Chapter 1, 2, 3 - Edit - 2

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CHAPTER 1
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Construction plays a vital role in the development of a country (Cabral M.C.,

1999). Over the past years, the Philippines has emerged as an economic tiger
despite the recent currency turmoil in the Southeast Asian Region. As a result of
this sustained rapid economic growth, a vast amount of work in the field of
construction are sprouting anywhere in the country. This is evident in the growing
number of high rise buildings and various infrastructure projects in Metro Manila
as well as in other highly urbanized cities and municipalities in Luzon, Visayas
and Mindanao areas.
According to Building & Construction Information (BCI) Asia Philippines, due to

the
countrys
robust
macroeconomic
conditions
and
strong
domestic
consumption, the construction industry in the Philippines is expected to grow by

46% equivalent to 938 billion pesos in 2014 surpassing the 2013s target of 643
billion pesos (Remo, 2013). And according to some of the experts, this growth in
construction industry will continue to grow and expand by as high as 46% for this
year 2015 which is equivalent to as much as 914 billion pesos when translated
into project cost by the end of this year (MST Lifestyle, 2014). BCI Asia

Philippines also said that this growth is being attributed mainly to the significant
growing demand for residential and office spaces, which leads to the construction
of high-rise buildings in the form of residential condominiums and various
commercial establishments.
Due to this great demand, a number of complex high-rise buildings are now being
built and some are still on their way to being constructed, attracting local and
international contractors and construction companies all over the world. However,
based on personal observations, some of these contractors and their companies
often lack of sufficient understanding of the social, cultural and physical
environment of the municipality that they are operating with (Al-Dubaisi, 2000).
And because of the eagerness and willingness to grab this opportunity and able to
get as much project, design consultants and contractors are in a hurry to start a
project without taking into consideration the necessary pre-design and preconstruction activities which is very much necessary in ensuring effective
implementation of the project. Hence, this situation has resulted to inadequate
designs and ultimately redounds to too many changes in the plans, specifications,
and contract terms, among others.
Time is money. A day of delay in the schedule would entail a lot of cost. And this
is true especially in construction industry. The construction owners of today are
willing to start implementing construction project without a final design because

of the great importance and value of time (Hanna, Russell, Gotzion, & Nordheim,
1999). However, fast-tracking the construction scheme often leads to a lot of
problems brought about by the issuance of change orders which redound to
incomplete and inaccurate designs. According to Arditi et.al (2007), one of the
factors that greatly affect the efficiency of the building projects is the magnitude
and frequency of the change orders that are being filed during construction. Given
the limited funding available for building projects, it is therefore imperative that
these projects shall be undertaken in the most efficient and effective way to
properly and effectively manage these construction change orders.
Aneesa, Mohamed, & Abdel Razek (2013), stressed that to manage change
order, there is need for a day-to-day decision in the construction processes based
on incomplete information, assumptions and the personal experience of the
construction professionals that might lead to change and/or rework. Both change
and rework is done in the form of either adding, deleting or replacement. In
construction, change option is the more general ones since construction has a
physical manifestation. Usually, construction rework is accompanied with the
demolition of what has been already built, which has a bigger direct impact in
construction performance as compared to the change option (Aneesa, Mohamed,
& Abdel Razek, 2013). Also, a degree of change should be expected since it is
difficult for the clients to visualize the end product that they are requested. These
changes are commonly referred to as change orders.
Change order as defined by Clare (2008) is a written agreement between the

owner, contractor and architect upon a change in the work and any appropriate
adjustment in the contract sum or the contract time It is being issued by project
stakeholders in order to correct or modify the original design or scope of work.
The corrections or modifications are carried out for many reasons which include
1) the changes in scope made by the client; and 2) the result of change requests
made by the consultant due to design errors or new findings. For many times,
change is necessary for the success of a project. Change, is defined as any event
that results in a modification of the original scope, execution time, or cost of
work, happens on most projects due to the uniqueness of each project and the
limited resources of time and money available for planning (Hanna, Camlic,
Peterson, & Nordheim, 2002). Change orders are inevitable in most construction
projects due to the uniqueness of each project, unexpected conditions and the
limited resources of time and money that can be spent for planning, executing,
and delivering the project (Hanna et.al, 2004). Critical change may cause
consecutive delays in project schedule, because it requires re-estimation of the
work statement, and extra demands of equipment, materials, labor, and overtime.
The changes, if these have not been resolved using the formalized change
management process, will result to big number of claims and disputes (Aneesa,
et.al., 2012).

The reasons for change orders differ from one country to another, or even
between one project and another. Due to technical and political reasons however,
construction projects in developing countries like the Philippines receive more
change orders as compare to those projects in the developed countries (Alnuaimi
et. al, 2010). Change orders are often caused by the needs of the owner in the
course of the design or construction. Market conditions may also impose changes
to the parameters of the project, and technological developments may alter the
design and the choice of the engineer. Moreover, the engineers review of the
design may also bring about changes to improve or optimize the design, and
hence, the operation of the project as a whole. Furthermore, errors and omissions
in engineering or construction may also force a change. All of these factors and
many others necessitate changes that are very costly and generally un-welcomed
by all parties. Owners do not like them because they generally feel they are
paying for others mistakes. In some cases, contractors believe that change orders
disrupt workflow and require additional paperwork and time. And in other cases,
contractors would find the change orders a mean to improve their outcome of the
project. However, it is generally accepted that consultants, contractors and owners
agree that projects would be better without change orders (Alaryan, Elshahat, &
Dawood, 2014).
Change orders occur on many construction projects and can exert significant
negative impacts on project performance. In fact, most of change orders issued

during construction period are major causes of time and cost overruns, disruption,
and disputes among all the parties involved. Change orders affect the construction
process in many ways depending on the contract type. Projects that are hit by
change orders are usually prone to delays, cost increases, and reduced labor
productivity. Loss of productivity will result in more manhours being expended,
thereby increasing the contractors costs and reducing its profits.
Change orders affect project duration especially if they are directly related with
the critical activities on the schedule. The impact of change orders is felt not only
by contractors but by owners too. Increased costs require larger budget
contingencies, delayed projects necessitate the rescheduling of the occupancy
time, and conflicts between the parties end up in costly disputes (Arditi et.al,
2007). According to Rashid et.al. (2012), negative relationships between the
parties are another by-product of changes on a project. Change orders strain the
relationships of the owners, engineer, contractors, subcontractors, and others
involved in the construction process. And not only is workflow disrupted, but also
trying to get quick responses quotes, shop drawings, and many other things
required to get back schedule causes a strain on working relationships
Because of the highly integrated nature of construction operations, quantifying

accurately the impact of change on project performance is difficult. Estimates of
the impact of change orders on project performance usually vary, but most may

agree that at a minimum, change can make life frustrating for project stakeholders
and many projects experience significant performance degradation because of
these changes. In fact, in the study conducted by Koushki, Al-Rashid &Kartam
(2003), they found out that projects that experienced variation orders incurred
more than 58% time delay and cost increases when compared to those with no
variation orders. Though there have been cases where variation costs accounted
for as much as 100% of the budgeted funds, the industry norm has been
determined to be about 10% (Arain & Pheng, 2005). Also, in the study of
Charoenngam et. al, (2003), they found that the average cost escalation was 7% of
the original project cost with an average time extension of 30% more than the
original project duration.
While change orders are necessary to address unforeseen conditions and other
unavoidable or unanticipated occurrences, however, they tend to negatively affect
construction (Goodrum, Taylor, Lester, McCoy, Uddin, & Shan, 2010).
According to Wu, Hsieh, & Cheng (2005), in most of the public works, change
orders are the main reason for construction delays and cost overruns.
Furthermore, change orders also lead to a decline in labor efficiency, loss of manhours, and costly disputes (Moselhi, Assem, & El- Rayes, 2005).
Given the foregoing, it implies that it is important to understand not only the
impact of change orders on project performance, but also the factors which cause

change orders. And to manage these inevitable changes, the owners as well as the
consultants and contractors also need to be aware of the rationale behind those
change orders.
In the light of the above empirical findings, this research will examine change
orders in the Philippines in order to bring to light this inevitable issue and to help
the professionals in the construction industry to better manage construction
projects and recommend appropriate actions to minimize or solve these problems.
Specifically, this research examines change orders on the Philippine construction

projects and focuses on identifying the leading causes of change orders,
identifying the effects of change orders on project performance, and developing a
procedure to effectively manage these construction change orders,
1.2 STATEMENT OF THE PROBLEM
Change orders are known as one of the major setbacks for construction projects.
They are inevitable and occur on many building projects and can cause significant
negative impacts on project performance. They are also a major source of time
and cost overruns, disruption and disputes among all the concerned parties.
Based on numerous studies, there are many reasons for issuing construction
change orders in large building construction contracts. Among them are as
follows 1) this might be the result of further development of the owners
requirements; 2) it will result to non-availability, slow delivery of required
materials or correction of contract document errors and omissions. Identifying the
causes of change orders is indeed important in order to avoid potential changes in
future projects or minimize their effects.
Generally, this study is primarily directed to identify the major causes, effects
construction change orders as well as the management control practices in the
Philippines with the end-in-view of bringing to light this inevitable issue as well
as provide recommendations that would help the construction industry
professionals in terms of taking necessary steps/ action to minimize these issues
and problems.

