Highways play a significant role in the economic growth of developing countries. Sri Lankan government also has realized such importance and has directed special focus on constructing new highways. However, highways construction is not a simple task and these projects are often typified by risk and complexities which create a range of problems that has to be dealt with utmost care. Variations are one of them, which commonly occur due to uncertain scopes of work defined at the beginning. Thus, this study is undertaken to identify causes, nature and effects of variations in highways construction in Sri Lanka. A questionnaire survey was undertaken to identify frequent causes of variations and semi-structured interviews were conducted to capture data regarding nature and effects of variations. The results revealed that change in mind force and requirement increases were the main causes of client originated variations while design changes and defects in BOQ were the main causes of consultant originated variations. Land acquisition and funds arranging issues were identified as main unforeseeable cause that originates variations. The study further revealed that omission of any work has a significant impact on the nature of variations. In most situations, variations have resulted in cost overruns with an average increase of 9.9% of the initial contract sum.