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ECAM
14,5 Modeling for management of
variations in building projects
Faisal Manzoor Arain
420 Department of Management, Institute of Business Administration,
Karachi, Pakistan, and
Low Sui Pheng
School of Design and Environment, National University of Singapore,
Singapore

Abstract
Purpose – This paper seeks to present research into the development of a theoretical model for
making more informed decisions for the management of variations in building projects. Primarily, the
study proposes six principles of effective variation management, which would be helpful for building
professionals in assessing and taking proactive measures for reducing the adverse impact of
variations.
Design/methodology/approach – Based on the principles of effective variation management, a
theoretical framework for management of variation orders was developed. The stages presented in the
theoretical framework were grouped into three main phases – screening, choice of promising
alternatives, and dominance building. Based on the theoretical framework, a model for management of
variations was developed.
Findings – The theoretical model presents a structured format for management of variation orders.
The model will enable the project team to take advantage of beneficial variations when the opportunity
arises without an inordinate fear of the negative impacts. By having a systematic way to manage
variations, the efficiency of project work and the likelihood of project success should increase.
Originality/value – The study would assist building professionals in developing an effective
variation management system. The model emphasized sharing the lessons learned from existing
projects with project teams of future projects. The lessons learned should be identified throughout the
project life cycle and communicated to current and future project participants. The system would be
helpful for them to take proactive measures for reducing variation orders. Hence, the study is valuable
for all professionals involved with building projects.
Keywords Project management, Construction industry, Modelling, Decision making
Paper type Research paper

Introduction
Variations are common in all types of construction project (Construction Industry
Institute, 1994b; Ibbs et al., 2001). Proper management of variation orders is very
significant for all types of construction project. The fact is that variation orders are an
unwanted, but inevitable, reality of any construction project. The construction process
can be influenced by changing variables and unpredictable factors that could result from
different sources. These sources include the performance of construction parties, resource
Engineering, Construction and availability, environmental conditions, involvement of other parties and contractual
Architectural Management
Vol. 14 No. 5, 2007
relations. As a consequence of these sources, the construction of projects may face
pp. 420-433 problems which could cause delay in the project completion time (Arain et al., 2004). The
q Emerald Group Publishing Limited
0969-9988
need to make changes in a construction project is a matter of practical reality. Even the
DOI 10.1108/09699980710780737 most thoughtfully planned project may necessitate changes due to various factors.
The nature and frequency of variations can vary from one project to another Management of
depending on various factors. Variations in construction projects can cause substantial
adjustments to the contract duration, total direct and indirect costs, or both (Ibbs,
variations
1997). Project management teams must therefore have the ability to respond to
variations effectively in order to minimize their adverse impact on the project. The
effective management of variation orders requires a comprehensive understanding of
the root causes of variations and their potential downstream effects (Ibbs et al., 2001). 421
To manage a variation means being able to anticipate its effects and to control, or at
least monitor, the associated cost and schedule impacts (Hester et al., 1991).
Every building project involves a multi-player environment and represents a
collaborative effort among specialists from various independent disciplines. Because
variations are common in projects, it is critical for project managers to confront,
embrace, adapt and use variations to impact positively on the situations they face and
to recognize variations as such (Ibbs, 1997). The variations and variation orders can be
minimized when the problem is studied collectively as early as possible, since the
problems can be identified and beneficial variations can be made (Construction
Industry Institute, 1994a). Variations and variation orders can be deleterious in any
project if not considered collectively by all participants. From the outset, project
controls should take advantage of lessons learned from past similar projects (Ibbs et al.,
2001).
Decision-making is a significant characteristic that occurs in each phase of a project.
At almost every stage, decision-making is necessary. Often, these decisions can, or will,
affect the other tasks that will take place. To achieve an effective decision-making
process, project managers and the other personnel of one project need to have a general
understanding of other related or similar past projects (Construction Industry Institute,
1994b). This underscores the importance of having a good communication and
documentation system for better and prompt decision-making during various project
phases.
The objective of this study is therefore to develop a theoretical model for the
management of variation orders. A theoretical model would be helpful in developing an
effective variation management system that eventually would assist professionals in
taking proactive measures for reducing potential variations in building projects.

