PPR - 2007, Rule 118

118. Variation Order:

(1) After having started the work in accordance with the procurement contract, if there is required addition to and reduction in the quantity or addition of new item to or substitution in such work due to technical reasons, the following authority may, after preparing the cost estimate of such alteration and new item, issue a variation order subject to the provision of Section 54 of the Act as hereunder:-

(a) In cases where the drawings, design and specifications etc. of the construction work need not be changed but the quantity of the work will be altered, the variation order of up to five percent of the contract price by the chief of the public entity of gazetted second class rank.
(b) Variation order of up to ten percent of contract price, whether the drawing, design and specifications of construction work requires to be changed or not, by the chief of the Public Entity of the gazetted second class by obtaining the approval of one level higher authority, and variation order of up to fifteen percent by the Departmental head by assigning technical justification, (c) In the case of procurement of goods and other services, variation order of up to fifteen percent of the contract price, by the chief of the concerned Public Entity by assigning technical justification, and
(d) In the case of procurement of consultancy services, variation order of up to ten percent of the contract price, by the chief of the concerned Public Entity by assigning technical evidence and variation order of up to fifteen percent by the Departmental head by assigning technical justification.

(2) If a variation order exceeding fifteen percent of the contract price requires to be issued pursuant to Sub-rule (1), a proposal shall be submitted, with the recommendation of a committee consisting of chief of the financial administration section, concerned Departmental head and one officer concerned with subject matter or expert designated by the secretary under the chairpersonship of the concerned secretary in the case of the Public Entity under sub-clause (1) of clause (b) of Section (2) of the Act, to the Council of Ministers, Government of Nepal and in the case of other Public Entity to the supreme executive body of that entity.

(3) A variation order shall not be issued with rates exceeding the rates stated in the procurement contract. If a variation order requires to be issued with higher rates, an approval shall be obtained from one level higher authority after making the rate analysis as well.

(4) If a new item requires to be added to the construction works under the procurement contract, the Public Entity shall have to determine the rate by analyzing the rate as well of such new item.

(5) In issuing a variation order pursuant to this Rule, there shall be clearly stated the nature of variation, large item, small item, whether time requires to be extended or not; if time requires to be extended how much time is to be extended, whether the rate of variation item is lesser or higher than that of stated in the bill of quantities, what is the percentage of the total contract price in terms of updated modifications, the source to meet additional amount for the work required to be carried out under the variation order; what will be the percentage of the total sum after variation compared to the initial contract price.

(6) If any additional work requires to be done immediately due to lack of time for any reasons or due to occurrence of conditions requiring an emergency work to be done, if any, the Public Entity may further the proceedings of variation order by obtaining prior approval of the one level higher authority.

SBD (for medium contract for construction of bridge) Section IV GCC: clause 38

38. Variations

38.1 All Variations shall be included in updated Programs produced by the Contractor.

 

PWD, Part III, Medium Contract, Clause 39 and 40, Condition of Contract

39. Variations
39.1 All Variations shall be included in updated Programs produced by the Contractor.

40. Payments for Variations

40.1 The Contractor shall provide the Project Manager with a quotation for carrying out the Variation when requested to do so by the Project Manager. The Project Manager shall assess the quotation, which shall be given within seven days of the request or within any longer period stated by the Project Manager and before the Variation is ordered by him.

 

40.2 If the work in the Variation corresponds with an item description in the Bill of Quantities and if, in the opinion of the Project Manager, the quantity of work above the limit stated in Sub-Clause 38.1 or the timing of its execution do not cause the cost per unit of quantity to change, the rate in the Bill of Quantities shall be used to calculate the value of the Variation. If the cost per unit of quantity changes, or if the nature or timing of the work in the Variation does not correspond with items in the Bill of Quantities, the quotation by the Contractor shall be in the form of new rates for the relevant items of work.

 

40.3 If the Contractor’s quotation is unreasonable, the Project Manager may order the Variation and make a change to the Contract Price, which shall be based on the Project Manager’s own forecast of the effects of the Variation on the Contractor’s costs.

 

40.4 If the Project Manager decides that the urgency of varying the work would prevent a quotation being given and considered without delaying the work, no quotation shall be given and the Variation shall be treated as a Compensation Event.

 

40.5 The Contractor shall not be entitled to additional payment for costs that could have been avoided by giving early warning.

 

PWD Part II, Procedural Directives, Chapter 11:Construction of Works, Sub Chapter 11.6 Variation

 

11.6 Variations

 

11.6.1 Definition

 

Variations during construction are a serious problem affecting the success of public works projects and often result in a major increase in the contract price. There are

two types of variations:

 

1. Variations in the measured, as-constructed quantities from the original quantities in the BOQ.

 

The original quantities in the BOQ are estimates made during the design stage and it is to be expected that as-constructed quantities will differ to some degree.

Problems occur when very large variations arise due either to poor design or to major changes in site conditions since the design was prepared.

 

2. Variations in the form of additional work items or changes in specifications.

 

These may be necessary either to compensate for major changes in site conditions since the design was prepared or to resolve problems which had not been foreseen

at the design stage.

 

Figure 11.3 illustrates the general process for dealing with variations and time requirements for each step.

 

It is essential that variations be dealt with expeditiously. Failure to do so will delay the progress of the work and may lead to a claim. The principal persons responsible

for processing variations are the Consultant (or Project Engineer if no Consultant is used), Project Manager, Department Head and Secretary of the concerned

agencies. These persons shall exercise the authorities prescribed to them in the FAR (or in the loan agreement in the case of donor assisted projects) to review and

decide expeditiously upon any variations.

