CONSTRUCTION VARIATIONS: A SCOURGE OR A NECESSITY?

Authors: Address: E-mail address: Keywords: ABSTRACT

Any building project is liable to variations ranging from changes of mind on the part of the clients, their consultant, to unforeseen problems raised by the main contractor or sub-contractors. From both sides, the employer and employee, on a building project, variations will therefore occur for a number of reasons ranging from finance, design, aesthetic, geotechnic, geological, weather conditions to feasibility of construction. This paper reports a study carried out to investigate the nature, causes, causers and occurrences of variations on building projects in Botswana. A questionnaire, with close-ended questions, was used to solicit opinions of architects and contractors on the issue. The paper concludes by asserting that variations are an unavoidable consequence. JK Ssegawa1, KM Mfolwe2, B Makuke3, B Kutua4 1 Civil Engineering Department , University of Botswana 1 ssegawaj@mopipi.ub.bw variations, construction industry, building project, contract

INTRODUCTION
The complexity of construction works means that it is hardly possible to complete a project without changes to the plans or the construction process itself. Construction plans exists in form of designs, drawings, quantities and specifications earmarked for a specific construction site. Changes to the plans are effected by means of a variation order initiated by a consultant on behalf of the client or as raised by the contractor. Legal precedents (for example, Pepper vs. Bourland, 1792; Myers vs. Sarl, 1860; Rusell vs. Sada Banderia 1862 and Galanger vs. Hursch 1899), illustrate that variations date back to time in memorial. While their occurrence is no longer an inconceivable issue, it is their effect and subsequent management that continues to challenge stakeholders of projects to this day. This happens against a background that over years, experience has been gained to handle variations in form of contract clauses and procedures, which define what constitutes a variation and how to manage them. They continue to cause undue uneasiness to the stakeholders because of their effect on the successful delivery of projects in terms of cost, time, quality and utility. Disputes and misunderstandings are still encountered when variations arise, often causing disruptions to the smooth running of projects. The type of project delivery (procurement) system and the form of contract may also compound the problem of how variations are managed. Variations are more common to the traditional procurement system (TPS) than, say the Design and Build system (Ashworth, 1998). With the TPS, the construction process is presumed to after all design work has been completed. In many instances this is a false assumption and hence the beginning of variations. Like many other construction industries (CI) in the world, variations are common in Botswana. Most of the projects are delivered using the TPS, a system frequently used by a number of Commonwealth countries. This paper is intends to highlight the perceptions held by architects and contractors regarding variations in Botswana. First, by highlighting what constitutes a variation and the common causes and causers of variations. This is followed by a discussion of the methodology used to solicit opinions from architects and contractors on issues related to variations in Botswana. A presentation of data, its analysis, and discussion of the results is included and the paper ends by summarising some important conclusions and recommendations.

BACKGROUND
Definition
There is no single definition of what constitutes a variation. Usually, any standard form of building contract will contain a definition of a variation in terms of specific actions and activities. Baxendale and Schofield (1996) defined variation simply as any change to the basis on which the contract was signed. This includes not only changes to the work or matters relating to the work in accordance with the provision of the contract but also changes to the working conditions themselves. However, Turner (1984) clarifies that variations are 'changes within a contract' and not 'changes of the contract'. The latter will require that the contract be rescinded in favour of writing another one if both parties are still interested. He further asserted that variations relate to firstly, changes to the work itself and secondly, to the means of getting the work done.

