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Assessment of
A quantitative assessment of the the cost and time
cost and time impact of variation impact
orders on construction projects
35
A.A. Oladapo
School of Civil Engineering, Surveying and Construction,
University of KwaZulu-Natal, Durban, South Africa
Abstract
Purpose – Variation orders are a common occurrence in construction projects and their impacts have
been studied by various authors. However, the contribution of project variations to construction cost
and time overruns is yet to be established. The purpose of this study is to assess the significance of
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Introduction
Construction is complex and uncertain in nature, and unlike manufacturing the design
and production functions in the construction process are conventionally separated.
Traditionally, the design and construction of a building are two separate functions
performed by different professionals or organizations working independently.
According to Kwakye (1997), this compartmentalisation of construction into separate
design and production functions leads to designs without concern for buildability or
production economies and the perpetuation of costly mistakes from one project to
another (Kwakye, 1997). This organisational characteristic of the construction industry
makes construction projects prone to variation or change during the construction phase.
Variation has become so prevalent in construction that it is hardly possible to
complete a project without changes to the plans or the construction process itself Journal of Engineering, Design and
(Ssegawa et al., 2002). Thus, according to Revay (2002), there will be changes to scope, Technology
Vol. 5 No. 1, 2007
time, cost and/or quality on most, if not all, construction projects. Various studies have pp. 35-48
identified variation orders among the causes of project cost and time overruns, which q Emerald Group Publishing Limited
1726-0531
(according to Sterman, 1992), are endemic problems in international construction. DOI 10.1108/17260530710746597
JEDT However, the existing literature gives little indication of their contributions to project
5,1 cost and time overruns. This study measures the proportion of total project cost and time
overruns directly attributable to variation orders using data on 30 completed projects.
The study also assesses the causes of variations and evaluates the contribution of the
project participants to the occurrence of variations in building projects.
immediate post-independence years in the 1960s to the 1980s, accounting for about 70
per cent of the GDP (Planning Committee on the National Construction Policy, 1989).
This made the industry very strategic to the nation’s development efforts.
Unfortunately, however, the industry has been bedevilled by a combination of low
demand and consistent low productivity and poor performance since the decline of the
national economy started at the end of the 1980s (Aniekwu, 1995; Okuwoga, 1998;
Adeyemi et al., 2005). This has reduced its contribution to the national economy to a
mere 1 per cent of the GDP in 2002 (AfDB/OECD, 2004) and manifested in, among other
effects, very high rates of cost and time overruns in the order of 140 per cent of initial
project cost and 81 per cent of original contract period, respectively, for public sector
projects (Oma-Williams, 1991).
only 50 were found to be properly answered and suitable for analysis. This represents a
response rate of 50 per cent which, according to by Elhag and Boussabaine (1999) and
Idrus and Newman (2002), is good enough for research of this nature.
A total of 50 copies of Questionnaire B were distributed to managers and senior
mangers in quantity surveying firms to collect details of completed building projects in
terms of original contract sum, final cost, cost overrun, approximate percentage of cost
overrun attributed to variation orders, original contract period, final completion time,
time overrun and approximate percentage of the time overrun attributed to variation
orders. Data were collected only on projects which suffered both cost and time
overruns. The respondents provided all the details requested for 30 projects.
Information on respondents’ profile is summarised in Tables II and III. These tables
show that 90 per cent of the respondents have the minimum qualifications (HND
and above) required for professional registration in most disciplines in Nigeria while
42 per cent of them have over ten years professional experience. The average number
of years of experience of the respondents is 11 years while 42 per cent have the
Type of organisation Number distributed Number returned Response rate (per cent)
variation orders to cost and time overruns. In addition, using the F-statistic and the
student t-test, the following null hypotheses were tested for building projects:
.
The project type (public or private) has no significant effect on the contribution
of variation orders to project cost and time overruns.
.
The project size (small, medium or large) has no significant effect on the
contribution of variation orders to project cost and time overruns.
.
Variation orders have no significant effect on cost overrun.
.
Variation orders have no significant effect on time overrun.
Up to 5 years 3 6 6.00
6-10 years 23 46 52.00
11-15 years 17 34 86.00
16-20 years 5 10 96.00 Table III.
Over 20 years 2 4 100.00 Respondents’ years of
Total 50 100 professional experience
JEDT
Response frequencies Importance index
5,1 Factors 1 2 3 4 (per cent) Rank
Response frequencies
Stakeholders 1 2 3 4 Importance index (per cent) Rank
Response
frequencies
Reason 1 2 3 4 Importance index (per cent) Rank
800 per cent of the contract period, and cost overruns ranging between 1.52
and 358.7 per cent of the contract sum (Table VIII).
