public Body and, where appropriate,
the Contractor, decide as soon as possible whether or not the modification shall be
carried out. (Sub-Clause 15.4)
 If the Engineer decides that the modification shall be carried out he shall issue the
change order stating that the modification shall be carried out at the prices and under the
conditions given in the Contractor's submission or as modified by him. (Sub-Clause
15.4)
 Ascertain prices for all modifications ordered by him. (Sub-Clause 15.5)
 Determines any reduction from the contract price after consultation with the Public
Body and the Contractor as a consequence of the application Sub- Clause 15.5. (Sub-
Clause 15.7)
Under civil code: The role of the engineer has not been mentioned.

7.3 Role of the Engineer in Approved Variation

The roles of the engineer in approved variation are as listed below;
According to MDB FIDIC 2006;
 Approves variation proposal submitted by the contractor (in his opinion) to value
engineering. (Sub-Clause 13.2)
 Determines fee and agree in accordance with Sub-Clause 3.5 [Determination] if the variation
results in a reduction in the contract value. (Sub-Clause 13.2)
7.4 Contribution of Design to Scope Change

Change of plan or design of the project is one of the most significant causes of variation and scope
change in construction projects. The contribution of design to scope change is due to poor design
like Errors and omissions in design, not involvement of owner during design, design complexity, the
client may change his needs and requirements on project design and using value engineering
regarding to design may change the scope of the projects.

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 CHAPTER 8: CASE STUDY ABOUT THE VARIATION
8.1 introduction
A variation (sometimes referred to as a variation instruction, variation order (VO) or change
order), is an alteration to the scope of works in a construction contract in the form of an addition,
substitution or omission from the original scope of works. Almost all construction projects vary
from the original design, scope, and definition. Whether small or large, construction projects
will inevitably depart from the original tender design, specifications, and drawings prepared by
the design team. This can be because of technological advancement, statutory changes or
enforcement, change in conditions, geological anomalies, non-availability of specified
materials, or simply because of the continued development of the design after the contract has
been awarded. In large civil engineering projects, variations can be very significant, whereas on
small building contracts they may be relatively minor
8.2 Background of the case

The project located in Dire Dawa city, around Mariam sefer and its an apartment building
project. The original project cost is 983,068,939.66 birr (Nine hundred eighty-three million
sixty-eight thousand nine hundred thirty-nine birr & sixty-six cent).
There were numerous additional works associated with the continuously revised works this is
the main reason for the occurrence of variation.
Causes of variation
1. Some additional works by the contractor due to design problems
2. Due to change in some finishing materials
3. Some activities are not listed on the previous document
4. Due to the current cost of construction materials
5. Quantity variation due to improper preparing of take-off sheet and BoQ

8.3 purpose of the project

The purpose of this building project is a residential apartment for former military's.

8.4 Project and contract information

Overview of the project
Company name Defense Construction Enterprise: GRADE1- GC
Purpose of the project---- Residential Apartment: project (20 blocks+ G+4)
Location of the site: Dire dawa
 Project code: 16-10B
 Consultant - DCDE (Defense Construction Design Enterprise)
 Client – MoND (Ministry of National Defense)
 Contract Price –983,068,939.66 birr (Excluding VAT)

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  Variation amount 92,827,015.65
 Total project cost 1,075,895,955.31 ETB (including variation)
 Contract Time – 1095 Calendar Day
 Site Hand Over – June 1/2017
 Mobilization Time – 60 Calendar Day
 Commencement Date- July 31/2017
 Contract Completion Date – July 31/2020
 Total number of blocks- 20 Blocks
 Based on their number of bedroom classified as
 One bed type 5
 Two-bed type 8
 Three-bed type 7

8.5 Proposed solution

Solutions for the initiated contract variation
1. Each and every Quantity are carefully prepared again by Quantity Surveyors
2. Each additional works which are constructed by the contractor are carefully measured
by data collectors and some representatives from both parties.
3. Finally, after prepared all variation documents Quantities which are greater than 125%
are approved and treated as a Variation by the Engineer.

8.6 discussion recommendation

The result of the case study shows as the engineer approved the variation, since the particular
items are greater than 125% of the bill of quantities. The cause of this significant amount of
variation is related to the owner interest on design modification and additional significant works
by the contractor which causes quantity change as a result of this variation.
The consultant through his design review and actual investigation has identified and report to the owner
massive variation will be expected because of these reasons. Finally, the variation is approved by the
Engineer on the project.

