Research On Variation Governance Of Construction Projects Based On Transaction Cost

Variation is inescapable during the period of construction, and combined with the incompleteness of contract, the dispute which aroused by the variation has negative influence on the project schedule, cost and quality, reducing the efficiency of the implementation of the contract. The result of the research will promote the value of the project. No agreement or unspecified clause about the variation is the main reason of the dispute,which provides the conditions for the parties to make opportunistic behavior because of coming out of nowhere. If the variation does not occur, the dispute will not exist. As the dynamic adjustment measure to improve the design and enhance the environmental adaptability, variation cannot be completely denied because of generate controversy and uncertainty. In view of this, this paper explores the effective measures to reduce the transaction costs of variation from two aspects: optimization of variation and the promotion of the efficiency of afterwards negotiations. In this way, avoid the blind change that they please and raise the solving efficiency of the matters that have to change.Firstly, remove the ambiguity of the variation terms which will cause controversy. Propose factors always cause the variation controversy in the engineering practice: engineering variation and construction program changes. At the same time, 07 “Standard Tender Document for Construction”, Code of bills of quantities and valuation for construction works(GB50500-2013)and 99“FIDIC Conditions of Contract for Construction” is taken as the subject, combining with the concepts often confused in practice. Then, we can define the prerequisite that engineering variation and construction program changes can be compensated in accordance with the engineering changes provision, in order to achieve the agreed transaction costs to remove the ambiguity caused by the increase.Secondly, explore the variation negotiations on cooperation incentive mechanism, proposed the idea that risk-sharing and co-induced point can induced negotiations on cooperation and gives practical guidance recommendations. Variation Order by the contracting parties of the subjective and the natural environment impact, the contract cannot be possible for all matters agreed upon changes, variation cannot be completely removed in a blur. Totally dependent on the contract can no achieve effective control of engineering changes, to explore incentive contracting parties to fulfill engineering change matters in accordance with the spirit of cooperation is the fundamental solution to solve the problem of high transaction costs of variation but perform inefficient.Finally, explore the idea of the optimization of variation from the perspective of reducing unnecessary changes. On the one hand, the establishment of internal variation control path and the design of effective variation control path can make both sides have to follow the procedures on contract to perform the contract law-abiding. On the other hand, propose variation control strategy based on revenue sharing, sharing earnings caused by the balance part of the cost of the project developer contractor proposed variation optimization and the saving part of the cost of the project caused by contractor’s reasonable suggestions. This can incentive contractor to carry out variation initiative control, improving the efficiency of the engineering change control.In conclusion, this paper analyses the essential reason of the variation by the base of the incomplete contract theory, proposes initiatives to reduce the transaction costs caused by variation, and explores the effective path to achieve effective control of variation. Aims to reduce the transaction cost of variation, enhance the value of variation, and ultimately enhance the efficiency of performance of the contract.