CHAPTER 4 : TECHNICAL REPORT

VARIATION ORDER

4.1

Introduction

Variation Order (VO) is meant any additions, replacement, omission or changes to the specifications, drawings or quantity on a contract or original work. Any Variation (VO) can only be performed by the contractor in the event of a formal directive issued by the Superintending Officer (SO). Variation to the original work is almost certain to happen in construction projects due to : a) Site conditions. b) Statutory requirements. c) Change in clients requirements.

29

d) Defective contract drawings, bills of quantities, specification, etc. (including intentional abuse of variation clause since contract allows changes to design, etc.) e) Poor cost control e.g. omissions required due to shortage of fund.

Most forms of contract have provisions which will allow any necessary changes to be made during the construction process.

Without the variation clause, changes to the original contract are not allowed. If changes to the works are necessary : a) Separate contract has to be drawn up (e.g. for additional work) b) A new contract has to be prepared to replace the existing contract (e.g. changes in design)

For contract based on bills of quantities the contractor has the right to claim under variation for carrying out the works not provided for or measured in the bill of quantities.

For contract based on drawings and specifications the contractor does not have the right to claim under variation for carrying out all works incidental or necessary for the completion of the work even though those works are shown in the drawings and described in the specifications.

30

4.2

P.W.D Form 203A (Rev. 2007)

- The relevant contractual provisions regarding variations are as shown in Table 4.2.1. P.W.D Form 203A (Rev. 2007)

Clause 5.0 S.O Instructions Clause 24.0 Variations Clause 25.0 Valuation of variation Clause 34.0 P.C and Provisional sums Clause 28. 0 Payment to contractor and Interim certificates

Table 4.2.1 Contractual Provisions Regarding Variations.

The above clauses explain the procedure to be adhered to in the variation process which include :

a) The power to order variations. b) The methods of valuations for variations. c) the amount to be paid to the contractor. d) The procedure and conditions precedent.

31

4.3

Variations The term alteration means a change in the Contract Document which necessitates the alternation or modification of the design, quality or quantity of the worksand affects the Contract Sum, including : a) The addition , omission or substitution of any work. b) The alteration of the kind or standard of any materials, goods to be used in the works, or c) The removal from the site of any work executed or materials or goods brought thereon by the Contractor for the purposes of the Works (Clause24,2)

Change of design of work

Change of quantity of work

Change of quality of work

Removal of materials brought onto site

Variations

Removal of work executed on site

Figure 4.3.1 Type of Variations of Work

32

A variation means any change to the work as described in the contract document i.e. as shown in the drawings , described in the Specification, Bills of quantities, etc.

A variation includes : a) The change to the works/materials i. The change of quality of the work. increase or decrease the quality of any work included in the contract i.e. change of specification level of the work. ii. The change of quantity of the work. Increase or decrease the quantity of any work included in the contract. iii. The change of design of the work. Omit any work included in the contract. Carry out additional work originally not included in the contract. Substitute any work in the contract. Change the level , positions , dimensions of any work in the contract. Change the kind of materials to be used in the work. Change the shape and colour of the works.

33

b) The removal of materials brought onto site. The materials removed must be intended or required for the work. i. The removal of materials not in accordance with the contract is not a variation. The S.O.s instruction is given according to Clause 5.1 (c)

c) The removal of works executed on site. The works removed must have been done according to the contract. i. The removal of works not in accordance with the contract is not a variation. The S.O.s instruction is given according to Clause 5.1 (c)

34

4.4

Procedure of Variations

S.O. issues instruction to contractor (Clause 24.1)

CONTRACTOR carries out the work (Clause 24.1)

S.O. measures, values the certifies work (Clause 25.1, 25.3)

EMPLOYER pays contractor through interim payment (Clause 28.6)

Figure 4.4.1 Variations Process

35

4.5

Instructions for Variations

4.5.1 Power to Issue Instruction The S.O. may from time to time issue further drawings, details and/or written instructions (All of which are hereafter collectively referred to as S.O.s instructions) in regard to : (a) The Variation.. (Clause 5.1)

The S.O. has the power to issue instructions to cover not only variations but many other areas for proper execution of the work.

Not every instruction constitutes a variation but every variation requires an instruction. The contractor therefore cannot expect payment for every work that he did in compliance with the instruction.

