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A REVIEW ON CHANGE ORDER AND ASSESSINGCAUSES AFFECTING CHANGE ORDER IN CONSTRUCTION

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The construction process is a complex one and is associated with various changes. These changes usually lead to issuance of change orders. Change orders are usually issued to cover variations in scope of work, material quantities, design errors, and unit rate changes. Change Orders in construction often have a serious impact on the quality, time, and cost of projects. Hence, Change Orders require proper analysis and action to measure the causes and effects of change orders. It is difficult and risky to manage them, but it is required to manage change order in construction projects. However, past research has been done on Change order are mostly qualitative and there is a lack of quantitative research. Due to this lack of quantitative research, there is no good-developed framework for causes and effects of Change order in the construction industry. This paper deals with identification of causes and effects of change order and developing a framework for assessing the causes of Change Order. In the end, a framework has been developed which can be used for the future research in this area.
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A REVIEW ON CHANGE ORDER AND ASSESSINGCAUSES AFFECTING
CHANGE ORDER IN CONSTRUCTION
JAYDEEP N. DESAI*
JAYESHKUMAR PITRODA**
PROF. JAYDEV J. BHAVSAR***
*Student of Final Year, M.E.(Construction Engineering& Management), B.V.M. Engineering College, Vallabh Vidyanagar,
Gujarat, India
**Assistant Professor & Research Scholar, Civil Engineering Dept., B.V.M. Engineering College, Vallabh Vidyanagar,
Gujarat, India
***Associate Professor, P.G. Coordinator of Construction Engineering Management, B.V.M Engineering College, Vallabh
Vidyanagar -Gujarat-India
ABSTRACT
The construction process is a complex one and is associated with various changes.
These changes usually lead to issuance of change orders. Change orders are usually issued to
cover variations in scope of work, material quantities, design errors, and unit rate changes.
Change Orders in construction often have a serious impact on the quality, time, and cost of
projects. Hence, Change Orders require proper analysis and action to measure the causes and
effects of change orders. It is difficult and risky to manage them, but it is required to manage
change order in construction projects. However, past research has been done on Change order
are mostly qualitative and there is a lack of quantitative research. Due to this lack of
quantitative research, there is no good-developed framework for causes and effects of Change
order in the construction industry. This paper deals with identification of causes and effects
of change order and developing a framework for assessing the causes of Change Order. In the
end, a framework has been developed which can be used for the future research in this area.
KEY WORDS: Change, Change order in Construction, Causes, Effects, Framework.
INTRODUCTION
Change order on a construction project is a work that added to or deleted from the original
scope of work of a contract which alters the original contract amount or completion date,
unavoidably a change order represents a problem on the project in terms of additional cost, or
additional time or both. Change orders play a significant role in construction because they
have a great impact on cost, schedule, quality, safety, and productivity. So, they are one of
the major causes of project failure.
Approximately every construction project throughout its lifecycle confronts with numerous
changes which frequently bring about cost and schedule overruns quality defects along with
various unfavourable impacts. Actually changes happen due to the uniqueness of each
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construction project as well as restricted resources available for planning such as time, money
and manpower. The formal way of implementing of changes in the project is by the Change
Order which authorizes the contractor to execute defined changes in the project. These
changes are often the origin of project disputes and future claims.
Change order is the most critical part in any construction project, as they are occurring by any
parties which involved in it. Therefore, causes which influence change order and its effects
on construction project are very much critical for any construction firms. Impact of change
order on construction projects and effective management of change order is required to be
done. They may change from project to project, place to place, time to time and also with
respect to the type of work.
