Variation Order Meaning
A Variation Order (VO) is a formal document that authorizes and records this change, ensuring it is contractually binding. Variations can arise from client requests, unforeseen site conditions, regulatory updates, or design modifications. By issuing a VO, all stakeholders agree on the modification, preventing disputes and keeping the project aligned with new requirements.
For a more detailed breakdown, check out our guide on Variation in Construction.
What is the Purpose of a Variation Order?
The primary purpose of a Variation Order is to maintain project flexibility while ensuring all changes are formally agreed upon. Key objectives include:
- Preventing disputes: A written VO serves as proof of approved changes, reducing conflicts.
- Cost and timeline adjustments: It allows for recalculating project costs and schedules due to modifications.
- Legal compliance: Ensures that all changes adhere to the terms of the construction contract.
- Project documentation: Keeps a clear record of changes for future reference and accountability.
What’s in a Variation Order?
A Variation Order is a detailed document that outlines approved changes to a construction contract. It typically includes:
- Project Details: Identifies the project, contract number, and relevant parties.
- Variation Order Number & Date: Assigns a unique reference number and date for tracking.
- Description of Change: Clearly explains what is being modified, whether it's a scope adjustment, material substitution, design change, or timeline extension.
- Reason for Variation: States why the change is necessary, such as client requests, unforeseen site conditions, or regulatory compliance.
- Impact on Cost & Timeline: Specifies how the variation affects the project budget and completion schedule, including any cost increases or time extensions.
- Approval & Signatures: Includes signatures from the contract administrator, contractor, and employer to confirm agreement and formalize the change.
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Variation Order Example and Template
Imagine a contractor is building a commercial office space. Midway through the project, the client decides they want to create 2 extra door openings and assembly 2 extra fire proof doors in the new position.
The contractor submits a Variation Request, outlining the cost and timeline impact. The contract administrator reviews it, approves the changes, and issues a Variation Order, officially modifying the contract to reflect the new specifications.
A well-structured Variation Order template simplifies the approval process and ensures all contract changes are properly documented. Below is a clear and organized format:
A Variation Template for documents contract changes in construction projects.How to Make a Variation Order in Construction
Issuing a Variation Order follows a structured process to ensure changes are properly reviewed, approved, and documented.
- Identify the need for change: Determine why a modification is necessary (e.g., unforeseen conditions, client requests, design errors).
- Submit a Variation Request: The party requesting the change (contractor, consultant, or client) submits a formal request outlining the proposed variation.
- Review and evaluation: The contract administrator assesses the request, considering cost, timeline, and contractual implications.
- Approval and documentation: Once agreed upon, the variation is formally recorded in a Variation Order, including details of scope changes, cost adjustments, and revised deadlines.
- Implementation and monitoring: The approved change is executed on-site, with progress monitored to ensure compliance with the updated contract terms.
Variation Order vs Variation Request
A Variation Request is the first step in modifying a construction contract. It is a formal proposal submitted by a stakeholder when a change is needed in the project. The request outlines the proposed modification, whether it’s a change in scope, materials, design, cost, or timeline.
However, a Variation Request is not legally binding. It must first be reviewed and approved by the contract administrator or project owner.
Once a Variation Request is evaluated and deemed necessary, a Variation Order is issued. The Variation Order formally authorizes the change and updates the contract. It includes details on how the modification affects the project's cost, timeline, and scope.
The contract administrator, acting on behalf of the owner, issues the VO to ensure that all parties acknowledge and comply with the approved changes. Once the order is issued, the contractor can proceed with implementing the modification.
In short, a Variation Request is a proposal for change. On the other hand, a Variation Order is the final approval that makes the change official and enforceable.