 

The procedures described below shall apply in all projects, except where specific clauses in the conditions of contract provide for different procedures.

 

As a normal part of his duties, the Consultant shall monitor the progress of the works and the quantities provided under the contract and maintain a running estimate of

the quantities upon completion, at least for major items. The Consultant shall inform the Project Manager at the earliest possible time of the need for a variation.

 

11.6.2 Variations Less Than the Contract Price

 

Variations which result in a reduction of less than 15% of the contract price generally do not require a variation to the contract, and payments are made to Contractor

based on the measured quantities and the original rates and prices. 11.6.3 Variations up to 15% of the Approved Cost Estimate Under the FAR, the Project Manager is

authorised to approve changes in quantities which do not exceed the approved cost estimate by more than 10%. If the changes in quantities increase the cost by

more than 10% of the approved cost estimate, or if the design, drawings and specification require modification, the approval of the Department Head is required.

 

In the present FAR, any increases are related to the approved cost estimate but amendments are proposed to substitute the original contract price for the approved

cost estimate, which is more consistent with international practice and the standard conditions of contract.

 

Where a variation from the approved cost estimate will occur, it is necessary for the Consultant to prepare a draft Variation Order (VO) attaching the following

information and submit it to the Project Manager:

 

For a change in quantities only:

• The estimated change in quantities and contract price.
• The reason for the changes.
• An indication if the rates or prices are required to be revised as a result of changes in quantities exceeding the limits prescribed in the conditions of contract, and the revised rates or prices.

 

For a change in the works or in the specification:

• The nature of the change, a description of alternative measures and their costs and the Consultant’s recommendation for a change in the works or specification.
• A preliminary design of the proposed change and the estimated cost.
• An indication whether or not new rates or prices need to be negotiated, and the new rates or prices.

 

The Project Manager shall review this information and decide upon the variation within 14 days from receipt from the Consultant. The Project Manager may approve the

variation provided (1) the cumulative effect of the variation taking account of previous variations does not exceed 10% of the approved cost estimate, (2) he has

sufficient approval authority, and (3) there is sufficient budget provision.

 

If the approval of the Department Head is required, the Project Manager shall forward a request for a variation to the Department Head within 14 days from receipt

from the Consultant. The Department Head shall review this request and decide upon the variation while making the necessary budget arrangement. The Department

Head shall give his decision and approval within 28 days from receipt from the Project Manager.

 

The Project Manager or the Consultant shall complete and issue the VO within 7 days of approval.

 

11.6.4 Variations Exceeding 15% of the Approved Cost Estimate

 

If the variation will result in (1) an increase exceeding 15% of the contract price or (2) an increase in quantities in major items of more than 25% of the original

estimates in the BOQ, the following steps shall be followed.

 

The Department Head shall direct the Project Manager and Consultant to (1) evaluate the scope of works to determine what changes can be made to limit the increase

in contract price and (2) compare the benefits and costs to HMG/N of continuing the contract with necessary changes versus terminating the contract and calling for

new bids for the completion of the works. The Department Head shall review the Project Manager’s and Consultant’s evaluation, recommend a course of action, and

submit a request for approval of the draft VO to the concerned Secretary within 28 days from receipt from the Project Manager.

 

The committee mentioned below should review the request and should take decision after arranging the required budget. The decision should be made by the secretary

within 28 days after receiving the request from the Department Head.

 

A Committee comprising:

• the Secretary of the concerned Ministry : Chairperson
• the Financial Comptroller General or a gazetted 1st class officer nominated by him : Member
• A representative (gazetted 1st class officer) from the MOPPW : Member
• A Department Head nominated by the Secretary of the concerned Ministry : Member
• The chief of the financial administration section of the concerned ministry : Member Secretary

The committee shall review the request and decide upon the variation while making the necessary budget arrangement. The Secretary shall give his decision and approval within 28 days from receipt from the Department Head.

11.6.5 Changes or New Rates and Prices

Where rates or prices are required to be changed as result of changes in quantities exceeding limits prescribed in the conditions of contract, the Employer and Consultant shall reach agreement with the Contractor in accordance with the conditions of contract. Where rates or prices are required for new items in the BOQ, the Employer and Consultant shall reach agreement with the Contractor either by using existing rates and prices as far possible or by establishing new rates which fairly reflect the Contractor’s cost, overhead and profit. New rates and prices shall not provide the Contractor with an unreasonable increase in profit.

11.6.6 Issuance of the Variation Order

No variation shall be implemented and no VO shall be issued without the prior approval of the competent authority of the Employer. The Project Manager or the Consultant, depending on the provisions in the contract, shall issue the VO within 7 days from receipt of approval. The VO shall clearly indicate:

• Change in quantities in the BOQ
• Change in rates or prices
• New items added to the BOQ and the rates or prices
• Change to or additional specifications to cover new items
• Change in the contract price
• Extension of time if any, and
• That the Contractor has agreed that no claim will be made as a result of the VO.

The Consultant’s contract shall not be changed as a result of the VO unless it can be shown that additional Consultant time and effort are required, in which case (1) the increase in the Consultant’s contract should be proportional to the amount of the variation and (2) the budget provision permits payment of such additional costs.

The summary of all variations and the budget provision shall be updated when the VO is issued.