Management of variations in construction contracts

Although it is best practice if all projects are fully planned, changes in circumstances demand that flexibility must be maintained. Measures should ideally be those that can function in either expected or changed conditions, striking a balance between precision and flexibility. Thus specific clauses, enabling changes to be made to the specification, are inserted in contracts. However, the advantage of this contractual flexibility has been largely overshadowed by reports that variations are the cause for delays, disputes and conflicts in the construction process. Some of the arguments' centre upon the amount of compensation due, whether time or money. If these problems are to be reduced, then contracts should be drafted to reflect the needs of the parties in changing circumstances. This is made more pertinent by the nature of construction; both parties will certainly be locked in a relationship for a long period. Given bounded rationality and opportunism, it is more advantageous to provide the parties with the opportinity to negotiate over aspects of the contract that are inconsistent with their own (changed) requirements. the purpose of this reserach work is to determine the precise area of contention over variations and to improve contract clauses by specifying a more flexible but enforceable contract drating policy.