ADDIS

ABABA

UNIVERSITY

ADDIS ABABA INSTITUTE OF TECHNOLOGY

Assessing the Impact of Variation Orders

on
Public Building Projects in Addis Ababa
M.Sc Thesis presented by
Andualem Endris
Advisor: Wubishet Jekale (Dr.-Ing)

15th October , 2014

01/21/15

Outline of Presentation
Introduction
Literature Review
Research Methodology
Analysis and Discussion of Findings
Conclusion & Recommendations

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Assessing the impact of variation

orders on public building projects
in Addis Ababa

Introduction
Background of the Study
Construction industry is one of the most growing industries in
Ethiopia
Addis Ababa in the last some ten years experienced a huge
volume of works in the field of construction
Large and complex public and private buildings have been built
The occurrence of variation order on public projects seems
usual
Previous studies mainly conducted on the causes of variation
orders
The study targeted to assess the impact of variation orders on
public building projects in Addis Ababa.
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Assessing the impact of variation

orders on public building projects
in Addis Ababa

Introduction ... contd

Statement of the Problem
Nowadays, variations are common on public building
projects
The fact is that variation orders impact building projects
Variation causes delay, disputes, and generates significant
cost during construction
The assessment of the impact of variation orders might lead
to their reduction, possible elimination and subsequent
improvement on public building projects.

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Assessing the impact of variation

orders on public building projects
in Addis Ababa

Introduction contd
Objectives of the Study
To determine the causes of variation orders;
To determine the impacts of variation orders; and
To recommend strategies to minimize variation orders.

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Assessing the impact of variation

orders on public building projects
in Addis Ababa

Introduction contd
Scope
The study was limited to public building projects in
Addis Ababa

Significance
The study will be important for:
Public building project stakeholders
Most government technical departments such as
Housing Development and Construction offices

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Assessing the impact of variation

orders on public building projects
in Addis Ababa

Introduction contd
Structure of the Research

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Literature Review
Definition
Variation- change, modification, alteration, revision or
amendment of the original contract and/or its works
Variation order- formal document used to modify the
original contractual agreement
Impact- the force of impression of one thing on another.

Nature of variation order

Beneficial variation order- adds value to the client or
project performance
Detrimental variation order- impacts the clients value or
project performance
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Assessing the impact of variation

orders on public building projects
in Addis Ababa

Literature Review contd

Management of variation orders
Valuation of variation orders may be in the form of:
Rates- adopted from similar item of works
Day works- analysis of costs based on cost of material,
labor, plant, etc
Quotation- contractors submit a quotation for variation
Quantum meruit- miscellaneous method where
negotiated or agreed rates or payments are made
Variation management process:
Start Up
Identify &
Evaluate

Implement &
Review
Approval

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Literature Review contd

Variables
38 causes of variation
15 impacts and
15 strategies to minimize variation orders
were identified from the literatures

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Research Methodology
The study approach
Qualitative
Quantitative

Population and Sampling

Concerned on public building projects which were
under construction
Commencement date from July 2010- June 2012
G+3 and above public buildings
More than 60% completed projects
Purposive sampling technique was used
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Research Methodology contd

Flowchart of research methodology

Research design
Population
Purposive sampling

28 projects/
45 participants
Data collection
Desk study

Survey
Interview

Questionnaire

Data Analysis
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Research Methodology contd

Method of data analysis
A Relative Index (RI) technique was used:
RI = (5n5 + 4n4 + 3n3 + 2n2 + n)
5 (n5 + n4 + n3 + n2 + n)
Spearman rank correlation coefficient () to measure the
differences in ranking between two groups of respondents
Rho (cal) = 1

6 x (di2)
N x (N2 1)

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Data Analysis and Discussion of Findings

The data collected through:
Desk study on selected projects
Interviews with selected practitioners and
Questionnaire survey were analyzed to identify the
highest ranked factors and discussions on important
factors were made.

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Data Analysis and Discussion contd

Findings from the Desk Study
Desk study conducted on five selected documents of public
building projects
List of selected building projects for desk study

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Project

Contract (Birr)

V.O (Birr)

Project A

51,931,227.89

8,284,485.09

Project B

60,343,438.45

4,091,699.06

Project C

99,444,398.79

8,152,255.70

Project D

36,914,578.87

7,234,368.3

Project E

58,076,253.18

5,150,610.80

Assessing the impact of variation

orders on public building projects
in Addis Ababa

V.O (%)
15.95
6.78
8.20
19.60
8.87
15

Findings from the desk study contd

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Findings from the desk study contd

Impact of variation orders
Four (4) impacts were identified from the desk study in
ascending order of their repetition:
Increase in project cost
Completion schedule delay
Payment delay to the contractor
Disputes among the involved parties

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Findings contd
Findings from the Interview
Interview made between three (3) selected public building
practitioners

Causes of variation orders

Eight (8) causes were identified from the interview:
Incomplete contract document
Design changes
Change in specifications
Errors in design
Unforeseen conditions
Design complexity
Lack of communication between the parties
Lack of experience and judgment
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Findings from interview contd

Impact of variation orders
Five (5) impacts were identified from interview:
Increase in project cost
Completion schedule delay
Disputes among the parties
Quality degradation and
Rework and demolition

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Findings from Interview contd