Nature of variations
The nature of variations is usually defined by a variation clause in the contract. However, a point to note is what constitutes a variation in a contract is not only found in one clause but in a range of clauses. The Botswana Government Building Contract with Bills of Quantities (BGBC/BoQ) of which an excerpt is shown in Figure 1, lists instances of variations and the rest are found in other clauses of the contract. The presence of such variation clauses in the contracts is close to an admission by the CI that no project is completed without changes. The nature of variations is well documented in literature by authors (for example, Trickey and Hackett, 2001; Fellows and Fenn, 2001; Potts, 1995; Atkinson, 1992; Turner, 1984; Wainwright and Wood, 1983 and Porter, 1980). It is in the form of commentaries to various forms of contracts, such as the JCT 98 form (Joint Contracts Tribunal 1998); the GC/W 98 form (Government Contract/Works, 1998); the FIDIC form (Federation Internationale des Ingenieurs-Consils); and the ICE form (Institution of Civil Engineers). From the commentaries, it may be concluded that major variations include additions, omissions and substitutions; changes in quality, character, form kind, position, dimension, line, level, specified sequence or method of timing of construction; changes which cause limitations or restrictions to site access, working space or hours; removal from sites of any material or goods that are not in the contracts; opening up for inspection of any work covered up; and the replacement of any person employed in connection with the contract. Extent of variations The spirit in which variations are permitted is to allow the contract to proceed without re-drawing another contract to cater for the changes. This is enshrined in one of clauses, which states that 'No variation required by the architect or subsequently sanctioned by him shall vitiate this contract. In the BGBC/BoQ, the Permanent Secretary has the absolute discretion from time to time to issue variations (see first sentence of Figure 1). In furthering that spirit, Atkinson (1992) argues that, should only one party benefit from the variation that party should: (i) (ii) (iii) have to forego some advantage under the contract, give some service, or pay some sum of money for the benefit of the other party.

In other words, variations follow negotiations for compensation for the direct loss and likely loss due to disruption. Contract clauses go further to state how a variation should be initiated, in other words, who should issue what is called a variation order. In all cases, orders must be written and issued by an architect as a consultant for a building project. However, it is not say that an architect has a blank cheque to issue anything purporting to be a variation. An excessive variation ordered by an architect would not be regarded as a variation under the contract (Fellows, 2001). Architects do not have the powers to vary the work to the extent of instructing the contractor to carry out extra work not contemplated by the parties at the time of signing the contract. Instructing a contractor to construct a sport field, when initially the contract was for school buildings only; or changing the construction of one block to

Figure 1: An excerpt of the Botswana Government Building Contract Form with BOQ
Source: Government Printer

two blocks of flats would be deemed excessive and not a variation (Wainright and Wood, 1987 and Turner, 1984). Therefore, changing the terms and conditions of the contract will normally require to rescind the contract and replace it with a new one (Atkinson, 1992). Normally, variation to terms and conditions could occur under the following conditions:

(a) (b) (c)

Increased costs due to inflation or higher taxation. The varied work is not similar in character or is not executed under similar conditions to that priced in the BoQs. Variation order renders contract rates or prices unreasonable in the opinion of the contractor.

Condition (a) should not be misconstrued to mean that any changes to the tax regime would require a new contract signed, for example, the Botswana Government announced the introduction of VAT one year in advance (Mmegi, 2001). It is not necessary to rescind a contract signed two months before the introduction date of 1st July 2002, claiming a changed tax regime, as both parties should have contemplated its introduction.

Causers and causes of variations

Literature survey reveals that mainly the client, architect, contractor and other stakeholders, cause variations. In addition, there are many reasons that may cause the mentioned stakeholders to initiate variations some of which are financial, design, aesthetic, changes in drawings, weather, geological and geotechnical reasons (Hibbard, 1986; Turner, 1984).

Effect of variation on projects

Variations have several effects on the project, some tangible and others intangible (Hibberd, 1986). Procedures prescribed by contract forms are insufficient to include a myriad of affects caused by variations during the execution of the contract. When additional work, for example, is carried out, it normally has the effect of lengthening the contract period. While the actual work may be quantified, 3

it may be difficult to quantify the effects of the lengthened contract period. Furthermore, even when a variation of omission occurs, it may not be a simple matter of compiling the quantities and prices of respective items omitted in the BoQ. The omission may disrupt the continuity of work for certain type of labour and plant, both of which may become idle due to a disruption of the project programmed or sequence activities (Oxley and Poskit, 1996). Therefore, when making valuations of work done, the effect of variations on the project must be borne in mind. Though issues relating to valuation of variations are beyond the scope of study, Trickey and Hackett (2001) identified the challenges of variations as the establishment of the value of the:

(a) (b) (c)

variation itself, effect of the variation on other work, and loss and expense directly experienced arising from regular progress of work having been materially affected due to the execution of the variation and for which its reimbursement is not covered by any other part of the contract.