Background
The issue of managing variations has received much attention in the literature. Despite
many articles and much discussion in practice and in the academic literature, the issue
of learning from past projects in making timely and more informed decisions for the
effective management of variation orders has not been explored much in the literature.
Many researchers have proposed principles and theoretical models for managing
variations. Krone (1991) presented a variation order process that promoted efficient
administrative processing and addressed the daily demands of changes in the
construction process. The contractual analysis technique (CAT) found that early
notification and submission of proposals helped to maintain management control and
avoided impact claims. The CAT laid the foundation for future contract variation
clauses in construction management. The proposed process was limited to
administrative processing and addressing the daily demands of variations in the
construction process. Stocks and Singh (1999) presented the functional analysis
concept design (FACD) methodology to reduce the number of variation orders in
ECAM construction projects. They found that FACD was a viable method that could reduce
construction costs overall. Harrington et al. (2000) presented a theoretical model for the
14,5 management of change (MOC) in the organizational context. The model presented a
structured process consisting of seven phases:
(1) clarify the project;
(2) announce the project;
422
(3) conduct the diagnosis;
(4) develop an implementation plan;
(5) execute the plan;
(6) monitor progress and problems; and
(7) evaluate the final results.
They suggested that the MOC structure can be applied outside the organization to any
project change management.
A theoretical model for controlling and managing variations was proposed by Gray
and Hughes (2001). The central idea of the proposed model was to recognize, evaluate,
resolve and implement variations in a structured and effective way. The Construction
Industry Institute (1994b) and Ibbs et al. (2001) proposed a project change management
system (CMS) that was founded on five principles. The five principles were:
(1) promote a balance change culture;
(2) recognize change;
(3) evaluate change;
(4) implement change; and
(5) improve from lessons learned.
The change management system was a two-level process model, with principles as the
foundation, and management processes to implement those principles. The proposed
system lacked the basic principle and process of implementing controls for future
variations in construction projects.
The basic principles of variation management that are presented in this paper were
adapted from the research works by Construction Industry Institute (1994b) and Ibbs
et al. (2001).

Basic principles of variation management


The fundamental idea of any variation management system is to anticipate, recognize,
evaluate, resolve, control, document, and learn from past variations in ways that
support the overall viability of the project. Learning from variations is imperative,
because professionals can improve and apply their experience in the future. This would
help professionals in taking proactive measures for reducing potential variations.
This study proposes six basic principles of variation management. As shown in
Figure 1, the six basic principles are:
(1) identify variation for promoting a balanced variation culture;
(2) recognize variation;
(3) diagnosis of variation;
Management of
variations

