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.
