Taxonomy for change causes and effects in construction projects

Available online at www.sciencedirect.com

International Journal of Project Management 27 (2009) 560–572 www.elsevier.com/locate/ijproman

Taxonomy for change causes and effects in construction projects Ming Sun a,*, Xianhai Meng b b

a School of the Built and Natural Environment, University of the West of England, Coldharbour Lane, Bristol BS16 1QY, UK School of Planning, Architecture and Civil Engineering, David Keir Building, Queen’s University Belfast, Belfast, BT9 5AG, Northern Ireland, UK

Received 25 January 2008; received in revised form 10 October 2008; accepted 16 October 2008

Abstract During many construction projects frequent changes often result in time delays, cost overruns, quality defects and other negative impacts. In recent years, many researchers worldwide investigated the effects of project change and more importantly the common causes behind the changes from different perspectives. A large number of research papers have been published in this field. While most existing papers presented valuable empirical work, very few offered a comprehensive and systematic overview. There is also a certain degree of confusion in the terminology used by different authors. The objective of this paper is to fill this knowledge gap by: (1) reviewing and synthesising existing literature on project change causes and effects; (2) developing two taxonomies for change causes and change effects; and (3) illustrating how the taxonomies can be used during the project change management process. Ó 2008 Elsevier Ltd and IPMA. All rights reserved. Keywords: Taxonomy; Change cause; Change effect; Delay; Cost overrun

1. Introduction Many time delays, cost overruns and quality defects of construction can be attributed to changes at various stages of a project [1–3]. In construction projects, a change refers to an alteration to design, building work, project program or other project aspects caused by modifications to preexisting conditions, assumptions or requirements. Construction, as a project-based practice, is particularly prone to a high degree of change for a variety of reasons [4,5]. A construction program, or project plan, consists of a series of inter-related and sometimes inter-dependent activities or processes. Each process requires a set of inputs and produces a set of outputs. Outputs from one process may be inputs to another process. Project planning or project scheduling is the task of defining all the activities/processes and their inter-relationship. It is done at the start of a project when many input parameters are uncertain and assumptions have to be made. Variations in any of the *

Corresponding author. E-mail addresses: [email protected] (M. Sun), xianhai2.meng@ uwe.ac.uk (X. Meng). 0263-7863/$34.00 Ó 2008 Elsevier Ltd and IPMA. All rights reserved. doi:10.1016/j.ijproman.2008.10.005

assumptions during execution will lead to changes from the baseline project plan. Typical changes include delays of start and completion of tasks, deletion and addition of tasks, variation of resource inputs, and so on. One of the harmful consequences of project change is rework or revision of work [2,6]. The cost of rework in construction projects can be as high as 10–15% of the contract value. In addition to rework, other negative effects of change include extra work, time loss, design revisions, increase costs, etc. [7,8]. Project changes may also result in some indirect effects, which will ultimately have a damaging impact on project cost and/or schedule. Indirect effects include disputes and claims, loss of productivity, loss of rhythm, unbalanced gangs and resource allocations, changes in cash flow, increased risks of co-ordination failures and errors, lower morale of the work force, loss of float, and so on [9]. To gain a better understanding of project changes, especially their causes and effects, has been a long-standing research challenge. Back in the late 1970s, the Chartered Institute of Building (CIOB) in the UK investigated delays, disruptions and cost increases as a result of changes to construction contracts [10]. The Construction Industry