The total cost overrun comprised loss and expenses claims (Clause 26 of JCT’98),
fluctuation claims (Clauses 38 and 39 of JCT’98) and variation claims (Clause 13 of
JCT’98). The time overrun, on the other hand resulted, from delays by the
contractors (Clause 24 of JCT’98) and extension of time by the owners (Clause 25 of
JCT’98) necessitated by variation orders and other causes. Using the SPSS, the
impact of variation orders by project size and type as well as the overall impact of
variation orders on project cost and time overruns were analysed employing
F-statistics and t-statistics. Table IX shows that the impact of variations on cost
overrun was greatest in small projects and least in medium projects while for time
overrun the impact of variations was greatest in medium projects and least in large
projects.
Table X shows that variations had a greater impact on cost overrun in public
projects than in private projects. On the other hand, variation had a greater impact on
total time overrun in private projects than in public projects. Viewed in the light of the
assertion by Ogunlana et al. (1996) that variations tend to occur more often in private
projects than in public projects, these results seem to suggest that the frequency of
variations do not necessarily determine their cost and time impacts on a project.
Response
frequencies Importance index
Reason 1 2 3 4 (per cent) Rank
5,1
42
JEDT
Table VIII.
selected projects
Time and cost details of
Approx. Approx. Approx. Approx.
Contract percentage of cost percentage of cost Initial contract Final percentage of time percentage of time
Project Year of sum Final cost overrun due to overrun due to period completion overrun due to overrun due to
type execution (N
¼ million)a (N
¼ million) VOs other causes (months) time (months) VOs other causes
Conclusion
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This study has shown that changes in specifications and scope, initiated mostly by
project owners and their consultants, are the most prevalent sources of variation. This
results mainly from changes in owners’ income/financial ability, changes in owners’
interests/requirements, design errors and insufficient time for preparation of contract
documents
The study concludes that variation had a significant impact on project cost and
time overruns and that project size and type did not significantly affect the
contribution of variations to project cost and time overruns. It is hoped that these
results will enable project owners, consultants, contractors and other stakeholders to
better understand and appreciate the real impact of variation on project
performance.
Level of
Project size F significance
Small Medium Large All statistic ( p value)
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(9) Rate the contributions of building owners (clients), contractors, consultants and
statutory/regulatory agencies to the incidence of VOs on a scale of 1 ¼ not significant,
2 ¼ quite significant, 3 ¼ significant and 4 ¼ very significant (Table AII).
Building owners
Contractors change in
specifications
Consultants
Statutory/regulatory
agencies Table AII.
(10) The following are some of the factors responsible for building owner-related variations.
Rate their influences on the building owner’s decision to order variations to a project on a
scale of 1 ¼ not significant, 2 ¼ quite significant, 3 ¼ significant and 4 ¼ very
significant (Table AIII).
Changes in owners’
interests/requirements
Changes in owners’
income/financial ability
Technological changes
Improper preliminary advice by
consultants
Environmental influence (weather,
geology, etc.) Table AIII.
JEDT (11) The following are some of the factors responsible for consultant-related variations. Rate
their influences on the incidence of consultant-related variations to a project on a scale of
5,1 1¼not significant, 2¼quite significant, 3¼significant and 4 ¼ very significant (Table AIV).
(12) Please give any other information you think might be useful for this study.
. . .. . .. . .. . .. . . . . .. . .. . .. . .. . . . . .. . .. . .. . . . . .. . .. . .. . .. . .. . .. . . . . .. . .. . .. . .. . . . . .. . .. . .. . .
. . .. . .. . .. . .. . .. . . . . .. . .. . .. . .. . .. . . . . .. . .. . .. . . . . .. . .. . .. . .. . . . . .. . .. . .. . .. . .. . .. . .. . .
. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .
Questionnaire B: cost and time data on the effect of variation orders on building projects
(1) Name of organization. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .
(2) Location of organization. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .
(3) Using Table AV , please provide information on completed projects which suffered both
time and cost overruns for which you have records.
Approx. Approx.
