Topic 3: Prepare Variation Accounts
In construction project management, variations refer to changes made to the original scope of
work after a contract has been signed. Preparing variation accounts involves identifying the
causes of variations, valuing the changes, and documenting them for payment or approval.
1. Sources of Variations
Variations may arise from several sources during the execution of a project. These changes could
be due to design alterations, site conditions, statutory requirements, or client instructions.
a) Statutory Authority Requirements
These are variations caused by instructions or compliance needs from government or regulatory
authorities such as:
Local government (county building department)
National Construction Authority (NCA)
Kenya Power, Water Services, or Fire Department
Examples:
Relocation of drainage systems as directed by the local authority.
Additional fire exits required by safety regulations.
Modification of electrical installations to meet code requirements.
Impact: May cause additional costs or time adjustments to comply with new legal or regulatory
conditions.
b) Engineer/Architect Instructions
These variations arise from directions given by the project engineer, architect, or consultant
during construction.
Examples:
Change in design or materials (e.g., upgrading tiles, changing roof design).
Alteration of structural elements for stability or safety.
Modification of layout to meet design intent.
Purpose: To improve design functionality, safety, or compliance.
Effect: Could lead to additional cost, time extension, or both.
c) Client Requirements
These are changes requested directly by the client or employer after the contract has
commenced.
Examples:
Addition of new rooms or facilities.
Upgrading finishes or fittings (e.g., from ceramic tiles to granite).
Change in project specifications or scope of works.
Impact: Typically leads to additional work, increased cost, and possible extension of time.
Typical Causes of Variations
i. Errors or omissions in design drawings or specifications.
ii. Unforeseen site conditions (e.g., rock excavation, poor soil).
iii. Change in statutory requirements.
iv. Client’s change of mind or design upgrade.
v. Value engineering proposals.
vi. Coordination problems between trades.
2. Determination of Causes of Variations
Identifying the cause of a variation is crucial for determining responsibility and how it should be
valued or compensated.
Steps in Determining Causes
a) Review Contract Documents - Check clauses relating to variations, instructions, and
approvals.
b) Identify the Initiator of the Variation - Establish whether it was caused by the client,
consultant, or a statutory body.
c) Examine the Nature of the Change - Determine if it is a change in design, quantity,
material, or method of work.
d) Assess Contractual Responsibility - Identify whether the change is within the
contractor’s control or external.
e) Document the Variation Event - Record details such as dates, instructions, drawings,
and reasons.
f) Determine Financial and Time Implications - Assess how the variation affects the
project cost and schedule.
3. Determination of Value of Variations
Once a variation is identified and its cause established, the next step is to determine its value for
payment and record it in the variation account.
Methods of Valuing Variations
1. Using Contract Rates
If similar work exists in the original Bill of Quantities (BQ), use the same unit rate for
the variation.
Example: If the original plastering rate is Ksh. 450/m², apply the same rate to the
additional plaster area.
2. Using Comparable Rates (Prorata Rates)
Where no exact rate exists, use a similar rate from related items and adjust for
differences in labour, materials, or difficulty.
3. Using New Rates
When the variation involves completely new work not in the original BQ, prepare a
new rate based on:
Material costs
Labour costs
Equipment/plant costs
Overheads and profit
4. Day work Basis
For minor or urgent variations where measurement is impractical.
Costs are based on actual labour, materials, and plant used, supported by day work
sheets signed by the site supervisor or engineer.
5. Provisional Sum Adjustments
Variations may arise from adjustments to provisional sums in the BQ after actual costs
are known.
Factors to Consider in Valuation
Changes in material prices.
Changes in labour productivity.
Time implications (extended preliminaries or overheads).
Additional testing, supervision, or compliance requirements
4. Contents of a Variation Account
A variation account records all approved changes and their corresponding cost impacts. It forms
part of the final account at the end of the project.
Typical contents include:
Project name and contract number
Description of each variation
Instruction reference (e.g., Architect’s Instruction No. 05)
Date of approval and execution
Quantity and unit rate used
Total value of each variation
Summary of total variation costs
5. Example of a Variation Account Entry
Variation Instruction Unit Rate
Description of Work Quantity Value (Ksh) Remarks
No. Ref. (Ksh)
Change of floor tiles Arch. Inst.
01 120 m² 950 114,000.00 Client request
from ceramic to 02
granite
Additional fire exit Stat. Req. Local authority
02 1 No 45,000 45,000.00
door 03 instruction
Extension of external Client Req.
03 80 m² 600 48,000.00 Client variation
paving 04
Total Value of
207,000.00
Variations
Key Points to note
Always confirm a written instruction before executing a variation.
Maintain proper records (site instructions, drawings, approvals).
Use contract clauses to justify variation claims.
Ensure all variations are valued and approved before inclusion in interim or final
accounts.