Transportation infrastructure is one of the most important categories of infrastructure. It is fundamental in movement of people and goods. According to Andrichak (2005), transportation infrastructure is the durable capital of the city that fixed in the location. It was defined as a long-term asset on investment site. For development side, transportation was defined as the one of the tools which influences two sides of country development. First side, transportation investment effects community development, comprises of social, political and natural, and another side is economic development (Mourmouris, 2005).
In Thailand, ADB (2008) emphasized that the proposed megaprojects program is required to sustain long-term growth of economy. The amount of expenditure in transportation sector is 7.8 billion dollars which is considered to be the third of government allocation in megaproject investment plan. The Bureau of the Budget plays a crucial role in all responsibilities concerned with budgeting such as budget management, budget analysis for budget allocation, monitoring and evaluating the performance of government ministries and agencies. This bureau is also responsible to prepare an annual government statement of expenditure.
For budgeting system, budget is always considered for two main sides which are revenue side and expenditure side. Budgeting is as a document which forecasts and authorizes the annual governmental revenue and expenditure of the state (Storum, 1917). On the expenditure side of the budget, government allocates budgets to project following functional classification of expenditure, such as health care, education and transportation project (World Bank, 2008). The thing is the bigger size of project means bigger amount of budget investing in project. The key important factor is expenditure prioritization. Therefore, principle to considering project is very important for budgeting officers in order to prioritize which project should be allocated budget in.
Ms. Korakade Thamphongsri made a case study to tackle the three main issues such as: (1) inadequate budgeting knowledge using for project prioritization and budget allocation; (2) unclear criteria for project prioritization and selection; and (3) lacking of understanding technical knowledge of transportation project using for project consideration.
The objectives of her study is to (1) investigate current practices and perceptions of governmental budgeting officers from Bureau of the Budget and Ministry of Transportation regarding budgeting system; (2) develop physical model of road transportation components for applying in budget consideration; and (3) propose recommendation for improving budget allocation of road transportation project by applying utilities of developed model.
She concluded that road transportation project is a basic infrastructure which is necessary for the society and needs huge amount of budget for investment. Therefore, bureaucrats who are responsible for budgeting department play crucial role in this task – project consideration and budgeting allocation. Although there is budgeting system used for managing budget, it still has problem in lacking of knowledge of budgeting officers to budget management.
The purpose of studying perception of budgeting officers regarding problem influencing budgeting system is to: 1) investigate current practices and perceptions of governmental budgeting officers from Bureau of the Budget and Ministry of Transportation regarding budgeting system, 2) develop physical model of road transportation components and 3) propose recommendation for improving budget allocation of road transportation project by applying utilities of developed model.
Current Practice of Budgeting System
From investigating current practice of budgeting system, it was found that there are different perceptions between budgeting officers from budgeting level and operational level. Below are crucial points that show different of perceptions to budgeting instrument of budgeting system.
1. Project management: Perception of budgeting officers at budgeting level with problem influencing implementation of budgeting system highly tend to be the problem in part of project management. The reason is problems are mostly related to unreadiness of project operation which mostly comes from planning phase of project. Another problem is related to lacking of important information of project such as project feasibility study which is the main data that budgeting officers use to consider and make decision for budget allocation.
2. Output costing: Perception of operational officers with problem influencing implementation of budgeting system highly tend to be the problem in part of output costing. Almost problems are related with financial recording system from central office which its function is not flexible to be integrated with existing system of operational department. It would make recording cost of activity at operational level difficult which affects to budget record at budgeting level as well. Another problem is activities distribution without considering of central officers before distributing which can lead to unnecessary budget allocation.
3. Output structure: From result, both levels of budgeting officers have good practice in output structure. The thing is that both budgeting officers at budgeting level and operational level familiar in using this budgeting instrument for breaking down output of project from time to time. Therefore, both levels of budgeting officers do not have problem with implementing output structure.
