VARIATION CLAIMS IN HIGH - RISE BUILDING PROJECT

By

 Krisana Juanwanpen

Abstract

             

This paper presents a study made on causes, effects and controls of variation orders in high-rise building project in Thailand. To achieve the study objective, the researcher carried a literature review of the subject previous research studies and books written on the subject of variation orders. In light of the literature study the researcher developed a survey case study.

The big challenge for Thai Construction industry is to advance the management styles to cope up with challenges faced in a project. Procedures in managing contract and variation orders are viewed to know the effectiveness and liability ensuing steps observed. Disruptions in cash flow and program when mitigated and handled correctly may create confidence in handling changes that transpire in any project.

However, knowledge and skill in managing this challenging changes and observing effective procedures may eventually create a norm in Project Management system in the industry where tradition of strong relationship among Owner and Contract still prevails.

Literature relative to the research area was extensively reviewed. The data gathering approaches included an exploratory study on costs of variation orders on high-rise building project, interviews with three managers and seven engineers in construction site, and the audit of site instructions with regard to waste and their value-addends and self-administered questionnaires. A purposive sampling method was followed to identify participants into the study.

The study also concluded that responses from contractors and consultants agree about the causes, effects and controls of variation orders and recommended to include the owner in future studies to verify the reasons behind changes made by the owners.

Executive summary

Rationale of research

This research has been conducted to study variation claim issues in high rise building  projects

Objectives of study

To identify types and causes of variation claims in high-rise building project in Thailand, how to prove claim in different types of work in terms Analysis for additional cost and to propose an effective negotiation on the accepted price and time for both contractor and owner.

 Methodology

The exploratory research method is used to study variation claims, and with extensive literature review about variation claims and analysis of additional costs.

Findings and conclusion

The research set up to analyze the leading cause of variation orders on high – rise building project, to identify project characteristics correlated with frequency of construction variation orders, to develop variation order reference that identify the structured methodology for pricing variation orders. After completing these objectives, it was determined the causes of variation orders on this project.

Project characteristics were also examined. The breakdown of the project into five categories such as:

·         New work – are the additional item in the some part of building for more suitable and aesthetic of the building. Frequently, this category is initiated by owner

·         Modified work – are the existing of buildings becomes unsuitable for their present use, and then improvement, repair and maintenance are often required to keep them in usable condition.

·         Change work – are covered amend in some parts or whole scope of work that is stipulate in the contract

·         Move work – are Moving things without creating any damage to those items including storage of those items, they assume a duty to be included in this section.

·         Demolishing work – are move the existing part out and would not be reused. And the occupancy of debris that comes from the demolishing process will be agreed before starting work.

From analyzing the different methods used in these examples, a standardized pricing flowchart was developed for use. The flowchart was designed to be a one page quick reference that could be used for most situations involved in preparing an estimated price for comparison to the contractor’s submission. The flowchart still allows for the consultant to use some professional judgment but gives enough pricing options to take away some of the uncertainty in producing a price. A standardized pricing procedure implanted across the state will improve variation order pricing consistency among districts. This tool can be used also in training new engineer to allow them to progress in their decision making process.

Finally, based on the findings, it can be concluded that each of the condition of contracts has stipulated clearly the rules for method of valuing the claims of variation works. However, the adequacy and appropriateness of the mechanism are different based on the different types of contracts. The selection of the type of contracts to be used for a particular project may influence the project implementation in terms of contractual administration related to claims for variation works. By selecting an appropriate type of contracts for a project to be implemented may reduce the tendency of disputes arising from valuation of variation claims. Disputes related to claims of variation works can be avoided by overcoming the problems of the disputes. This may only be achieved through the proper selection of type of contracts which contain the most effective methods of valuing the variation claims. Despite the fact that BQ rates/Contract rates is the most instant method and agreeable among the contracting parties, it is recommended that this method should be improved by rationalization of the rates accordingly depend on the nature of the work of similar character executed under similar conditions. In other words, the BQ rates/Contract rates despite being the most agreeable rates they should be adjusted accordingly so that the rates for varied works will be fair to both contracting parties.

Recommendation

·         Out-Source Information - for variations that need price comparison, outsource information must be obtained such as price indices from the government, quotations from suppliers and price information from consultants.

·         Data collection – is to collect the correct information to support the validity of the any variation order. It can be Site Records such as site diaries, weather charts, site instructions, inspection reports, shop drawings and materials approval, RFIs, NCRs and other forms of communication like emails, transmittals, minutes of meeting and project reports.

·         Investigation - For variation order due to differing site conditions, sit investigation is imperative. It is essential in determining the actual site situations and for observing if the proposed change were feasible to the site. It is also done to verify quantities, type of material applied by the contractor and to confirm the methods proposed for application for use.

·         Know your references - reference materials would be the basis for evaluation first, entitlement of the contractor to a variation order, validity of the change, and determination of quantities either additive or deductive. Reference may include Construction Contract, Drawings, Specifications and other forms of site communications.