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Research and Information Association (CIRIA) published a best practice guide on Managing Project Change following a practice-based study [11]. In the early 1990s, the Construction Industry Institute (CII) of the USA set up two dedicated task forces on ‘‘Cost/Schedule Controls” and ‘‘Project Change Management”. The teams carried out a series of studies on the impact and magnitude of project changes on cost and schedule [12–14] and how changes should be managed [15]. In addition to the efforts by these professional institutions, researchers from the academic community worldwide have carried out numerous research projects. As a result, a large number of research papers were published based on these empirical works. An initial literature review had identified a few issues that underlie the rationale and motivation for this study: (1) There is a lack of comprehensive overview papers; (2) A proportion of the research is repetitive of, rather than built on, previous work; (3) A diverse collection of terminology was used by different authors to describe the same concepts. This paper will review and synthesise the existing research efforts in order to establish state of the art collective knowledge in relation to construction project change causes and effects. It aims to create two separate taxonomies, which are comprehensive collections of all project change causes and change effects identified in previous studies. A simple case study is presented to demonstrate how the taxonomies provide a useful framework for construction professionals to manage project changes. However, they are not management tools that can be used directly in practice. Instead, they provide a basis for developing project management solutions and toolkits. While the industry focus of this study is construction, the developed taxonomies can be modified and adopted for other project-based industrial sectors. 2. Literature review methodology The principal method for this study is literature review and analysis. A preliminary review found that studies on construction project change fall into a broad spectrum, covering change causes and effects, change management systems, as well as project control methods and techniques. Given the large volume of published work, there was a need to set a limit to the scope of the review. The study was chosen to focus on change causes and effects at project level, because a good understanding of causes and effects is a prerequisite for effective management of change. Such a decision excluded papers on change management systems, methods and techniques from the review. Furthermore, there is also a large body of literature on change management at business or organisational level. These are also excluded unless they also discuss implications at the project level. The targeted literature sources are limited to refereed academic journals, published in English. They are a good representation of the breadth and depth of research achievements; and they have been scrutinised through peer

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review. In recent years, most academic journals began to provide online access. The emergence of a number of publication index databases has greatly assisted the literature search task. As for the date of publication, no explicit restriction was set. However, because few pre 1990s publications were covered by the online index databases the number of papers identified for that period is very small. This will be revealed in the following analyses. Relevant research papers are identified and gathered using the following three methods: 1. First, keyword searching was carried out on several online databases, including EBSCO Host Electronic Journals Service, Emerald Database, ScienceDirect, Taylor & Francis, and Palgrave Macmillan. For this purpose, keywords used include ‘‘project change”, ‘‘change order”, ‘‘construction variation and alteration”, ‘‘change cause”, ‘‘change effect”, ‘‘dispute and claim”, ‘‘errors and rework”, ‘‘time and cost overruns”, and so on. Multiple index databases were used to ensure that no significant sources were missed, even though there are considerable overlaps between different databases. 2. The initial keyword search identified several leading journals, in addition to a list of published papers, which are most relevant to the topic of change causes and effects. These include: ‘‘Journal of Construction Engineering and Management”; ‘‘International Journal of Project Management”; ‘‘Construction Management and Economics”; ‘‘Cost Engineering”; ‘‘Journal of Management in Engineering”; and ‘‘Engineering, Construction and Architectural Management”. The full indices of these journals were then reviewed to identify further papers. Most of these journals provide online indices going back to the mid 1990s. 3. The third method was through reference lists of the papers identified using the previous two methods. As a result of the search, 101 journal papers have been found. In addition, 6 major research reports, published by CII, CIRIA and CIOB respectively, were also identified. These publications covered most of the research initiatives in this area worldwide. It was therefore decided not to extend the search to conference proceedings, unpublished theses and dissertations. The identified papers were reviewed and essential information was captured in a literature database using SPSS software. The information included authors’ names, year of publication, paper title, journal title, number of pages, country of origin, research methods, research topics, etc. Once the database was completed, a number of analyses were made. First, sources of the identified papers are analysed (Table 1). It indicates that all the leading construction management journals regularly published papers related to causes and effects of project change. ‘‘Journal of Construction Engineering and Management”, published by American Society

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Table 1 Paper distribution according to sources. Name of the journal

n

%

Journal of Construction Engineering and Management International Journal of Project Management Construction Management and Economics Cost Engineering Journal of Management in Engineering Engineering, Construction and Architectural Management AACE International Transactions Building Design and Construction Engineering Management Journal Others

27 20 13 10 8 5 2 2 2 12

26.7 19.8 12.9 9.9 7.9 5.0 2.0 2.0 2.0 11.8

Total

101

100

of Civil Engineers, tops the list with 27 papers, accounting for 26.7% of the total number. It is followed by ‘‘International Journal of Project Management” and ‘‘Construction Management and Economics” with 20 and 13 papers respectively. Journals with 2 or more papers include ‘‘Cost Engineering”, ‘‘Journal of Management in Engineering”, ‘‘Engineering, Construction and Architectural Management”, ‘‘AACE International Transactions”, ‘‘Building Design and Construction”, and ‘‘Engineering Management Journal”. In addition, there are 12 other journals that have one paper each. They are: ‘‘Automation in Construction”, ‘‘Building Environment”, ‘‘Construction Law and Business”, ‘‘Construction Procurement”, ‘‘European Journal of Operational Research”, ‘‘Facilities”, ‘‘International Journal of Quality and Reliability Management” ‘‘Journal of the Operational Research Society”, ‘‘Project Management Journal”, ‘‘Research Policy”, ‘‘The Cost Engineer”, and ‘‘Transport Policy”. Next, the number of papers published in each year is analysed (Fig. 1). The small number for 2006 is due to the fact that only the first quarter of the year was covered