4. Alignment between strategies, objective, strategic plan, and output with the budget: Operational officers mostly have practice problem with this instrument more than budgeting officers. Problem with key performance indicator (KPI) is a main problem for Operational officer. Performance indicator has bigger scale of measurement than actual work. The thing is bigger scale of performance indicators would lead more budgets to project. Therefore, indicator should be indicated with appropriate consideration.
5. Medium Term Expenditure Framework (MTEF): Budgeting officers at budgeting level mostly have practice problem with this instrument more than operational officers. The important practice problem for budgeting officers is a lack of success evaluation of megaproject for MTEF budget ceiling. This problem would affect budgeting allocation. Because megaproject needs large amount of budget, success evaluation of previous megaproject would be useful for considering in order allocating budget to coming megaproject.
6. Performance Assessment Rating Tool (PART): Budgeting officers at budgeting level have practice problem in implementing PART at operational level which operational officers do not emphasize PART evaluation on working performance. A lack of emphasizing PART evaluation would affect to decision making on budget allocating for the next project of department. For operational officers, they have practice problem in inflexible PART system for using operational level because evaluation system is belonging to assessment division in practical.
Problem Ranking
From part of analysis, there are problem ranking of both budgeting officers from Bureau of the Budget and from Ministry of Transportation. For officers at Bureau of the Budget - budgeting level, the first three problems, which are the most importance to influencing budgeting system, are problems in part of project management. These are problems in the first three ranks.
1st rank : Most projects are prioritized by the individual policies of high level management rather than by the readiness of project operation. (Project Management)
2nd rank : There is a lack of important information related to the project, the act of which can hinder effective project prioritization. (Project Management)
2nd rank : A project cannot achieve its target that has been planned because of project delay due to the fact that the project is not ready to be launched and there are on-side obstacles. (Project Management)
For perception of budgeting officers from Ministry of Transportation, first three rank include two problems are in output costing and one problem are in part of big picture of budgeting system.
1st rank : The financial record of the government, GFMIS, used by government divisions at budget management and operational level is not flexible to be integrated in output costing system. (Output Costing)
2nd rank : Officers at the operational level only focus on achieving task-objectives, but lack consideration for the monitoring and evaluation. (Big picture of budgeting system)
3rd rank : Central officers distribute activities and budget to provincial officers even though such activities can be done for the whole country at the central level. (Output Costing)
Model Development
In order to achieve objective two, physical model of road transportation components has been develop. The purposes of model development are:
1. To make budgeting officers more clear perception about physical components of road transportation.
2. Help budgeting officers to be more understanding technical terms of road transportation project and it will be useful for budgeting officers in project consideration process.
3. To make use of relationship between factors for better considering proposed physical output of road transportation project.
4. To be used as an instrument for budgeting officers in order to consider project budget requests from operational officers by using physical output to clarify output costing of project.
5. To improve budget allocation of budgeting officers on road transportation project by reducing unnecessary outputs of road transportation project which causes unnecessary budget.
Recommendation for improving budget allocation of road transportation
There are utilities of physical model on budget allocation. Factors in each group have different utilities issues. This part would propose recommendation for better decision making on budget allocation for budgeting officers. Proposed recommendation mainly focuses on improving budget allocation for road transportation project.
1. Long term planning: Budgeting officers can make use of design factors in order to plan and study road transportation project in long term which would benefit for preparing budget. In addition, project would be ready to be launched with completely information and resources.
2. Emphasis on setting and using performance indicators: Budgeting officers should consider result of measuring performance of project operation by using performance indicators. It would be guideline for considering next project proposal for budget allocation.
3. Eliminating unnecessary budget: Budgeting officers should divide important level of output components of road transportation and consider output that relate with objective of the project. Budgeting officers would eliminate unnecessary output, which can lead more amount of budget, which included in project proposal without relating with targets. Therefore, budgeting officers can eliminate unnecessary budget and budgeting officers also can select the most important project.
4. Understanding technical knowledge of road transportation: Technical terms in physical model of road transportation would make budgeting officers better understanding road transportation project at operational level. It would help budgeting officer consider project easily.