The contractor may request the S.O. to specify the contract condition which empowers him to issue instruction.

Instruction given by any other person will not valid.

No variation required by the S.O shall vitiate this Contract... (Clause 24.1)

The S.O. has full power to issue instructions to the contractor to carry out any variation work which he thinks necessary for satisfactory completion of the project.

Generally, any variation instructed by the S.O. is allowed under the contract and it will not be in breach of contract.

36

However changing the original scope of work is not allowed. The variation should not fall outside the scope of works contemplated by the parties at the time when the contract was made. The contract does not authorize extra work not related to the original project.

Omission of work is allowed under the contract (Sub-clause 25(b)(iii)). The limitations are as follows : a) Invalid omission the S.O. may omit work only if it is not to be done at all. The omitted work cannot be carried out by another person. Galagher v. Hirsh (1899) work was omitted and given to another contractor was held to be a breach of contract. b) Substantial omission extensive omission that substantially changes the character of the work will be a ground for claim for breach of contract by the contractor.

4.5.2 Written Instructions All instructions issued by the S.O. shall be in writing. Th e Contractor shall forthwith comply with all instructions issued to him by the S.O. If such instruction is given orally, the S.O. shall then issue a written instruction within seven (7) days from the date of such oral instruction is given. (Clause 5.2).

An oral instruction is of no immediate effect and it does not bind the contractor to comply with it.

37

Oral instruction

Confirmation in writing

7 Days Figure 4.5.2.1 Comfirmation of Oral Instruction.

Any oral instruction must be comfirmed later in writing within 7 days after its issuance by the S.O. himself. The instruction only takes effect upon confirmation.

The contractor will have to bear the cost of complying to the oral instruction if the S.O. does not confirm the oral instruction within 7 days the S.O. is not bound to do so.

The S.O. may issue instructions requiring a Veration in a form of a Variation Order.. (Clause 24.1).

All instruction regarding variations issued by the S.O. must be in writing and in a recognized format entitled Variation Order as shown in Figure 4.5.1.1.

The particulars to be stated by the S.O. in the Variation order include : a) Description of variation. b) Estimated cost of variation. c) Cumulative total value of variations to date.

38

4.5.3 Compliance to Instructions ..Upon the issuance of such Variation Order, the Contractor shall forthwith comply with the Variation Order issued by the S.O. (Clause 24.1) If within seven (7) days after receipt of the written notice from the S.O. requiring compliance to an instruction and the Contractor does not comply therewith, then the S.O. undertake the work departmentally, or employ and pay another contractor or any other persons to execute any work (Clause 5.3)

The contractor must comply with the S.O.s instruction immediately. If the contractor does not comply with the instruction, the S.O. will send a notice to the contractor requiring the contractor to comply with the instruction.

S.O.s Instruction

Notice requiring contractor to comply with instruction

S.O.s decisions : -do the work departmentally -employ another contractor

Non compliance

Non compliance 7 Days

Figure 4.5.3.1 Non-compliance to Instruction by Contractor.

If the contractor still does not comply with the instruction within 7 days after receiving the notice, the S.O. may take the following actions : a) Execute the work departmentally. b) Engage another contractor to carry out the work

39

. All cost and expenses incurred in connection with such employment (including On-Cost Charges), shall be deducted from any money due or to become due to the Contractor under this Contract, and failing which such deduction shall be recovered from the Performance Bond or as a debt due from the Contractor.. (Clause 5.3)

The payment made to the third party or the employer himself for executing the work can be deducted from the contract sum, performance guarantee sum, etc.

The employer can also claim for on-cost charges the cost and expenses incurred by the employer in getting the work done by another contractor or by the employer himself.

The percentage for on-cost charges is fixed in the Appendix as 5% of the cost of the affected work.

If the contractor carries out the work that is outside the work he was bound to do for original contract price without S.O.s instruction : a) the contractor will not be paid for the work. b) the contractor is in breach of contract for not carrying out the work according to the contract he may have to remove the work and replace it with the work according to the contract.

40

In the case of differences between actual quantities and the quantities stated in the bills of quantities : a) No instruction is required. b) The contractor is bound to carry out works in excess of those stated in the bills of quantities.

