Ensuring Project Success Through Variation Order

In project management field, especially in engineering projects, a variation order is a crucial document that addresses changes to the scope of work after a contract has been signed. These changes can arise from various factors, such as unforeseen site conditions, client requests, design modifications, or regulatory requirements. Properly preparing a case for a variation order is essential to ensure that the project continues smoothly, within budget and targeted benefits are ensured for the organisation.

Project managers should view variation orders as an integral part of project management rather than something to avoid. They are essential for managing changes effectively, ensuring financial and legal protection, and maintaining clear communication and collaboration among all parties involved. Far from being a sign of failure, raising a variation order is a proactive step that can significantly contribute to the overall success of a project.

Here's a step-by-step guide to effectively preparing a case for a variation order.

1. Understand the Contractual Framework

Before preparing a variation order, it is imperative to have a thorough understanding of the contract in place. Contracts often include specific clauses detailing how variations should be handled, including procedures, timeframes, and approval processes. Familiarize yourself with these clauses to ensure that your variation order complies with contractual obligations.

? Key points to consider:

- Identify the clauses related to variations, including how and when they can be initiated.

- Understand the contract's provisions for additional costs, time extensions, and documentation requirements.

- Review any related guidelines or standards specified in the contract.

2. Document the Need for Variation

The first step in preparing a variation order is to clearly document the need for the variation. This involves identifying what has changed from the original scope of work and why the change is necessary.

? Steps to follow:

- Identify the Change: Describe the specific change in the scope of work, such as additional tasks, materials, or services required.

- Justify the Change: Provide a rationale for the variation, explaining why it is necessary. This could include unforeseen conditions, client requests, or compliance with new regulations.

- Assess Impact: Evaluate the impact of the variation on the project, including potential delays, cost implications, and any risks associated with the change.

3. Gather Supporting Evidence

Supporting evidence is crucial in making a strong case for a variation order. This evidence helps substantiate the need for the variation and the associated costs and time extensions.

? Types of evidence to collect:

- Site Reports: Documentation of site conditions that necessitate the variation, such as unexpected geological findings or weather conditions.

- Correspondence: Emails, meeting minutes, or letters from clients or stakeholders requesting changes.

- Design Drawings: Updated design drawings or specifications that reflect the proposed changes.

- Regulatory Requirements: Any new laws, regulations, or standards that require modifications to the original scope.

4. Estimate the Cost and Time Impact

A variation order typically includes an estimate of the additional costs and any time extensions required due to the change. Accurate estimation is vital to avoid disputes and ensure project continuity.

? Cost estimation should include:

- Direct Costs: Additional labor, materials, equipment, and subcontractor fees.

- Indirect Costs: Overhead, administrative expenses, and potential penalties for delays.

- Contingency: A buffer for unforeseen expenses related to the variation.

? Time estimation should cover:

- Schedule Impact: Detailed analysis of how the variation will affect the project timeline, including any delays or acceleration required.

- Critical Path Analysis: Evaluation of how the variation impacts the critical path of the project, potentially leading to time extensions.

5. Prepare the Variation Order Document

The variation order document is the formal request for approval of the change. It should be clear, concise, and well-structured to facilitate approval by the relevant authorities.

? Key components of the variation order document:

- Introduction: Briefly explain the reason for the variation and its importance to the project.

- Description of Change: Detailed description of the work to be added, modified, or omitted.

- Cost Breakdown: Itemized breakdown of the costs associated with the variation, including direct and indirect costs.

- Time Impact: Analysis of the time required to implement the variation and any extensions to the project schedule.

- Supporting Evidence: Attach all relevant documents that justify the variation, including site reports, design changes, and correspondence.

- Approval Section: Space for signatures from all relevant parties, including the project manager, client, and contractor.

6. Submit and Follow Up

Once the variation order is prepared, submit it to the relevant authorities as per the contract's procedures. Ensure that it is submitted within the required timeframe and to the appropriate stakeholders.

? Follow-up steps:

- Track the Approval Process: Keep a record of the variation order submission and follow up regularly to ensure timely approval.

- Address Queries: Be prepared to answer any questions or provide additional information that may be requested during the review process.

- Monitor Implementation: Once approved, monitor the implementation of the variation to ensure it aligns with the agreed-upon terms and does not negatively impact the project's progress.

7. Review and Learn

After the variation order has been implemented, it is essential to review the process and outcomes. This helps in identifying any lessons learned that can improve future variation order preparations.

? Consider:

- Review Performance: Evaluate how well the variation was managed, including cost control, time management, and communication with stakeholders.

- Document Lessons Learned: Record any insights gained from the process to refine future variation order preparations and project management practices.

8. Conclusion

Preparing a case for a variation order requires careful planning, detailed documentation, and effective communication. By following these steps, project managers can ensure that variations are managed smoothly, minimizing disruptions and maintaining project alignment with contractual obligations. This not only protects the interests of all parties involved but also contributes to the overall success of the project.