Specifically, it aims to answer the following sub-questions:
1. What are the prevailing causes and effects of construction change orders?
2. What are the management control practices that contractors, consultants

and clients do in response to the issuance of construction change orders?
3. What management model can be designed in order to control the effects of

construction change orders?
1.3 OBJECTIVES OF THE STUDY
Identifying the causes of change orders is very important in order to avoid

potential changes in future projects or minimize their effects. Likewise, having
knowledge on the potential effects of change orders on construction projects can
lead to the formulation of management models in managing change orders
effectively thus minimizing their impacts on projects.
Specifically, this research aims to:
1. To identify the prevailing causes and effects of construction change

orders.
2. To determine the management control practices that contractors,

consultants and clients do in response to issuance of construction change
orders
3. To design a management model in order to control the effects of

construction change orders.
1.4 CONCEPTUAL FRAMEWORK

Construction Change Order
Private Building Project
Public Building Project
Project Stakeholders
1. Client
2. Consultant
3. Contractor
Survey Questionnaire
Causes of Change
Orders
Case Studies
Effects of Change
Orders
Analysis of Data
Conclusion and
Recommendation
Proposed Change Order
Management Model
Figure 1: Conceptual Framework
Management of
Change Orders
1.5 SIGNIFICANCE OF THE STUDY
This research about construction change orders will provide valuable information
to the construction industry, both Private and Public sectors, with regards to the
current situation and status of change order management in the country. The
results and findings that will be generated from this research may be used by the
industry in making decisions and necessary actions to alleviate various problems
brought about by change orders. The findings and the suggested remedies that
will be developed in this study will be helpful to the whole project team from
project planners to design consultants and decision makers in the construction
industry.
This research will also assist the Clients, Consultants and Contractors in planning
effectively prior to starting a project and even during the design phase in order to
minimize and control changes and change effects. This will broaden their
knowledge and understanding about change orders and will also serve as a guide
in making their own management procedures in dealing with these change orders.
This research will also enlighten them on the issues on change orders and make
them understand each other better by knowing how each of them view change
orders and how they respond to it. And through this, possible conflicts and
disputes may be prevented.

In addition to these, this study will also lay the foundation for further research on
construction change orders in the country. There is a dearth of researches in the
country about change orders and this study will be an important addition to those
few. Given that change orders are one of the risks in construction, a study on this
matter such as this one will be a very significant source of information which they
can use to dig deeper into the issue and come up with more researches in this
particular area.
1.6 SCOPE AND DELIMITATIONS
This study will be delimited to the analysis of construction change orders by

identifying their main causes, potential effects and management control practices
as well as developing a model to manage change orders. This study will only
focus on these areas for these are the fundamental factors in understanding the
current situation of change order management in the country. And since there is a
dearth of information on empirical studies/ researches in the Philippines that
would inform us about the causes and effects on the construction of change orders
including the management practices on the issuance of change orders, focusing on
these things will be of great importance in the construction industry. Other factors
aside from what was mentioned will not be considered.

This study will be conducted in selected cities within Metro Manila only
particularly in Taguig City, Quezon City, Makati City and Pasay City where you
can find a pile of on-going high-rise building construction. These cities were
chosen for they will be a good representation of the whole country because of
their exposure to different and diverse construction contracts.
This study will employ two research modes, Descriptive/ survey and case Study
Research. The instruments that will be used to gather data and address the
research questions are Survey Questionnaires and actual Case Studies. Other
methods such as Interviews, Site Inspection/ Observation will also be used to
supplement the research instruments.
The respondents for this study will come only from those companies whose
projects are located in the said area of study. Each respondent must be principal
engineers of their respective companies and each representing either as Client,
Consultant or Contractor. They will be chosen using a Purposive Sampling
technique in order to focus on a particular population that will best answer the
research questions, thus enabling the researcher to get more reliable and accurate
information. A total of 20 respondents representing the Clients, 20 respondents
representing the Consultants and 20 respondents representing the Contractors will
be chosen to be the sample size for this research.

One (1) public and one (1) private building construction project, of any contract
type, which are also located in the area of study, will be the bases for the conduct
of case studies. This will be conducted on top of the Survey in order to arrive at a
more comprehensive conclusion and also to compare the findings that will be
gathered from these two sectors. Only building projects from these two sectors
will be analyzed as case studies. This is because building projects are observed to
have been incurring more change orders than the other types of construction
projects.
1.7 DEFINITION OF TERMS
Change- Any modification to the original contractual agreement.

Change Order -Is the formal document that is used to modify the original
contractual agreement and becomes part of project's documents.
Cost Reimbursable Contract - A contract providing financial arrangement to
allow price adjustment relative to project cost. Also called cost plus contract.
Constructability- The optimum use of experience in design, procurement and
planning to achieve the objectives of the project in the least possible cost.
Control Account - A selected account to manage resources, productivity and
historical database.
Cost Growth - The percentage increase in original contract value.
Cost Overruns - The difference in cost between actual and original contract
award amount.
Creeping Scope - Loss of control of a project scope. Creeping scope provides
good grounds for construction and design changes.
CPM (Critical Path Method ) - A scheduling method that arranges all activities
of a project in a network showing all interdependencies.
Fixed price Contract - A contract that establishes a fixed lump sum for the
execution or completion of a defined scope. Also called hard money contract.
It can be lump sum or unit price format.

Free Float - Free time available to the scheduler assuming that all proceeding and
following activities will start on early start dates.
LSPB Contract - A construction contract that includes all parts of LSTK contract
except engineering and design.
LSTK Contract - A construction contract, which includes engineering,
procurement, construction, construction management and commissioning.
Money Left On the Table (MLOT) - The difference between the low bid and the
next higher bid in a fixed price contract.
Productivity Index (PI)- The ratio of planned productivity over actual
productivity.
Ripple Effect - The propagation of change impacts to other activities in other
work packages.
Quality Deviation - A departure from established requirements. It could be
imperfection, defect or non-conformance.
Schedule Growth - The percentage increase in original contract schedule.
Schedule Overruns - The difference in project duration between actual and
original contract award schedule.
Total Float - Total free time available to the scheduler assuming that all
proceeding activities have been started on early start and that all succeeding
activities will start on late start dates.
Value Engineering - An engineering review to economize the cost of the project.

Variance- The quantitative difference between original scope and new scope after
changes. It is prepared for later settlement of price /shekel adjustment if required.
Unit Price Contract - A form of contract, which involves fixed unit prices
against a variable quantity. Owner takes the risk in quantity variation.
Work Breakdown Structure (WBS) - An ordered representation of the
construction project organized in an increasing detail array.
Work Package - A group of products and activities that requires to be managed
as a unit within the project structure.
CHAPTER 2
REVIEW OF RELATED LITERATURE
In this chapter, the researcher reviews some of the literatures pertaining to change
orders. And in this study, the literature review section is divided into four parts.
The first part defines the basic concepts about change orders and definitions of
some terms. The second part covers the legal aspects of change. The third part
covers the evaluation and cost aspects. And lastly, the fourth part concentrates on
control, administration and procedures of changes.
There have been numerous articles written on changes, change orders and change
management in construction. Most of these articles mainly discuss the legal
aspects of changes such as claims and disputes and some others were devoted to
the discussion of the effects of changes on labor productivity and efficiency. Most
of the research on changes as a separate construction issue is done by or under the
guidance of some funding organizations like the Construction Industry Institute
(CII), an American national organization. In the Philippines, however, very few
studies haveattempted to discuss change orders and the condition of change order
management in the country. And most of the related local studies in the country
do not directly discuss change orders; rather, they discuss related topics such as
risk management and cost engineering.

Although this review is by no means a comprehensive one, it covers the most
important articles and subjects and can open the door for further research on the
subject of changes.
2. 1 Basic Concepts about Change Orders
A change is defined in literature as any deviation from an agreed upon welldefined scope and schedule. Stated differently, a change is any modification to the
contractual guidance provided to the contractor by the owner or owner's
representative (Al-Dubaisi, 2000). This includes changes to plans, specifications
or any other contract document. A change order is the formal document that is
used to modify the original contractual agreement and becomes part of project's
documents.
While the terms variation, change and change order are used interchangeably
in parts of the literature, in strict terms, a variation or change is any type of
deviation from an agreed upon, well-defined scope or schedule of works and a
change order is the formal document that provides authorization relative to the
contractual agreement, and which becomes part of the projects documentation
(Stasis, Whyte, & Dentten, 2013). A change order is thus an order given by the
employer and authorizing a variation. A change request denotes the request for a
variation, while the order characterizes the employerauthorized instruction for it.

The change order may be complex as it may require the construction team to
engage with a substantial amount of information, which needs to be appropriately
sent, checked, corrected, approved, requested, clarified, transmitted or
submitted.
Initially, the contractor receives the contract package in the form of plans,
drawings, equipment lists and other documents. This constitutes the basis of his
proposal. Contractor will calculate labor cost, material cost, and schedule based
on this original package. Obviously any changes to this set of documents will alter
his plans and calculations.
Changes can be initiated by all parties in the construction process. All changes,
however, must be approved by Owner before implementation. CII Publication 610 (as cited in Al-Dubaisi, 2000) summarizes initiation of change orders as
follows:
1. Owner may request/order a change, usually a scope change.

2. Engineer may originate a change because of differing site conditions or
new governmental regulations etc.
3. Project management firm/person may originate a change, usually in
schedule.