Her thesis abstract is copied and posted
ABSTRACT
Road transportation project is an infrastructure which serves society in movement of people and commodity. Most road transportation projects are megaproject that need huge budget for investment. Therefore, it is a responsibility of Bureau of the Budget in order to consider and allocate budget into project. Budgeting officers use budgeting system to be as an instrument for considering project and allocation budget. From problem statement, for budgeting officers, there are unclear criteria for project selection and inadequate knowledge to prioritize project and allocate budget. Therefore, this research is aimed to investigate current practice and perception of budgeting officers, who work at different level which are budgeting level and operational level, regarding budgeting system and develop model to improve budget allocation process.
To achieve objective of study, the first objective is achieved by using questionnaire survey to investigate current practice and perception of budgeting officers between Bureau of the Budget and Ministry of Transportation. Current practice and perception would be investigated about problems regarding budgeting system throughout budgeting components included six budgeting instruments. Descriptive analysis by mean and ranking is used to analyze important level of problem in each instrument. Result is that there are similar and different perception between budgeting officers from budgeting level and operational level.
Results were found that perception of operational officers with problem influencing implementation of budgeting system highly tend to be the problem in part of output costing. The reason is almost problems are related with financial recording which is not flexible for working at operational level, and also activities distribution which is lack of considering of central officers before distributing. It would affect to unnecessary budget allocation. For budgeting officers at budgeting level, their perception with problem highly tend to be problem in project management. The reason is problems are mostly related to unreadiness of project operation and lacking of important information of project such as project feasibility study which is the main data that budgeting officers use to consider and make decision for budget allocation. Therefore, physical model of road transportation components has been developed. The purpose is to be as an instrument for budgeting officers more understanding in technical term, and used to improve budget allocation of road transportation. Finally, recommendation for improving budget allocation has been proposed.
Wednesday, 29 July 2009
Tuesday, 28 July 2009
Quality Management System For Consultant Supervision For Managing Performance Of Building Contractors In Vietnam
The purpose of the quality control system is to make high quality products and focus on customers’ satisfaction. Business competition in today’s markets has increased that tend the customers to being quality oriented. Many companies try to find the way to satisfy customers’ needs in order to survive. For this reason, quality management accreditations such as ISO 9000, total quality management (TQM), and the likes can be frequently heard and more widely discussed.
Worldwide, ISO 9000 and TQM are considered as the most effective ways of quality managing. ISO 9000 has guidelines and requirements for documenting a quality system. TQM is far wider in application than ISO 9000.
TQM is organization’s set of management practices equipped to guarantee the organization consistently meets or exceeds customer requirements. TQM focused on process measurement and controls as means of continuous improvement. It has four key elements (1) customer’s expectations and definition of quality; (2) Focusing on the improvement process and not the end result; (3) The participation of all employees and their empowerment to make decisions affecting quality; and (4) Continuous, ongoing improvement.
On 8 June 2004, the Vietnamese government issued decree No 209/2004/ on quality management in building projects. This decree requires all construction organizations to follow to avoid related accidents that happened in three construction projects in 2007 until middle 2008. After investigating those problems, construction committee concluded that the owners were lacked of construction quality control. Besides, the consultant also did not have a quality control system to keep track of the contractor’s work.
Therefore, quality control system of the consultant is strongly necessary for both owner and contractor to assure quality and prevent any unexpected hazards.
Mr. Bui Van Bao made a case study on “Quality Management System for Consultant Supervision for Managing Performance of Building Contractors in Vietnam”. The objective of his study is to develop quality management system for consultant supervision in managing the performance of building contractors in Vietnam. His study also aimed to investigate the construction methods which are related with quality control based on the Vietnam standard and regulation, and analyzed the communication process of managing quality and exchanging information between the owner, supervising consultant, designing consultant and contractor to solve many problems at the site.
Worldwide, ISO 9000 and TQM are considered as the most effective ways of quality managing. ISO 9000 has guidelines and requirements for documenting a quality system. TQM is far wider in application than ISO 9000.