OBJECTIVE OF THE STUDY

The objective of the study was to investigate the opinions of architects and contractors regarding the (i) frequency of occurrence, (ii) effect, (iii) cause and (iv) causers of each type of variations on public building projects.

METHODOLOGY
The study methodology consisted of soliciting opinions from contractors and architects using a structured close-ended questionnaire. The questionnaire was distributed to twenty (20) firms from each group selected randomly around Gaborone City. The close-ended questions required respondents to make a ranking commensurate with the frequency of occurrence, ranging from never (0) to very often (4). However, during the data analysis, the response never (0) was ignored because it indicated that the issue is insignificant or non-existent. A frequency of occurrence (FO) index was constructed with a minimum value of 1, and maximum value of 4, from Equation 1

FO=

1n1 + 2n2 + 3n3 + 4n4 n1 + n2 + n3 + n4

Equation 1

where, FO is the frequency of occurrence/significance, n is the frequency of responses, ranging from n1 rarely (1), n2 sometimes(2), n3 often (3) and n4 very often(4). A FO score of 3 would be considered very significant, a score of < 2 would be considered not significant while the range 2 FO<3 may be considered moderately significant. However, where some question had a subset of factors which required to calculate a relative frequency of occurrence (RFO) to determine the significance of the sub-factor in the sub-set. The RFO was calculated using Equation 2.

RFO=

FO FO

Equation 2

where, FO is the frequency of occurrence/significance, and FO is the sum of all frequency of occurrence of the construct. A question regarding the causers (client, architect, contractor and others) of variations, required ranking from 0 (does-not) to 4 (does very often), where 'does-not' meant the stakeholder never causes such a variation. A simple frequency distribution, combining the responses of both architects and contractor was compiled. On each close-ended question, respondents had a chance to provide any comments they deemed relevant and important on the issue. Furthermore, three senior officers from the Department of Architecture and Building Services (DABS) were interviewed to ascertain and clarify some issues. DABS oversees the planning, design, implementation and supervision of public building projects. 4

The results were compiled, analysed and are presented below.

RESULTS AND DISCUSSION

Fifteen (15) contractors and twelve (12) architects out of the selected twenty (20) from each category responded. This was response of 75% and 60%, respectively All 27 respondents (100%), both contractors and architects, confirmed that their firms have been involved in some kind of variation on all projects they worked on as the FO value of 4.0 indicates in Table 1. This response confirmed that no project proceeds to completion without some adjustments. The two groups also concurred that variations affect the sequencing of work programme (3.7) and hence the completion time and cost (3.6 each). Both of these factors were considered very significant and have a combined RFO of 55.7% (28.2% and 27.5%) of the effect of variations on projects. Quality (2.2) was not perceived as adversely affected. They however, indicated that when it came to costs, it depended on the type of variation. Omissions in most cases reduce costs, while additions normally increase costs. They added though, that in a number of cases variations occur simultaneously such that the net change in costs depended on which variation was greater.
Table 1: Effects of variations on projects Question 1. 2. How often do you encounter variations on building projects? How do variations affect the following? i) Project programme ii) Time iii) Cost iv) Quality FO 4.0 RFO Rank

3.7 3.6 3.6 2.2 13.1 2.1 3.8 2.9 2.5 2.4 11.6

0.282 0.275 0.275 0.168 1.000

1 2 3 4

3. 4.