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 CHAPTER 9: COMPARATIVE TABLE AND ANALYSIS

NO. Comparative criteria MBD FIDIC 2006 PPA 2011

1. Definition of Variation means any ” Modifications by Change
variation change to the Works, which is Orders” The Engineer shall have
instructed or approved as a variation the power to order any
under Clause 13 [Variations and modification to any part of the
Adjustments]. works necessary for the proper
completion and /or functioning of
the works. (Sub-clause 15.1)
Similarity: Both of conditions of contracts defined as varied work.
Difference: According to PPA-2011 “Variation” is stated as
“Modifications”.
2. Right to vary under MDB-FIDIC 2006 sub-clause, PPA-2011 condition of contracts
13.1 (a) up to(f) contain: Changes to (Sub-clause 15.1) contains:
quantities, quality of an item of Changes to quantities, quality of an
works, changes to levels, positions item of works, changes to levels,
and/or dimensions, the omission of positions and/or dimensions, the
any work any additional work, omission of any work any
changes to the sequence or timing of additional work, changes to the
the execution of the works, etc. sequence or timing of the execution
of the works, etc.
(i)Engineer under MDB-FIDIC 2006 (sub-clause PPA- 2011 (sub-clause 15.1 up to
13.1) condition of a contract the 15.4) condition of the contract the
engineer has the right to initiate, engineer has the right to initiate,
order, confirm, omit and asses the order, confirm, omit and asses the
(ii)Contractor variation variations.
MDB-FIDIC (sub –clause 13.1) PPA- 2011 (sub-clause 15.2(b) and
condition of contract state the right 15.3) condition of contract
and the obligation of the contractor state the right and the obligation of
(iii)employer the contractor
Under MDB-FIDIC the Employer has PPA-2011 there is no any clauses
to approve the variation order by the that state about this.
Engineer(Sub-Clause 3.1)
Similarity: both are similar according to right to vary, engineer and
contractor
Difference: the only difference is an employer

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3. Value Engineering The basic concept of Value There is no a value engineering
Engineering is more detailed and concept under PPA-2011
properly addressed by MDB-FIDIC General Conditions of Contract
2006
Similarity: there is no similarity.
Difference: exist.

4. Procedure of under MDB-FIDIC 2006 sub-clause PPA-2011 condition of contracts

variation 13.3 describes the same procedure of (Sub-clause 15.3 and 15.4)
variation, which is the engineer describes the same procedure of
instruct the variation and the variation, which is the engineer
contractor respond instruct the variation and the
accordingly contractor respond
accordingly
Similarity: they are similar regarding to the procedure
Difference: there is no big difference
5. Payment in MDB-FIDIC 2006 (Sub-Clause 13.4) PPA-2011 (Sub-Clause 59.1) states
Applicable mentions that payment of currency for that the payment of currency for
Currencies the varied works should be based on the varied works should be based
the proportions of various currencies on the proportions of various
specified for payment of the Contract currencies specified for payment of
Price. the Contract Price.
Similarity: similar
Difference: no difference
6. Day work under MDB-FIDIC 2006 Sub-Clause, PPA- 2011(Section-6D, Sub-
13.6 allows execution of these works Clause 5(a)) allows the execution
based on a day work basis. of these works based on a day work
basis.
Similarity: similar
Difference: no difference