4. Contractor may initiate a change due to design errors, value engineering,
or field requirement.
Unfortunately, no project is without its share of changes or change orders, ranging

from the home builder to the mega-billion dollar projects. And according to B.-G.
Hwang & Low, (2012), when project changes occur, there are bound to be certain
consequences. The impact of project changes can either be significant or trivial as
it may affect the operation and progress of the project.How change orders are
handled can affect the outcome and financial stability of the project (Clare, 2008).
The sooner change orders are dealt with and resolved, the better chance of project
success. The contractor is also entitled to fair, negotiated and reasonable
compensation for the extra work that was performed and can be expressed as a
lump sum, unit prices, or cost plus a fee depending on the contract terms.
2.2 Classification of Change
Few construction contracts are completed without change.
Changes can be
classified in many different ways depending on the basis and the purpose of
classifications. In this review, the most common classifications will be presented.
According to J. Burati et. al. and Thomas & Napolitan (as cited in Al-Dubaisi,
2000), changes in a construction project can be classified based on the cause that
forced them. The cause or originator based classification is best suited for the

assessment of cost impacts of changes. These causes can be numerous. In a study
by J. Burati, et. al. (as cited in Al-Duabisi, 2000), deviations or changes in
constructions are caused by design, construction, fabrication, transportation or
operability. Barrie and Paulson (as cited in Al-Dubaisi, 2000) further explains that
changes or causes for change may be initiated by the designer, owner, regulatory
agencies and others and the contractor. They specifically classified changes
according to a) the initiator/ originator of change, b) effect on the scope, and c)
the procedure used in introducing them.
A. Changes classified in terms of the initiator/ originator of change

1. Design changes initiated by the Owner, Engineer or Consultant.
Common Owner or Designer changes may include the following:
a. Numerous last minute addenda during bid period
b. Delay in access to the site
c. Delay in furnishing approved for construction design drawings or
clarifications
d. Delay in furnishing owner-furnished items
e. Defects in plans or specifications including errors and omissions
f. Major design changes
g. Scope additions
h. Scope Deletions
i. Schedule improvement directives

j. Acceleration directives
k. Suspension of work
l. Interference by owner or his designated representative
m. Nonperformance by owner
n. Termination of contract
o. Equivocal or conflicting contract clauses
p. Slow or inadequate response to submittals and requests for
information
2. Design changes initiated by the Contractor Contractor changes usually
involve some type of performance failure or installation of defective work
like the following:
a. Failure to start work as planned
b. Failure to supply a sufficient workforce
c. Contractor performance failure
d. Subcontractor performance failure
e. Supplier performance failure
f. Installation of defective work
g. Poor workmanship
h. Schedule delay
i. Subcontractor schedule delay

3. Design changes caused by Others Other changes include acts or
omissions by third parties, discovery of actual site conditions different
than those represented, and other items not caused by owner, designer, or
contractor.
a. Unforeseen changed physical site underground or other conditions
b. Other unforeseen site conditions
c. Unusual weather or other natural event
d. Regulatory agency change
e. Change in the law
f. Labor disputes
g. Third-party interference
h. Third-party nonperformance
B. Changes classified in terms of net effect on scope (based on CII publication

6-10 and in the study of Fisk (as cited in Al-Dubaisi, 2000))
1. Additive change - This involves addition of work to the original

scope
2. Deductive change - Unlike the previous type this change involves

deletion ofwork or shrinking the scope of work.

3. Rework - due to quality deficiency.
4. Force majeure change - A force majeure caused change may entitle

thecontractor to schedule adjustment and or cost adjustment
depending on theconditions of contract.
C. Changes classified in terms of the procedure used in introducing them (as

stated in CII publication 6-10 (as cited in Al-Dubaisi, 2000))
1. Formal or directed change - is a change introduced by the owner or his

agentunder the mechanism of the change clause.As such, the owner
recognizes directed changes as changes to the contract documents (Egan,
Seder, & Anderson, 2012). A directed change can also be deductive in
nature, that is, it may reduce the scope of work called for in the contract
(Osman, Omran, & Foo, 2009). Fisks study (as cited in Osman, Omran &
Foo, 2009) found that disagreements tend to center on questions of
financial compensation and the effect of the change on the construction
schedule for directed changes. Examples of directed changes include the
addition or deletion of scope and revisions to material specifications.
2. Constructive Change -is a change that resulted from a failure to do or not

do on part of the owner or owner's agent. In other words, they are typically

defined as acts by the owner or its representative that are not directed
changes but which still require the contractor to perform work different
from that required by the contract documents (Egan et al., 2012).
Moreover, Osman et al., (2009) defines constructive change as an informal
act authorizing or directing a modification to the contract caused by an act
or failure to act. In contrast to the mutually recognized need for change,
certain acts or failure to act by the client that increases the contractors
cost and/or time of performance may also be considered grounds for a
variation order. This is termed as a constructive change and must be
claimed in writing by the contractor within the time specified in the
contract documents in order to be considered.Examples of constructive
changes include performance interference by the owner, and untimely
responses by the owner to contractor submittals, among others.
3. Cardinal change - is a change outside the scope of the contract and

executed only after complete redefinition of the scope and renegotiation of
the contract. Cardinal changes are typically changes which require the
contractor to perform work that was not contemplated by the parties when
they entered into the contract and is fundamentally different from the
scope of work outlined in the contract documents (Egan et al., 2012). For
example, the deletion of a large portion of a contractors scope of work by
the owner could constitute a cardinal change.
2.3 Causes of Change
Causes of change are conditions or event that either directly trigger or contribute
to a change in construction projects. It is important to identify first different
causes of project changes before attempting to minimize it. There have been
numerous studies on causes of project change and delays, which can be broadly
classified into three groups: questionnaire surveys, review of project records, and
case studies (Sun & Meng, 2009). Wu, Hsieh, Cheng, and Lu (2004) believed that
categorizing the change order causes will reveal how their impacts will affect
project cost and schedule.
Project changes can be originated from numerous factors that are related to the
construction projects. According to Love et al. (2002), both Internal and External
elements can influence any project changes to occur.
A. Firstly, the Internal Factors include project, organizational and stakeholder

related issues.
1. Project related issues comprise of uncertainties of project, increasing

project complexity, inaccurate cost estimating, shortage of resources

availability, or change of financial status of any party involved in the
project.
2. Next, organizational related issues refer to change in management, lack of

timely and effective communication, and lack of integration between
departments (Ibbs et al., 2001).
3. Stakeholder related issues are for instance, design errors, omissions, or

modifications to the drawingsleading to infective design, poor project
definition by owners, inadequate pre project planning, inadequate project
change management, poor communication among owners, designers and
constructors, or constructability ignored in the design process (B. Hwang,
Thomas, Haas, & Caldas, 2009).
B. Secondly, the External Factors consist of natural unforeseeable circumstances,

government intervention, economy, or legal issues.
1. Due to natural unforeseeable circumstances such as inclement weather,
project duration is often delayed as it is unpredictable. During inclement
weather especially rainy or stormy seasons, it will not be possible for
workers to perform any work at the construction site. As safety is also one
of the main concerns in construction industry, the well-being of the
workers should not be risked.
2. Government related issues are for example, statutory requirements or strict

rules and regulations that must be complied with.
3. Changes in tax and interest rates are some of the economy related issues. It
affects the project in terms of the financial viability. Uncertain inflation
rate can affect the cash flow and material availability of the project.
4. As for legal issues, the implementation of new law or regulations may

impose project scope to change and incur more project cost.
As a consequence of all these factors that surfaced, it will lead to project changes
and eventually having an impact on the whole project.
Aside from these factors enumerated by Love et al. (2002),Sun &Meng, (2009)
also identified the causes of change orders by developing a taxonomy. This
taxonomy for change order causes was done through the review of different
journals. They classified causes of change order into external causes, organization
causes and project internal causes. They also summarized the causes of change
identified by the existing studies. According to them, the main project change
causes are the following:

1. Project-related causes - The uniqueness nature of construction projects
often increases the complexity of a project, which in turn increases the
chances of change occurring. A construction project usually involves a
temporary team. A successful project delivery requires good collaboration
between all parties involved. Unfortunately, communication and
collaboration failures are very common in practice. Poor communication
between the key partners is a main cause for design changes and rework.
Delays in action by one party can cause delays of work of others. For
example, if the client fails to secure the site in time, the contractors onsite operation will be delayed. Disputes and conflicts between different
parties are also a common source of project change. Contracts awarded on
the basis of low costs are particular vulnerable for disagreements between
the contractual parties. Such disagreements can lead to claims, payment
delays and disruption to project schedule. Finally, change causes also
come from specific conditions of the site, such as safetyand security
considerations and other restrictions.
2. Client-related causes - Client-initiated changes are very common,

especially during the design stages. These are usually caused by variations
in clients expectations, for instance, requirement updates, budget
reduction, demand for accelerated completion, etc. Inexperienced one-off
clients are particular prone to causing late changes due to delays in review

and approvals; as well as inappropriate interference in design and project
execution.
3. Design-related causes - Design errors and omissions are one of the main
causes for project change during the construction phase. Design errors and
omissions can be caused by human error on the part of architects,
structural engineers, as well as building services engineers. Poor brief
development at the start of a project often leads to a wrong understanding
of clients requirements and wrong assumptions on key project aspects.
Such a bad start would inevitably result in damaging design revisions at
later stages. On the other hand, clients requirements often change during
the course of a project for a variety of reasons. When requirements are
changed, design solutions need to be modified accordingly. Site and
ground conditions provide the foundation for developing design options. If
some abnormal conditions are not discovered during site investigation, the
whole design basis is undermined. Remedial actions are required, most of
which involve design changes.
4. Contractor-related causes - On-site work is usually a complex operation

involving the co-ordinations of many inter-dependent activities carried out
by different subcontractors. The main contractor is responsible for
planning and managing the whole process. Poor site management and

supervision by the contractors was one of the main causes for project
change and delays. This may be caused by inadequate managerial skills,
lack of experience or unsuitable management structure. Poor workmanship
is also widely recognized as a common cause of unplanned project change
and rework. In recent years, the growing trend of using subcontractors
instead of direct labor by the main contractor increased the difficulty of
coordinating the work between different subcontractors. Delays by one
subcontractor can cause secondary delays by others. It is even worse if one
subcontractor has to be replaced during the project due to poor
performance or bankruptcy.
5. External causes - On-site work of a construction project is usually carried