by the review. The statistics show that there has been a consistent high level research interest on change causes and effects since the late 1990s. On average, 7–13 papers were published in academic journals every year. Before 1996, the number of papers published each year was 2 or fewer. One of the reasons for such small numbers might be because some journals’ indices are not fully included in the literature databases used by this review. Another reason could be that a relatively small number of research activities were conducted for this period. The research interests in project change causes and effects are spread worldwide. Table 2 shows the number of papers published by authors from different countries or regions. USA has the highest number of papers with 42, followed by the UK with 11. There are 10 more countries or regions with 2–6 papers and another 11 countries with one paper each.

Table 2 Papers distribution according to countries. Country

n

USA UK Hong Kong Australia Canada Taiwan Sweden Nigeria Indonesia Saudi Arabia Jordan Singapore Others

42 11 6 6 5 4 3 3 3 3 2 2 11

41.6 10.9 5.9 5.9 5.0 4.0 3.0 3.0 3.0 3.0 2.0 2.0 10.7

Total

101

100.0

14

12

10

8

6

4

2

0 19851990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Fig. 1. Distribution according to year of publication.

%

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The research methods used in the reviewed studies were analysed. The main types of research methods have been identified (Fig. 2):  Eight papers were based on Literature Review method. Examples include Akinci and Fisher [16], Al-Sedairy [17], and Andi [18].  Questionnaire survey was used in 36 papers. One of the most common uses of questionnaire is to establish the importance ranking for change causes. Examples of this method include Chan and Kumarawany [19], Odeh and Battaineh [20], Frimpong et al. [21], and Assaf and AlHejji [22]. The advantage of this method is that it can gather information from a large number of construction practitioners efficiently. However, the collected information is usually subjective.  Interview method requires direct interaction between the researchers and construction practitioners. It can help to collect richer information and is usually used in conjunction with other methods. Interview was used in 13 papers, including Ogunlana et al. [23], El-Rayes and Moselhi [24], and Arain and Pheng [25].  Case study, adopted in 28 papers, is a method that allows quantitative data to be collected. Research using this method usually focuses on a small number of projects. It can gather reliable data on cost, time and other project conditions. Conclusions can be drawn on the basis of quantitative and in-depth analyses. Authors who adopted this method include Chang [26], Josephson et al. [6], Wu et al. [5], etc. This method requires extensive effort during data collection. It is therefore difficult to be used on a large number of projects. 50

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 Documentation and database refers to the method of analysing documentation records of completed projects. It allows researchers to examine a large number of projects. Clearly, the results depend on the quality and comprehensiveness of the project records. Forty-nine papers used this method.  Finally, there are 19 papers that did not have explicit description on research methods. These are mainly short articles published in journals, such as Cost Engineering. Some papers used more than one method and appeared in two or more categories. For example, Chang [26] used case study and documentation analysis; Wu et al. [27] used documentation and interview; and Hsieh et al. [4] used documentation, interview and case study. That is the reason why the sum of all categories exceeds the total number of papers of 101. Finally, all papers were classified into three groups according to their contents: (1) those addressing change causes; (2) those addressing change effects; and (3) those addressing both change causes and change effects. Fig. 3 shows the result of this analysis. 38 of the 101 papers focused on change causes, 40 on change effects and 23 covered both causes and effects in a balanced manner. For some papers, the decision is clearcut. For others, it is a degree of judgement. Most papers discussed change causes and effects with different emphasis. For example, if a paper is about ‘‘the causes of delays in large construction projects”, it is put in the ‘‘Change causes only” category. On the other hand, the paper on ‘‘the potential effects of variation orders on institutional building projects” is put in the ‘‘Change effects only” category. The third group of papers, such as Andi [18] and Douglas [28], addressed both change causes and effects with equal emphasis. They are included in the ‘‘Change causes and change effects” category. The decision on each paper was based on a review of the whole contents not just paper title.

