For capital construction projects that use the FIDIC form of contract, a variation is a change in the form, quality, or quantity of the works as defined in sub-clause 51.1 of the conditions of the contract. Its impact on the contract value and/or duration shall be assessed and evaluated in accordance with clause 52 of the contract conditions. A change or variation may be initiated by the employer, contractor, engineer, engineer’s representative, or by the government through new regulations issued after signing of the contract. To improve the management of variations, approve a three-stage change management process.

The first stage of the three-stage change management process captures all types of potential changes that could result in variation orders, the second stage is variation orders, while the third is the budget adjustment caused by change orders. There are different types of potential changes on capital construction projects depending on the occurred event that could result in a change. Examples of those include early warning notification (EWN), claim notice, design change notice (DCN), field change request (FCR), value engineering proposal (VEP), extension of time request (IoT), and initial variation order (IVO). All of those potential change document types could be used on the same project.

There are more than 40 events that could trigger the issuance of a potential change record. Those include for example the events of acts of God, acts of government, actual and constructive acceleration, , adverse weather, cardinal change, commercial impracticability/ performance, commercial impracticability/ supply, constructive change, defective specifications, delay of approvals, delayed issuance of change orders, delayed notice to proceed, destruction of work, destruction of materials, differing site conditions, early completion prevented, impossibility of performance, improper inspection, inadequate supervision, inadequate utilities, interference, labor shortage, lack of access, lack of information or decision, lack of permits, lack of right of way, late drawings, defective material, payments not made, scheduling difficulties, stacking of trades, strikes, nominated subcontractor delay, superior knowledge/ misrepresentation, supplier delay, suspension of work/delay, COVID-19 disruption, among others. The FIDIC contract conditions include the clauses that provide the entitlement for a change event. Examples of those clauses include 1.9 Delayed Drawings or Instruction, 1.13 Compliance with Laws, 2.1 Right of Access to the Site, 4.6 Co‐operation, 4.7 Setting Out, 4.12 Unforeseeable Physical Conditions, 4.24 Fossils, 7.4 Testing, 8.4 Extension of Time for Completion, 8.10 Payment for Plant and Materials in Event of Suspension, 9.2 Delayed Tests, 10.2 Taking Over of Parts of the Works. 

PMWeb 7 Potential Change Orders Status Report from Three-Stage Change Management

Potential Change Record

The potential change record gets submitted to the employer or his authorized representative for review and comments. The employer shall evaluate the IVO’s technical, cost and time implications and submit the recommendation for either tentative approval or total rejection, as the case may be. The review and approval process should be aligned with the authority approval levels as set in the project’s Delegation of Authority (DoA) matrix. The status of the potential change record is then either approved, disputed, rejected, withdrawn, or submitted if it is still under review.

Following the employer tentative approval, the contractor will be informed of the intention to vary the works or part of them. At the same time, the employer team with the input from the contractor, assesses more thoroughly the time and cost implications of the varied work to reach an agreement on the change implications. All review and approval tasks should be aligned with the authority approval levels as set in the project’s DoA matrix. Upon reaching an agreement on the final impact of the change on cost and time, the employer issues the change or variation order (CO/VO) to the contractor. If the contractor disagrees on either the technical, cost, or time assessments, he may reserve his rights. However, he shall carry out the varied work as requested. Similar to the potential change orders, the status of CO/VO is either approved, disputed, rejected, withdrawn, or submitted if it is still under review.

PMWeb 7 Change Orders Register with Three-Stage Change Management

PMIS for Three-Stage Change Management

Using a Project Management Information System (PMIS) like PMWeb, the business processes for managing three-stage changes including potential change orders, change orders and change events for awarded contracts come ready out-of-the-box. In addition, the three business processes are integrated to avoid data redundancy and enforce project governance. 