out in an external environment. It is subject to the influence of rain, wind
and temperature variations. Extremes of any of these elements can slow
down or even stop normal operation of plants, equipment and people.
Furthermore, climate conditions are very difficult to predict and plan for in
advance. Subsequently, climate and weather conditions are widely cited as
one of the main causes of project delays and unscheduled changes.
Another common type of cause is related to site and ground conditions.
Inadequate soil condition survey and unknown geological conditions often
result in necessary amendment to design and remedial actions to building
work. In severe cases, a finished structure has to be demolished and

rebuilt. Cost fluctuations and change in availability of material, equipment
and labor during the life cycle of a project can also have a serious impact
on the project delivery. Frimponget. al. (2003) found that escalation of
material costs is one of the top five causes of project change and cost
increase in Ghana. Similar conclusions were reported by Arditi et al. as
well as Dlakwa and Culpin (as cited in Sun &Meng, 2009). Finally,
another source of project change is change in government legislation and
regulation with regards to health and safety, planning, employment,
environment, taxation, etc.
Similar studies conducted by Alnuaimi et. al. (2010) investigated the causes,
effects, benefits and remedies of change orders on public construction projects in
Oman. They divided the causes of change order into client related, consultant
related, contractor related and others. They concluded that the Owners
instruction for additional works and modification to design were the most
important factors causing change orders, followed by the non-availability of
construction manuals and procedures. Agreeing with the study of Alnuaimi et
al.(2010), Ibn-homaid et al. (2011) also concluded that change of the project
scope due to additional, diminution, or enhancement in Owner requirement was
the most frequent, severe, and important causes of change orders. This was
followed by changes of design because of insufficiency of geologic survey, sitesurvey and/or inadequate field investigation as the second most severe and

important cause and the third most frequent cause of change orders. In a
comparative study conducted by Ijaola & Iyagba (2012) of the causes, effects,
benefits and remedies of change orders in Nigeria and Oman, they also arrived at
a similar conclusion that the Owners instruction for additional works and
modification to design were the most important factors causing change orders. It
was then followed by the Contractor uses the gray areas in general conditions
and request variations to the contract as the third most important factor.
2.4. Effects of Change Orders
Effects of change refer to direct or indirect impact of a change event on various

aspect of a project. Although some projects may benefit from positive changes,
most changes interrupt the flow of work and cause cost and time overrun (Sun &
Meng, 2009). Moreover, considering that changes can have both positive and
negativeeffect on project cost, schedule and quality, changes canbe categorized
into two main types, namely beneficial changesand detrimental changes (Ibbs et.
al., 2001). Beneficial changescan be resulted from exercising value management.
Althoughvalue management may incur more cost to the project, it is usefuland
helpful to the project in the long run. Since beneficialchanges are of advantage to
a project, these changes are encouragedin a project by the management team. In
contrast, detrimentalchanges are discouraged and result in negative impactsto the
project, reducing values going to the owner. Ibbs study(as cited in Hwang &Low,

2012) concluded that because changes are common in projects,it is critical for
project management team to confront, embrace,adapt and use variations to impact
positively on the situationsthey face and to recognize changes at the early phase
of theconstruction. Also, in order to contribute to a successful project,it is very
important for the timely identification of impacts ofproject changes(B.-G. Hwang
& Low, 2012).
Sun &Meng (2009), in their study of change causes and effects in construction
projects, developed a taxonomy for change effects. This taxonomy for the effects
of change order was done through the review of different journals. They classified
effects of change order into (a) time and cost related effects, (b) productivity
related effects, (c) risk-related effects and (d) other effects.
1. Time and cost related effects - The most frequent effects of project
changes were increases in project costs and delays in completion as
identified by all three studies. These two effects are often inter-related.
Project changes usually result in extra work or variations of work. These
are generally regarded as changes to the contractual terms. Contractors
and specialist subcontractors usually ask for more money for carrying out
the required changes, especially for those initiated by the clients. Cost can
also increase because more people have to be employed, or staff overtime
has to increase, in order to deal with the consequences of changes. Rework

is recognized by all three studies as a negative effect of project changes.
Rework incurs cost increase onwasted labor and material for the initial
effort that needs to be abandoned. Further costs are related to equipment
and labor that are required to remove the existing work. In addition, Love
et al. (2003) carried out a series studies on the common causes of rework
during construction projects and the consequence of rework project time
and cost overruns, and ultimately customer dissatisfaction. Some studies
attempted to quantify the cost of rework, ranging from 2.4%, 4.4% to as
high as 12.4% of the total project cost.
2. Productivity related effects - Productivity is a measurement of speed and

efficiency with which a task is completed. It is generally accepted that
projects with a high level of change experience productivity degrading.
This negative correlation between the amount of change and project
productivity was also reported by Ibbs (as cited in Sun & Meng, 2009).
Arain and Pheng (2005) only acknowledged the fact of productivity
degradation as a result of project change. On the other hand, Hanna et al.
(1999) conducted a series of detailed studies on the impact of project
productivity and efficiency by the size of change order, relative size of
project, timing of change order, complexity of change work, effectiveness
of management, etc. They concluded that the loss of productivity due to
change was caused by the loss of learning curve effect, site congestion,

trade stacking, schedule compression, overtime, over-manning, multipleshift work, staff morale and motivational problems, and resource
problems. Bower (2000) attributed the loss of productivity to the need for
reprogramming, loss of rhythm and unbalanced gangs as a result of
changes.
3. Risk-related effects - In addition to the immediate consequences, project

changes can also increase the risk of further disruptions. Because in order
to catch up with the delays caused by change, some tasks have to be
accelerated and some floats of the original schedule are lost.
4. Other effects - The relationship between the client and contractor is

usually formalized by a contract. Project changes often result in alterations
to the contractual terms and conditions. Differences in understanding of
causes of change would lead to claims and counter claims. The prevalent
occurrences of claims and disputes are due to the fact that a project change
is usually a result of a combination of causes rather than a clear-cut
individual factor. A client and a contractor can often agree on what the
change is. However, they do not agree on the exact causes of the change
and the responsibilities for the causes. If such a disagreement cannot be
resolved through consultation, claims and disputes will be the result.
Project changes often lead to higher workload and the need for

rescheduling of work. Working overtime and/or managerial pressure are
usually required to get the project back on track. One of the consequences
of this is the damage on staff morale and staff fatigue, which in turn
results in low productivityand poor quality of work.
B.-G. Hwang & Low (2012) specifically identified the major negative impacts/
effects of change orders. These effects coincide and agree with the classification
from the taxonomy made by Sun & Meng (2009). Some of the major negative
effects according to B.-G. Hwang & Low (2012) are as follows:
1. Increase in project cost - This is the most common effect of project

changes which may occur. Any major additions to the original work scope
will lead to a significant increase in project cost. Therefore, there is always
the contingency sum in the contractto counter for this purpose.
2. Recruiting New Professionals - According to the research conducted by

CII (as cited in Hwang & Low, 2012) changes are frequent in complex
technological projects. According to Fisk (as cited in Hwang & Low,
2012), considering that specialized manpower is one of the integral
resources required for complex technological projects, when there are new
changes to a project, engagement of specialized professionals may be
essential to facilitate the changes (Arain and Low, 2005). Furthermore, if

the professionals are not readily available to deal with the new changes,
there will be accumulatedproblems.
3. Increase in overhead expenses - As stated earlier on, project changes

indicate some minor or major differences to the contractual scope agreed
between owner and contractor. O'Briens study (as cited in Hwang & Low,
2012) concludes that in order to make the changes validated and agreed
upon mutually by both parties, proper documentation is vital. This is to
ensure that the proposed changes are properly communicated and
documented to all the parties involved. Hence, it implies that more
expenses will be necessary for the legal documentation and paper
procedurespertaining to the agreed changes (Arain and Low, 2005).
4. Quality degradation - This is also one of the main concerns for owners.
Contractors may tend to compensate for the losses by cutting corners due
to the frequent changes of the owners. Thus, this will affectthe quality of
the work negatively (Arain and Low, 2005).
5. Decrease in labor productivity - Lee et al. (2005) highlighted that working

overtime could demoralize the morale of workers and deteriorate the
productivity of workers. Consequently, the productivity degradation will
affect the delaying of the project too. In relation with that, Ming et al.

(2004) also mentioned that in cases whereby workers were expected to
work for overtime over a prolonged period to compensate for the project
schedule delays, productivity will begreatly affected.
6. Delay in procurement process In the studies conducted by Hester and