423

Figure 1.
Principles of effective
variation management
ECAM (4) implement variation;
14,5 (5) implement controlling strategies; and
(6) learning from past experience.
Each of these principles works hand-in-hand with the others.
Decision-makers seek guidance from past decisions, like learning from past
424 experience. The adaption-innovation theory (AIT), proposed by Kirton (1976), defined
and measured two styles of decision making:
(1) adaption; and
(2) innovation.
Kirton (1984) further explained that adaptors characteristically produced a sufficiency
of ideas, based closely on, but stretching, existing agreed definitions of the problem
and likely solutions. Kirton (1984) argued that the decisions made by adaptors were
precise, timely, reliable and sound.
The first principle of variation management is to identify variations. As shown in
Figure 1, in this principle, referring to past projects for the early recognition of a
problem is very important, because it will assist in identifying the issue at the early
stage. Furthermore, this will also assist in encouraging beneficial variations and
discouraging detrimental variations. Beneficial variations are those that actually help
to reduce cost, schedule, or degree of difficulty in the project. Detrimental variations are
those that reduce owner value or have a negative impact on a project.
The second principle of variation management is to recognize variations. In this
principle, communication, documentation and awareness about trending are very
important, because these would assist in identifying variations prior to their actual
occurrence. The third principle of variation management is to diagnose the variation.
As shown in Figure 1, nature evaluation, trending, and impact evaluation are very
important aspects. This is because these would assist in determining whether the
management team should accept and implement the proposed variation.
Implementing variation is the fourth principle of variation management. After
evaluating the variation, implementing variation is an important step. As shown in
Figure 1, in this principle, communication, documentation and tracking are very
important. This is because these would assist in implementing variation through
communicating information between team members and developing database through
documenting and tracking of the variation implemented. Implementing controls for
variations is the fifth principle of effective variation management. It is a very
important step, since this is the main reason to have the variation management system.
As shown in Figure 1, evaluating and documenting controls are very important,
because evaluating suggested controls would assist in selecting effective controls for
variations, and documenting the controls would assist in learning lessons from the
variation.
The sixth principle of variation management is to learn from past experience. In this
principle, learning lessons and sharing experiences are very important, because the
main idea is to evaluate mistakes made so that errors can be systematically corrected.
Such analysis should be shared between team members so that everyone will have a
chance to understand the root causes of the variations and to control problems in a
proactive way.
Theoretical framework for management of variation orders Management of
As mentioned earlier, the central idea of any variation management system is to variations
anticipate, recognize, evaluate, resolve, control, document, and learn from past
variations in ways that support the overall viability of the project. It is obvious that
every stage of the management process requires professionals to come up with a
decision to accept or reject the idea. Decision-making is an integral part of any
management process (Fisk, 1997). In almost every stage of project management, 425
decision-making is necessary (Construction Industry Institute, 1994b). Montgomery
(1989) suggested that the structured process played a fundamental role in
decision-making. Decision-making is represented as a process extended over time,
which can be divided into a number of stages or phases (Tversky and Fox, 1995). As
shown in Figure 2, a theoretical framework is developed based on the structured six
basic principles of variation management (see Figure 1).
Prospect theory, proposed by Kahneman and Tversky (1979), suggested that the
decision making process included a problem formulation stage which involved the
framing and editing processes. Similarly, the theory of dominance structuring,
proposed by Montgomery (1983), suggested that the pre-decisional information search
passed through three phases:
(1) screening;
(2) choice of a promising alternative; and
(3) dominance building.

Hence, as shown in Figure 2, the sub-stages of theoretical framework for management


of variation orders are further categorized into three phases as suggested by
Montgomery (1983).
The first step of the theoretical framework for management of variation order is to
identify variations for promoting a balanced variation culture. As shown in Figure 2,
recognizing problems, encouraging beneficial variations and discouraging detrimental
variations are considered as very important aspects for identifying the variation. The
problem recognition step refers to the nature of the variation, which includes the type
of variation, cost implications, schedule implications, and the downstream effects of a
similar variation in past projects. It is imperative to encourage and educate team
members that beneficial variations should be encouraged and supported and that
detrimental variations should be discouraged and avoided (Ibbs et al., 2001). As shown
in Figure 2, the professional should therefore refer to the nature of variation and need
for variation, which includes the reasons given and root causes of similar variations in
past projects, to encourage beneficial variations and discourage detrimental variations.
Eventually, these aspects would assist in identifying the variation in the early stage of
the variation occurring. The timing of a variation often determines whether the
variation is beneficial or detrimental (Construction Industry Institute, 1994b). A
suggestion in the early stages of a project may be helpful, but that the same suggestion
later in the project may actually increase project costs and schedule.
Once the variation is identified as shown in Figure 2, the second step of the
theoretical framework is based on the second principle of variation management (see
Figure 1). Recognizing variation is the second step of the theoretical framework for
management of variation orders. Communication, documentation and trending are
important for recognizing variations, as shown in Figure 2. Communication within the
ECAM
14,5