40

3. Causes of change Causes of change are conditions or events that either directly trigger or contribute to a change in construction projects. There have been numerous studies on causes of project change and delays, which can be broadly classified into three groups: questionnaire surveys, reviews of project records, and case studies. Questionnaire survey is good at gathering views from a large of number of practitioners. However, a response to such a survey can be subjective

30

20

10

Change causes th e

Change effects 23

38

40

oc

um

O

en

st e as C

rs

n

ud

ta tio

y

w ie In te rv

es tio nn ai re

R ev ie w

0

Fig. 2. Research methods adopted in the studies reviewed.

Fig. 3. Paper distributions by main research topics.

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and represents an accumulative experience over many projects by a respondent. Most surveys had relatively small sample sizes, e.g. with less than 80 valid responses. Caution is required when these survey results are extrapolated to the whole construction industry. Chan and Kumaraswamy [19,29] carried out a survey in Hong Kong involving clients, consultants and contractors on causes of delays in construction projects. Prior to the survey they identified 83 causal factors in 8 categories. Construction professionals were asked to assign a value of significance to each factor using a 1–5 scale. Results from all respondents are collated and analysed to produce the list of top 20 most important factors. They also analysed the differences in answers from the three groups. Similar surveys were carried out by Kaming et al. [30] in Indonesia, by Frimpong et al. [21] in Ghana and by Assaf and Al-Hejji [22] in Sandi Arabia. Odeh and Battaineh [20], also through a questionnaire survey, identified the most important causes of delays in construction projects with traditional contracts. Al-Khalil and Al-Ghafly [31] extended the scope of their survey to

include both frequency and extent of project delays in addition to causes. The second research method is review of project records. The advantage of this method is that it is more objective. However, the results are directly influenced by the accuracy and completeness of project records that are kept. Al-Momani [32] examined 130 public projects in Jordan and concluded that the main causes of delays include changes initiated by designers, client requirement, weather, site conditions, late deliveries, economic conditions, etc. Hsieh et al. [4] conducted a statistical analysis in 90 metropolitan public work projects in Taiwan and identified problems in planning and design as main causes of change orders. Yogeswaran et al. [33] scrutinised 67 civil engineering projects in Hong Kong and suggested that at least a 15–20% time overrun was due to inclement weather. Based on analysis of 46 completed building projects in the UK, Akinsola et al. [34] identified and quantitatively examined factors influencing the magnitude and frequency of variations in building projects. The third method of investigation is case study, where researchers concentrate on a

Table 3 Summary of change causes.

Projectrelated

Chan and Kumaraswamy [29]

Hsieh et al. [4]

Wu et al. [27]

Project construction complexity

Site safety considerations

Site restrictions

Low speed of decision making involving all project teams

Site security considerations

Delays in secure site, equipment or materials

Lack of communication between client, consultant and contractor Slow information flow between project team members Inappropriate overall structure linking all design teams Disputes/conflicts

Safety facilities reinforcement Complexity of project

Client-related

Client-initiated variations Unrealistic contract durations imposed by client

Designrelated

Necessary variations of works

Defects in design and planning

Delay in design information

Mistakes and discrepancies in design documents Inadequate design team experience

Errors and omissions in quantity estimations Inconsistency between drawings and site conditions Citation of inadequate specification Design changes

Poor site management and supervision

Inadequate planning

Changes in construction method

Inadequate managerial skills Improper control over site resource allocation Inadequate contractor experience Contractor’s deficiencies in planning and scheduling at preconstruction stage Delays in subcontractors’ work Unsuitable management structure and style of contractor Unsuitable leader style of contractor construction manager

Lack of contractor experience

Poor workmanship Poor scheduling

Unforeseen ground conditions

Unforeseen site conditions

Legislative or policy changes

Change of regulations Change of decision-making authority Unpredictable weather conditions

Political pressure Natural disaster Expected geological conditions Local residents Other organisations

Long waiting time for approval of drawings

Contractorrelated

External factors

Requirement changes Design changes in respond to site conditions Erroneous or incomplete design information Insufficient site investigation prior to design

