A Variation (Change Order in USA) is a construction contract term that refers to any change or modification to the originally agreed scope of work outlined in the contract documents. Variations can include alterations to the design, specifications, quality, quantity of work, or conditions under which the work is to be executed. They are a common aspect of construction projects, reflecting the dynamic nature of construction work and the need to adapt to unforeseen circumstances, client requirements, or regulatory changes.
Key aspects and processes related to Variations include:
- Initiation: Variations can be initiated by either the principal, through a change request, or by the contractor, if changes are necessary due to unforeseen site conditions or other factors. In some cases, variations may also be mandated by regulatory authorities.
- Approval Process: Before a variation can be implemented, it must typically be assessed and approved by the principal and, in some contracts, by the superintendent acting on behalf of the principal. This process ensures that the variation is necessary and that the implications for cost and time are understood and agreed upon.
- Valuation: The financial impact of the variation on the contract price needs to be evaluated and agreed upon. This involves determining additional or reduced costs resulting from the change and adjusting the contract sum accordingly.
- Impact on Schedule: Variations can affect the project's completion date. When a variation is approved, the contract may need to be adjusted to reflect changes in the project schedule, including extensions of time to accommodate the additional work.
- Documentation: Each variation must be documented thoroughly, including the nature of the change, the reasons behind it, its impact on costs and schedule, and the agreement between the parties. This documentation becomes part of the contract records.
- Dispute Resolution: Disagreements over variations, including their necessity, valuation, or impact on the schedule, are resolved through the dispute resolution mechanisms specified in the contract.
Variations are an integral part of managing Capital Projects, allowing for flexibility in execution while ensuring that changes are controlled, documented, and fairly compensated. Effective management of variations is crucial for maintaining project budgets, schedules, and overall project success.
