Causes and Effects of Variation Order and Solutions to Minimise Variation Order

Lee, Kok Jong (2020) Causes and Effects of Variation Order and Solutions to Minimise Variation Order. Final Year Project (Bachelor), Tunku Abdul Rahman University College.

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Abstract

Variation order (VO) is a formal change order that shall be executed by the contractor during the construction stage. Even though the variation order work was not included in the original contract but the standard form commonly used in Malaysia such as Pertubuhan Arkitek Malaysia PAM 2006, Public Works Department of Malaysia PWD 203A 2010, CIDB 2000 and Asian International Arbitration Centre AICA 2018 stipulated a clause for Variation Order. This clause allowed the Architect or Superintendent Officer (S.O.) issue an Architect Instruction (AI) or S.O Instruction for variation work. In construction industry, variation order is an issue that frequently happened in every single project. It may due to the client requirement, statutory requirement, design error and so on. Furthermore, it will also cause the project delay or overspending on cost. Therefore, this research had been carried out to achieve the main objectives which are identifying the reasons that can cause variation order, investigating the impact of variation order and establishing the measure to minimise the variation order to occur. In order to achieve the main objectives, there are many articles, journal and reference had been reviewed as a secondary source and questionnaire survey has been distributed to obtain the answer and opinion from the respondents who are working in construction industry. The data collection has been analysed by using Microsoft Office Excel. As the result, the most causes of variation order are change in design, alteration in specification and owner’s financial problem. Moreover, the most effects of variation order are due to delay in completion, increases in project cost and additional payment for contractor. Furthermore, the most solution to minimise variation order are implementation advance programme in design planning and estimating, increase collaboration and transparency and client provide sufficient time and requirement in initial design stage. Lastly, there are two respondents had provided further suggestion for cause of variation order and measure to minimise variation order. One of the respondents said the change of government policy may also lead to variation order. Another respondent said that a change management must be conducted before variation order can be executed.