TQM is organization’s set of management practices equipped to guarantee the organization consistently meets or exceeds customer requirements. TQM focused on process measurement and controls as means of continuous improvement. It has four key elements (1) customer’s expectations and definition of quality; (2) Focusing on the improvement process and not the end result; (3) The participation of all employees and their empowerment to make decisions affecting quality; and (4) Continuous, ongoing improvement.
On 8 June 2004, the Vietnamese government issued decree No 209/2004/ on quality management in building projects. This decree requires all construction organizations to follow to avoid related accidents that happened in three construction projects in 2007 until middle 2008. After investigating those problems, construction committee concluded that the owners were lacked of construction quality control. Besides, the consultant also did not have a quality control system to keep track of the contractor’s work.
Therefore, quality control system of the consultant is strongly necessary for both owner and contractor to assure quality and prevent any unexpected hazards.
Mr. Bui Van Bao made a case study on “Quality Management System for Consultant Supervision for Managing Performance of Building Contractors in Vietnam”. The objective of his study is to develop quality management system for consultant supervision in managing the performance of building contractors in Vietnam. His study also aimed to investigate the construction methods which are related with quality control based on the Vietnam standard and regulation, and analyzed the communication process of managing quality and exchanging information between the owner, supervising consultant, designing consultant and contractor to solve many problems at the site.
He concluded that to ensure the quality of construction works, the consultant and contractor are responsible to determine the quality of construction project. All management procedures must also be followed on a suggested three stage basis: input à processà output. Of these three, the most important stage is “process”.
The quality management system functions as practiced in building construction. A model for managing quality has been defined and shown to apply to any construction domain and organizational structure for developing and administering a quality assurance program. The model involves multi level quality management participation, encompassing contractors, engineers, and managers. It describes the quality management tasks and the roles assumed in a scheme relating construction quality control, quality assurance, and the interface between them. This study advances the understanding of how quality management is performed and engages participants at several management levels.
His recommendations for management improvement are:
1. The Supervising Consultant should supply the contractor with their quality management system before construction commencement so that the contractor knows and understands QMS for better coordination.
2. Top manager of Supervising Consultant should update new standards in quality management system in order to improve its management system and preventing quality risk in building the project. The Consulting Engineer must have a quality policy that applies the quality standards and approval requirements all in accordance with the law of construction.
3. Top management of the contractor should take a lead role in commitment towards quality. They must understand the quality policy and follow it as a work quality standard.
4. The owner should have a good financial condition to enable the contractor to complete the project in accordance with the contract schedule.
His recommendation for further study is to find out the influence of Owner, Consultant and Contractor in the project quality itself for consultant management improvement.
His thesis abstract is copied and posted.
Abstract
The study gives a thorough description of the quality management system as practised by the supervising consultant in the construction industry. This function is shown as an interconnected system that recognizes the main quality system management activities. The documents and records used in these activities are also reviewed. A model for high level quality system management is defined, including supervising consultants and contractors.
The model depicts the quality management system responsibilities and the roles in a scheme relating to construction quality control, quality assurance, and the interface between them. The scheme can be applied to any construction domain and quality management structure of organization. The study advances the understanding of how quality management is performed and engages participants at several management levels.
The use of quality management system in the construction industry has greatly increased in recent years. Because the purpose of QMS development is to manage the performance of building contractors in Vietnam, it is very important to assure quality in building projects and satisfy the client as much as possible in the construction industry. The objective of the quality management system is to improve the quality of construction projects and to enhance the effect and productivity during the building project in order to achieve client satisfaction.
The research methodology is highlighted as the main philosophy. Besides, different sources of data will be gathered in this research, including project documents, reports from local government and project agencies, newspapers, construction law and standards in Viet Nam etc. an exploratory approach will be adopted by reviewing the available literature to develop a quality management system framework for consultant supervision building projects in Vietnam.
Report the findings of a research study, which was undertaken to examine the underlying factors affecting the quality of a building project. It also aims to identify factors that show a strong correlation to good quality performance. The ultimate goal is to provide clients, project managers, supervising consultants and contractors with information that can help them become more efficient with their limited resources and, as a result, achieve better quality outcomes.