PREVIOUS RESEARCH REVIEW BASED ON CHANGE ORDER AND ASSESSING
CAUSES AFFECTING CHANGE ORDER IN CONSTRUCTION
Diekmann et al. (1985) examined the cost of change orders on 22 federal construction projects
and found that change orders on these projects averaged 5.5% of the contract value. [5]
Fleming et al. (1990) found in his study that changes in construction project can cost between
10-15% of a contract’s value. Fleming also developed Framework, which aims to provide the
management of project change with a tool that will enable construction professionals to
consider and analyze the changes that occur on projects from cause to consequence. To
determine whether a change is feasible and to provide a result that is favorable to all parties. [6]
Thomas et al. (1995) causes for change orders vary greatly, thus making the task of change
management difficult for most clients. He reviewed 522 days’ work on three different
projects. This analysis showed that on many days (fewer than half) it was possible to
incorporate change orders into the project without hurting labour productivity. However, the
average impact of all changes was a 30% loss of productivity, indicating that when the impact
is negative, it is substantial. The analysis concluded that the timing of change was a key
variable affecting productivity. [29]
Ibbs et al. (1997) in his study found that the amount of change is negatively correlated with
productivity and total installed project cost, whether within the design phase or construction
phase, or between them. He also found that the greater the amount of change, the more
productivity and costs are degraded. He also analyzed that if some small fraction of the $60
billion spent annually on change were invested in research and development, the construction
industry would be a much more cost-effective business. [12]
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Aldubaisi et al. (2000) described that changing the plans by the owners is the main source of
change orders, change in mind, substituting materials and/or procedures is the second source
of change orders and errors and omissions in design are another source. Increase in project
cost and duration were founded as the main two effects of change orders. [3]
Johnson et al. (2000) said that significant change conditions resulting in change orders to a
construction contract are generally due to one of four situations: underground conditions
different from those identified in the contract document, differing existing conditions often
associated with remodeling work on an existing building, owner request and changes, and
regulatory review. [18]
Hanna et al. (2004) showed that the most common reasons for change orders are additions,
design changes, and design errors, all of which can theoretically be eliminated in the design
stage. Recommend that the time between the initiation of the change order and its approval
should be kept as short as possible because they found that the project is more likely to see a
smaller productivity loss if the processing time of change orders is shortened. [8]
Hsieh et al. (2004) reviewed recorded change orders in 90 effective metropolitan public work
projects completed before the year 2000 in Taipei, Taiwan. The study categorized causes for
change orders in a detailed hierarchy that divides the causes into two main dimensions, i.e.,
technical and administrative, which in turn are also divided into nine categories. Thirty-five
causes among nine categories are ranked according to their contribution level to seven indices
representing the impact or effect of change orders.[11]
Ssegwa et al. (2004) described that the major cost due to change is the cost of rework or
revision of work which in construction projects can be as high as 10-15% of contract value.
Rework is an example of a direct effect of the project change. In addition to direct effects,
project changes can also bring some indirect effects, which will ultimately have an impact on
project cost and schedule. [27]
Love et al. (2004) presented a number of recommendations to reduce rework such as:
understanding and identifying client and end-user requirements and implementing techniques
for mitigating change; auditing contract documentation and providing a risk assessment for
the potential of change and errors; implementation of training programs to enhance skills and
knowledge.[19]
Osama et al. (2005) carried a study conducted to investigate the impact of change orders on
construction productivity and introduces a new neural network model for quantifying this
impact. A prototype software system is developed to estimate the percentage loss of labour
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productivity due to change orders. The developed software provides a user-friendly interface
to facilitate data entry and to assist users in generating a response to a number of what-if
scenarios. The results of the analyses indicated that the present neural network model
provides, in comparison to the other models, more accurate estimates of the impact of change
orders on productivity. [22]
Ibbs et al. (2007) used the methods available for quantifying lost productivity to visualize
relationships among uncertainty, effort and expertise to use, and the level of
contemporaneous project documentation required of these methods. He also stated that the
keys to successfully achieve cumulative impact claims are Credibility of analysts, explicit
connections between damages and causes, and an acceptable level of accuracy for measuring
lost labor productivity. [14]
Gerald et al. (2007) described a quantified investigation of the effects of changes on labor
productivity. The study was based on a detailed review of 90 claims, each from a separate
contract. The cases were divided into two groups: civil/architectural and
mechanical/electrical. The percentage loss of productivity was shown as a function of the
percentage of the total work hours spent on changes. A four or fivefold increase in the
percentage of work hours spent on changes lead to 10-20% loss of productivity. [7]
Oladapo et al. (2007) explored the significance of variation as a cause of cost and time
overruns explored. The study displayed that changes in specification and scope initiated
mostly by project owners and their consultants are the most sources of variation. [21]
Perkins et al. (2007) examined the causes for construction phase changes in 23 private
design/build and 20 government design/build construction projects in the United States. He
found that changes might arise from: owner-requested additions/deletions to the work; the
action of third parties beyond the control of the owner or contractor; delays in owner-supplied
access or equipment; differing site conditions; and discrepancies in the original design
specifications. He reported that the number of changes due to design error in design/ build
construction is statistically significantly lower than that of the design-bid-build construction. [23]
Hao et al. (2008) stated that effectively managing change orders in construction processes is
not trivial because change orders are a part of the contract and they need to be strictly traced
in terms of contracts. He developed a generic change process model is proposed having five
stages in a sequence: identify, evaluate & propose, approve, implement and review. [9]
Homaid et al. (2009) investigated 21 causes and 11 potential impacts of change orders. Also,
nine practices reported to management and control of change orders. The study identified
eleven important causes and seven important impacts. It is further concluded that the
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consultant is the most responsible party for the change orders. The overall average increase in
total cost of construction projects due to change orders was found to be 11.3%. The research
concluded that change of project scope due to owner requirements is the most important
cause and cost overruns are the most important impacts of change orders in those projects. [10]
Jawad et al. (2009) presented causes, effect, and controls of variation orders in large building
construction. The study concluded that the owner is the major source of variation and that
most variation is civil and structural. [17]
Alnuaimi et al. (2010) investigated the causes, effects, benefits and remedies of change orders
on public construction projects in Oman, they divided the causes of change order into client
related, consultant related, contractor related and others. They concluded that client’s
additional works and modification to the design were the most important factors causing
change orders, followed by non-availability of construction manuals and procedures. The
most important effects of change orders on the project were found to be the schedule delays,
disputes, and cost overruns. The contractor was found to be the party most benefiting from
the change orders followed by the consultant and then the client. [4]
Ross et al. (2010) presented causes of variation and change orders in group as owner-related
variations; consultant related variations; contractor-related variations; and other variations.
