The Case Of Millennium Erectors Corporation

VARIATION ORDER

Changes arise for various reasons and throughout all stages of a project. To regulate changes, a project manager must be aware of the causes and plan to avoid circumstances which give rise to changes. During the conceptual and development stages, numerous changes are made in the name of design development. At these primary stages the ability to influence cost is greatest and lest control is executed, the financial ability of the owner or the economic feasibility of the project may be surpassed.

Essentially, a variation is a modification to the scope of works in a construction contract in the manner of an addition, substitution or omission from the original scope of works.

It frequently occurs that a contractor of a project
Variations should not be acted upon unless the change has been authorized by the recognized authority. An authorized change becomes a change order, which will affect the cost of the project.

In the case of Millennium Erectors Corporation, regarding the R Square Residences project, there have been at least four variation orders issued in the past few months by the project engineer. Two of them will be studied for the sake of this report.

The first example is the front page letter for the additive change order claim for the adjustment of the fire exit stairs from the ground floor to the ninth floor as shown in Figure 6.1. It appears that there has been at least a change in cost as according to the claim, combining in the cost for the concreting works, reinforcement bar works, and formworks, there is a total net additive cost of Php38,833.76. Attached with this claim are photos of the stairs as proofs and the photos of plan for the stairs. It can be seen in the proof photos that the stairs were lacking in concrete as the other end of the stairs have protruding steel bars that have to be covered in
Delays in obtaining permissions that the contractor has taken practical steps to evade.

Often, change orders may also be necessary to alter the original contract schedule because of delays that arose in the project due to unexpected situations. The owner, the contractor or a third party may be accountable for delay.

In construction contracts, there are what are called force majeure contract clauses which refer to incidences which are beyond the reasonable control of any party to the construction contract. These are known as "acts of god" or "unavoidable casualty." For these types of events, claims for a time extension are typically allowed. These claims are due to severe weather, floods, fire, sabotage, etc.

As an example, Figure 6.3 shows the time extension claim with the attached supporting documents such as the PAGASA advisories and rainfall monitored on the day the typhoon named “Karen” struck the country last October 2016.

In this letter, the reader is notified that a one day time extension is claimed due to the extreme weather inclement that is beyond the control of the contractors and engineers. A good case of the force majeure contract, this is a claim that must be accepted by the owner of the