41

4.6

Measurement of variations

4.6.1 Generally All variations instructed in writing shall be measured and valued by the S.O. (Clause 25.1)

The S.O. is responsible to measure and value the variation works done by the contractor.

The measurement and valuation of the works should be done as soon as possible to enable payment for the works to be included in the interim payment certificates.

The variation work which is to be treated as the work done by the contractor has to be paid in the interim payment certificates even though Certificate Of Adjustment Of Contract Sum is not yet prepared.

The S.O. is only required to measure variations that have been confirmed in writing.

Method: Omit the work from the contract bills and add the measurement of the work carried out as instructed. The S.O. the works to be measured give reasonable notice to the Contractor who shall attend or send a qualified agent to assist the S.O. shall furnish all particulars required by the S.O.. Should the Contractor fail to attend the measurement made by the S.O. or approved by him shall be taken the correct measurement of the work. (Clause 27.1)

42

The measurement of work will used for the valuation of variation. The measurement sometimes needs to be done on site especially when the measurement cannot be accurately done based on the available information or drawings.

The S.O should carry out measurement of the variation work jointly with the contractor.

The S.O. will send a notice to the contractor informing him about the measurement to be made.

The contractor is required to take part in the measurement even though the contractor does not participate in the measurement after being told to do so.

43

4.7

Valuation of variations

4.7.1 Generally The valuation of Variations, unless previously or otherwise agreed, shall be made in accordance with the following rules : (Clause 25.1)

The S.O has to make the valuation of the varied work in order to arrive at the amount to be paid to the contractor.

The provision lists down the rates or prices to be used in the valuation of the works.

4.7.2 Contract Rates the rates in the Bills of Quantities shall determine the valuation of work of similar character and executed under similar conditions as work priced therein. (Clause 25.1 (a)). the rates in the Bills of Quantities shall determine the valuation of items omitted, (Clause 25.1(c)).

These contract or B.Q. rates are applicable for valuing: a) Similar work i.e. varied works which are of similar character and executed under similar conditions to the work in the Bills of quantities. b) Omitted work.

44

The rates are taken from the bills of quantities. Reference to the bills of quantities should be made when these rates are used in the valuation of varied works.

Percentage adjustment is required to be made on the contract rates if necessary.

Example 1 : Application of B.Q. rate.

VO Title : Additional perimeter drain and brick sump at PPU No. 3 and No. 4.

VO Detail : Additional perimeter drain and brick sump at PPU No. 3 and PPU No. 4.

Employer's Representative Instruction closed out : IDMS/MED/INFRA 3/2011/EI-____ Element Unit RM Rate Omission
SOW NO. 12- PPU

RM Value Addition 54,007.50 PPU NO. 3 27,042.60 PPU NO. 4

Description

(44,382.90) (44,382.90)

(88,765.80) (7,715.70)

81,050.10 Total Nett Omission :-

4.7.3 Adjusted contract rates / pro-rata rates The said rates, where work is not of similar character and executed under similar conditions as aforesaid, shall be the basis of rates for the same, as far as may be reasonable (Clause 25.1(b)) if the omission vary substantially the conditions under which any remaining items of work are carried out, the rates of such remaining items shall be valued under rule (b) (Clause 25.1(c))

45

These are the rates from the bills of quantities with adjustment for differences between the varied work and the work priced but only so far as may be reasonable.

These adjusted contract rates are applicable for valuing: a) Varied work not of similar character and executed under similar conditions to the work in the bills of quantities. b) Remaining items of work if they are to be carried out under very different condition when part of the original work has been omitted.

Example 2 : Calculation of adjusted rate. Assumptions : Contract rate for 100mm x 100mm x 1.00 m long reinforced pre-cast concrete lintel = RM 10.00 / No. The length of lintel is to be changed to 1.20m.

Pro-rata rate for 100mm x 100mm x 1.20 m long reinforced pre-cast concrete lintel = x RM 10.00 = RM 12.00 / No.

46

4.7.4 Agreed rates The said rates, where work is not of similar character and executed under similar conditions as aforesaid, failing a fair valuation thereof shall be made by the S.O.. (Clause 25.1(b))

These agreed rates are applicable for valuing : a) Different work i.e. varied works which are different in character or executed under conditions different from those included for in any bill rates. b) Remaining items of work if they are to be carried out under very different condition when part of the original work has been omitted.