426

Figure 2.
Conceptual framework for
management of variation
orders

team is very important because it assists in recognizing variation (Ibbs et al., 2001).
Identifying and recognizing variations prior to their actual occurrence can help the
professionals to manage variation better and earlier in the project life cycle. Many
models and theories proposed that the structured information assisted in the process of
decision-making (Tversky and Kahneman, 1991). Two types of restructuring
information were identified and were considered to be important in decisions involving Management of
well-defined risks:
variations
(1) the framing or coding of the information; and
(2) the grouping by similarity of elements of the choice problem (Kahneman and
Tversky, 1979; Tversky and Kahneman, 1992).
Hence, the communication aspect refers to structured information for team 427
communication for recognizing variations, which includes coded and categorized
information of variations in past projects (i.e. types of variations, total number of
variations, cost implications, and schedule implications, etc.). As shown in Figure 2,
recognizing variations through documentation refers to the basis for variations, which
includes structured information about justification of variations, schedule implications,
and cost implications of similar variations in past projects. Trending refers to the
frequency of occurrence of variations, which includes structured information
about the frequency of the occurrence of variations in certain type of past projects, and
the frequency of the occurrence of variations in all types of past projects. Eventually,
communication, documentation, and trending assist in recognizing variations. As
shown in Figure 2, the sub-stages for identifying variations and recognizing variations
fall under the screening phase (the first phase of pre-decisional information search,
according to the theory of dominance structuring). Finally, the sub-stages, which include
problem recognition, encouraging beneficial variations, discouraging detrimental
variations, communication, documentation and trending, assist in screening for the
decision-making process.
The third step of the theoretical framework for the management of variation orders
is to conduct the diagnosis of variation. As shown in Figure 2, the sub-stages of the
third step are nature evaluation, trending, and impact evaluation. The nature
evaluation stage refers to the nature of variations, which includes information about
the type of variation, and the elective or required nature of the variation. The purpose
of evaluating the nature of variations is to determine whether the management team
should accept and implement the proposed variations. Trending refers to the frequency
of occurrence of variations, which includes structured information about the frequency
of occurrence of variations and variation orders in the present project. The objective of
analyzing the trend is to identify frequent variations and to manage these variations in
a proactive fashion. Impact evaluation refers to the diagnosis of the impact of
variations, and includes root causes, potential frequent effects, schedule implications,
and cost implications of the proposed variations. The purpose of impact evaluation is
to analyze the impact of variations on the overall project, and to take proactive
measures for controlling variations.
Implementing variation is the fourth step of the theoretical framework, as shown in
Figure 2. Implementing variation refers to three sub-stages:
(1) communication;
(2) documentation; and
(3) tracking.
Communication between team members is an integral part of implementing variations.
The communication stage refers to team involvement, which includes communicating
to all affected parties and sharing a database for timely decisions. Documentation and
ECAM tracking refer to record implementation, which includes information updates about
types of variations, cost implications, schedule implications, root causes, and the
14,5 downstream effects of the proposed variations. The objective of documentation and
tracking of variations is to develop a database that would assist in learning lessons
from these variations. As shown in Figure 2, the sub-stages of the third and fourth
steps are in the context of choice of promising alternatives phase (the second phase of
428 pre-decisional information search, according to the theory of dominance structuring).
The aim of this phase is to find an alternative that has a reasonable chance to be seen
as dominant over the others. An alternative that is more attractive than the other
alternatives on an important attribute may be selected as a promising alternative
(Montgomery and Svenson, 1989). Eventually, these stages can assist in choosing and
implementing the possible alternatives (variations) since going through these stages,
the variation is evaluated and implemented.
The fifth step of the theoretical framework for management of variation order is to
implement controlling strategies. As shown in Figure 2, the sub-stages of the fifth step
are controls evaluation and documentation. The controls evaluation stage refers to the
selection of controlling strategies, which include structured information about the root
cause of the variation, suggested controls, structured weighted evaluation, and
selection of potential controls. The purpose of evaluating controls for the variation is to
select and to implement the most effective controls for variations. The structured
information about the root cause of the variation, suggested controls, and structured
weighted evaluation would assist in dominance building (the third phase of
pre-decisional information search, according to the theory of dominance structuring)
for selecting the most effective controls for variations. Documentation refers to record
implementation, which includes information about new suggested controls and
updating of the database. The objective of documentation is to develop a database that
would assist professionals in learning lessons from variations.
Learning from past experience is the last and the most important step of the
theoretical framework shown in Figure 2. This step refers to two sub-stages where
lessons are learned and experience shared. The objective of the lesson learned is to
record the nature of the variation, the frequency of variation, the root causes of
variation, cost implications, schedule implications, downstream effects, and suggested
controls. The main idea is to evaluate the mistakes made so that errors can be corrected
systematically. The main objective of sharing the database is to involve team members
in discussing the issues based on past project information. These analyses should be
discussed between team members so that everyone has a chance to understand the root
causes of variations. Understanding the nature, frequency, root causes, cost and
schedule implications, downstream effects and suggested controls are important for
preventing similar mistakes in the future. Furthermore, this would also assist in
building dominance for taking proactive measures to reduce variations in future
projects. As mentioned earlier regarding adaption-innovation theory, decision-makers
who seek guidance from past decisions like learning from past experience are more
likely to make precise, timely, reliable and sound decisions. Hence, sharing a database
of past projects would assist professionals in deciding promptly.
As shown in Figure 2, the sub-stages in the last two steps of the theoretical
framework for management of variation orders are in the context of the dominance
building phase. The aim of this phase is to analyze whether a promising control is
dominant over the other alternatives. Furthermore, the objective is to check whether
the promising alternative has any disadvantages as compared to other alternatives or Management of
as compared to some absolute criterion values on different attributes. Documenting
and sharing databases of past projects would assist in dominance building for taking
variations
proactive measures to reduce variations in future projects. Eventually, the controls that
are found to be dominant should be implemented and the database should be updated.
As shown in Figure 2, the stage of learning from past experience contributes to all
other stages of the theoretical framework for the management of variation orders. 429
This theoretical framework underscores the importance of having a good
communication and documentation system for better and prompt decision-making
during various project phases. Hence, a theoretical model for management of variation
orders is developed and discussed in the following section.

