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Benefits and Disadvantages of Variation Orders
Definition of Variation:
A variation from the contract occurs where the actual work to be carried out changes, or where the circumstances in which the work is to be carried out changes. The term “variation" also includes:
The addition, omission or substitution of any works.
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 has now been changed.
Any changes to the provisions in the contract with regards to any limitation of working hours, any limitation of working space, access and use of the site and the execution of work in any specific order.
Therefore, the standard forms of contract provide the variation clauses are enable the employer’s design team to vary the design and specification. This is to avoid any problems that a contract would and in principle, have to be re-negotiated due to the changes of specification of works.
The benefit of variation is also allow such changes to be made stated in the contract and also permit to any consequential to be made in the contract sum.
Variation allows the constructive changes that allow changing on the mistake and error accidently occurred such as example in correcting a discrepancy in the contract drawing and specification.
Besides, the benefit of variation is stated under clause 11.7 of PAM 2006. The contractor is entitled to claim for such additional expenses for which he would not be paid under clause 11.6 of PAM 2006. It is allow the contractor claim back any direct loss and expense incurred such as pro-rata rates, daywork rates, BQ rate, and fair market rate from the Variation Order (V.O) work and requested by employer and Architect.
The benefit of variation order is one issued to improve the quality standard or degree of difficulty in a project.
Variation order also eliminates unnecessary cost from a project in order to optimise the client’s benefit against the resource input by reducing the unnecessary costs.
Variation clause is tends to encourage clients to change their minds and embark on building projects without having properly thinking on their project requirement.
Variation is allowing changes in any requirement of Local Authority. Like example, any amendment to the works regarding to the regulation and by law and approved by local authority is allows variation in the construction works.
The benefit of variation order is to realize a balance between cost, function and quality required of a project to the satisfaction of clients. Therefore, it will increase the value of the building.
The variation clause is allowing an employer to pursuit the aesthetic consideration in one project. Changing in new design on variation work can enhance the aesthetic quality of the project and constructability of the work if compare to the original design.
The disadvantage of variation is that allows the Architect, or other designers to delay making decisions almost until the last possible moment. This can be having serious repercussions on the planning of the project and in executing the works efficiently.
The disadvantages of variation occurred because the Architect or other designer is not taking seriously while preparing the drawing. Therefore, those drawing cannot be finalised under tender stage and any error happen on the drawing can be put right in the variation clause.
The variation orders contribute to construction cost overrun. The more the variation orders, the more that effect the overall of construction costs.
It was revealed that various variation orders issued during the construction phases of a project will affected the project’s completion time. The project may delay and contractor needs to reschedule his work programme due to the variation work happen.
The rate of variation work increase because the additional works carried out by contractor and additional charge to the delay works.
The variation work also brings inconvenience to the end user. No matter how much effort reduces the variation work in construction industry, it is still happen and final account remains unresolved after the building was occupied.
When the variation order occurred, it will forced to the contractor re-measure the quantity works from the new drawing and prepare a new amount for the new items.
The disadvantages of variation works is caused the contractor shall comply and complete the variation order that requested by the Architect Instruction. If he did not follow it, the contractor may entitle in breach his contract.
The disadvantages of variation works will affect the quality of the work. This is because the contractors tend to compensate for the losses by cutting corners incurred to variation order. Therefore, the productivity of work achieved by contractor will be poor or lower.
When the variation orders occur, it can affect the safety and health condition. The reason is because of changing in the construction method, materials and equipment may require the additional safety and health measures in the project.
The disadvantages of variation order will allow the dispute arisen between the parties of the particular contract. For example, a misunderstanding may arise when the contractor refused to accept with the judgement of the consultant in term of fair valuation of a variation order.
The disadvantages of variation works usually allow contractor claim higher profit than the really cost incurred. Thus, where a contractor has secured a project on prices and terms which are profitable, he will have strong interest to argue that the additional work should be constructed as a variation and valued according to the prices and rates stated in the contract.
The disadvantages of the variation clause is that the Architect will make not clear on his intention on paper such as contract specification and drawing before the contract is signed because they know the variation clause will permit them to finalised their intention during the term of contract.
The disadvantages of variation works is allow rework and demolition works. Some variation works may need to demolish the building for changing the use of material and design for that particular works. Hence, it will increase the wastage of the product of works.