To be used in the event where B.Q. rates and pro - rata rates are not suitable.

These rates normally consist of the cost plus a reasonable percentage for profit.

These rates are required to be agreed between the S.O. and the contractor.

4.7.4 Day Work Price This method of valuation is normally used where the varied work cannot be properly measured and values and a valuation at rates is not practicable (example : Demolition work).

47

To be eligible for payment, the contractor has to submit within 7 days after the works have been done the following particulars to the S.O. for verification : a) Receipts as a proof for the amount paid b) Particulars on : the workmen employed the plant employed the materials used

The day work price can be : a) The day work as priced by the contractor which is normally included in the appendices to the contract document. It is important for the S.O. to make sure that all items in this section are priced by the contractor before the singing of the contract. b) In the absence of (a), the actual cost of resources.

The calculation of day work price includes the actual cost incurred by the contractor and an allowance of 15% for profit.

48

4.8

Adjustment of Contract Sum The amount to be added to or deducted from the Contract Sum in respect (Clause 29.0)

The original contract sum has to be adjusted by taking into account the following : a) Fees and charges for supply of water, electricity, etc (Clause 6.2) b) Variations (Clause 24) c) Rectification of errors I the Bills of Quantities (Clause 26.3) d) Fluctuation of price (Clause 30) e) Payment of Prime cost sums (Clause 34) f) Payment of Provisional sums (Clause 34) g) Testing of materials and works covered up (Clause 35.2) h) Loss and expense ( Clause 44) i) Cost of disposal of fossil, etc. (Clause 64)

The original contract sum has also to be adjusted by re-measurement of provisional quantities (Clause 26.7).

49

4.9 -

P.A.M Contract 2006 The relevant contractual provisions regarding Variations are as shown in the table below :

P.A.M. Contract 2006 Clause 2.0 Architects instructions Clause 11.0 Variations, Provisional and P.C. sums Clause 30.0 Certificates and Payments

Table 4.9.1 Contractual Provisions.

4.9.1 Architects Instructions All instruction must be in writing and entitled Architects Instruction (AI). Other written instructions (without title AI) become AI: a) when confirmed in writing by contractor entitled Confirmation of Architects Instruction (CAI) b) when confirmed in writing by Architect himself with an AI.

A written instruction does not take effect unless the instruction is entitled AI or CAI.

50

If time of compliance is stated in AI : a) Time specified by Architect must not be less than 7 days from receipt of AI. b) Contractor must comply to AI within the given time. c) If non-compliance by contractor employer may engage other person to carry out the work.

Employer may engage other Receipt of AI person to execute work

Non-compliance by contractor 7 days

Figure 4.9.1.1 Non compliance to AI by contractor.

51

Example 3 : Variation Order (Copy from company)

MEDINI ISKANDAR MALAYSIA SDN BHD

Company No. 782021-V

3.0 - EMPLOYER'S REPRESENTATIVE INSTRUCTION Package Name: The Proposed Construction and Completion of Infrastructure Works For Medini Development, Iskandar Malaysia, Nusajaya, Johor Darul Takzim - Package Infra 3 To : WCT Berhad No 12, Jalan Majistret U1/26, Seksyen U1, Hicom-Glenmarie Industrial Park, 40150 Shah Alam, Selangor. Attn : En. Roslan bin Sarip Proceed as stated : [P] P E I PROCEED WITH INSTRUCTION ESTIMATE COST/TIME EFFECT ONLY INFORMATION ONLY Package No : MED1-INF03-CNTR-0003 E.I No : IDMS/MED/INFRA 3/2010/EI-_______

From : Medini Iskandar Malaysia Sdn Bhd Ground Floor Seri Medini, No. 7, Persiaran Ledang Heights, 81560 Nusajaya, Johor

Under Clause 10 of Condition of Contract you are hereby instructed to effect the following :-

Summary Description: You are hereby instructed to construct and complete the additional structure of reinforced concrete gutter for all TNB sub stations as accordance to revised construction drawings and specification

Compliance with this Instruction is required in accordance with the Conditions of Contract

.............................................. Project Manager, IDMS Name in full : Date :

E.R. Assistant Name in full : Date :