Theoretical model for management of variation orders


From the outset, project strategies and philosophies should take advantage of lessons
learned from similar past projects (Ibbs et al., 2001). It signifies the importance of an
organized knowledge-base of similar past projects. The importance of a
knowledge-base for better project control has been recommended by many
researchers (Miresco and Pomerol, 1995; Mokhtar et al., 2000; Gray and Hughes,
2001; Ibbs et al., 2001).
If professionals have a knowledge-base established on past similar projects, it
would assist the professional team to plan effectively before starting a project, and
during the design phase as well as during the construction phase to minimize and
control variations and their effects. Current technological progress does not allow the
complete computerization of all managerial functions or the creation of a tool capable
of carrying out automatically all the management decisions required. To ensure the
success of this important management function, human involvement in this process
remains essential. Thus the decision support system (DSS) approach for this kind of
application seems to be the most natural extension (Miresco and Pomerol, 1995). The
knowledge base should present a comprehensive scenario of the causes of variations,
their relevant effects and potential controls that would be helpful in decision-making at
the early stage of variations occurring.
Based on the proposed conceptual framework for management of variation orders
as shown in Figure 2, a system model for making more informed decisions for the
management of variation orders was developed (see Figure 3). The model consists of
six fundamental stages linked to two main components (i.e. a knowledge base and a
decision support shell) for making more informed decisions for the effective
management of variation orders. The database will be developed through collecting
data from source documents of past projects, questionnaire surveys, a literature review
and in-depth interview sessions with professionals who were involved in the projects.
The knowledge base will be developed through initial sieving and organization of data
from the database. The decision support shell would provide decision support through
a structured process consisting of building a hierarchy between the main criteria and
the suggested controls, rating the controls, and analyzing the controls for selection
through multiple analytical techniques.
The knowledge base should be capable of displaying variations and their relevant
details, a variety of filtered knowledge, and various analyses of the knowledge
available. This would eventually lead decision makers to the suggested controls for
variations and assist in the selection of the most appropriate controls.
ECAM
14,5

