Impact Of Variations On Project Performance

Given a well-structured schedule of works, the maximum project performance could be achieved if the work progress flows smoothly within the time frame and within the budget. However, it is rare that a project performs according as scheduled due to several reasons such as market conditions changes and Variations on the design drawings or contract. Therefore, the occurrence of Variations has negative impact on project performance. Thomas et al (2002:144) believe that variability generally impedes project performance. Ibbs (1997:308) concluded that Variations have tremendous effect on the project performance as the negatively affect the productivity and cost. Arain & Pheng (2005:285) argued that Variations are unwanted but inevitable reality of any construction project. Hanna et al (2002:57) indicated that projects impacted by Variations causes the contractor to achieve lower productivity level than planned. There are 16 effects identified from the literature review, as shown in Figure 1 is discussed bellow.

Delay in payment: Delay in payment occurred frequently due to Variations in construction projects (CII, 1990a). Variations may slow down the project progress, leading to delays in achieving the targeted dateline during construction (CII, 1995). Eventually, this may affect payment to the contractors. These delay may causes severe problems until it end up in delays in payment to the subcontractors; this is because the Contractors may not be able to pay the Sub-Contractors unless they get paid by the Employer first.

Quality degradation: If occurrence of Variations is frequent, they may affect the quality of works. According to CII (1995), the quality of work was usually poor because of frequent variations because Contractors tended to compensate for the losses by doing “short cut” works.

Productivity degradation: Interruption, delays and redirection of work that are associated with Variations have a negative impact on labour productivity. These in turn can be translated into labour cost or monetary value (Ibbs, 1997b). Hester et al. (1991) argued that the productivity of workers was expected to be greatly affected in cases where they were required to work overtime for prolonged periods to compensate for schedule delays. Thomas and Napolitan (1995) concluded that Variations normally led to disruptions and these disruptions were responsible for labour productivity degradation. The most significant types of disruptions were due to the lack of materials and information as well as the work out of sequence. Lack of material was reported as the most serious disruption, because labours could not continue their works and end up idling while waiting for the materials to be available. Hence, to manage Variations, one needed to manage these disruptions. However, the disruptive effects could not be avoided in many instances.

Rework and demolition: Rework and demolition are frequent occurrences due to Variations in construction projects (Clough and Sears, 1994). Variations which are imposed when construction is underway or even completed, usually lead to reworks and delays in project completion (CII, 1990a). Rework and demolition are potential effects of Variations in construction, depending on the timing of the occurrence of the Variations. These effects are to be expected due to Variations during the construction phase. This is because the Variations during the design phase do not require any rework or demolition on construction sites.

Logistics delays: Logistics delays may occur due to Variations requiring new materials and equipment (Fisk, 1997). Hester et al. (1991) observed that logistics delays were significant effects of Variations in construction projects. Logistics delays were experienced in construction projects where Variations in the construction phase required new materials, tools and equipments.

Tarnish firm’s reputation: Variations are referred to as a major source of construction claims and disputes (Fisk, 1997; Kumaraswamy et al., 1998). The claims and disputes may affect the firm’s reputation negatively, due to unable to solve sever Variation cases. Variations also increase the possibility of professional disputes. Conventionally, Variations present problems to all the parties involved in the construction process.

Poor safety conditions: Variations may affect the safety conditions in construction projects

(O’Brien, 1998) as changes in construction methods, materials and equipment may require, therefore additional safety measures are needed during carrying out the construction phase.

Poor professional relations: A construction project is not a mere brick and mortar brought together. Rather, it creates professional relationships between parties to the contract. Each project successfully completed constitutes an added experience to participants and their reputation builds up. But disputes may arise between parties to the contract owing the occurrence of Variations. Misunderstanding may arise when the Contractor is not satisfied with the judgment of the consultant in terms of a fair valuation of a Variation. Bower (2000:264) argued that parties to a contract have been left to argue over the cost, time effects and due compensation of a Variations. Since the Contractors are pessimist of the outcome of the negotiations, they usually allow higher value than the real cost incurred. Bower (2000:264) opined that this causes the contention between parties as the Contractor continually push the client to settle the claim for additional costs while invariably feeling that the reimbursement has been insufficient. As a consequence, this can be very damaging to relationship between all parties’ representatives (Bower 2000:264). Charoenngam et al (2003:197) remarked that disputes between the Employer and the Contractor can occur if the Variations undertaking is not managed carefully. Harbans (2003:42) warned that unless a mutually acceptable solution is agreed by the parties, valuation of Variations would remain at the forefront of disputes and claims making their way ultimately to arbitral tribunals or the corridors of justice. Ssegawa (2002:92) revealed that more than one-third of disputes occurs pertain to how to ascertain losses arising from Variations. The excessive occurrence of Variations due to design errors or omission may undermine the professionalism of the designer. Furthermore, workers get demoralised when they demolish a portion of work that has already been done.

Additional payments for contractor: Additional payments for the contractor can be a potential effect of Variations in construction projects. Variations are considered to be a common source of additional works for the Contractor (O’Brien, 1998). Due to additional payments, the Contractor looks forward to Variations in the construction project because contractor benefits from the additional profit on Variations.

Disputes among professionals: Like poor professional relations, disputes among professionals are also potential effects of frequent variations in construction projects. The disputes over Variations and claims are inevitable and the Variation clauses are often the source of project disputes (CII, 1986a). Clear procedures presented in the contract and fair allocation of risks can help in resolving disputes through negotiation rather than litigation (CII, 1986a). Frequent communication and strong coordination can assist in eliminating the disputes between professionals.

Completion schedule delay: Various authors agree that Variations could be one of the reasons behind project time overruns or delays (Chan & Yeong 1995:467, Mohamed 2001:1). It is said that a project that finished within the shortest time could, achieves some monetary savings. Unfortunately, each additional day due to occurrence of Variations on a project implies additional money. Variations issued during any various phases of construction gives negative affected to both project’s completion time and cost increase (Koushki 2005:292). Hanna et al (2002:63) revealed that the more the Variations occurrence the more significant productivity losses. The productivity is the amount of output over a unit of time.