VARIATION ORDER AND ITS EFFECT ON CONSTRUCTION PROJECT PERFORMANCE: IN THE CASE OF ROAD CONSTRUCTION PROJECTS IN ADDIS ABABA

Abstract

The purpose of this research was to identify the major causes of variation order and their effects on road construction project performance in Addis Ababa. Variation order is pointed out as one of the major reasons that lead to poor construction project performance. The research was explanatory and the research design was survey design. A quantitative research approach was adopted and the hypothesis was also tested. The study used both primary and secondary data sources. A structured close-ended questionnaire was designed and distributed to the client (ACCRA), contractor and consultants working under ACCRA. Since the target population was small respondents were selected using the census method. Out of 60 questionnaires, 52 were able to be retrieved with a response rate of 86.7%. The data gathered using the questionnaire was analyzed with the help of Statistical Package for Social Sciences (SPSS version 20) using descriptive statistics and regression analysis. The descriptive analysis was done to identify major causes of variation order and major effects on project performance. The findings showed that right of way/difficulties faced in land acquisition by the client was the first major cause of variation order and that time extension (time overrun) was the first major effect of variation orders on road construction project performance in Addis Ababa. Regression analysis was also conducted and the result revealed that variation order has a significant effect on project performance with a p-value of 0.002 <0.05 and regarding the hypothesis, the alternative hypothesis was accepted based upon the obtained a value of β =.524 and p<0.05. The study concludes that variation order is a statistically significant predictor of project performance and represents the value change in project performance is associated with a unit change in variation order. Therefore, increased variation order results in an increased effect on project performance (increased time extension, cost and claim and dispute and etc…). The research finally recommends for all parties to be involved and work to minimize change orders starting from the initial design stage and manage the variation order at the construction stage using effective change management system and furthermore adopt different technologies to facilitate the change management process.