Managing Contract Variations within the Legal Framework of Public Procurement in Ghana: A Case Study of Electricity Company of Ghana Limited

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Construction in Ghana is a high risk prone industry because of the complex and dynamic project environment. Construction projects are complex because they involve many human and non-human factors and variables. Construction contracts usually last long and experience various uncertainties such as variations. Even well planned projects may eventually require variations. The management of contract variations can be enhanced by the identification and analysis of potential contract variations as early as possible. All issues regarding procurement in Ghana are governed by a legal framework. The study aimed to ascertain the adequacy of the legal framework of public procurement and the root causes, effects and controls of variations in ECG works procurement contracts. The study adopted a case study approach through which structured questionnaires were designed to solicit views from all staff of the Premises Division of ECG. The study revealed after analysing the data using a Relative Importance Index, Kendall’s Rank Test and Gap Analysis that the five most prevalent root causes of variations in ECG contracts include; Change in plans by the client, Discrepancy in design details and BOQ, Differing site conditions, Client’s financial constraints and Change in economic conditions. That of the effects of variations identified include; Increase in project cost, Completion schedule delay, Project progress is affected but without any delay, Rework and demolition and Dispute between parties to the contract. Control measures identified to manage contract variations effectively include; Clarity of variation order scope, Written approvals, Prompt approval procedures, Variation logic and justification and Review of contract documents. A Gap analysis was conducted to ascertain the level of knowledge and usage of variation provisions within the legal framework of public procurement. It was concluded that ECG contract variations are not properly managed using all the necessary variation principles in line with the legal framework of the Public Procurement. There is a very wide gap between the level of knowledge and application of variation principles and that this gap has to be bridged. This should serve as a source of worry to ECG if it desires to effectively manage its construction contract variations.
A thesis submitted to the Department of Building Technology, Kwame Nkrumah University of Science and Technology in partial fulfillment of the requirement for the Degree of Master of Science in Procurement Management, 2015