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Variation Order

The document discusses variation orders in construction contracts. A variation order refers to any increases or decreases made to the original scope of work, such as additions, omissions, or substitutions. There are two types of variation orders: change orders, which alter quantities of original work items, and extra work orders, which introduce new work items not included in the original contract. Variation orders can be issued during contract implementation to fully meet project requirements, but the total value of all variation orders cannot exceed 10-20% of the original project cost without a new bidding process. Common causes and effects of variation orders are also outlined.

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109 views10 pages

Variation Order

The document discusses variation orders in construction contracts. A variation order refers to any increases or decreases made to the original scope of work, such as additions, omissions, or substitutions. There are two types of variation orders: change orders, which alter quantities of original work items, and extra work orders, which introduce new work items not included in the original contract. Variation orders can be issued during contract implementation to fully meet project requirements, but the total value of all variation orders cannot exceed 10-20% of the original project cost without a new bidding process. Common causes and effects of variation orders are also outlined.

Uploaded by

SherrinaBenedicto
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CHANGE ORDER/ VARIATION

ORDER

Engr Paulo Olisa


VARIATION

• an alteration in the scope of works in a construction


contract that will include substitutions, additions and
omissions. They happen for two main reasons: events occur
external to the contract, or there are changes in the
design, scope or circumstances.
VARIATION ORDER

A Variation Order refers to any increase/decrease in quantities within the general scope of the project as bid
and awarded, in any of the following aspects:

1. Introduction of new work items that are not included in the original contract; or
2. Reclassification of work items that are either due to change of plans, design or alignment to suit actual
field conditions resulting in disparity between the preconstruction plans used for purposes of the bidding
and the “as staked plans” or construction drawings prepared after a joint survey by the contractor and the
government after award of the contract, or during actual construction.
TYPE OF VARIATION ORDER

1.Change Order
2.Extra Work
CHANGE ORDER

• A Change Order covers any increase/decrease in


quantities of original work of items in the contract.
EXTRA WORK

• An Extra Work Order covers the introduction of new work necessary for the
completion/improvement or protection of the project which are not included
as items of work in the original contract.
• As an example, there may be subsurface or latent physical conditions at the
site that differ materially from those indicated in the contract. There might
also be duly unknown physical conditions at the site of an unusual nature
that differ materially from those ordinarily encountered and generally
recognized as inherent in the work or character provided for in the contract.
• The addition/deletion of works should be within the general scope of the
project as bid and awarded, and the deletion of the work should not affect
the integrity and usefulness of the structure.
WHEN CAN THE PROCURING ENTITY
ISSUE A VARIATION ORDER?

• Variation Orders may be issued by the Procuring Entity concerned at


any time during contract implementation. However, the adjustment
provided for in these orders must be necessary to fully meet the
requirements of the project. The issuance of a Variation Order, must
conform to the following:

1. That there will not be any short changes in the original design;
2. That it will not affect the structural integrity and usefulness of the
structure
HOW MUCH VARIATION ORDER IS
ALLOWED?

• The net cumulative amount of the Variation Order should not exceed
positive ten percent (+10%) of the original project cost.
• If the adjustments provided for in a Variation Order costs more than ten
percent (10%) of the original project costs, these shall be the subjects of
another contract to be bid out if the works are separable from the
original contract. However, if these adjustments are urgently necessary
to complete the original scope of work, the Head of the Procuring Entity
may authorize the Variation Order beyond ten percent (10%) but not
more than twenty percent (20%), subject to the guidelines to be
determined by the GPPB (Government Procurement Policy Board).
CAUSES OF VARIATION ORDER

1. Changes of scope by client 11. Technology changes


2. Owner finanacial problem 12. Value Engineering
3. Inadequate project objective 13. Lack of coordination
4. Replacement of material by client 14. Design complexity
5. Impediment decision making process 15. Inadequate working drawing
6. Obstinate nature of client 16. Poor knowledge of available material
7. Changes of specification by client 17. Consultant lack of data
8. Changes in design by consultant 18. Ambiguous in design detail
9. Error and omission in design
10. Conflict among the contract document
EFFECTS OF VARITION ORDER

1. Delays in completion
2. Increase in project cost
3. Logistic delay
4. Effect on the quality of work
5. Demolition and re work

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