Factors Influencing the Occurrence of Variation Orders and their Impact on Project Performance

Ruben Ndihokubwayo, Cape Peninsula University of Technology
Theo Haupt, Cape Peninsula University of Technology

Abstract

Purpose – This paper identifies the factors that influence the occurrence of variation orders with respect to their value-addedness as a proactive measure to reduce them. Methodology/Scope – Relevant literature was reviewed. Both qualitative and quantitative methods were used, consisting of closed and open-ended questions, together with case studies on construction projects. Questions sought the perceptions of practitioners involved in the administration of variation orders about the occurrence of variation orders and their impact on construction projects. Case studies consisted of the scrutiny of site instructions. Findings - A total number of 23 participants from architectural, contracting and cost consultant companies participated in the questionnaire survey. The complexity of works was the most frequent factor influencing the occurrence of variation orders. Cost and time overruns were the most predominant outcomes of variation orders that adversely impacted the project performance; hence the potentiality to yielding non value-adding costs. A total number of 660 site instructions, issued on 3 construction projects, was analysed. It was revealed that 63% of site instructions resulted in additional works, suggesting a need to refocus on the design stage with regards to the reduction of the occurrence of variation orders. It was revealed that 14% of all site instructions had apparent waste associated with them, especially those involving alterations to work already completed. Research limitations - Site instructions from a limited number of construction projects under construction were analysed. Practical implications - The study stimulates debate over building activities that give rise to non value-adding costs due to the occurrence of variation orders. Value - The study aims to increase the awareness of the impact of variation orders on overall construction project performance and will enable the development of proactive measures to reduce them.