How often do you encounter disputes? Which areas normally cause disputes? i) Ascertaining losses arising from the variations ii) Valuations iii) Acceptance of instructions iv) Final account

0.328 0.256 0.216 0.207 1.000

1 2 3 4

Both groups indicated that there are disputes when variations arise, but not as many (2.1). This is perhaps due to the presence of guidelines set out in contract forms and the experience gained in handling them. However, when significant disputes occur, the focus is on how to ascertain losses arising from variations (3.8). This factor was perceived as the most significant aspect, when compared to the rest, when disputes arise as it was scored with a RFO of 32.8% It was interesting to note the comments made by both groups that (i) most projects have multiple variations and (ii) some variation are similar or bring similar results, for example, additions or omissions may be construed as alterations. Four of the respondents asserted that variations are alterations and are changes to the contract. The further commented that alterations are of three types namely additions, omissions and substitutions. The fear of making the questionnaire lengthy and hence laborious to fill prohibited the author from defining each term. Another observation made by most respondents - 14 (95%) for contractors and 10 (80%) for architects - is that 'changes in quality, character, form, kind, position, dimension, line, level, specified sequence or method of construction' were specific variations which would fall in the category of additions, substitutions or omissions. Therefore, Table 2 shows how each group 5

responded to the frequency of occurrence of various variations with the exclusion of those mentioned above. Column 3 shows the average FO, from both groups, which was used to rank the variations in descending order while column 4 shows RFO. Additions and omissions are the most common variations on projects with a FO of 3.8 and 3.6, respectively. Compared to the rest, respondents perceived them to account for 45.7% of all variations on building projects. Substations came third and constitute 17.3% of variations 'Removal from sites of any material or goods that are not in the contracts; inspection for work covered up; restrictions on working conditions of space; access and hour; and replacement of employees on the project', were ranked very low in occurrence (1.7, 1.6, 1.4 and 1.3, respectively) . Respondents indicated these items may be contemplated before or after signing of the contract, hence are manageable and avoidable. In any case, these variations are tilted towards the side of the client and architect. Furthermore, four of the contractors indicated that restrictions and limitation of (sites, space and hours) are more frequent in civil and roads construction work as compared to building work. When it came to the causes of variations, respondents ranked each cause differently as shown in Table 3 and also illustrated in Figure 2. Respondents indicated that the main cause of omissions is for financial (3.8), design (3.5) and feasibility of construction reasons (3.4). Geological/geotechnic and aesthetic reasons came second as a group with a FO of 2.7 and 2.2, respectively.
Table 2: Frequency of occurrence of variations to design, drawings, specifications and quantities Nature of Variation FO RFO Rank Additions* Omissions* Substitutions* Removal from sites of any material or goods that are not in the contracts Opening up for inspection of any work covered up Changes which cause limitations or restrictions to site access, working space or hours The replacement of any person employed in connection with the contract 3.8 3.6 2.8 1.7 1.6 1.4 1.3 16.2 0.235 0.222 0.173 0.105 0.099 0.086 0.080 1.000 (1) (2) (3) (5) (6) (7)

5 i) ii) iii) iv) v) vi) vii)

For additions, respondents indicated that they occurred because of mainly design (3.9) and aesthetic (3.6) reasons. Geological/geotechnic and feasibility of construction caused fewer additions.
Table 3: Frequent causes of variations 6 Reason for variation i) ii) iii) iv) v) vi) vii) Finance Design Changes in drawings Feasibility of construction Increment weather Aesthetic Geological/Geotechnic 3.8 3.5 2.0 3.4 1.0 2.2 2.7 18.6 Omission 0.204 0.188 0.108 0.183 0.054 0.118 0.145 1.000 (1) (2) (6) (3) (7) (5) (4) 2.8 3.9 2.6 1.6 1.8 3.6 1.2 17.5 Additions 0.160 0.223 0.149 0.091 0.103 0.206 0.069 1.000 (3) (1) (4) (6) (5) (2) (7) 3.8 3.2 1.3 2.6 1.4 3.6 2.9 20.5 Substitutions 0.20 0.170 0.069 0.138 0.074 0.191 0.154 1.000 (1) (2) (7) (5) (6) (3) (4)

From the FO scores, respondents believed that substitutions are caused by almost all factors mentioned in Table 2 except for the increment weather, which they scored at 1.4. Table 4 is an extension of Table 2,except the stakeholders are brought into play, to investigate reasons that cause them to make variations. The stakeholders considered are mainly, client, architect, contactors and other (e.g. regulatory bodies). Figures 3, 4, 5 and 6 obtained from Table 4, further illustrate the responses regarding causers and causes of variations.

