Variation orders in transmission projects of Tenaga Nasional Berhad

Abstract

The project owner must accept that no construction method or for that matter the project, is free of changes and its subsequently activity of claims. Tenaga Nasional Berhad, in its implementation of capital infrastructure projects for the electrical power industry is not immune to variation orders. Every year an average of RM 19.4 million is spend on variation orders. This has impacted the company’s budgeted capital expenditure and the completion of projects within time. The consequential effect is the non-commissioning of associated projects. This study has determined the most frequent causes of variation orders in transmission projects. The owners/project managers group has considered incomplete project scooping and inadequate bill of quantities as the main cause while new requirements was considered by the contractors group. These causes were confirmed during the oral interview as well as the results from the case study. The effect of these variation orders are increase in project cost and delay in project completion. The findings of this study also indicated that the detail project scoping during design stage and the understanding of contract and specification are the two most considered factors to minimising the occurrences of variation orders.