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In construction projects, variation orders are frequently issued when the original scope of work is altered. It is essential to carefully review these orders to ensure fair compensation and avoid potential disputes. Below is a step-by-step guide for effectively managing variation orders:
1. Understand the Contract Terms:
1.1 Review contract provisions: Familiarize yourself with clauses related to variations, including how they should be initiated, documented, and priced.
1.2 Identify the dispute resolution mechanism: Understand the procedure for resolving disagreements regarding variations.
2. Examine the Variation Order Details:
2.1 Check the justification: Ensure the reason for the variation is clearly stated and aligns with the project’s objectives.
2.2 Verify the scope: Confirm that the proposed changes remain within the contract’s scope and do not introduce entirely new elements.
2.3 Assess the impact: Evaluate how the variation will affect the project’s timeline, budget, and quality.
3. Evaluate the Pricing:
3.1 Compare to original contract rates: Ensure that the variation pricing aligns with the rates established in the original contract.
3.2 Consider additional costs: Take into account any extra costs, such as mobilization, demobilization, or overhead, that may arise from the variation.
3.3 Request an itemized breakdown: If the pricing is complex, ask for a detailed breakdown to better understand the components contributing to the total cost.
4. Review the Effect on the Timetable:
4.1 Assess schedule impact: Determine how the variation will affect the project’s completion date.
4.2 Negotiate extensions: If necessary, negotiate extensions to the contract timeline to accommodate the additional work.
5. Check for Approvals:
5.1 Verify required signatures: Ensure all necessary parties, such as the project owner, contractor, and subcontractors, have signed the variation order.
5.2 Obtain supporting documentation: Collect relevant documents, such as drawings, specifications, or change orders, to justify the variation.
6. Consider Potential Disputes:
6.1 Identify areas of disagreement: Be aware of potential points of dispute, such as differing interpretations of the variation’s scope or the pricing.
6.2 Prepare for negotiation: Be ready to negotiate or mediate, if necessary, to resolve any disagreements.
7. Document the Review Process:
7.1 Maintain records: Keep detailed records of the review process, including correspondence, negotiations, and decisions.
7.2 Update project documentation: Incorporate the variation order into the project’s official documentation to ensure all parties are informed of the changes.
By following these steps, you can effectively review variation orders, ensure fair outcomes, and protect your interests throughout the construction project.
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