.............................................. Employer's Representative Name in full : Date : Copies : 1. Contractor

.. Contractor's Acknowledgement Name in full : Date : 2. Contract Management & Administration 3. Project Team 4. Document Control

* Delete whichever is not applicable

52

4.0 - EMPLOYER's REPRESENTATIVE INSTRUCTION RECOMMENDATION * * * THIS IS AN INTERNAL DOCUMENT ONLY Package Name The Proposed Construction and Completion of Infrastructure Works For Medini Development, Iskandar Malaysia, Nusajaya, Johor Darul Takzim Package Infra 3 * * *

Package No : MED1-INF03-CNTR-0003 E.I No : IDMS/MED/INFRA 3/2010/EI-_______

DESCRIPTION :

To carry out additonal earthwork at Road C, Road F and Road G with superelevations and normal crossfalls all as shown in the drawings. (EI-P) PROCEED WITH INSTRUCTION. 1 - NEW SCOPE [ ] 2 - OPTION PURCHASE [ ] RM90,054.80 Qty Unit RM Rate RM Value Description Nett additional reinforced concrete structure of gutter for all TNB sub-station 3 - PROVISIONAL/PRIME COST SUM [ ] 4 - CHANGE SCOPE [ ]

TYPE OF E.I : CATEGORY :

AMOUNT (RM) : Element

TNB Substations - Roof

90,054.80

90,054.80

Total Addition (RM)

DETAILS OF CHANGE The size increase due to existence of pitch roof. Original gutter wall is 380mm height. Revised construction drawings is 1200mm height.

REASON FOR CHANGE The design changed due to cater the run-off water and aesthetic value. COMMENT ON COST OF CHANGE Total cost of nett addition = RM 90,054.80 IMPACT OF CHANGE ON PROJECT SCHEDULE None PMC/PMT Prepared by

Reviewed and Checked by

Recommended by

Name : PNFL / Melajasmiyati Md. Dali Designation : Consultant / VP,Cost & Contract Date : IIB Verified By

Name : Peter Tan Beow Teik Designation : VP, Project Date :

Name : Designation : Date :

VP, Project, MIMSB Name : Norashiken bt Ibrahim Date :

Director, Project & Infrastructure Name : Wong Chan Thong Date :

SVP, CMA Department Name : Mohd Azmi bin Hitam Date :

Acting CEO, Medini, Iskandar Malaysia Sdn. Bhd Name : Ir. Khairil Anwar bin Ahmad

53

MEDINI ISKANDAR MALAYSIA SDN BHD

Company No. 782021-V

5.0 - VARIATION ORDER

Package Name : The Proposed Construction and Completion of Infrastructure Works For Medini Development, Iskandar Malaysia, Nusajaya, Johor Darul Takzim Package Infra 3 Package No : MED1-INF03-CNTR-0003 IDMS/MED/INFRA 3/2011/VO-003 IDMS/MED/INFRA 3/2010/EI-__

Variation Order No: EI No. closed out :

To : WCT Berhad No 12, Jalan Majistret U1/26, Seksyen U1, Hicom-Glenmarie Industrial Park, 40150 Shah Alam, Selangor. Attn : En. Roslan bin Sarip

From : Medini Iskandar Malaysia Sdn. Bhd. Ground Floor, No. 7 Persiaran Ledang Heights 81560 Nusajaya, Johor Darul Takzim.

The Employer hereby gives to the Contractor this Change Order for, and the Contractor agrees to provide the material and perform the work described herein, in accordance with all of the terms Contract unless otherwise expressly stated herein. VO Title : Additional Structure of Reinforced Concrete Gutter for all TNB Sub-Stations as Accordance to Revised Construction Drawings and Specification. VO Detail : The size increase due to existence of pitch roof. Original gutter wall is 380mm height. Revised construction drawings is 1200mm height. Employer's Representative Instruction closed out : Element Unit RM Rate Omission SOW 14 : TNB Substations Roof (115,168.20) IDMS/MED/INFRA 3/2010/EI-__ RM Value Addition 205,223.00 Nett additional reinforced concrete structure of gutter for all TNB sub-station Description

(115,168.20)

205,223.00 Total 90,054.80 Nett Addition :-

Schedule Impact :