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small number of projects and carry out in-depth analysis. For example, Wu et al. [27] focused on one large national highway project in Taiwan and identified 34 change order causes. They further proposed a coding system for these change causes. Table 3 summarises the causes of change identified by the existing studies, using one example paper for each of the above discussed three types of studies. The questionnaire survey produced the most comprehensive lists of change causes [29]. It also suggested categories for these causes, which are used in the table. On the other hand, documentation reviews and case studies offered a more indepth analysis of the change causes in a project context. There is also a broad consensus between the findings of the three types of studies. The main project change causes are discussed in the following. 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 [29,30]. 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 [35,36]. 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 contractor’s on-site 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 safety and security considerations and other restrictions [4,27]. Client-related causes: Client-initiated changes are very common, especially during the design stages. These are usually caused by variations in client’s 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 [27,29,37]. Design-related causes: Design errors and omissions are one of the main causes for project change during the construction phase [4,27,38]. 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 client’s 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, client’s 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 condi-

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tions 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 [4,27]. 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 [4,29]. This may be caused by inadequate managerial skills, lack of experience or unsuitable management structure [29,22]. Poor workmanship is also widely recognised as a common cause of unplanned project change and rework [3,27]. In recent years, the growing trend of using subcontractors instead of direct labour by the main contractor increased the difficulty of coordinating the work between different subcontractors. Delays by one subcontractor can cause secondary delays by others [29]. It is even worse if one subcontractor has to be replaced during the project due to poor performance or bankruptcy. 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 [4]. 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 [24,32,33]. Another common type of cause is related to site and ground conditions [32]. 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 labour during the life cycle of a project can also have a serious impact on the project delivery. Frimpong et al. [21] 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. [39] and Dlakwa and Culpin [40]. Finally, another source of project change is change in government legislation and regulation with regards to health and safety, planning, employment, environment, taxation, etc. [41]. 4. Effects of change Effects of change refer to direct or indirect impact of a change event on various aspects of a project. Although some projects may benefit from positive changes, most changes interrupt the flow of work, cause cost and time overrun. Amongst the 101 papers reviewed, 40 of them

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focused on change effects; another 23 had change effects as one of their main focuses. Three representative studies are selected to illustrate the main change effects (Table 4). Arain and Pheng [25] conducted a questionnaire survey with 54 professionals, 26 of which were through face-toface interview. Their aim was to identify potential effects of variations in institutional building projects in Singapore. Hanna’s [47–51] studies were based on data collected from 61 mechanical construction projects; and Bower’s [7] research is on the basis of one case study. 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 [42]. 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 recognised by all three studies as a negative effect of project changes. Rework incurs cost increase on wasted labour and material for the initial effort that needs to be abandoned. Further costs are related to equipment and labour that are required to remove the existing work. In addition, Love et al. [2,43,44] 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% [3], 4.4% [6] to as high as 12.4% [35] of the total project cost. 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 [14,45]. This negative correlation between the amount of change and project productivity was also reported by Ibbs [46]. In Table 4, Arain and Pheng [25] only acknowledged the fact of ‘productivity degradation’ as a result of project change. On the other hand, Hanna et al. [47–51] 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, multiple-shift work, staff morale and motivational problems, and resource problems. Bower [7] attributed the loss of productivity to the need for reprogramming, loss of rhythm and unbalanced gangs as a result of changes. 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 [7,47–51]. Other effects: The relationship between the client and contractor is usually formalised by a contract. Project changes often result in alterations to the contractual terms and conditions. Differences in understanding of causes of

Table 4 Summary of change effects. Arain and Pheng [25]

Hanna [48–52]

Bower [7]

Time-related

Delay in payment Material and equipment procurement delay Logistics delay Rework and demolition Completion delay

Time extension Overtime Rework Re-planning

Time lost in stopping and restarting Rework Standing time for subcontractors

Cost-related

Increase in cost Increase in overhead Additional payments to contractor

Increased costs Adjustment in crew makeup Overtime costs Compensation

Loss of earnings Increased time and material related charges Increased overheads Change in cash flow

Productivity-related

Productivity degradation

Schedule compression Out-of-sequence work Trade stacking Overmanning Loss of learning curve Multiple-shift work

Reprogramming Loss of rhythm Unbalanced gangs

Risk-related

Affected progress

Acceleration Interruption Interference Site congestion

Acceleration Loss of float Increased sensitivity to delay

Other effects

Poor professional relations Claims and disputes Poor safety conditions Quality degradation Damage to reputation

Co-ordination problem Less-qualified labour Loss of moral

Revision to project reports and documents Winter working

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change would lead to claims and counter claims [10]. 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