Strategies to minimize variation orders
The interviewee recommended five (5) strategies to minimize
variation orders:
A complete design and contract documents should be
produced
Complete detail drawings should be submitted on time
A detail site investigation should be carried out
Unforeseen conditions should be forecasted before the
tendering stage and
Supervise the works with experienced supervisors
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Findings contd
Findings from the Questionnaires
The respondents were public building project participants
namely clients, consultant and contractors
45 questionnaires were distributed to participants of 28 projects

Rate of Response
Out of 45 expected responses, only 32 (71%) were returned
the questionnaire.
Number of
Questionnaires
Distributed

Number of
Questionnaires
Returned

Response
Rate (%)

Client

12

75

Consultant

80

Contractor

28

19

68

45

32

71

Group

Total
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Findings from Questionnaire contd

Causes of variation orders
Overall Responses
Rank
Causes of Variation Orders
Impediment in prompt decision making process

0.669

Change in design by the consultant

0.669

Inadequate working drawing details

0.669

Change in specifications

0.663

Poor procurement process

0.663

Errors and omissions in design

0.656

Lack of communication

0.656

Unforeseen problems

0.656

Design discrepancies

0.650
Assessing the impact of variation

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Overall RI

Contractor's desired profitability

orders on public building projects
in Addis Ababa

0.650

1
2
3
4
5
6
7
8
9
10

22

Findings from Questionnaire contd

Causes of variation orders
Correlation
Respondents

Rho(cal)

Relation of
respondents

Client Vs
Consultant

0.999

strong

Consultant Vs
Contractor

1.000

strong

Client Vs
Contractor

1.000

strong

There was a strong correlation between the attitudes of all the three groups
Most of the respondents have the same perception about the causes of
variation order
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Findings from Questionnaire contd

Impact of variation orders
Overall Responses
Ran
Impact of Variation Orders
Completion schedule delay
Increase in project cost
Additional payments for contractor
Progress is affected
Increase in overhead expenses
Delay in payment
Procurement delay
Logistics delays
Disputes among professionals
Rework and demolition
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Overall RI
0.794
0.793
0.742
0.731
0.697
0.694
0.679
0.667
0.661
0.642

Assessing the impact of variation

orders on public building projects
in Addis Ababa

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1
2
3
4
5
6
7
8
9
10
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Findings from Questionnaire contd

Impact of variation orders
Correlation
Respondents
Client Vs
Consultant
Consultant Vs
Contractor
Client Vs
Contractor

Rho(cal)

Relation of
respondents

0.994

strong

0.999

strong

0.997

strong

There was a strong correlation between all the three groups

Most of the respondents have the same perception about the impact
of variation orders.
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Findings from Questionnaire contd

Recommended strategies to minimize variation orders
Overall Respondents
Rank
Recommended strategies to minimize V.O
Overall RI
Adequate planning in advance is required
0.900
The consultant should produce a concluding design and
contract documents
0.856
Drawings should be complete at tender stage
0.844
Closer consultant co-ordination is required at design stage
0.838
Works should be supervised with an experienced and
dedicated supervisor
0.838
Enhance communication between all parties
0.831
Place experienced and knowledgeable executives in the
engineering and design department
0.831
Consultants should ensure that the design/specifications fall
within the approved budget
0.825
Carry out detail site investigation
0.825
Adequate time should be spent on pre-tender planning phase
0.806
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Assessing the impact of variation

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2
3
4
5
6
7
8
9
10
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Findings from Questionnaire contd

Recommended strategies to minimize variation orders
Correlation
Respondents
Client Vs
Consultant
Consultant Vs
Contractor
Client Vs
Contractor

Rho(cal)

Relation of
respondents

0.997

strong

0.998

strong

1.000

strong

There was a strong correlation between all the three groups

Most of the respondents have the same perception on the
recommended strategies to minimize variation orders
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orders on public building projects
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Discussion of Findings

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orders on public building projects
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Discussion of Findings
Impact of Variation Orders on Public Building
Projects in Addis Ababa
According to the findings from the study, the most impact
of variation orders on public building projects were:
Completion schedule delay
Increase in project cost
Additional payments for the contractor
Progress affected
Increase in overhead expenses

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Discussion of Findings
Recommended Strategies to Minimize Variation Orders
From the findings of the study, the most recommended
strategies to minimize variation orders were:
Consultants should produce a concluding design and
contract documents
Drawings should be complete at tender stage
Works should be supervised with experienced and dedicated
supervisor
All involved parties should have an adequate plan before
work starts on site and
There should be a closer consultant co-ordination at design
stage
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Conclusion & Recommendations

Conclusion
The study found that design change was the main cause of variation
orders on public building projects
Variation orders on public building projects also caused by
incomplete contract documents
It was found that variation order had adverse impacts on public
building projects performance
Completion schedule delay and increase in project cost were the
major impacts of variation orders
The study found that variations were common sources of additional
works for the contractor
The respondents suggested that consultants should produce a
concluding design and contract documents to minimize variation
orders on public building projects
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Conclusion & Recommendations contd

Recommendations
Consultants are advised to produce a complete design and
contract documents before tendering as these were the most
causes of variation orders
The client should allow sufficient time to prepare an
elaborately detailed project scope
Decision should be made at its earliest
Adequate drawing details should be submitted on time
Consultants should give sufficient time for planning and
design phase
The contractors should have effective management system to
minimize careless work of the clients.
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Conclusion & Recommendations contd

Recommendations for further studies
It would be interesting to study the impact of variation
orders on other building projects and compare the results.
A more elaborative investigation into the contract
conditions is needed with the view to minimizing impact of
variation orders.

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orders on public building projects
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THANK YOU!
Q U S T I O N S?

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