How do you assess and quantify the impact of variations and changes in construction projects?

2 Why do variations and changes lead to claims?

Claims are demands for additional payment or time extension by one party to another due to variations and changes. These claims can arise from a variety of sources, such as errors or omissions in the contract documents, differing site conditions, changes in design or specifications, delays or disruptions caused by a third party, force majeure events, defective workmanship, or disputes over interpretation. Unfortunately, these claims can lead to conflicts, disputes, and litigation which can damage the relationship between the parties, increase project risks, and incur additional costs and time.

3 How can you assess and quantify the impact of variations and changes?

To accurately assess and quantify the impact of variations and changes, you need to follow a systematic and transparent process. This process includes identifying and documenting the variations and changes as they occur, evaluating the entitlement and liability of each party, measuring and calculating the cost and time implications, negotiating fair compensation or adjustment, and implementing and monitoring the agreed outcomes. To support this assessment and quantification, you should use change order forms and registers, variation orders and instructions, cost breakdowns and estimates, time impact analysis and schedules, delay analysis and claims, as well as records of communications.

4 What are some construction claims case studies and lessons learned?

Case studies of construction claims demonstrate the difficulties and complexities of dealing with variations and changes. For example, a contractor claiming for additional costs and time due to changes in design was rejected by the client and lost in arbitration. In contrast, a client claiming for liquidated damages from the contractor was settled by mediation. Additionally, a contractor claiming for additional costs due to differing site conditions was awarded some compensation and an extension of time by an expert determination. These cases illustrate the importance of clarifying the scope of work, conducting thorough site investigations, and communicating effectively throughout the project. Furthermore, they demonstrate that disputes should be resolved promptly and amicably.

5 How can you manage variations and changes effectively and avoid claims?

To prevent or minimize disputes and claims, it’s important to manage variations and changes effectively. This can be done by planning and defining the project scope, objectives, requirements, and deliverables accurately. Additionally, you should select and contract with qualified and experienced parties who share a common vision for the project. Establishing a robust change management system that defines the roles, responsibilities, procedures, and criteria for initiating, approving, implementing, and documenting variations and changes is also key. Furthermore, communication and collaboration with all parties involved in the project should be regular and open. Additionally, you should monitor and control the project progress, performance, quality, and costs as well as anticipate and mitigate any potential risks or issues that could cause variations or changes. Finally, feedback should be sought and provided for improvement. If variations or changes are unavoidable or necessary, they should be managed in a fair and reasonable manner that respects the rights of all parties while preserving trust and cooperation among them. All variations and changes should be documented and recorded with their impacts noted. Additionally, any disputes or claims should be resolved amicably and promptly.