The quality management system functions as practiced in building construction. A model for managing quality has been defined and shown to apply to any construction domain and organizational structure for developing and administering a quality assurance program. The model involves multi level quality management participation, encompassing contractors, engineers, and managers. It describes the quality management tasks and the roles assumed in a scheme relating construction quality control, quality assurance, and the interface between them. This study advances the understanding of how quality management is performed and engages participants at several management levels.
His recommendations for management improvement are:
1. The Supervising Consultant should supply the contractor with their quality management system before construction commencement so that the contractor knows and understands QMS for better coordination.
2. Top manager of Supervising Consultant should update new standards in quality management system in order to improve its management system and preventing quality risk in building the project. The Consulting Engineer must have a quality policy that applies the quality standards and approval requirements all in accordance with the law of construction.
3. Top management of the contractor should take a lead role in commitment towards quality. They must understand the quality policy and follow it as a work quality standard.
4. The owner should have a good financial condition to enable the contractor to complete the project in accordance with the contract schedule.
His recommendation for further study is to find out the influence of Owner, Consultant and Contractor in the project quality itself for consultant management improvement.
His thesis abstract is copied and posted.
Abstract
The study gives a thorough description of the quality management system as practised by the supervising consultant in the construction industry. This function is shown as an interconnected system that recognizes the main quality system management activities. The documents and records used in these activities are also reviewed. A model for high level quality system management is defined, including supervising consultants and contractors.
The model depicts the quality management system responsibilities and the roles in a scheme relating to construction quality control, quality assurance, and the interface between them. The scheme can be applied to any construction domain and quality management structure of organization. The study advances the understanding of how quality management is performed and engages participants at several management levels.
The use of quality management system in the construction industry has greatly increased in recent years. Because the purpose of QMS development is to manage the performance of building contractors in Vietnam, it is very important to assure quality in building projects and satisfy the client as much as possible in the construction industry. The objective of the quality management system is to improve the quality of construction projects and to enhance the effect and productivity during the building project in order to achieve client satisfaction.
The research methodology is highlighted as the main philosophy. Besides, different sources of data will be gathered in this research, including project documents, reports from local government and project agencies, newspapers, construction law and standards in Viet Nam etc. an exploratory approach will be adopted by reviewing the available literature to develop a quality management system framework for consultant supervision building projects in Vietnam.
Report the findings of a research study, which was undertaken to examine the underlying factors affecting the quality of a building project. It also aims to identify factors that show a strong correlation to good quality performance. The ultimate goal is to provide clients, project managers, supervising consultants and contractors with information that can help them become more efficient with their limited resources and, as a result, achieve better quality outcomes.
Monday, 27 July 2009
Managing Subcontractor Schedule Performance In An EPC Contract
The construction industry has been used as a gauge of economic health because of its strong linkage to cyclical fluctuation in the economy. The construction services sector is thus a relatively large employer. It draws on a large part of fixed capital formation in an economy, and it provides the essential support for economic development.
Over the last two decades, up to 70% of construction business opportunities in international markets as measured by the size of contracts were found in developing countries primarily in infrastructure projects. Some developing countries have been exporting construction services successfully and have attained a certain competitive advantage, although they have had extremely limited success in penetrating the markets of development countries.
With economic development, contracts in the construction industry have greatly increased in recent years. The experience of large companies has shown that technology co-operation agreements with developed country partners have helped to reduce organizational and transaction costs, facilitated international sourcing of technology and improved marketing and managerial practices. As a result, main contractor prefer to subcontract the services. Subcontracting has proved to be an entry point to the international market for small and medium-sized construction companies from developing countries and also transition economies. This appears to be because developing country companies seem to have inadequate capacities for executing overall management of large construction projects and are usually subcontracted for other specialized services. In most construction projects, especially building projects, it is common for 80 to 90% of the work to be performed by subcontractors (Hinze and Tracey, 1994).