Three-Stage Change Management – Stage 1: Potential Change Orders

The potential change order template header includes the data fields for the project name, contact number, subject, potential change order document type (EWN, claim notice, DCN, FCR, VEP, EoT, and IVO), project event that has caused the change, when the contractor becomes aware of this event and explanation of the event, contract condition clause that gives entitlement for a change, project schedule activity that this change first impacts and any other data fields that the employer believes is needed to better manage those potential changes. For the data fields that require selecting the value from a list, the PMWeb selection list module helps create those values dictionaries.

The potential change order header also includes an automatically generated table to summarize the original contract’s value and duration, approved changes to date, revised value and duration, and the current potential change value. The detailed table of the potential change order template itemizes all cost items included in the change. For each item, there is a field for the relevant cost breakdown structure (CBS) level associated with the change cost. In addition, other fields to improve the description of each cost item are added.

PMWeb 7 Costs Change Management online Change Requests Differing Site Conditions for Three-Stage Change Management

If the potential change order is tentatively approved, the generate command creates the change/variation record. Similar to the potential change order template, the PMWeb change order template can be designed to all data fields that the employer might require. In addition, it also includes an automatically generated table to summarize the original contract’s value and duration, prior approved changes, prior revised value and duration, a total of the current change order value and duration, and current contract revised value and duration. The detailed table of the change order template is imported from the potential change order record it was generated from. Of course, those values get modified to reflect what is agreed on.

PMWeb 7 Costs Change Management Commitment COS Differing Site Conditions for Three-Stage Change Management

Three-Stage Change Management – Stage 2: Change Events

PMWeb Change Event module aligns the approved change order or orders as well as potential change orders with the budget adjustment made to provide the authorized funds for those changes. Usually, the budget adjustment is in the format of a budget transfer from the project contingency cost element to the cost elements of the items included in those approved change orders. Those cost elements are defined using the cost breakdown structure (CBS) levels. For most capital construction projects, the employer can only issue the Order to Commence letter for varied work to the contractor to carry out the work when the budget adjustment for the approved baseline budget has been approved. Only then is the VO considered valid and the contractor liable to carry out its contents.

PMWeb 7 Costs Change Management Change Events Additional Design Services for Three-Stage Change Management

Three-Stage Change Management – Stage 3: Budget Requests and Adjustments

The PMWeb Budget Request module, which is another ready-to-use module, captures the details of the budget adjustments. The budget adjustments can be for omissions, additions, or transfers with the option to allow transfers across different projects.

PMWeb 7 Costs Budgets Budgets Requests Budget Transfer for Three-Stage Change Management

Similar to all other business processes managed in PMWeb, supportive documents that are usually associated or required for each potential change order, change order, or change event as well as budget request business processes transaction can be attached to the template. It is highly recommended to add details to each attached document to better explain to the reader what is being attached and viewed. In addition, links to other relevant records of other business processes managed in PMWeb can be also linked to the records of those change orders-related business processes. 

PMWeb 7 Forms Inspections Progress Observation Level 01 

Managing Supportive Documents

It is highly recommended that all those supportive documents, regardless of their type or source, get uploaded and stored on the PMWeb document management repository. PMWeb allows creating folders and subfolders to match the physical filing structure used to store hard copies of those documents. 

PMWeb 7 Document Manager Projects Capital Project Construction Phase BP02 Superstructure

Approval Management

To ensure that the submit, review and approve dates of each potential change order, change order, or change event as well as budget request business process transaction submission is captured, assign a workflow each one of those business processes. The assigned workflow maps the submit, review and approve tasks, roles or roles assigned to each task, task duration, task type, and actions available for the task. In addition, the workflow could be designed to include conditions to enforce the approval authority levels as defined in the DoA matrix. 

PMWeb 7 Workflows Business Processes (BPM) for Three-Stage Change Management

When any of the potential change orders, change order or change event as well as budget request business process transaction is initiated, the workflow tab available on the relevant template captures the planned review and approve workflow tasks for each transaction as well as the actual history of those review and approval tasks. The captured workflow data includes the actual action data and time, done by who, action taken, comments made, and whether team input was requested.

PMWeb7 Forms RFIs Conflict 
Workflow for Three-Stage Change Management


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