OBrien (as cited in Hwang & Low, 2012), both concluded that
procurement delays can be frequent in a construction project as a result of
project changes. New specialized materials or equipment may be neededto
be the resources of the project (Arain and Low, 2005).
7. Rework and Demolition According to the study of Clough and Sear (as
cited in Hwang & Low, 2012), rework and demolition are considered the
most potential effect of project changes that can occur. This is especially
in the event whereby the construction has either just commenced work or
already in the midst of the construction process (Arain and Low, 2005).
Minor or major rework may be needed depending on the timing when the
changes occurred. B. Hwang et. al.(2009) adds on that project cost
performance can be improved by recognizing the impactsof reworks.
8. Safety conditions - Safety conditions in construction projects may be

affected by changes (Arain and Low, 2005; Arain et al., 2004; O'Brien,
1998). Employers should always ensure a safe workplace condition for

workers. Health and safety of the workers should be carefully taken care
of. When there is new equipment or other construction methods used,
proper and additional safetymeasures must be prepared for the workers.
9. Delay in completion schedule - Completion schedule delay is the most

frequent effect that can occur. A survey finding in the study of
Kumaraswamy et. al. (as cited in Hwang & Low, 2012) showed that 50
percent of the projects surveyed were delayedbecause of the frequent
changes.
Related studies conducted by Alnuaimi et al. (2010) on the status of change orders
on public construction in Oman revealed that the delay completion date of
projects was the most important effect of variation. This was already expected as
changes mostly in revision of plans, addition of works, more time for decision
making, material re-sourcing, etc. The second important effect was found to be
variation would result in claims and disputes and it was followed by cost
overruns as the third most important effect. The results of this study were quite
the same with that obtained from the comparative study conducted by Ijaola and
Iyagba (2012). However, the ranking with regards to the importance of the effects
of change orders was different. Ijaola and Iyagba (2012) concluded that the
variations would result in claims and disputes was the most important effect of
change order. They said that this is true as claims will arise from one party to

another as a result of misinterpreting or misunderstanding change order and
eventually lead to disputes. Delay in completion date of projects was ranked
second along with cost overruns. This was also expected as delay in time will
automatically affect the cost of the project. Ibn-homaid et. al., (2011) also agreed
with the first two studies. They found out that all the respondents perceived that
construction delay was the most frequent, severe and important effect of change
orders. It was then followed by cost overruns and interruption of continuous
work as the second and third most frequent, severe and important effects of
change orders. Furthermore, there was also a similarity of results obtained from
the study of Osman et al. (2009). According to them the most frequent effects of
change orders were increase in project cost, additional payment for
contractor, and increase in overhead expenses. These effects are also similar to
and can be summarized as cost overruns from the previous studies. These were
then followed by completion schedule delay as the fourth most frequent effect.
2.5. Benefiting Parties of Change Orders
Owners involved in ongoing construction projects are virtually unanimous in

recognizing the need to minimize the number and amount of change orders as a
way to keep the project costs within budget. In viewing change orders with only
this in mind, however, owners may tend to overlook the benefits that the change
order process offers to owners. The primary benefits afforded by the change order

process are that it allows owners the flexibility to respond quickly, to capitalize
upon opportunities and to mitigate problems both of which frequently arise
during the course of construction (Parisi, 2002). Flexibility and speed are the two
key benefits that the change order process provides to owners. Flexibility is a
benefit, in that change orders allow the owner to accommodate modifications
without having to renegotiate the entire basic agreement with the contractor. The
change order process also allows for a relatively quick method to accommodate
needed revisions. A short turnaround time is essential for the owner to capitalize
on opportunities as well as to minimize the cost and time impact of dealing with
problems that arise. Contractors, on the other hand, also benefit from change
orders in such a way that they are entitled to claim for any direct loss and expense
incurred such as pro-rata rates, day work rates, BQ rates, and fair market rate
(Law Teacher, 2013). Moreover, the contractor also makes use of different
interpretations of the contract clauses or loose ends in the scope or design to
improve his profit margin (Alnuaimi et al., 2010). And lastly, the consultant also
benefits from change orders because of guaranteed payments for redesign works
and increase in the time frame of the project.
According to Alnuaimi et al. (2010), the first party that benefits from variations is
the contractor, the second benefiting party is the consultant, and the least
benefiting party is the client. Their study also showed that only few people
believe that no one is benefitting from change orders. This just means that

somebody, if not all the parties, is benefiting from change orders. The contractor,
in particular, benefits because of money earned due to increase of works including
unit rates, time extension, variation in quantities, etc. without competition from
other contractors. The consultant benefits because of guaranteed payment for time
extension and design modifications. The client benefits because he/she ultimately
receives the project with less problems after corrections/ modifications. However,
contrary to the results of their study, Alnuaimi et al. (2010) believe that the
consultant is the one who is benefiting the most. This is so because of the low
level of risk and the guaranteed fee payments in most cases. In comparison with
this study of Alnuaimi et al. (2010), Ijaola & Iyagba (2012) also yielded the same
results thus verifying the ranking they already made.
2.6. Remedies for Change Orders
Alnuaimi et al. (2010) identified eight (8) remedies for change orders which were
based on the knowledge they gained from the four case studies they conducted,
discussions held with concerned parties and previous industrial experiences.
Listed below are the said remedies (ranked according to their importance) which
are aimed towards alleviating the problems brought about by change orders.
1. Registration of the consultant company should be reviewed to reflect its

technical capabilities.

2. A standard document should be developed to establish the stages/ steps
from the start of the project until completion and close out.
3. A common learning database system should be shared among all
governmental units.
4. A specialized quantity surveyor/ cost controller and project manager
should be assigned to large construction projects.
5. No design engineer shall be allowed to practice without having a
professional license.
6. Permanent standards shall cover all construction regulations and permits
required for construction projects in the country (in their study, it was
Oman).
7. The general conditions should be reviewed and updated.
8. A construction procedure manual should be established and implemented.
This list was adopted by Ijaola & Iyagba (2012) in their comparative study of
causes of change orders in public construction projects in Nigeria and Oman.
However, they arrived at a different result. The most important remedy in their
list was the a specialized quantity surveyor/ cost controller and project manager
should be assigned to large construction projects. The least important, on the
other hand, was the registration of the consultant company should be reviewed to
reflect its technical capabilities which was ranked by Alnuaimi et al. (2010) as
the most important remedy. This difference in ranking among the importance of

the identified remedies can be attributed to the varying conditions present in both
countries.
2.7. Legal Aspects of Change Orders
We now discuss the legal aspects of change orders such as contract change, clause
interpretation, substantiation and management of claims. It is equally important to
have knowledge about the legality of change orders for us to be able to analyze
each change and formulate appropriate steps on how to manage the said change.
Throughout this literature review, change orders are looked at as major sources of
construction claims and disputes. The majorlegal aspects are (Cox, 1997):
1. Selecting the best delivery system (contract format)

2. Drafting and interpreting change clauses
3. Documenting change orders to be ready in case of litigation
Most of these issues can be found in literature discussing claims and disputes
anddeal with after the fact approach. However, there are few points that affect
how a project twill cope with changes and problems anticipated. As determined
by Cox (1997), Anowners management of change orders and claims must also
anticipate and provide fordispute prevention and dispute resolution processes
from the outset.
2.8. Types of Construction Contracts
Whenever the legal aspects of change orders are being talked about, the subject of
contract formats used are also being discussed. There are numerous contract types
used in construction depending on ownerand project requirement. The more
common types will be reviewed here.
Construction contracts are typically drafted by the Owner or his representative

(consultant) and contain the subject matter and terms and conditions. According
to the study of Ashly & Workman (as cited in Al-Duabisi, 2000), construction
contract is typically comprised of:
1. Bid Form
2. Agreement Form
3. General Conditions or Standard Specifications
4. Special Provisions
5. Plans
6. Addenda
Construction contracts must also include a compensation system and are generally
classified according to the compensation system as follows:

1. Fixed Price Contracts
According to Ibbs study (as cited in Al-Dubaisi, 2000), this category
includes all contract types in which financial terms require thecontractor to
establish a stipulated sum for the completion or execution of a defined
quantity of work. Under this category the following types are listed:
a. Lump Sum - The contractor in this type of contract is required to construct

the project inaccordance with plans and specification for a fixed sum.
Contractor will besolely responsible for any cost exceeding the agreed
amount. The scope mayinclude or exclude materials, procurement or
engineering as agreed.
b. The term Lump Sum Turn Key (LSTK) - is often used to indicate a lump
sumcontract including design procurement and construction. Sometimes it
isreferred to as simply turnkey contract. Sometimes the term Design and
Build (D&B) is usedto indicate a lump sum contract as will be discussed
later under contracting strategies. Another form of lump sum type contract
used in industrialconstruction is the Lump Sum Procure and Build
(LSPB).
c. Unit Price - This contract type contains a detailed list of estimated work
quantitiessuch as cubic meters of excavatedland or concrete or a total

length ofdifferent pipe sizes. The owner in this case willtake the risk of
variationin quantity. Actual price paid (fixed) is determined by actual units
doneas constructed. Most government contracts in the Philippines are unit
typeformat. According to Ayers (as cited in Al-Dubaisi, 2000), unit price
contract allows owner the freedom to make changes inthe volume of work
and permit more control.
d. Guaranteed Maximum - In this type of contracts, the owner is guaranteed

a maximum price forexecuting the work as defined in the contract.
Normally the contract contains incentive clauses for cost under-runs and
penalty clauses for costoverruns. In the study of Ashly and Workman (as
cited in Al-Dubaisi, 2000), they discussed the effects of incentivesin the
contract and concluded that they promote an attitude of motivationon the
contractual relationship and take the form of inducements,encouragement
and threats. The study also indicates that incentives are atool used by
owners to adjust the contractors fee. The study includes fulldetails of
finding on contractual motivation which is beyond the scope ofthis review.
2. Cost-Reimbursable Contracts - This category includes all contract types,

in which financial terms allows thecontractor price adjustment relative to
project costs. The study of Ibbs et. al. (as cited in Al-Dubaisi,
2000)summaries the type of contracts which fall under this category as:
a. Cost Plus Fixed Fee - The contractor in this type of contract is paid
whatever cost associatedwith the project plus a lump sum fee for corporate
overhead and profit.
b. Cost Plus Percentage - In this type of contract the contractor is paid all
costs associated with theproject plus a percentage of these costs rather
than a fixed sum or fee.
c. Target Price Plus a Fee - In this type of contract, a target price is first
established for the cost of theproject based on contract documents or unit
prices. The contractors feewill be based on this sum. Typically financial
arrangements makeprovision for the contractor to share any savings below
the target price orparticipate in the liability of cost overruns.
There are other classifications or names used to describe certain contract

formatsbased on scope or on contractual strategy such as the Engineer-Procure
and Constructcontract (EPC) which is quite common in industrial construction.
There is the Design andBuild type (D&B) as discussed earlier. Other type
includes Build-Own-Operate-Transfer (BOOT) and Build-Operate-Transfer
(BOT) contract methods.