The contractors that are selected to enter into general EPC contracts must fully satisfy the conditions on experience and capability. In the process of preparing, entering into and performing the contracts, the contractors are encouraged to put forward initiatives, measures or apply their experiences in order to fulfill the contractual jobs, meet the objectives and requirements of the projects or bidding packages and raise their efficiency (Circular 08/2003/QD-BXD - Ministry of Construction of Vietnam).
Most of the work should be done by subcontractors as the main contractors rely on a large number of subcontractors. As much as 90% of the construction work id carried out by the variety of subcontractors while the main contractors tend focus on the management and coordination. Therefore, main contractor need to develop subcontract management strategy that leading to control subcontractors’ performance effectively and efficiently.
Managing subcontractors does not simply involve asking them to allocate resources into the jobsite whenever an activity is scheduled and then push them to speed up the work without the consciousness of schedule and cost risks. A good general contractor or project manager must award to which subcontractors should be paid more attention than others in preventing delay when considering the problems on duration and additional costs.
Mr. Nguyen Tan Hoang made a study to (1) identify problems related with subcontractors’ performance in terms of project schedule and delivery; and (2) study the monitoring the performance of subcontractors in terms of project schedule and delivery.
He found out that relating to the concept of concurrent delay is one of the most troubled and complicated area. It is strongly contested topic in the building and construction industry. Both parties in the construction contract regularly use concurrent delay as an excuse to avoid responsibility for extension of time claims and the assessment of liquidated damages. It was also found out in this study that even contractor hired a third party for selecting subcontractors. The contractor also implemented the bidding that follows basic principles including consideration of the interaction of different factors such as:
Contractual provisions.
Legal principles.
Technical assessment of the construction program.
Definition of criticality.
Floating ownership and methods for proof of delay claims.
The delays absolutely happened 100% in public main subcontractors and only a small % delay of private subcontractors because of unforeseen conditions as very bad weather. Despite of these, contractor almost solved the subcontractors’ delays by using the contractual provisions of back-charge to hire another subcontractor to do the impacted areas. The overall time to be recovered and is similar to required schedule of project.
Conclusions for Subcontractor Control Strategy
It can be concluded based on this study that subcontractor control strategy has been well aligned and well organized in all aspects to international contractor. However, there are some major points that need to be improved in order to strengthen the management efficiency and it effectiveness. These are the following:
1. Consider to the size of scope of work for each package.
2. Consider to the public and private subcontractors in the subcontractor master list and the overall subcontract plan, also their current works at the same time of awarded project as well. They are the main causes of overloading.
3. Study site conditions more carefully in order to consider the proper price of each package that could be awarded to subcontractor.
4. Sharing with subcontractors in risks that could be happened by unforeseen conditions not only generally covered in contractual provisions.
5. Obligate subcontractors must use legal tools for tracking schedule and define delays.
Conclusion for subcontractor Performance Management
It can also be concluded that main contractor maintained a very systematically concise subcontract performance management. However, there are some major points that need to be improved in order to strengthen continually the performance efficiency and it effectiveness. These are the following:
1. Contractor must consider to the prepared schedule may include milestone and interim completion dates that satisfy contractor needs and they should be required in subcontract provisions clearly.
2. Contractor must consider to unforeseen conditions clearly as the bad weather and undiscovered soil conditions.
3. Contractor must consider the progress payments that to be used 100% by subcontractors for project.
4. Contractor must consider the facilities conditions for subcontractors in subcontract before implementing the work at site.
5. Contractor must consider incentive in line of subcontractors’ performances.
Mr. Nguyen Tan Hoang learned from this case study regarding on how the main contractor managed their subcontractors in line of subcontractor control strategy and how they managed the performance in terms of schedule delays together with its strength and weaknesses. In order to improve this, he made some recommendations as follows:
1) Whether the scheduling obligation is to be imposed on a subcontractor, main contractor, the scheduling specification should be as carefully considered and written as any other technical specification.
2) Setting up the rewards for subcontractor performance when achieving each milestone as required in the subcontract in order to increasing the productivity and endeavors from subcontractors.
3) Construct an unforeseen conditions control procedure for applying at site when the parties faced, especially for bad weather and soil conditions not only locked by subcontract provisions.