Fin a c e Fe a sib ility o f c o n st G e so te c h n ic

4.5 4

De sig n We a th e r

Dra win g c h a n g e s A e sth e tic

Respeonses

3.5 3 2.5 2 1.5 1

O missio n

A d d it io n s

S u b st it u t io n s

Variations

Figure 2: Frequent causes of variations

Variation

Table 4: Frequent causers of variations and reasons for causing variations Causers of Variations (Responses) Cause of Variation Client Arch. Contract. Other Finance Design Changes in drawings Feasibility of construction Increment weather Aesthetic Geological/Geotechnic Finance Design Changes in drawings Feasibility of construction Increment weather Aesthetic Geological/Geotechnic Finance Design 21 25 12 24 22 24 24 6 3 25 22 5 4 6 16 21 11 17 5 3 2 5 20 1 16 6 5 6 2 3 3 6 2 5

Total 27 27 27 27 0 0 0 27 27 27 0 0 27 0 27 27 27 27 0 27 27

Substitutions

Additions

Omission

Changes in drawings Feasibility of construction Increment weather Aesthetic Geological/Geotechnic

25 20 15 10 5 0

Clie n t

A rc h i.

Co n tra c t.

o th e r

Figure 3: Reason for and frequent causers of Omission variations

C lie n t 30 A rc h i. C o n t ra c t . other

25

20

15

10

0
Financ e Design Changes in dr awings Feasibilit y of c onst r uc t ion Inc r em ent weat her A est het ic

Figure 4: Reason for and frequent causers of addition variations

C lie n t

A rc h i.

C o n t ra c t .

other

30 25 20 15 10 5 0

Figure 5: Reason for and frequent causers of substitution variations

From the responses in Table 4, clients and architects cause most of the omissions due to financial reasons, design and changes in drawings and feasibility of construction. For additions, clients and architects are the main causers of this variation due to financial, design and changes in drawings reasons. Mainly clients, architects and contractors cause substitutions. Finance and aesthetic are the issues for clients, while for the contractor it is the feasibility of construction. Architects reasons are varied but design and change of drawings are the major causes.

CONCLUSION
The study has highlighted that additions and omissions are the most common variations in building projects. They are frequently caused by financial, design aesthetic and feasibility of construction reasons. Clients and architects acting individually or collectively are the most causers of variations. Since variations are encountered on most of the building projects, they are a necessary evil that must be accommodated by providing provisions and procedures in the contract and administration of the project, for which both the client and the contractor must be prepared to negotiate. 8

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Atkinson, A.V (1992), Civil Engineering Contract Administration, -2nd Edition, Stanley Thornes Ltd., England. Baxendale A T and Schofield T J (1986), Planning and Progressing Project Variations in Langford, D. A. and Retik, A. (eds) The Organization and Management of Construction: Shaping theory and practice, Vol. 2, E & FN SPON, Britain. Fellows R F (2001), 1980 JCT Standard Form of Building Contract A commentary for students and practitioners, Macmillan Press, Hong Kong. Government Printer (2001), Agreement and Schedule of conditions of Building contract, Form of contract incorporating Bills of Quantity, Government printer, Gaborone. Hackett, (1998), Design and Build: Uses and Abuses, LLP, England. Hibberd P R (1986), Variations on construction contracts, Collins, London. Mawdesley M. Askew A. and OReilly M. (1997), Planning And Controlling Construction Projects The Best Laid Plans, Longman, England. Mmegi (2001), Botswana to introduce Value added Tax (VAT) by 1st July, 2002, Mmegi Newspaper, July 14-20,2001, Gaborone, Botswana Oxley, R. and Poskitt, J. (1996), Management Techniques Applied To The Construction Industry-5th Edition, Blackwell Science Ltd., UK. Porter R (1980), Building contract conditions, George Godwin, England Trickey G and Hackett M (2001), The presentation and settlement of contractors claims, Spon Press, London, UK Turner D (1984), Standard Contracts for Building, George Godwin, England Wainwright H W and Wood A A B (1983), Variation and final account procedure, 4th Edition, Hutchison, London.