He found various causes of variations through case study: errors and omissions, ambiguous
design details, poor design, poor working drawing details, change in specifications by owner,
poor coordination. Additionally, causes of variations through questionnaire survey findings
are: conflicts between contract documents, lack of involvement in design. Andrew David
Ross also recommended that Variations can be avoided or minimized through successful
contract preparation and execution phases, successful project management, and sustainability
in the parties’ relationships and emergence of variations and change orders can also be
minimized through the contractor’s involvement at the design stage.[25]
Sunday et al. (2010) identified 53 causes of variation orders for the formulation of the
questionnaire. 58 questionnaires were distributed to the in-house construction professionals,
consultants and contractors involve in handling government projects. 30 in house staff
responded to the questionnaire and 18 responded by both the consultants and contractors who
were involved in government construction projects. Through the analysis of the data it was
discovered that the projects handled by the consultants are more prone to variation orders
than projects handled by the in-house professionals. Aside the study also discovered that the
percentage difference in the initial contract sums and final sums was significant both for the
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projects managed by the in-house project staff and the consultants but higher in the
consultants managed projects. The study concluded that the projects handled by the
consultants suffered both cost and time overruns than the projects handled by the in-house
staff. [28]
Wambeke et al. (2011) examined the similarities and differences between craft workers,
foremen, and project managers in terms of starting time and task duration variation. He
summarized the causes of variation, which account for a total of over 19 hours of variation
per week. [30]
Ibbs et al. (2012) in his research examined 226 projects in an attempt to better quantify
patterns. He developed a set of curves and reference points that contrast the amount and
likelihood of change with the amount and nature of its impact. He also find out major finding
of this study is that the ratio of final project costs with estimated project costs is substantially
higher than conventionally thought. Approximately 40% of all projects in this study
experienced more than 10% change. He also stated that even when a project has little or no
change, costs, schedules, and labour productivity can vary considerably from the plan. Thus,
minimizing change is important for realizing good cost, schedule, and productivity
performance. [13]
Ijaola et al. (2012) indicated in his study that the “clients’ additional works and modification
to design” were the most important causes of change order in both Nigeria and Oman, the
most important effects of change order are “variations result in claims and disputes” in
Nigeria while “delay in the completion date of the project and cost overruns” were the most
important effects in Oman. He also identified the contractor as the most benefiting parties in
change order. He determined certain points that are: Implementation of National Building
Code, Review of contractor’s/ consultant’s registration should be carried out periodically to
ascertain their professional competency, the Client should carry out proper feasibility study
and survey before the design stage. [15]
Jawead et al. (2012) identified that there is not only a need to apply an appropriate variation
order management system to Saudi public sector construction project at the design stage, but
it also present participant’s suggestions are invited. [16]
Moghaddam et al. (2012) formulated 8 open-ended and 16 close-ended questions. He showed
that there is not a change management procedure available in the Iranian construction
industry; therefore, the existence of such procedure is vital in order to achieve the contractual
obligations of time, cost and quality. [20]
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Rashid et al. (2012) said that change Orders strain the relationships of the owners, engineer,
contractors, subcontractors, and others involved in the construction process as well as add
cost and schedule delay. Changes in one project can also affect other unrelated projects by
tying up resources that are committed elsewhere. Negative relationships between the parties
are another by-product of changes on a project. Not only is workflow disrupted, but also
trying to get quick responses quotes, shop drawings, and many other things required to get
back schedule causes a strain on working relationships.[24]
Soares et al. (2012) in his study concluded that the best way to manage change orders is to
reach a negotiated solution between the different parties. The initiation of change orders in a
construction project correlated with the level of integration of the services of design and
construction. [26]
Albalushi et al. (2013) investigated the cost overrun in public construction projects in Oman.
He also identified the average change in budgets during the design period was 257.6 %; while
in construction period was 11.4 %. This indicates that cost overrun initiates at design stage.
Accordingly, the review of design systems is very essential to avoid the problem. [2]
Alaryan et al. (2014) investigated the change orders in construction projects in Kuwait by
conducting a questionnaire surveying of the owners, contractors and consultants to identify
the major causes of change orders, their effects on projects and controls measures. The most
five common causes of change orders can be identified as: change of plans by owner, change
of project scope by owner, problems on site, errors and omission in design, poor working
drawing details. The five most common effects of change order are increasing the project’s
cost, increasing the duration of individual activities, delaying in completion schedule,
additional money for the contractor, and delaying in payment. Finally, the most six common
control measures are: checking and reviewing the contract documents, reviewing design
before change approval, the change order must be negotiated by knowledgeable persons, the
scope of change orders must be clearly made, appropriate approval in writing must be
Handed, and best tools to control the occurrence of change, including the areas of concern in
monthly reports and meetings. [1]
Based on the literatures studied, the following figure 1 has been shown, describing the
studied papers published till the year stated and indicating the key findings till this year.
