Variation Order

How Variation Orders Work

A variation order (also called a change order) formally documents a change to the contracted scope of work. It typically includes: description of the original work, description of the changed work, reason for the change (design revision, site condition, client request, regulatory requirement), quantity and rate impact (additional cost or saving), and timeline impact (additional days or no impact).

Both parties - the developer and the contractor - must approve the variation order before the work proceeds. In practice, this approval step is where the system breaks down.

The Real-World Variation Problem

On Indian construction sites, the typical variation cycle looks like this: the architect issues a revised drawing showing a changed column size on Floor 12. The site team executes the change because the formwork is already going up and they can't wait for formal approval. The contractor notes the additional steel and formwork cost. Two months later, the variation bill arrives with the monthly Running Account Bill.

The developer's QS team disputes the rate. The contractor argues they incurred additional mobilisation cost. The variation was never formally approved before execution. Three months of emails follow.

This pattern - execute first, document later, argue forever - is so common that many Indian construction projects carry a "disputed variations" register that grows throughout the project and gets resolved during final settlement.

Preventing Variation Disputes

Effective variation management requires three disciplines: early identification (flagging potential variations when design changes are issued, not after execution), pre-approval (agreeing the rate and quantity before the work starts), and linkage to schedule (showing how the variation impacts the project timeline, not just the cost).

The third discipline is often ignored. A variation that adds Rs 12 lakh to the cost might also add 8 days to the critical path. If the cost is approved but the schedule impact isn't assessed, the project loses 8 days without anyone adjusting the overall timeline. Those 8 days compound through downstream activities.

Variations and Final Account Settlement

On most Indian construction projects, final account settlement - the process of reconciling all bills, variations, and claims at project completion - takes 6-12 months after physical completion. A significant portion of this time is spent arguing about variations that were executed without formal approval.

Projects that maintain a digital variation register - with each variation documented, approved, and linked to both BOQ and schedule at the time of occurrence - complete final settlement significantly faster. The evidence is clear, the approvals are documented, and the arguments are pre-resolved.