Table 5 Taxonomy of change causes. Level 1

Level 2

Level 3

External causes

Environmental factors

Conservation restrictions Weather conditions (wind, temperature, rain, etc.) Natural disaster (flood, earthquake, etc.) Geological conditions Unforeseen ground conditions

Political factors

Changes in government policies (environmental protection, sustainability, waste recycle, brown field use, etc.) Changes in legislations on employment, and working conditions Delays in planning permission approval

Social factors

Demography change and its impact on labour demand and supply Skill shortage on certain trades Opposition of neighbouring community

Economical factors

Economic development cycle and its impact on demand Inflation impact on material, equipment and labour price fluctuation Market competition

Technological factors

New materials New construction methods Technology complexity

Process related

Organisation business strategy

Organisational causes

Business procedures, including payment practice Quality Assurance procedures

Project internal causes

People related

Competence and skills Culture and ethics

Technology related

IT and communication systems Technical supports

Client generated

Requirement change and variation Funding change, i.e., shortage of funding Slow decision making Payment delays Difficulty in site acquisition

Design consultant generated

Poor, incomplete drawings Design changes due to poor brief, errors and omissions Inconsistent site conditions

Contractor/subcontractor generated

Poor project plan/schedule Poor site/project management skills Delays in appointing subcontractor Delay of subcontractors’ work Poor workmanship Low productivity Poor logistic control

Others

567

Poor interdisciplinary communication Team instability, i.e., disputes, bankruptcy, etc. Inappropriate project organisational structure

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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 productivity and poor quality of work [25,47–51]. 5. Taxonomies of change causes and change effects The review has found that a combination of all the papers produced a long list of diverse factors for both change causes and effects. On the basis of the review, an appropriate classification system, or taxonomy, is going to be proposed separately for change causes and change effects to collate and consolidate results of these previous studies. Several authors proposed different ways of categorising causes of project time and cost variations without calling them taxonomies. Chan and Kumaraswamy [29] grouped change causes into eight main categories: (1) Projectrelated; (2) Client-related; (3) Design team related; (4) Contractor-related; (5) Materials; (6) Labour; (7) Plant/equipment; and (8) External factors. The categories reflect both key participants (client, designer and contractor) and main components (material, labour and equipment) of construction projects. Akinci and Fisher [16] divided change causes into three broad categories: (1) construction-specific factors; (2) economic and political environmental factors; and (3) contract-specific factors. Construction-specific factors include unknown geological conditions, weather conditions, client-generated risks and subcontractor-generated risks. Economic factors refer to price fluctuations, inflation and economic stability. Political environmental factors are mainly government policy and regulation changes. Contract-specific factors are related to both the types and the context of contract. Chang [26] investigated design changes in engineering design projects; and put forward a classification of change causes to indicate the roots of problems and responsibilities: (1) compensable causes; (2) non-excusable causes; and (3) excusable causes. Compensable causes are initiated by the client. They are usually related to requirement changes and client failures or delays. Design consultants can claim compensation from the client for any extra work resulted from changes by this type of causes. Non-excusable causes are errors and omissions by the design consultants. Excusable causes are external factors that are beyond the control of the consultant and client. Such a classification is, in theory, helpful in portioning responsibilities for changes and settling claims. However, in practice client and consultant may have differing views on the real causes for a change, as revealed in the surveys by Chan and Kumaraswamy [29] and Assaf and Al-Hejji [22]. Another classification system was proposed by Wu et al. [5] based on a case study of a highway construction project. The classification adopted a hierarchical structure. At level 1, all external and internal causes are divided into seven groups – ‘‘political and economic factors”; ‘‘natural envi-