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Figure 1: Historical Development of Causes of Change Order
CONCLUSION
This review research investigated the causes and impacts of change orders in construction
projects are as follows:
1. Change orders on construction projects averaged 10-15% of the contract value. [5,6]
2. The greater the amount of change, the more productivity and costs are degraded. [12]
3. Change in plans by the owners is the main source of change orders, change in mind,
substituting materials and/or procedures is the second source of change orders and
errors and omissions in design is another source. Increase in project cost and duration
were founded as the main two effects of change orders.[3]
4. The most common reasons for change orders are additions, design changes, and
design errors, all of which can be removed from the design stage. The time between
the initiation of the change order and its approval should be kept as less as possible.[8]
5. Percentage of work hours spent on changes lead to 10-20% loss of productivity. [7]
6. Changes in specification and scope initiated mostly by project owners and their
consultants are the most sources of variation.[21]
7. The consultant is the most responsible party for the change orders. The research
concluded that change of project scope due to owner requirements is the most
important cause and cost overruns are the most important impacts of change orders in
those projects. [10]
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8. Client’s additional works and modification to the design were the most important
factors causing change orders. The most important effects of change orders on the
project were found to be the schedule delays, disputes, and cost overruns. [4]
9. Minimizing change is important for realizing good cost, schedule, and productivity
performance. [13]
10. Change Orders strain the relationships of the owners, engineer, contractors,
subcontractors, and others involved in the construction process as well as add cost and
schedule delay. [24]
11. The average change in budgets during the design period was very more; while in
construction period was very less. [2]
After identifying these causes and impacts of change orders, an integrated framework for
assessing the causes and impacts of change orders in construction projects was developed,
which contained main 4 groups containing different 22 causes and impacts of change orders.
This framework, shown in figure 2 (See Annexure), shall be used for future research work.
ACKNOWLEDGMENT
The Authors thankfully acknowledge to Dr. C. L. Patel, Chairman, Charutar Vidya Mandal,
Er. V.M.Patel, Hon.Jt. Secretary, Charutar Vidya Mandal, Mr. Yatinbhai Desai, Jay Maharaj
construction, Dr. F.S.Umrigar, Principal, B.V.M. Engineering College, Dr. L.B.Zala,
Headand Professor, Civil Engineering Department, Prof. J. J. Bhavsar, Associate Professor,
Civil Engineering Department, B.V.M. Engineering College, Vallabh Vidyanagar, Gujarat,
India for their motivations and infrastructural support to carry out this research.
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ANNEXURE
Figure 2: Framework for Assessing Causes of Change Order
... Achieve the ICP by dividing earnings by actual costs. Any ICP of more than 1 indicates that there have been cost overruns [46]. ...
... Project scheduling efficiency is measured using the index for schedule performance (ISP). This signifies that the project is behind schedule if ISP goes below 1 [46]. ...
... Leadership is critical throughout the project's life cycle. Although good leadership is vital throughout the project's lifecycle, it is essential during the early phases when the emphasis is on conveying the vision and motivating and inspiring project members to achieve high performance [46]. The leadership index is a subjective value assigned by the PM on a scale of 1-10 to the contractor manager's ability and flexibility in guiding the project team and balancing project constraints. ...
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Measurement of construction performance is essential to a clear image of the present situation. This monitoring by the management team is necessary to identify locations where performance is exceptionally excellent or poor and to identify the primary reasons so that the lessons gained may be exported to the firm and its progress strengthened. This research attempts to construct an integrated mathematical model utilizing one of the recent methodologies for dealing with the fuzzy representation of experts’ knowledge and judgment considering hesitancy called spherical fuzzy analytic hierarchy process (SFAHP) method to assess the contractor’s performance per the project performance parameters (cost, schedule, quality, leadership, and change management). At the same time, most project control systems are currently applied through software like Primavera P6 or MS Project. These look at a project’s cost and schedule status by following the earned value analysis for finding the performance. Based on decision makers’ preferences, the analytic hierarchy process (AHP) may be used to arrive at the optimum conclusion. AHP approaches are discussed, including AHP, grey-AHP, fuzzy-AHP, and SFAHP weights comparison. Calculation results showed that the spherical fuzzy approach differs significantly from the other approaches where it considers the decision maker’s hesitation when making linguistic multicriteria decisions and then, as a result, recommends applying periodically for performance measurement. This model can be viewed as a valuable way to help the decision-making stakeholders in the construction sector do the best job about critical issues at a suitable time.