Certainly not all types of contracts are equally sensitive to changes. If contracts
are classified as either cost reimbursable or fixed cost, the latter will be the most
sensitive to changes. For example, Resmonds study (as cited in Al-Dubaisi,
2000) suggested that in a climate of intense competition, the winners of bid
awards are not only willing to assume the risk of losing profits, but are also
willing to improve their financial position through excessive use of change orders.
This premise was tested against a sample of actual data from the Western
Division, USA Naval Facilities Engineering Commands.
In cost reimbursable projects, there is a direct transfer of cost and schedule effects
to the owner. Generally fixed price contracts are selected for projects in which the
scope is well defined and the risk is low. Cost reimbursable contracts on the other
hand are selected for ill-defined projects or for schedule acceleration. In short,
owners should consider changes when considering the type of contract for their
project in terms of the ability of the contract to contain and minimize changes (CII
publication 5-1 as cited in Al-Dubaisi, 2000).
2.9. Existing Local and International Provisions for Change Orders
In every contract, one of the most important clauses is the change clause: Change
clauses are an important element of the contract because they provide mechanism
for contract modification (either to react to unexpected events or because the
owner desires change) and for appropriate compensation (CII publication 5-1 as
cited in Al-Dubaisi, 2000). The change clauseestablishes the right of the owner to
make changes within certain limitations and through adefined mechanism. As
noted by Cox (1997), the change clause is the most frequently relied on by
contractors and subcontractors when seeking recovery of extra money.
In Krones study (as cited in Al-Dubaisi, 2000), he found in his interesting

comparison between ConstructionManagement styles in the US and Japan that
change orders are uncommon in Japanese construction. Instead, Japanese
contractors request additional money at the end of construction projects.
Meanwhile, in a study done by the Construction Industry Institute (as cited in AlDubaisi, 2000) it was found that change clause is one of the most troublesome
contract clauses. Problems most often encountered with construction change
clauses involved definition and negotiation of costs, dispute resolution and time
required for approval. According to Hesters study (as cited in Al-Dubaisi,
2000), legal disputes over changes often focus on whether or not a compensatory

change exists, the appropriate level of compensation, and the relative
responsibility for a change. Hester further differentiated between the direct and
indirect impacts from a legal point of view. Two terms came into discussion
namely compensability and excusability of a change.
Change clause is an essential part of any legal construction contract. It defines

how the two parties will handle changes and change orders, and form the basis of
any legal claims. There are many forms of change clause. Some are standard, such
as the American Institute of Architects (AIA) form. Sometimes an owner or an
engineer may attempt to avoid responsibility of changes by using a disclaimer
clause or risk-shifting clause in the contract. Such a clause may state that
subsurface data provided is for information only and the owner is not
responsible for any variation. The owner or the engineer may also place a design
responsibility on a contractor, whereas it is the responsibility of the engineer
under common law or traditional industry practice. By using such clauses an
owner or an engineer is transferring the risk to the contractor. These clauses, if
used, become risk items in themselves which affect the contractor bidding
strategy. Some examples are the no damage for delay clause, a site condition
disclaimer, a blanket indemnity clause (Cox, 1997) and the list is long which
requires contractors to allow for these shifted risks in their bids and go into their
project with open eyes.

In the Philippines, most of the construction contracts are based on international
standards. Public construction also follow certain government issued laws and
regulations. In this regard, the researcher reviewed the International Federation of
Consulting Engineers (FIDIC) Redbook 1st Edition and the Philippine
Presidential Decree 1594 (PD 1594).
The FIDIC Redbook is an international standard about the conditions of contract

for construction for building and engineering works designed by the employer. It
specifically discusses the general conditions, guidance for the preparation of
particular conditions, forms of letter of tender, contract agreement and dispute
adjudication agreement. Variations and Adjustments clauses are presented under
Section 13. Under this section, FIDIC Redbook (1999) states that Variations may
be initiated by the Engineer at any time prior to issuing the Taking-Over
Certificate for the Works, either by an instruction or by a request for the
Contractor to submit a proposal. The Contractor shall execute and be bound by
each Variation, unless the Contractor promptly gives notice to the Engineer
stating (with supporting particulars) that the Contractor cannot readily obtain the
Goods required for the Variation. Upon receiving this notice, the Engineer shall
cancel, confirm or vary the instruction. The Contractor shall not make any
alteration and/or modification of the Permanent Works, unless and until the
Engineer instructs or approves a Variation.

Further, it also states that if the Engineer requests a proposal, prior to instructing a
Variation, the Contractor shall respond in writing as soon as practicable, either by
giving reasons why he cannot comply (if this is the case) or by submitting:
a. a description of the proposed work to be performed and a programme for

its execution
b. the Contractor's proposal for any necessary modifications to the

programme according to Sub-Clause 8.3 (Programme) and to the Time for
Completion, and
c. the Contractor's proposal for evaluation of the Variation.
The Engineer shall, as soon as practicable after receiving such proposal (under
Sub-Clause 13.2 (Value Engineering) or otherwise), respond with approval,
disapproval or comments. The Contractor shall not delay any work whilst
awaiting a response. Each instruction to execute a Variation, with any
requirements for the recording of Costs, shall be issued by the Engineer to the
Contractor, who shall acknowledge receipt. Each Variation shall be evaluated in
accordance with Clause 12 (Measurement and Evaluation), unless the Engineer
instructs or approved otherwise in accordance with this Clause. (FIDIC Redbook,
1999)
On the other hand, the Philippine Presidential Decree 1594 (PD 1594) presents
the prescribing policies, guidelines, rules and regulations particularly for local
government infrastructure contracts. This decree was made because of the need to
adopt a comprehensive, uniform, and updated set of policies, guidelines, rules and
regulations covering government contracts for infrastructure and other
construction projects in order to achieve a more efficient and effective
implementation of these projects. Under Section 9 of this decree, Change Orders
and Extra Work Order were discussed. According to this section, A change order
or extra work order may be issued only for works necessary for the completion of
the project and, therefore, shall be within the general scope of the contracts as bid
and awarded. All change orders and extra work orders shall be subject to the
approval of the Minister of Public Works, Transportation and Communications,
the Minister of Public Highways, or the Minister of Energy, as the case maybe.
(PD 1594, 1995)
Aside from this provision, there is a section specifically pertaining to change

orders. And that is Section CI 1: Variation Orders Change Order/ Extra Work
Order/ Supplemental Agreement. Under this section, it was stated that Variation
orders may be issued by the concerned agency/ office/ corporation to cover any
increase/ decrease in quantities, including the introduction of new work items that
are not included in the original contract or reclassification of work items that are

either due to change of plans, design or alignment to suit actual field conditions
resulting in disparity between the preconstruction plans used for purposes of
bidding and the as staked plans or construction drawings prepared after a joint
survey by the contractor and the government after award of the contract. The
addition/ deletion of works should be within the general scope of the project as
bid and awarded. A variation order may either be in the form of a change order,
extra work order or a supplemental agreement (PD 1594, 2000). Moreover, the
decree also said that change orders or extra work orders may be issued on a
contract upon the approval of competent authorities provided that the cumulative
amount of such change orders or extra work orders does not exceed the limits of
the formers authority to approve original contracts. There was also a provision in
this section that any variation order (change order, extra work order or
supplemental agreement) shall be subject to the escalation formula used to adjust
the original contract price less the cost of mobilization.
After going through the review of these two standards and/ or guidelines for
construction contracts, it can be deduced that change orders are serious matters
that need a detailed description of its legality, conditions, and guidelines for its
implementation. Excerpts of FIDIC Redbook 1st Edition and PD 1594 containing
provisions for change orders are attached in the Appendix for reference.
2.10. Control, Administration and Procedures of Change Orders
1. Control of Change Orders

One of the main objectives of this research was to identify the most
significant corrective action or preventive measure that could be
recommended to affected professionals in the construction industry; these
factors are important to minimize avoidable design changes. Several
literatures discuss corrective actions and/or preventive measures that could
be implemented to minimize design changes. Mohamad, Nekooie, and Alharthy, (2012), in particular, presented some remedies which were
reported as required corrective actions and/or preventive measures along
with their mean scores and ranks as perceived by the participating groups.
According to them, the top three (3) Corrective Actions and/ or Preventive
Measures of Design Changes are:
a. Allocating sufficient time at the initial design stage to implement

clients ideas properly and to finalize the requirements of the
proposed work.
b. Allocating sufficient time and funds at the initial planning stage for
feasibility studies, site investigations, detailing the existing site
conditions and highlighting any site restrictions to avoid
unexpected circumstances.