Approx. percentage Approx. percentage
Project percentage of cost percentage of time
type of cost overrun Initial Final of time overrun
(public Contract Final overrun due to contract completion overrun due to
or Year of sum (N¼ cost (N
¼ due to other period time due to other
a
private) execution million) million) VOs causes (months) (months) VOs causes
Table AV. Notes: a130 naira ¼ 1 US$, where the naira (N) is the Nigerian currency
Corresponding author
A.A. Oladapo can be contacted at: adeladapo@yahoo.com
1. Richard Ohene Asiedu Koforidua Technical University Koforidua Ghana Ebenezer Adaku Ghana Institute
of Management and Public Administration Achimota Ghana De-Graft Owusu-Manu Kwame Nkrumah
University of Science and Technology Kumasi Ghana . 2017. Beyond the causes – rethinking mitigating
measures to avert cost and time overruns in construction projects. Construction Innovation 17:3. .
[Abstract] [PDF]
2. Jiankun Ma, Zhiliang Ma, Jiulin Li. 2017. An IPD-based incentive mechanism to eliminate change orders
in construction projects in China. KSCE Journal of Civil Engineering . [CrossRef]
3. OyewobiLuqman Oyekunle Luqman Oyekunle Oyewobi Dr Luqman Oyekunle Oyewobi is a Lecturer
in the Department of Quantity Surveying, School of Environmental Technology, Federal University
of Technology, Minna, Niger State, Nigeria. He holds HND, B.Tech (Hons) and M.Tech all in
Quantity Surveying. He is a Corporate Member of the Nigerian Institute of Quantity Surveyors and
also a Registered Quantity Surveyor with the Quantity Surveyors Registration Board of Nigeria. Dr
Oyekunle’s research interests include performance measurement and strategic performance management.
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JimohRichard Richard Jimoh Dr Richard Jimoh is a Senior Lecturer in the Department of Building,
Federal University of Technology, Minna, Niger State, Nigeria. Dr Jimoh is a Corporate Member of
the Nigerian Institute of Building and a Registered Builder with the Council of Registered Builders
of Nigeria (CORBON). He has more than 10 years of experience in both teaching and practice in the
construction industry. Dr Jimoh has practised in, lectured and researched on sustainable housing and
social housing development. GaniyuBashir Olanrewaju Bashir Olanrewaju Ganiyu Bashir Olanrewaju
Ganiyu is a Lecturer in the Department of Quantity Surveying, Federal University of Technology
Minna, Nigeria. He holds B.Tech(Hons) in Quantity Surveying and an Msc degree in Construction
Management. Mr Ganiyu’s research interest is in the areas of Construction Economics and Management
and sustainable housing development. Mr Ganiyu is a Corporate Member of The Nigerian Institute
of Quantity Surveyors (NIQS) and also a Registered Quantity Surveyor (RQS), having registered with
Quantity Surveyors Registration Board of Nigeria (QSRBN). ShittuAbdullateef Adewale Abdullateef
Adewale Shittu Abdullateef Adewale Shittu is a Lecturer in the Department of Quantity Surveying
at the Federal University of Technology, Minna, Niger State, Nigeria. He holds a Bachelor’s Degree
(Hons) in Quantity Surveying from the Federal University of Technology, Minna, Nigeria. He had his
Master’s Degree (MSc) in Construction Management from University of Jos, Nigeria. He is currently
undertaking his PhD programme at the Ahmadu Bello University, Zaria – Nigeria. His areas of research
interest are fire safety, construction cost modelling and health and safety management. Quantity Surveying
Department, Federal University of Technology, Minna, Nigeria Building Department, Federal University
of Technology, Minna, Nigeria Quantity Surveying Department, Federal University of Technology,
Minna, Nigeria . 2016. Analysis of causes and impact of variation order on educational building projects.
Journal of Facilities Management 14:2, 139-164. [Abstract] [Full Text] [PDF]
4. Abdulaziz M. Jarkas, Rashid A. Al Balushi, P.K. Raveendranath. 2015. Determinants of construction
labour productivity in Oman. International Journal of Construction Management 15:4, 332-344. [CrossRef]
5. Elisa Atália Daniel Muianga, Ariovaldo Denis Granja, Joyce de Andrade Ruiz. 2015. Desvios de custos e
prazos em empreendimentos da construção civil: categorização e fatores de influência. Ambiente Construído
15:1, 79-97. [CrossRef]
6. Ismail Abdul Rahman, Aftab Hameed Mem, Ahmad Tarmizi Abd. Karim. 2013. Significant Factors
Causing Cost Overruns in Large Construction Projects in Malaysia. Journal of Applied Sciences 13:2,
286-293. [CrossRef]