No time impact

Not valid until signed by Employer's Representative. Signature of the Contractor indicates agreement herewith, including any adjustment in the Contract Sum and the Date for Completion or Section. This Variation Order is the entire claim in respect of the above works and/or material supplied. Contractor Acceptance Employer's's Representative/ERA Authorisation:

Name in Full : Date : Copies to : 1. Contractor 2. Contract Management & Administration 3. Project Management/ Project Manager * Delete whichever is not applicable

Name in full : Date :

4. Employer's Representative/ ERA 5. Finance 6. Document Control

54

6.0 - VARIATION ORDER RECOMMENDATION * * * THIS IS AN INTERNAL DOCUMENT ONLY * * * 1. New Scope [ ] 2. Option Purchase [ ] 3. Provisional & PC Sum [ ] 4. Changed Scope [ ] 5. Remeasurement of Prov.Quantities [ ] To From Date Package No. Package Name Variation Order No. VO Description VO Amount : Employer's Representative : Project Team : 15-Apr-2011 : MED1-INF03-CNTR-0003

: The Proposed Construction and Completion of Infrastructure Works For Medini Development, Iskandar Malaysia, Nusajaya, Johor Darul Takzim - Package Infra 3 : IDMS/MED/INFRA 3/2011/VO-003 : Additional Structure of Reinforced Concrete Gutter for all TNB Sub-Stations as Accordance to Revised Construction Drawings and Specification. : RM90,054.80

In accordance with the following and the IIB's Limits of Authority in force at the time of writing this memo, this Variation Order is within your limit of Authority. We hereby recommend the approval of the above Variation Order for the following reasons: SUMMARY OF CONTRACT STATUS RM 284,539,383.06 112,083.00 32,478.18 144,561.18 90,054.80 234,615.98 284,773,999.04 Breakdown of VO RM Cat 5 Cat 1234 0.00 0.04% 0.00 0.01% 0.00 0.05% 0.00 0.03% 0.00 0.08% % Cat 5 0.00% 0.00% 0.00% 0.00% 0.00% Total % of Contract Sum 0.04% 0.01% 0.05% 0.03% 0.08%

a. Contract Sum (plus 5% service tax) b. Approved VOs c. Pending VOs d. Previous VOs (b+c) e. This VO f. Total All VOs (d+e) New Contract Sum Details Of Change

Cat 1234 112,083.00 32,478.18 144,561.18 90,054.80 234,615.98

The size increase due to existence of pitch roof. Original gutter wall is 380mm height. Revised construction drawings is 1200mm height. Details as per enclosed drawing, Contract Drawings No. : RB1689/T-INF-3/TNB004, RB1689/T-INF3/TNB/S/DCA1/03, RB1689/T-INF3/TNB/S/DCA1/04, RB1689/T-INF3/TNB/S/DCA2/03, RB1689/T-INF3/TNB/S/DCA2/04 and Construction Drawing No. : RB1689/C-INF3/TNB/S/DCA1/03, RB1689/C-INF3/TNB/S/DCA1/04, RB1689/C-INF3/TNB/S/DCA2/03, RB1689/C-INF3/TNB/S/DCA2/04. As per MCLD's requirement changed due to cater the run-off water and aesthetic value. Total cost of nett addition as per summary breakdown. None IDMS/MED/INFRA 3/2010/EI-__

Reason For Change Comments On Cost Of Change Impact On Design/Project Schedule Instruction Closed Out :

With the issue of this Variation Order, the following Employer's Representative Instruction is closed-out : IDMS/MED/INFRA 3/2010/EI-__ Please indicate your approval to issue this Variation Order by signing the attached Variation Order form. PMC/PMT Prepared By Reviewed & Checked By Recommended by

Name : PNFL / Melajasmiyati Md. Dali Designation : Director / VP, Cost & Contract Date : IIB Verified By

Name : Peter Tan Beow Teik Designation : VP, Project Date :

Name : Designation : Date :

VP, Project, MIMSB Name : Norashiken bt Ibrahim Date :

Director, Project & Infrastructure Name : Wong Chan Thong Date :

SVP, CMA Department Name : Mohd Azmi bin Hitam Date :

Acting CEO, Medini, Iskandar Malaysia Sdn. Bhd Name : Ir. Khairil Anwar bin Ahmad

55

56