c. Providing a clear and comprehensive design brief at an early stage.
Mohamad et al. (2012) concluded that the item, allocating sufficient time and
funds at initial planning stage for feasibility studies, site investigations, detailing
existing site conditions and highlighting any site restrictions to avoid unexpected
circumstances, scored second highest by both clients and consultants. They said
that feasibility studies and site investigations and details are critical because they
normally define the basic requirements of work that need to be developed further.
This information provides alternative options and highlights any technical
problems or restrictions to the work with solutions to such potential problems at
the initial stage of a project. It is also worth mentioning in their study that
providing a clear and comprehensive design brief at an early stage to minimize
the design changes was ranked third by the participating groups. Design changes
occur because of unclear design briefs and in many instances, these changes lead
to disputes, which invariably address details that did not exist in the scope of the
original design.
Alnuaimi et al. (2010) also identified and ranked some remedies of change orders.
According to their study, the most important remedy was the registration of the
consultant company should be reviewed to reflect its technical capabilities. This
remedy is specifically directed toward the consultant. This, according to them,
suggests that there is a close link between the qualifications of the consultant and

the change orders caused by the client. This is probably true because the client
may not receive proper advice from the consultant during the feasibility study or
during preliminary design, which leads to changes during detail design and
construction. These changes are counted on the client although instigated by less
qualified consultants.
Further, Alnuaimi et al. (2010) ranked second and third most important remedies
the item a common learning data base system should be shared among all
governmental units and a standard document should be developed to establish
the stages/ steps from the start of the project till the completion and closeout.
These remedies are not directly asking the client as individual for improvement.
Rather, they said that these are directed toward the whole system. This shows that
that in some cases change orders causes are beyond the control of the clients or
the consultants. Rather they require regulations at the national level. This also
shows the importance of establishing and implementing standard manuals for
design and construction, as well as building national database system for soil and
infrastructure services.
Comparing the study of Alnuaimi et al.(2010) with that of Ijaola and Iyagba
(2012), it can be noted that their second and third most important remedies are the
same. Both studies agree that there is indeed a need for a standard documentation
all throughout the project as well as a common learning database. This similarity

can be attributed to the fact that both countries to where they conducted their
respective studies are referred to as developing countries thus having some
commonality in some of the results. However, not all of the results are the same;
they also differ in some aspects particularly in the first most important remedy.
While Alnuaimi et al., (2010) concluded that registration of the consultant
company should be reviewed to reflect its technical capabilities as the most
important remedy, Ijaola and Iyagba (2012) concluded otherwise where it was
ranked last. According to Ijaola and Iyagba (2012), the most important remedy
was the item a specialized quantity surveyor/ cost controller and project manager
should be assigned to large construction projects. But even though they differ in
description, they mean the same idea. These suggested remedies were indeed
consultant-related and they show how far consultant could prevent changes during
construction.
Observing the top three remedies, corrective actions and/or preventive measures,
it can be observed that they all pertain to the consultant or design engineers. All of
the studies mentioned above agree that change orders can be minimized, if not
totally eliminated, depending on the preparedness and competency of the
consultant. A nearly perfect plans and specifications are some of the
requirements to mitigate change orders and licensed and/or qualified designers are
also required in order to minimize errors and changes in the design.
2.11 Management of Change Orders
Change management is one of the project management practices that resolve

problems when changes occurred in a project or minimize changes that may occur
and disrupt the progress of the project (Zhao, Ph, Lv, Zuo, &Zillante, 2010). It
seeks to forecast possible changes, identify changes that have already occurred,
plan for preventive measures, and coordinate changes across the entire project
among all stakeholders. Besides addressing the impact of changes, an effective
change management should also look into the cost, time and quality
considerations for the project.
Inconsistent management of the change process can result in many disruptive

effects (Motawa et al., 2007). Additionally, if changes are not resolved through a
formalized change management process, it may become the major source of
contract disputes and leading to a project failure. The process of change
management comprised of four basic principles: (1) to identify changes; (2) to
evaluate changes; (3) to implement changes; and (4) to learn from past
experiences (B.-G. Hwang & Low, 2012). These four principles work together to
achieve the objective of an effective change management system.

Molly (2007) identified six steps to managing change orders. These steps provide
a comprehensive approach to resolving project changes in a more cost and time
efficient manner. These steps are as follows:
Evaluate the contract
1. Identify the change
2. Notify parties of change
3. Document the change
4. Prepare the change request
5. Resolve the change request
According to her, implementing these steps at the first sign of a change can help
the parties spend less money and exert less effort to recover or pay for the costs
associated with the change. She also concluded that the parties can benefit by
maximizing their efforts to resolve the changes during the construction project,
rather than incurring the high costs associated with mediation, arbitration, or
litigation after the project is complete.
Although some authors give some recommended steps or guidelines on how to

manage change orders, Egan et al. (2012) believes that currently, there are no
widely accepted industry standards related to change management processes;
however, numerous organizations and individuals have recommendations on
change management processes.One challenge is that there is no one specific

change management process that is most beneficial and appropriate for all types
of construction projects. Each project has its own unique set of facts and
circumstances which may make standardization difficult. Moreover, the methods
and procedures used for managing changes can vary based upon the type of
construction contract. Detailed support of a change and its impact to the project
may be more beneficial on a lump sum or fixed price contract compared to a costplus contract. Additionally, the standard contract documents used in the
construction industry include various methods for managing change.Variances in
the size, length, and complexity of a project can also be a factor in how change is
managed. For example, a large, multi-year project with multiple contractors,
subcontractors, architects, engineers, and other consultants may use a robust
change management process that canelectronically track changes, notify and
coordinate the change among the parties, update the project schedule, and track
the cost and schedule impacts going forward through the completion of the
project.At times, large, complex projects may require multiple people fully
dedicated to tracking and managing change. This detailed process may require
additional resources and is less likely to be fully employed on projects of smaller
scale and scope.
As demonstrated by these few examples, there may not be one specific change
management methodology that is appropriate for all construction projects.
However, despite the differences that exist between the scenarios mentioned

above, each of the change management methodologiesreviewed include certain
underlying
consistencies
and
commonalities
among
the
alternative
approaches.Egan et al. (2012) summarized some of the practices from these

various approaches and outlines the steps that can be taken to effectively manage
change on a construction project:
1. Address potential changes in the contract documents.

2. Identify the potential change.
3. Create a proposed change order and document the proposed change.
4. Review and evaluate the proposed change order timely.
5. Execute the change order. And,
6. Document the executed change.
However, in spite of these suggested approaches, why do companies still having

problems when it comes to managing change orders? Molly (2007) sighted some
of the biggest challenges with the management of change which include the
following:
1. Recognizing that a change has occurred

2. Identifying the effects of the change
3. Managing the elements of the project that are impacted
4. Assessing and calculating the impact of changes
B.-G. Hwang and Low (2012) further identified the barriers the prevent
companies from implementing change order management. They found out that
81% of the respondents indicated that being comfortable with current operations
is the greatest barrier hindering them from implementing change management,
followed by the small scaleof projects (48%). Companies may be reluctant to be
adapted to a new management style and prefer to maintain with their current
operations. Furthermore, practicing new management approaches require
additional resources and technical requirements to support them. This also incurs
additional cost and thus becomes the main issue when companies consider the
implementation of change management. It is of interest that there were
respondents who even consider change management time consuming (38%).
While the result might be due partly to concerns about time taken for its
implementation, it draws attention as the result may imply that benefits from
change management have not been well recognized in the construction industry.
And as a result, B.-G. Hwang and Low (2012) also identified the benefits of
implementing change order management.
In general, the respondents agreed that their companies have benefited from the
implementation of change order management (B.-G. Hwang & Low, 2012).
According to them, more specifically, 82% of the respondents indicated that they
can respond faster and more readily to project changes, practicing change

management. Next, cost and time savings were found to be the second most
benefits identified. Hence, this further supports the importance of implementing
change management in projects.Cost and time have been the two major objectives
of construction projects and as change management may reduce cost and time,
more companies will implement it. Another important aspectof projects is quality.
However, it was reported that only 27% of the respondents recognize
improvement in quality by implementing change management. In fact, change
managementmay not directly improve quality while it would remove potential
risks that are caused by changes, which affect quality of the project.
CHAPTER 3
RESEARCH DESIGN AND METHODOLOGY
This chapter discusses the research design and outlines the research methodology
and identifies the tools and techniques that will be employed in a systematic data
collection exercise. It describes the practical way in which the whole research
project will be organized. It highlights the research locale, sources of data and
samples, data gathering instruments, procedures for gathering data and the
statistical treatment and analysis of data.
3.1. Research Design
There will be two research modes that will be employed in this study:
Descriptive/ Survey Research and Case Study Research. Descriptive/ Survey
Research involves gathering data in order to describe and explain events and
validate findings. It uses techniques such as observational, survey and interviews
to collect data. And specifically in this research, a questionnaire will be developed
to assess the perceptions of clients, consultants, and contractors on the relative
importance of causes, effects, and management of change orders in Philippine
construction industry. Case study research, on the other hand, is an in-depth study
of an individual or group of individuals and typically collects data from a natural
setting, with no experimental controls. The goal of a case study is to identify

primary causes and effects and relationships. Quantitative data may also be
limited in this kind of study.
3.2. Research Locale
This study will be conducted in selected cities within Metro Manila particularly in
Taguig City, Quezon City, Makati City and Pasay City where you can find a pile
of on-going high-rise building construction. Due to time constraints, the
researcher opted to limit his study and chose Metro Manila as the ideal study area
because of its diverse exposure to different kinds of construction projects, a thing
which makes it a good representation of the current status of construction industry
in the country.
Being the capital of the Philippines, Metro Manila is a place where you can find
the biggest and the most complicated construction projects in the country. It is
also a home for many construction companies, consultancy and engineering
design companies, as well as owners whose projects are located not just in Metro
Manila but are also extended to different regions and provinces within the
country.
3.3. Sources of Data and Sampling
The data that will be used in the survey will come from a variety of selected
respondents, each representing the Consultant, Client and Contractor. A Purposive
Sampling will be used in this study in order to focus on a particular population
that will best answer the research questions, thus enabling the researcher to get
more reliable and accurate information. According to Walliman (2005) and
O'Leary (2004), purposive sampling is labelled as "theoretical sampling". It is a
useful sampling method consisting of getting information from a sample of the
population that one thinks knows most about the subject matter (Walliman, 2005).
O'Leary (2004) indicated that there is a growing recognition that non-random
samples can credibly represent the populations, given that the selection is done
with the goal of representativeness in mind. Furthermore, "purposive" highlights
the importance of conscious decision-making in non-random sample selection
(O'Leary, 2004). This method will be used to select respondents to which
questionnaires will be sent.
The respondents will be coming from different construction projects located in the
area of study. They will be selected in such a way that they must be principal
engineers who have the necessary professional background to answer the research
questions. They must have also been working for their respective firms for at least
three years to ensure that they can answer questions regarding their company and