ronmental factors”; ‘‘third party factors”; ‘‘owner factors”; ‘‘design consultant factors”; ‘‘contractor factors”; and ‘‘others”. Each level 1 cause group is divided into level 2 change cause subgroups. For example, the ‘‘natural environmental factors” group is divided into ‘‘adverse weather conditions” and ‘‘uncertain subsurface conditions”. Using the same principle, level 2 is further divided into level 3 causes. At level 3, the cause descriptions are more specific, i.e., ‘‘because of incomplete geological survey, slope reinforcement may become necessary” or ‘‘construction drainage is affected by groundwater location change or incomplete information”. Because the system was developed on the basis of a single project, its scope is somewhat limited. On the basis of synthesis of the existing classifications, a taxonomy of change causes is proposed (Table 5). The taxonomy adopts a hierarchical structure with three levels. At top Level, change causes are divided into external causes, organisational causes and project internal causes. External causes include environmental, political, social, economical and technological factors. These factors are usually beyond the control of project teams. They exist and evolve independent of any individual project. Organisational causes, covering process, people and technology, are related to organisations directly involved in a project. Because most organisations are often involved in more than one project, organisational causes are also project independent. On the other hand, project internal causes are project specific and directly related to an individual project. At Level 2, internal causes are divided according to their sources – client, design consultant, contractor and others. All Level 2 causes are broken down to more detailed Level 3 ones. Descriptions of Level 3 causes are self-explanatory. The change causes taxonomy seeks to provide a comprehensive list of possible causes. However, it does not intend to be exhaustive. Construction professionals can use it as a generic framework and customise for their only purpose by adding more factors or removing some of them. Following the same principle, a taxonomy for change effects is also developed (Table 6). 6. Potential use of the taxonomies In order to reduce the negative effects of project change, it is important to identify, as early as possible, causes that are likely to lead to changes and to establish the possible effects in the event that a change occurs. Sun et al. [52] proposed a change management process model, which includes four key phases: (1) Start up: This phase contains proactive actions to prepare a project team for effective change management, including team building, clarification of roles and responsibilities, agreeing on change management processes and procedures. (2) Identification and evaluation: The project team need to consider whether any of the potential change causes are present at a certain stage of a project. Once

M. Sun, X. Meng / International Journal of Project Management 27 (2009) 560–572 Table 6 Taxonomy of change effects. Level 1

Level 2

Level 3

Time effect

Time extension

Addition of work Deletion of work Rework/redesign Work duration extension

Loss of productivity

Productivity degradation Procurement delays Logistic delays Unbalanced rhythm

Cost effect

Increased risk

Acceleration measures Interruption of flow of work Loss of float Increased sensitivity to further delays

Direct cost increase

Waste on abandoned work Demolition costs Increase in overheads Additional equipment and materials Additional payment to contractors

Indirect cost increase

Interrupted cash flow Increased retention/ contingency sum Overtime costs Litigation costs

Relationship and people effect

Relationship related

Claim and dispute Arbitration and litigation Team change Poor co-ordination

Working conditions

Revision to work method Site congestion Poor safety conditions

Staff related

Loss of learning curve Lower morale Staff turnover

Quality

Quality degradation Damage to reputation

a potential change is identified, evaluation needs to be carried out in order to establish both the implication of that change on the project and the optimum solution for the change. (3) Approval: Once the evaluation is completed, the chosen change option needs to be approved by an appropriate member of the team, usually the project manager. Sometimes, a change needs to be approved by the client before it can be implemented.

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(4) Implementation and review: Once a change is approved, it needs to be communicated to all team members whose work is affected by it. If necessary, the schedule of work needs to be adjusted and a new schedule needs to be agreed by the whole team. After the implementation, the project team also need to review and learn lessons from the change event. The proposed taxonomies can be used at different stages of the project change management process. First of all, they can be used as a framework by the project team to proactively manage project risks. By reviewing the list of common causes of change in the taxonomies, the project team can identify those factors that are particularly relevant to their project. Preventative measures can then be taken to either avoid a possible change before it occurs or to minimise its negative effects when it does. When a change becomes inevitable, the project team needs to consider different options of responses and evaluate the likely impact of each option. The change effect taxonomy can help the project team conduct such an evaluation in a more systematic manner. Once a change is implemented, it can be recorded and documented using the taxonomies. A case study was carried out to demonstrate such a usage. A supermarket building project was chosen, which consisted of a full refurbishment of an existing store and the construction of an extension to the store. The project duration was 29 weeks and budget was 7.0 million pounds. During the project a number of changes occurred; the following are some examples:  Piling: During one design team meeting, it was reported that 4 piles had failed due to variable site conditions and poor workmanship. As a result, the dimensions of the restaurant had to be changed from the original design. Another consequence was that one of the neighbouring shops had been partially obscured from public view.  Trolley Traps: In response to neighbouring residents’ concern about trolleys might be removed from the site, it was decided that trolley traps should be installed on the periphery of the car park. These were included in the original approved design. However, the client later decided to remove them during the construction phase, but before any work started on them.  Restaurant: The restaurant refurbishment was delayed due to the client not making final decision on a design option promptly. This delays the starting of the preliminary works on the restaurant and the interface with other parts of the shop.  Floor: During the construction phase, a new European regulation was issued requiring the condition of the flooring to be surveyed. The survey revealed some serious damages to the flooring that was already laid. Therefore it needed to be either replaced or repaired. An updated design was developed to ensure that the floor met the new European standards.

