A Proposed Model for Variation Order Management in Construction Projects

Abstract

This study aims to identify the causes of excessive change orders and their impact on public construction projects in Saudi Arabia. This should support the organizations working in the construction industry to improve variation order management (VOM) as a preventive action by dealing proactively with variation order causes. Therefore, a new methodology was proposed to minimize change orders and their impact on the successful completion of projects as well as cost during the project lifecycle. The methodology involved ten selected turnkey building projects at King Faisal University (KFU) campus, Saudi Arabia. Statistical analyses were conducted to predict the cost overrun in project size and contract value. The findings showed the most significant causes leading to variation order in public construction projects. These include the combined effect of the designer and owner technical committee, designer document, and owner stakeholder committee. Hence, a new model for VOM was developed as a best practice approach, including three stages. The first stage is the initiation process, which includes seven procedures, seven tools, and key responsibilities. The second stage deals with the course of change orders based on a certain number of procedures and weight for each parameter assigned to this phase. It supports decision processes based on a certain average ratio of weights calculation. The third stage is the decision to support decision makers in proceeding or not proceeding with the variation order. Although the present study was conducted in Saudi Arabia’s public building construction project, it is envisaged that these research results are widely applicable to other developing countries. The paper presents a direction for further research to enhance the impact of cost overrun in public sector construction projects in developing countries, i.e., Saudi Arabia.