430

Figure 3.
System model for
management of variation
orders

As shown in Figure 3, the need for a variation can originate from the client, user,
design consultant, project manager or contractor. Considering the underlying
principles of effective variation management and the theoretical framework discussed
earlier, the first step of the theoretical model for management of variation orders is to
identify variations for promoting a balanced variation culture. Once the variation is
proposed, the proposal will be analyzed through a knowledge base (level 1) for initial
decision support to recognize the variation at an early stage in order to encourage Management of
beneficial variations and prevent detrimental variations. If options are required for
certain variations, then the request for a proposal will be made. However, the proposals
variations
will be analyzed generally through a knowledge base that will assist in establishing the
first principle of effective variation management.
The second step of the theoretical model for the management of variation orders is
to recognize the variation. Therefore, it is important that an environment be created 431
that allows team members to communicate with one another openly. In this stage, team
members are encouraged to discuss and to identify potential variations (Ibbs et al.,
2001). Identifying variations prior to their actual occurrence can help the team to
manage variations better and earlier in the project life cycle. As shown in Figure 3, the
knowledge base (level 2) provides structured information of past projects that would
assist in effective communication between team members. The codes and categorized
information relating to the effects on the programme, the cost implications and the
frequency of the occurrence of variations would eventually assist in recognizing
variations in the early stage of their occurrence.
After the team recognizes the variation, diagnosis of the variation is carried out
through the knowledge base (updated). The knowledge base (updated) contains
information about the frequency of variations and variation orders in the present
project, their root causes, and their potential effects. This information assists the
management team in evaluating the variation. The purpose of the evaluation is to
determine whether the management team should accept and implement the proposed
variation.
After the evaluation phase, the team selects the alternatives and communicates the
details of the variation to all affected parties. Better team communication will allow for
the timely implementation of the variation selected. Documentation of the variation
implemented is an integral part of the implementation phase. The documentation
contributes to the knowledge-base decision support system, as shown in Figure 3.
After the implementation phase, selecting and implementing controls for variations
are very important, as shown in Figure 3. The knowledge base eventually leads
decision-makers to the suggested controls for variations and assists them in selecting
the most appropriate controls. The decision support shell would provide decision
support through a structured process consisting of building the hierarchy between the
main criteria and the suggested controls, rating the controls, and analyzing the controls
for selection through multiple analytical techniques.
After selecting and implementing the controls for variations, establishing and
updating the knowledge base is the last yet most important phase of the theoretical
model for the management of variation orders. The knowledge base will improve with
every new building project, since the essence of the model is to provide timely and
accurate information for the decision making process. The knowledge base established
may assist project managers by providing accurate and timely information for decision
making, and also providing a user-friendly system for analyzing and selecting the
controls for variation orders.

Conclusion
This paper has presented research into the development of a theoretical model for
making more informed decisions for the management of variation orders. Primarily,
the study proposes six principles of effective variation management. A theoretical
ECAM framework for the management of variation orders that is founded on these principles
was developed. The stages presented in the theoretical framework were grouped into
14,5 three main phases:
(1) screening;
(2) choice of promising alternatives; and
432 (3) dominance building.
The three phases assisted in a pre-decisional information search for a structured
decision-making process for management of variation orders.
Based on the theoretical framework, a theoretical model for management of
variation orders was developed. The model consists of six fundamental stages linked
to two main components (i.e. a knowledge base and a decision support shell) for
making more informed decisions for effective management of variation orders. The
database will be developed through collecting data from source documents of past
projects, questionnaire surveys, a literature review and in-depth interview sessions
with professionals who were involved in the projects. The knowledge base will be
developed through initial sieving and organization of data from the database. The
decision support shell would provide decision support through a structured process.
The theoretical model presented a structured format for the management of
variation orders. The model would enable the project team to take advantage of
beneficial variations when the opportunity arises without an inordinate fear of
negative impacts. By having a systematic way to manage variations, the efficiency of
project work and the likelihood of project success should increase. The model
emphasizes sharing the lessons learned from existing projects with the project teams of
future projects. The lessons learned should be identified throughout the project life
cycle and communicated to current and future project participants. The study would
assist building professionals in establishing an effective variation management
system. The system would be helpful for them to take proactive measures for reducing
variation orders. Hence, the study is valuable for all professionals involved with
building projects.

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Corresponding author
Faisal Manzoor Arain can be contacted at: farain@iba.edu.pk

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