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Table 7 Record changes using the taxonomy of causes and effect.

7. Discussions and reflections

Changes

Causes

Effects

Piling

Unforeseen ground conditions Poor workmanship

Redesign/rework

Trolley traps

Opposition of neighbouring community

Redesign

Due to timing and access constraints to the case study project, the demonstration of the use of the taxonomies is rather limited. Its main purpose was to gain some feedbacks on the potential value of such a development. The following tentative observations can be made based on the case study experience and further reflections:

Restaurant

Slow decision making

Work duration extension Acceleration measures Interruption of flow of work Increased sensitivity to further delays

Flooring

Changes in legislation

Redesign/rework Interruption of flow of work Increased sensitivity to further delays

Bakery

Requirement change and variation

Redesign

Interruption of flow of work Quality degradation

Additional equipment and materials Additional payment to contractors

 Bakery: It was originally planned to move the location of the bakery but reuse the existing equipment, allowing for a one week shutdown of the bakery. However, the plan was altered because the client decided to install new equipment in the bakery at the new location. This change led to a cost increase from the previous budget of £36,000 to the actual cost of £160,000. Using the taxonomy, the above causes and effects of project changes are recorded, as illustrated in Table 7. The definitions in the taxonomy provide a common set of terminology for this task so that the whole team share the same understanding with regards to its causes and effects. This helps to avoid disputes later as to who is responsible for causing the change. This exercise also helped to refine the taxonomy. ‘‘Additional equipment and materials” was added to ‘‘Direct cost increase” of the effect taxonomy. It was identified as a necessary addition for the Bakery change. Recording project changes using the taxonomy also allows the project team to conduct statistical analyses on both causes and effects of change during project review stage. Such analyses can identify the most frequent causes and the most negative effects of change during the project. This will assist the project team in learning from the experience of completed projects. Senior executives can also use this to benchmark different projects and identify best practice across multiple projects.

 The proposed taxonomies consolidate the existing studies on change causes and change effects in construction. They appear to be sufficiently comprehensive for typical projects. However, there is a need for further extensive evaluation before concrete conclusions are drawn.  In practice, there is a multitude of factors that can cause changes during construction projects. Similarly, the effects of change often vary widely. It is virtually impossible to produce exhaustive lists for all change causes and change effects. The hierarchical approach adopt for the taxonomies ensures that there are no crucial omissions at higher levels, i.e., at least at level 1 and even at level 2. Some unforeseen specific causes and effects can be added at the lower level of the taxonomies.  The taxonomies should be viewed as a generic template that can be further expanded. Additional levels can be added to the frequent types of change causes and more significant change effects. Any expansion should follow the hierarchy structure to gain benefits of both specificity and generality.  There is a need for developing more comprehensive definitions for the terms included in the taxonomies, in order to provide a clear guidance for their users.  The case study only shows the use of the taxonomy when a change occurs. Another more important aspect of their value is that they can be used by project teams to proactively manage potential changes. Many damaging changes of construction projects are caused by the lack of systematic review and early identification of project risks. The taxonomy of change causes can be used as a framework by project teams to ensure that all key aspects are covered during project risk reviews.  When assessing change effects, project teams often only focus on more tangible aspects, such as time delays and cost increases. The taxonomy of change effects highlights some of the important intangible aspects, such as ‘increased risk’, deterioration of ‘working conditions’, and damage in ‘staff morale’. It provides construction professionals with a more comprehensive understanding of potential negative effects of project changes.  While the taxonomies show the diverse nature of change causes and effects, they do not show the complexity of project changes themselves. In reality, a change is caused be a variety of factors with different degrees of importance. Some factors are root causes; others are contributory causes. Some are direct causes and others are indirect causes. Similarly, a change can have multiple

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effects and some effects are interlinked. There are also dependencies not only between causes and effects but also between one change and another.  In order to be used more effectively in practice, the taxonomies need to be integrated with project management tools and project change management processes.  The application targets of the developed taxonomies are primarily construction projects. However, other projectbased sectors, such as civil engineering and IT, share similar problems of managing project changes. The taxonomies can be easily adopted by these sectors.

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