... Desain penelitian akan dibuat dalam bagan alir yang dapat dilihat pada Gambar 1. Perubahan rencana dan ruang lingkup [3], [4], [6], [7], [8], [9], [10], [11], [12], [13], [14], [15], [16], [17], [18], [19], [20] Kesalahan dan kelalaian desain [3], [4], [6], [7], [8], [9], [10], [11], [12], [13], [14], [15], [16], [17], [18], [19], [20] Pembiayaan proyek [6], [11], [12], [16], [17], [19], [20] Masalah owner [6], [9], [12], [14], [17] ], [20] Masalah perjanjian/kontrak [7], [13], [14], [17], [20] Faktor alam [3], [4], [6], [8], [9], [13], [14], [17], [19] Koordinasi yang tidak baik antar pihak yang berkepentingan [7], [11], [14], [17] Masalah pembebasan lahan [21] Frekuensi CO [20] Kinerja proyek [7], [16], [20] ...
... Desain penelitian akan dibuat dalam bagan alir yang dapat dilihat pada Gambar 1. Perubahan rencana dan ruang lingkup [3], [4], [6], [7], [8], [9], [10], [11], [12], [13], [14], [15], [16], [17], [18], [19], [20] Kesalahan dan kelalaian desain [3], [4], [6], [7], [8], [9], [10], [11], [12], [13], [14], [15], [16], [17], [18], [19], [20] Pembiayaan proyek [6], [11], [12], [16], [17], [19], [20] Masalah owner [6], [9], [12], [14], [17] ], [20] Masalah perjanjian/kontrak [7], [13], [14], [17], [20] Faktor alam [3], [4], [6], [8], [9], [13], [14], [17], [19] Koordinasi yang tidak baik antar pihak yang berkepentingan [7], [11], [14], [17] Masalah pembebasan lahan [21] Frekuensi CO [20] Kinerja proyek [7], [16], [20] ...
... Many researchers believe that an effective approach to reducing and/or mitigating reworks is to identify the root causes of the design errors and investigate their impacts on projects in a timely manner (Sunday 2010;Desai and Pitroda 2015). Multiple authors such as Keane et al. (2010) identified rework indicators and categorized them into three classes based on the entity from which they are derived: owner, consultant, or contractor. ...
... Sun and Meng (2009) reviewed the existing literature for causes and effects of project changes. Desai and Pitroda (2015) conducted a thorough literature review to identify and investigate the causes and effects of change orders in the construction industry, and several researchers conducted systematic reviews to prioritize the recorded factors, based on the frequency with which they were mentioned in the literature. Bakhshi et al. (2016) studied the historical development of project complexity, identified the contributing factors cited in the literature, and ranked them based on the frequency with which they were mentioned. ...
Article
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Reworks are unavoidable during the design and construction phases of construction projects and significantly increase the time and cost required to complete projects. Several studies have been conducted to determine how to mitigate the major consequences of reworks by identifying the critical root causes of the design changes and/or modifications. Multiple researchers and practitioners have concluded that reworks are due to human-, organizational-, and /or project-based changes; however, the existing literature lacks in-depth information pertaining to these rework indicators. The authors of the present study aimed to investigate, identify, and prioritize the organizational-based rework indicators (ORIs), project-based rework indicators (PRIs), and human-based rework indicators (HRIs). A thorough list of strategies to prevent or mitigate the major consequences of PRIs, ORIs, and HRIs was also developed. A comprehensive literature review was conducted, and 212 relevant articles were carefully selected to be reviewed in detail. The rework indicators in each category were ranked based on how often they were mentioned in the literature and then were weighted using the rank sum method. The PRIs, ORIs, and HRIs were classified and weighted by their attributes, then were compared with one another. The results revealed that poor design, lack of communication, and inexperienced workers were the first-ranked rework indicators in the project, organization, and human categories, respectively. It was also concluded that the attributes of leadership and management, error and inefficiency, and skill and experience received the highest weights among the attributes belonging to the organization, project, and human categories, respectively. The findings of this study will help decision makers timely identify the main causes of construction reworks and enable them to allocate resources for preventing and/or mitigating their cost and frequency of occurrence.
... Rework is unavoidable in almost all types of construction projects. It impacts the cost of a project, creates time delays, decreases productivity, and plays a key role in a project's success or failure [44][45][46][47][48][49]. Reworks have the potential to generate major issues for clients, consultants, and contractors, and may also cause miscommunication among the project parties [44,47,[50][51][52]. ...
... It impacts the cost of a project, creates time delays, decreases productivity, and plays a key role in a project's success or failure [44][45][46][47][48][49]. Reworks have the potential to generate major issues for clients, consultants, and contractors, and may also cause miscommunication among the project parties [44,47,[50][51][52]. The literature contains different definitions of rework in the field of construction management [53]. ...
Article
The aims of this study are to identify the factors that contribute to occurrence of reworks in the reconstruction of transportation infrastructure following hurricanes, develop a model for predicting the costs associated with these reworks. In addition, this study determined the robustness and fragility of each rework predictor. Therefore, the stepwise multiple regression and extreme bound analysis (EBA) methods were adopted. The results demonstrated that the influential predictors are distance from highly-populated areas, shortage of laborers, logistics management, frequency of inspections, information management, coordination, environmental/safety issues, work suspensions, regulatory requirements, and temporary pathways. The outcomes provide accurate information that will be helpful in preventing/mitigating the cost of reworks in reconstruction of transport infrastructure.