its operations. And to maintain the quality and effectiveness of the survey, the
researcher will choose to have a sample size of 20 respondents representing the
Clients, 20 respondents representing the Consultants, and 20 respondents
representing the Contractors. This sample size may not accurately represent the
whole construction industry, but this will be a good representative sample since
the respondents will be chosen based on a set of criteria mentioned above.
On the other hand, two (2) construction projects (one public and one private) will
be explored as the bases for the case studies. The cases shall be chosen in such a
way that these should have undergone substantial changes resulting to a
significant effect on construction cost and schedule. These two cases will be
treated as two separate single cases wherein the conclusion in each case will be
used as information contributing to the whole study.
3.4. Data Gathering Instruments
A. Survey Questionnaire
To achieve the study objectives, previous studies related to the current study will
be collected. The researcher will conduct a literature review of design change
factors and will investigate the processes in the construction industry. The

information that will be gathered from literature review will then be used for
questionnaire development.
The data gathering will be based on the questionnaires that will be sent to selected
clients, consultants and contractors. This questionnaire will enable the researcher
to organize the questions and receive replies without actually having to talk to
every respondent (Walliman, 2005). It will be devised as a means for the
systematic gathering of field data and will be developed to obtain professional
opinions and perceptions on the causes, effects and management control practices
of construction change orders. The questionnaire statements will be based on
experience and discussions with different concerned parties. They will also be
somewhat similar to statements as presented in different reviewed literatures.
Thequestions will be fixed and the same for each respondent. Most of the
questionnaires will be hand-delivered and responded to in the presence of the
researcher. This optionmight be time consuming but it may yield a higher
response rate. Other questionnaires will be sent by post where deemed necessary.
Closed-endedand open-ended questions will be formulated.
The questionnaire will be divided into six sections. Section one discusses the
instruction and definition of some terms which are intended to help respondents
complete the questionnaire. Section two includes general questions about the

respondents such as experience, profession, and specialty of their projects.
Section three includes questions that deal with the subject of change orders in a
general sense and their experience as a contractor, consultant or owner in the field
of large building construction in the Philippines. Sections four, five and six will
be dealing with the causes, effects and management control practices of change
orders in construction projects, respectively. And lastly, space will be provided at
the end of the questionnaires which will ask for the respondents additional
comments, suggestions and recommended management process in dealing with
change orders that were not covered or mentioned in the questionnaires.
B. Interviews and Actual Observation
Aside from the questionnaires, the researcher will also be conducting interviews
in order to obtain first-hand information about the background and history of the
project. It will also be conducted in order to gain some insights about the project
which cannot be obtained thru survey questionnaires.
The researcher will likewise conduct actual site observations on the project
particularly on how they respond to and process change orders. Although this is a
qualitative approach in gathering data, so many valuable information can be
derived from this such as their behaviour towards change orders and how they

document and process change orders. These sets of supplementary information
can greatly help the researcher analyze the cases at hand.
C. Collection of Physical Artefacts
Physical artefacts such as project documents (e.g. contract documents, plans &
specifications, etc.) will be collected as valuable source of information
particularly those pertaining to the commercial and contractual aspect of the
project. These sets of information are equally important as these would give the
researcher an in-depth understanding of the project in terms of the conditions of
the contract it entered in. The analysis of the two cases will also be based and
grounded on the conditions stipulated in the contract and project specifications.
3.5. Procedures for Gathering Data
A. Distribution of Survey Questionnaire
Before anything else, a draft questionnaire will be prepared first. After which, it
will then be discussed with the thesis adviser to confirm its validity, clarity and
preciseness. And after finalizing the questionnaire, it will then be distributed to
selected members of the target population. It will be sent personally by hand, with
a covering letter explaining the purpose and importance of the study, to each

organizations general manager in order to get a 100% response rate. And to
ensure a well representation of the answers, only one set of questionnaire will be
given to each client, consultant and contractor.
A five-point Likert scale ranging from 1 (strongly disagree) to 5 (strongly agree)

will be adopted to capture the opinion of respondents on the causes, effects, and
management control practices of change orders.
B. Conducting Interviews
Set-up interviews with the stakeholders making sure that the purpose of the
interview, why the stakeholder has been chosen, and the expected duration of the
interview will be clearly explained. Also, the researcher will also seek for the
informed consent of the interviewee explaining whether and how the information
will be kept confidential. And if the interviewee has consented, the interview may
now be conducted.
A semi-structured interview will be conducted. And in order to have an efficient

way of gathering information thru interviews, an interview protocol will be
developed these are rules that guide the administration andimplementation of
the interviews. Put simply, these are the instructions that must be followed for
each interview, to ensure consistency between interviews, and thus increase the

reliability of the findings. And aside from this, an interview guide that lists the
questions or issues to be explored during the interview will also be prepared.
A voice recorder, as a supplement to writing down notes, will be used to record

the interview proceedings. But before doing so, permission will be sought first to
use such recording method.
C. Data from Physical Artefacts
A letter will be prepared to ask for a permission to collect project documents such
as the conditions of contract, change order forms, project plans and specifications
and other pertinent documents that will be helpful in this study. The data from
these documents will be collected and tabulated for the purpose of information
and as a guide all throughout the study. Original plans will be compared to the
revised ones to know the changes that have taken place in the project and the cost
of such changes.
3.6. Statistical Treatment and Analysis of Data
Data analysis encompasses the compilation and interpretation of the datacollected.

Analysis will depend on the nature and form the data has been recorded.Since the
data has been recorded using qualitative and quantitative approaches, theanalysis

will be done accordingly. Whether it is qualitative or quantitative data, the main
rule of any form of analysis is to move from raw data to meaningfulunderstanding
(OLeary, 2004).
A. Survey Questionnaire Data
The analysis of questionnaire respondents will be mainly done by calculating the

relative importance index (RII). Kometa et al. (1994) used the relative importance
index method to determine the relative importance of the various causes and
effects of delays. The same method will be adopted in this study within various
groups (clients, consultants, contractors).
The five-point scale ranged from 1 (strongly disagree) to 5 (strongly agree) will
be adopted and transformed to relative importance indices (RII) for each factor as
follows:
Equation 1: Relative Importance Index
where: W = weighting of each factor by respondents ranging from 1 to 5

H = highest weight (i.e., 5 in this case)
S = total number of respondents
The RII value will range from 0 to 100 in which the higher the value of the RII,
the more important is the cause and effect of change order is.
The RII will be used as a ranking technique to each statement in order to compare
the responses received from the three parties (i.e., client, consultant, and
contractors). This will be done for each section of the questionnaire (i.e., causes,
effects). In addition to this, an overall analysis will be carried out to compare the
results of the individual group (client, consultant, and contractor) with the overall
results. Likewise, an analysis will also be done in order to compare the result of
public construction projects versus that of private construction projects.
Standard deviation (SD) will also be calculated for the relative importance to
determine the dispersion of relative importance values around the mean. A low
standard deviation would indicate that the data points tend to be very close to the
mean and that there is a strong agreement among all parties being surveyed. A
high standard deviation, on the other hand, would indicate that the data points are
spread out over a large range of values and that there is a strong disagreement
among all parties being surveyed.
B. Data coming from Interviews, Actual Site Observations and Physical

Artefacts
The data coming from interviews, actual site observations and physical artefacts
will be used and treated as guiding pointstowardthe analysis of the two case

studies. The researcher will examine these raw data using many interpretations in
order to find linkages between the research object and the outcomes with
reference to the original research questions.
The researcher will categorize, tabulate, and recombine these data to address the
initial propositions or purpose of the study, and conduct cross-checks of facts and
discrepancies in accounts. The researcher will also place information into arrays,
creating matrices of categories, creating flow charts or other displays, and
tabulating frequency of events. The researcher will then use the quantitative data
that has been collected to corroborate and support the qualitative data which is
most useful for understanding the rationale or theory underlying relationships.
And after all of these, a careful analysis will be conducted to compare the findings
obtained between the two case studies: public and private construction projects.
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UNIVERSITY OF THE EAST GRADUATE SCHOOL Page | 1

1.1 BACKGROUND OF THE STUDY

Construction plays a vital role in the development of a country (Cabral M.C.,

According to Building & Construction Information (BCI) Asia Philippines, due to

consumption, the construction industry in the Philippines is expected to grow by

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Change order as defined by Clare (2008) is a written agreement between the

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Because of the highly integrated nature of construction operations, quantifying

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Specifically, this research examines change orders on the Philippine construction

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1.2 STATEMENT OF THE PROBLEM

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2. What are the management control practices that contractors, consultants

3. What management model can be designed in order to control the effects of

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1.3 OBJECTIVES OF THE STUDY

Identifying the causes of change orders is very important in order to avoid

Specifically, this research aims to:

1. To identify the prevailing causes and effects of construction change

2. To determine the management control practices that contractors,

3. To design a management model in order to control the effects of

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1.4 CONCEPTUAL FRAMEWORK

Private Building Project

Public Building Project

Figure 1: Conceptual Framework

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1.5 SIGNIFICANCE OF THE STUDY

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1.6 SCOPE AND DELIMITATIONS

This study will be delimited to the analysis of construction change orders by

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1.7 DEFINITION OF TERMS

Change- Any modification to the original contractual agreement.

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2. 1 Basic Concepts about Change Orders

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1. Owner may request/order a change, usually a scope change.

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Unfortunately, no project is without its share of changes or change orders, ranging

2.2 Classification of Change

Few construction contracts are completed without change.

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A. Changes classified in terms of the initiator/ originator of change

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B. Changes classified in terms of net effect on scope (based on CII publication

1. Additive change - This involves addition of work to the original

2. Deductive change - Unlike the previous type this change involves

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4. Force majeure change - A force majeure caused change may entitle

C. Changes classified in terms of the procedure used in introducing them (as