The Influence of Change Orders leading to Disputes in Construction Phase: Contractors’ Perspective

ABSTRACT: Changes and Change Orders are inevitable in almost every type of project. It plays an important role in determination of quality, the overall cost and the completion time of a construction project. Thus, the Change Order process should be managed well. The Change Orders in construction are one of the main causes of conflict between the owner and the contractor. Unless a good management is applied to conflicts, they quickly turn to disputes which require resolution. The dispute resolution process is highly time consuming and costly manner. The study aims to examine the influence of Change Orders leading to disputes in construction phase of a project from the contractors‟ perspective. To identify the objective, a questionnaire survey is carried out. To do so, 37 common Change Orders are selected from the literature and the questionnaire survey is carried out with 52 construction companies from the private sector of the North Cyprus construction industry. From the analysis of the 37 change orders, 4 of them are identified to be the most effective. They are As-built used for design were incorrect, Late issue of design, Change in timing of vendor drawing approval, and Design changes. As it can easily be seen, the all 4 most effective change orders are related with the design. The 4 least effective change orders are identified as Regulatory/Permit change, Code change, Change in access to the work area, and Accident-Change in safety approach. As it can be seen the 3 least effective change orders are related with the regulatory changes. Often Change Orders can become a polarizing factor between the parties. The owner‟s objectives are to minimize the impact of Change Orders to the greatest extent possible as a measure of control over a project‟s budget and schedule. Comparatively, the contractor‟s interests may involve expanding the scope of work beyond the defined by the contract, in addition to boosting its project revenue. The differing objectives between the parties can result in divergent positions and the inability to attain fair and equitable relations in changes. If the owner and/or the contractor elect to ignore or postpone the negotiation and settlement of Change Orders until the end of a project, the issues that may have been previously solvable have a greater potential of being disputed and becoming claims. The researches and studies on variations and Change Orders, and their causes and effects are still limited. Further researches and studies should be done in order to have more information and knowledge in hand to fulfil the requirements of the construction industry. The researches should be done in the design, bidding, contract, and construction phase. It has a significant importance for the studies to be done especially in the construction phase which is the case of this study. So that, the researchers will have more data, information and knowledge in hand for further studies and the construction industry will get benefit from them. Keywords: Change, Change Order, Claim, Conflict, Dispute, Construction, North Cyprus. …………………………………………………………………………………………………………………………