... Reworks are inevitable in all types of construction projects (Safapour et al. 2019c; Safapour and Kermanshachi 2019; Safapour and Kermanshachi 2021b). Reworks impact the cost of a project, create scheduling delays (Kermanshachi and Rouhanizadeh 2019), decrease productivity(Kermanshachi et al. 2018b;Kermanshachi et al. 2021), and play an important role in a project's success or failure(Wu et al. 2005; Sunday 2010; Li and Taylor 2014;Desai 2015;Kermanshachi 2016;Dao et al. 2016a;Dao et al. 2016b;Dao et al. 2017;Dao et al. 2020). Reworks have the potential to create serious challenges for owners, designers, and contractor stakeholders, and may also cause conflicts among the project stakeholders(Wu et al. 2005;Desai 2015;. ...
... Reworks impact the cost of a project, create scheduling delays (Kermanshachi and Rouhanizadeh 2019), decrease productivity(Kermanshachi et al. 2018b;Kermanshachi et al. 2021), and play an important role in a project's success or failure(Wu et al. 2005; Sunday 2010; Li and Taylor 2014;Desai 2015;Kermanshachi 2016;Dao et al. 2016a;Dao et al. 2016b;Dao et al. 2017;Dao et al. 2020). Reworks have the potential to create serious challenges for owners, designers, and contractor stakeholders, and may also cause conflicts among the project stakeholders(Wu et al. 2005;Desai 2015;. The literature contains several definitions and interpretations of rework in the area of construction management(Love 2002). ...
Technical Report
In the aftermath of disasters, when reliable transportation systems are vital, the chaotic and complex environment creates multiple uncertainties and risks in the reconstruction of transportation infrastructures. Damaged transport infrastructures decrease the timeliness of emergency responses and recovery procedures and make it difficult for authorities, who are under excessive pressure and are struggling to find the financial resources to reconstruct them on time and within budget. The aim of this research was to predict the cost performance, schedule performance and cost of reworks in post-disaster reconstruction of transport infrastructures. Significant factors that contribute to cost overruns, schedule delays, and the cost of reworks in post-disaster reconstruction of transportation infrastructures (PRT) were statistically determined in this research. The results demonstrated that 26, 23, and 25 PRTs were statistically significant for cost escalations, schedule delays, and reworks of the mentioned projects, respectively. Three models were developed to predict the cost performance, schedule performance, and cost of reworks, and a stepwise multiple regression method was adopted. The results revealed that seven, nine, and ten PRTs were significant predictors of cost performance, schedule performance, and cost of reworks, respectively. The extreme bound analysis (EBA) method was adopted to determine how robustly each predictor was connected to the corresponding developed model. This project provides accurate knowledge and information that will be helpful in effectively allocating limited resources after disasters and mitigating schedule delays, cost overruns, and reworks in the reconstruction of transportation infrastructures.
... The reconstruction needs to be completed in a timely manner, but the chaos causes Determing reconstruction performance indicators serious time delays, and local governments experience major pressure from the public when contractors are not able to deliver their services on time. A lack of sufficient resources and pressure to complete a reconstruction project are also likely to decrease the quality of the construction and increase the need for further repairs (Safapour and Kermanshachi, 2021), as well as increase the frequency and cost of reworks that seriously affect the cost and time of the project (Desai and Pitroda, 2015). (In 2001, the Construction Industry Institute (CII) defined "rework" as activities that have to be done more than once, or activities that remove previous work installed as part of a project.) ...
Article
Purpose In the aftermath of hurricanes, the damage levied on transportation infrastructures increases the timeliness of emergency responses and recovery procedures, making it essential that they are reconstructed as quickly as possible – on time and within budget. The aim of this study was to determine significant performance indicators (PIs) that considerably affect cost and schedule performance as well as reworks in post–hurricane reconstruction of transportation infrastructure including highways, bridges, roadways, etc. Additionally, the determined PIs were clustered to investigate key components. Design/methodology/approach The root causes of reconstruction projects' poor performance were identified through the existing literature, and 30 transportation infrastructure case studies were analyzed to determine the significant PIs that corresponded to cost, schedule performance and reworks. The factor analysis method was used to cluster the significant PIs and determine the key components affecting them. Findings Eight key components were found for cost, eight for schedule performance and six for reworks. The key components of cost performance are shortage of resources, information management, coordination, safety, location, quality of materials, quality of resources and project complexity. The key components of reconstruction schedule performance are human resources, risk management, work suspension, material resources, productivity, on-site inspections, geometrical characteristics and level of reconstruction complexity. The six key components of reconstruction reworks are logistic management, pace of decision-making, accommodation for staff, environmental issues, available temporary paths and volume of debris. Originality/value The outcomes of this research will assist authorities and decision makers in identifying and evaluating the critical root causes of poor cost performance, poor schedule performance and reworks and will enable them to facilitate the timely and effective allocation of resources.
