CHAPTER 1

INTRODUCTION

1.1 OVERVIEW OF THE TITLE

Construction is a very high risk industry that acts as a catalyst to

Malaysian’s GDP. It comprises a wide range of activities that involves
construction, alteration and repair. According to Memon et al. (2014), the
GDP growth of the construction sector has recorded a growth of 22.2% in the
second quarter of 2012, contributed mainly by the civil engineering sub-
sector. This pick-up in the civil engineering works was due to substantial
progress in infrastructure, utility and oil and gas projects, making construction
industry as one of the key industries in Malaysia. Such projects are like
Seremban Gemas Double Track, the Second Penang Bridge and Melaka
Regasification Terminal. However, the industry is facing many problems in its
projects. N. Mohammad et al. (2010) mentioned that one of the many major
problems faced by construction projects is the issue of variation order,
occurring during the construction phase.

There are many definition and interpretation of variation in term of

construction industry. Variation in construction according to Dickson et al.
(2015) is a combination of any or all of the following: addition, omission or
substitution of any work; the alteration of the kind or standard of materials or
goods; the removal from site of work, materials or goods that were formerly
in accordance with the contract, but which now have been changed and
change in the circumstances in which the work is carried out such as; access
and use of site; limitation of working space; limitation of working hours and
changes made to the sequencing of work. Variation also means any addition,
deletion, or any other revision to project goals and scope of work, whether
they increase or decrease the project schedule or cost (Ibbs et al., 2001).
 Variation orders are the changes that are inevitable in any
construction project (Shahin et al., 2016) and it will affect the project
performance itself. It becomes more impossible to avoid for the project which
are larger in size and having multiple scopes of works to be carried out. When
a variation order is created, it gives several negative effects to both the client
and the contractor. As revealed by Al-Hadhrami (2011), such changes or
variations may have significant implications on cost, time and quality of
construction. Not only that, it also affects health, safety and professional
relations (Halwatura & Ranasinghe, 2013). According to Ayodele (2011),
variation is one of the major causes of abandonment of building and civil
engineering projects in Nigeria. However, even though there are many
attempts and strategies have been done at the pre contract stage, for
instance by doing a modern planning, using overall checklist and other
solutions, the variations in construction projects are still not easy to eliminate
(Nazir, 2014).

Despite all those negative implication that variation order may bring to
construction projects, variation order can sometime be a solution to problems
or any disruptions associated in the construction site, to fulfill the demand,
current policies and laws, improving as well as other related causes that
required by the client (Nazir, 2014).

According to Zamri Abdul Rahman (2010), beneficial variations are

those that actually aid in improving quality, reducing cost, schedule or degree
of difficulty in the projects. Meanwhile, detrimental variations are those that
reduce owner value or have a negative influence on a project. So, project
team should be able to take advantage of beneficial variations every time
when opportunity arises. Variations can be minimized when the problem is
studied collectively at the earliest stage possible, since the problem can be
identified and beneficial variations can be made (CII, 1994).