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 7. Adjustments for In MDB-FIDIC 2006 the contractor
Changes in has the right to ask any adjustments
Legislation regarding to cost and time whenever
he feels that he suffers from
additional cost as a result of changes
in the laws of the country, including
the introduction of new laws and
modification of the
existing one.
Similarity: no similarity
Difference: exist
TABLE 2 COMPARATIVE TABLE AND ANALYSIS
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In PPA-2011 Sub Clause 16.1
Unless otherwise expressly agreed
in the SCC. if, after the deadline
for submission of the Bid then such
Contract Price shall not
be correspondingly increased or
decreased and/or the Completion
Date shall not be adjusted to the
extent that Contractor has thereby
been affected in the performance
of any of its obligations under the
Contract
 CHAPTER 10: CONCLUSION AND RECOMMENDATION
10.1 conclusions
Variations are often a source of dispute and consume a lot of time and money in arguments and
negotiations. Accordingly, for building and engineering works, the causes of variation in works
are: Employer related variations, Consultants related variations, and Contractor related
variations and other variations. For those variations, some of the root causes are financial, design
aesthetics, changes in drawings, weather, geological and geotechnical reasons. The studies have
shown that inadequate workings drawing details, design discrepancies, and conflicts between
contract documents are the most prevalent sources of variations due to consultants, change of
plans or scope by the owner, impediment in the prompt decision-making process, and inadequate
project objectives contributed mostly to variations by the owner. Contractors' prevalent reasons
for variations are differing site conditions, shortage of skilled manpower, and contractor's
desired profitability.
To minimize the above causes of variations, we have to follow and apply the approaches that
use to reduce the number and the impact of variations, which are the Design stage, Construction
stage and Design-Construction interface stage.
In our study we have seen the most of variations occurred due to improper design, poor project
objective/ scope, design discrepancies, and conflicts between contract documents are the most
prevalent sources of variations due to owner /engineer and differing site conditions are the main
reasons for variations by Contractors. Those different variations result in to increase in project
cost and time overruns of a project.

10.2 recommendation

This study focused on the variation orders in construction projects, while variation cannot be
completely avoided but it can be reduced. To reduce the occurrence of variation orders
recommendations from the analysis were stated as follows:

 The client should allow sufficient time to prepare an elaborately detailed project brief. This
will eliminate frequent variations to the original plan of the project due to the client change
of mind.
 Direct communication among the project team is a key to eliminate variations that occur due
to the communication gap during the design and execution phase.
 Enhance communication and all parties should be proactive all times.
 Consultants should give sufficient time for the planning and design phase, this will assist in
minimizing variation orders due to design changes at the construction stage.
 The owner should give a reasonable time period to the Consultant for preparing a complete
design and records.
 The owner should perform a comprehensive and integrated study for the projects

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 A detailed design would be able to exert control to unnecessary interference from consultants
or other external influences.
 The consultants should prepare a completed contract document before the tendering stage.
This minimizes variation occurs due to the change of specifications.
 Direct communication among the project team is a key to eliminate variations that occur
due to the communication gap during the design and execution phase.
 There should be an improvement in project management, and improved decision-making
process on the part of the client during the project execution stage so as to minimize the
occurrence of variation.

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 Reference
 MDB-FIDIC (2006); conditions of contract for construction for building and engineering
works designed by the employer.
 PPA (2011) General Conditions of Contract for Procurement of Works
 Bin-Ali, Z, 2008, ‘Causes and Steps to Minimize Variations in Construction Projects’,
Thesis, Technology University of Malaysia
 CII, (1990); The Impact of Changes on Construction Cost and Schedule, Construction
Industry Institute, University of Texas, Austin
 CII, (1995); Qualitative effects of Project Changes, Construction Industry Institute,
University of Texas, Austin
 Arain, F.M. & Pheng, L.S. 2005b, How Design Consultants Perceive Causes of Variation
Orders for Institutional Buildings in Singapore', Architectural Engineering and Design
Management, vol. 1, no. 3.
 Bin-Ali, Z, (2008); Causes and Steps to Minimize Variations in Construction Projects,
Thesis, Technology University of Malaysia Saukkoriipi, L. & Josephson, P.E. 2006
 Ibbs, C.W. 1997, 'Quantitative Impacts of Project Change: Size Issues', Journal of
Construction Engineering and Management, vol. 123, no. 3.
 Osman, Z., Omran, A., FOO, C. 2009, The potential effects of variation orders in
construction projects, Journal of Engineering annals of Faculty of Engineering,
Hunedoara.
 Ruben, N. 2008, "An analysis of the impact of variation orders on project performance"
 Zimmerman, L. & Hart, G. 1982, 'Value Engineering - A practical approach for Owners,
Designers and Contractors', New York: Van No strand Reinhold Company
 Alan C. Twort and J. Gordon Rees, 2004 “Civil Engineering Project Management”
Linacre House, Jordan Hill, Oxford OX2 8DP 200 Wheeler Road, Burlington, MA
01803, Britain.

Websites
 www.academia.edu
 http://onlinemanuals.txdot.gov/txdotmanuals/cah/supplemental_agreements.htm

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