... Halwatura & Ranasinghe (2013) stated that a variation order is the formal document used by the client or the client's representative to modify the original contractual agreement provided to the contractor and becomes part of the project's documents. Desai et al. (2015) defined change order as a document describing the scope of the change and its impact on both cost and / or time. (Memon et al., 2014) also defined the variation order as an addendum to the terms of the contract and is signed by all contracting parties. ...
Research
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A variation (sometimes referred to as a variation order or change order) is a change to the scope of operation in a building contract in the form of an extension, substitution or omission from the original scope of works. The construction industry in the world and particularly in Nigeria, where construction projects suffer from variation orders, has been supported for a long time by changing orders. Such targets are usually not achieved in building projects, which hinder customer satisfaction according to Fatoye (2012). The aim of this research is to ascertain variation orders and it causes in building construction industry from Nigerian perspective, to achieve the aim of this research many objectives exists, these objectives can be summarized as (1) to investigate the factors causing variation order from the literature, (2) to extract real causes of variation order in building industry in Nigeria through literature content analysis of Nigerian origin. This study is based on a content analysis carried out on 8 major studies of Nigerian background in the subject matter. The justification for the 8 is because they represent core expectation of this study which borders on Nigerian perspective. The contents were analyzed using a benchmark of 4 to arrive at decision. This decision rule is based on the obvious that the mean of 8 is 4 which is 8/2 =4. Since we have 8 works, any factor or item that is captured by four (4) of the 8 major studies will adjudged significant, any factor below four is not significant. The study observed that out of the 12 identified owner related causes or factors of variation order from the 8 major studies of Nigerian perspective, five (5) are the core owner related causes of variation order in Nigerian building industry. They are namely in their order of significance: change of plans or scope by owner, change of schedule by owner, owner's financial problems, inadequate project objectives and replacement of materials or resources respectively.
... Pinto & Quadras (2016) examined the impact of capital structures on the financial performance of Indian banks. According to Desai & Pitroda (2015) that the capital structure has a positive influence on financial performance. Therefore, we can form the following hypothesis: H 6 : The capital structure effects on the bank's financial performance. ...
Article
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The banking sector plays an important role in the country's economic growth. International experience shows that a weak banking sector not only threatens the long-term stability of a country's economy. It can also cause a financial crisis which can lead to economic crisis. Therefore, it is important to identify and investigate the factors on which the financial performance of banks depends. The purpose of this study is to analyze the influence of risk management, third-party funds and capital structure on banking sector financial performance in Indonesia and Thailand with corporate governance as moderating variable. The authors use return on assets (ROA) as the key indicator of bank efficiency. The data used in this study are secondary data, including nonperforming loan (NPL), loan-to-deposit ratio (LDR), operating expenses to operating income (BOPO), net interest margin (NIM), third party funds (TPF), debt-to-equity ratio (DER), return on assets (ROA), corporate governance. The data was obtained from the official website of the Indonesia Stock Exchange (www.idx.co.id) and the Thai Stock Exchange (www.set.or.th). The sample used in this study is 20 conventional banks listed on the Indonesia and Thailand Stock Exchange from 2015-2019. The methodological basis of this study is the use of the Structural Equation Model (SEM) with Partial Least Square (PLS). Data processing was performed in the WarpPLS 7.0 software. The study results show that NPL and LDR have a negative and significant influence on the financial performance of banks. At the same time, the BOPO and DER do not affect the financial performance of banks. The NIM and TPF have a significant and positive influence on the bank's financial performance. In addition, corporate governance does not moderate risk management relationship to the bank's financial performance. The results of this study can benefit bank shareholders and customers, and bank management.
... This is because it only includes uncertainty associated with the extent and timing of the variation work itself, without considering renegotiation effects (Akinsola et al. 1994 Taiwan, can be used to infer that the standard deviation of the variation cost over the expected value may range from 7% to 17%. This is consistent with the findings of Aziz (2013), Desai et al. (2015), Finke (1998), Serag et al. (2010), Sun and Meng (2009), and Shrestha and Maharjan (2018). ...
Article
The literature on public-private partnership (PPP) agreements suggests that variation renegotiation places the public sector authority at a disadvantage, because the authority has to pay extra costs to claim its variation. This leads to the need for a PPP contract to incorporate flexibility, embedded with real options analysis (ROA), to deal with these variations. This paper proposes that PPP agreements should ideally contain an option for the authority to order variation as an effective response to changing circumstances in the postconstruction phase throughout the concession period of toll roads. Having the variation option, the authority sets a threshold on the concessionaire’s bargaining power via variation negotiation as the authority can order its variation at its favorably controlled price. The paper also presents the ROA, based on the probabilistic cash flow approach, that gives the financial value of flexibility for the authority to order variation. This approach is straightforward and provides a fair way forward for the implementation of PPP toll roads.
Article
Change orders are documents that describe a specific contract amendment to the original scope of work. Historical change orders are invaluable information sources that can provide practical and proven solutions for developing new change orders from similar cases. However, current change order management systems are not efficient in searching for and finding the most related and similar change orders due to inherent weaknesses in current archiving and search processes, such as keyword-based or reason code–based search. This study proposes and develops a natural language processing (NLP)–driven model that can significantly improve the accuracy and reliability of searching cases by restructuring how each change order’s information is stored and retrieved in change order management systems. The NLP-driven model proposed in this study can automatically detect change reasons and altered work items through text representation pattern analysis and training. The proposed model applies semantic frames to define essential semantic components and determines syntactic features for text representation pattern analysis. The model also utilizes a conditional random field (CRF) classifier, which can consider contexts in sequential texts at the model training stage. The proposed model can significantly improve the accuracy and relevancy of the search process to find the most similar cases by allowing context-driven classification, archiving, and retrieval of change orders.
Article
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The construction process is a complex one and is associated with various changes. These changes usually lead to issuance of change order. Identifying the causes of change order is vital in order to avoid potential changes in future project. The research aimed at comparing change order in construction project in Nigeria and Oman, vis-à-vis the causes, effect, benefits and remedies. This was meant to compare the scenario of change order in both countries and subsequently determine areas for improvement in Nigeria. Questionnaire survey was use to elicit information. The questionnaires were analysed using Relative Importance Index. The result indicated that the "client's additional works and modification to design" were the most important causes of change order in both Nigeria and Oman, the most important effects of change order are "variations result in claims and disputes" in Nigeria while "delay in completion date of project and cost overruns" were the most important effects in Oman.
Conference Paper
URL: http://www.arcom.ac.uk/-docs/proceedings/ar2012-1003-1012_Alsuliman_Bowles_Chen.pdf
Article
The complexity of construction projects means that it is unusual to deliver a project without any change during its project lifecycle. Liability to change is an attribute that generally characterises almost all projects. It is assumed that the use of a change management system in construction projects would assist the management of variation orders effectively. Variation order management is not fully understood nor well applied in the Saudi construction industry. In order to better understand the current practice of variation order management at the design stage of public sector construction projects in Saudi Arabia, this paper reports the results of an exploratory study that used a series of interviews with public sector clients and consultants in 2011. Findings indicate that there are currently no formalised approaches to the management of variation orders at the design stage. In addition, there is a general lack of knowledge about managing variation orders. The paper concludes that there is not only a need to apply an appropriate variation order management system to Saudi public sector construction projects at the design stage, but it also presents participants suggestions of the most appropriate ways of doing so.
Article
In this research, variation is defined as the time difference between what was planned and what actually happened in terms of task starting times and duration. Variation in construction tasks is important as it can impact productivity performance. Construction projects consist of a large number of interdependent tasks. When the starting time and/or duration of one task varies, it can affect other downstream tasks and result in disruptions to the schedule and/or decreased productivity. The construction process is complex and involves numerous people with different levels of responsibility, which makes identifying the root causes of the variation difficult. A nationwide survey was administered to workers, foremen, and project managers to identify the most prevalent causes and magnitude of both starting time and task duration variation. Fifty individual causes of variation were divided into eight categories: prerequisite work, detailed design/working method, labor force, tools and equipment, material and components, work/job site conditions, management/supervision/information flow, and weather or external conditions. This research examined the similarities and differences in perceptions between craft workers, foremen, and project managers in terms of starting time and task duration variation. The top eight causes of starting time variation and top nine causes of task duration variation were identified. The research also quantitatively analyzed the underlying structure of the causes of variation using factor analysis. This was done by grouping the 50 individual causes into nine orthogonal factors that represent the underlying structure of the affecting causes. The findings will help construction project managers and field managers focus on the root causes of variation during planning in order to develop effective strategies to reduce variation and improve project productivity performance.
Article
Use of design-build contracting has been gaining popularity for government procurement of construction. An oft-touted advantage is fewer change orders due to design errors, since the designer (A/E) and contractor are one entity. A comparison of transportation-related design-build projects with roughly comparable design-bid-build (traditional) contracts indicated there was little difference in the amount of change orders and their cost. Overall, recent literature presents little statistically sound evidence that design-build contacting "reduces cost growth." Changes might arise from: owner- requested additions or deletions to the work; the actions of third parties beyond the control of the owner or contractor; delays in owner-supplied access, permits, or equipment; differing site conditions; as well as discrepancies in the original design-build specifications that the owner developed to form the basis for the request for design-build proposals. This research reports on the changes in twenty-three government design-build construction projects, and categorizes their causes. Overall, the number of changes due to design error in design-build construction is statistically significantly lower than that of the traditional design-bid-build construction. Design-build construction also experiences a lower number of changes in sources other than design error, albeit not statistically significant.