4) Parties must get resources evaluation for project before implementing the work in the cases of far site location with economic - social centers. They must be considered in the contract negotiation meetings.
5) Maintain the other standby strong subcontractors/ suppliers for cases of back-charge decisions happened. These standby subcontractors could be some ones that are doing other packages of project in order to reuse available resources and facilities.
6) Maintain at least a lawyer for cases of contractual conflictions in a large project in order to solve local rules and regulations, especially when removing any subcontractor out of battery limits.
His thesis abstract is copied and posted.
ABSTRACT
The construction industry has greatly developed and increased in recent years. In most EPC projects, it is common for over 80% of the work to be performed by subcontractors. This has resulted in main contractors concentrating their efforts on managing subcontractor performance rather than employing direct labor to undertake construction work. Therefore, main contractor need to develop a strategy that allow him to control subcontractor effectively and efficiently in terms of schedule delay. In order to understand how the current strategies are being operated together with the strengths and the weaknesses of the strategy, an EPC international contractor who is doing a very large project in Vietnam was investigated through documentation, archival, and interview. Major improvements are needed for the subcontractor control strategy for local subcontractors in order to improve the subcontractor management performance. In contrast, subcontractor control strategy and relationship management from international contractor had been aligned and organized. However, there are some major points, which need to be improved in order to strengthen and continually improve the strategy performance.
Over the last two decades, up to 70% of construction business opportunities in international markets as measured by the size of contracts were found in developing countries primarily in infrastructure projects. Some developing countries have been exporting construction services successfully and have attained a certain competitive advantage, although they have had extremely limited success in penetrating the markets of development countries.
With economic development, contracts in the construction industry have greatly increased in recent years. The experience of large companies has shown that technology co-operation agreements with developed country partners have helped to reduce organizational and transaction costs, facilitated international sourcing of technology and improved marketing and managerial practices. As a result, main contractor prefer to subcontract the services. Subcontracting has proved to be an entry point to the international market for small and medium-sized construction companies from developing countries and also transition economies. This appears to be because developing country companies seem to have inadequate capacities for executing overall management of large construction projects and are usually subcontracted for other specialized services. In most construction projects, especially building projects, it is common for 80 to 90% of the work to be performed by subcontractors (Hinze and Tracey, 1994).
The contractors that are selected to enter into general EPC contracts must fully satisfy the conditions on experience and capability. In the process of preparing, entering into and performing the contracts, the contractors are encouraged to put forward initiatives, measures or apply their experiences in order to fulfill the contractual jobs, meet the objectives and requirements of the projects or bidding packages and raise their efficiency (Circular 08/2003/QD-BXD - Ministry of Construction of Vietnam).
Most of the work should be done by subcontractors as the main contractors rely on a large number of subcontractors. As much as 90% of the construction work id carried out by the variety of subcontractors while the main contractors tend focus on the management and coordination. Therefore, main contractor need to develop subcontract management strategy that leading to control subcontractors’ performance effectively and efficiently.
Managing subcontractors does not simply involve asking them to allocate resources into the jobsite whenever an activity is scheduled and then push them to speed up the work without the consciousness of schedule and cost risks. A good general contractor or project manager must award to which subcontractors should be paid more attention than others in preventing delay when considering the problems on duration and additional costs.
Mr. Nguyen Tan Hoang made a study to (1) identify problems related with subcontractors’ performance in terms of project schedule and delivery; and (2) study the monitoring the performance of subcontractors in terms of project schedule and delivery.
He found out that relating to the concept of concurrent delay is one of the most troubled and complicated area. It is strongly contested topic in the building and construction industry. Both parties in the construction contract regularly use concurrent delay as an excuse to avoid responsibility for extension of time claims and the assessment of liquidated damages. It was also found out in this study that even contractor hired a third party for selecting subcontractors. The contractor also implemented the bidding that follows basic principles including consideration of the interaction of different factors such as:
Contractual provisions.
Legal principles.
Technical assessment of the construction program.
Definition of criticality.
Floating ownership and methods for proof of delay claims.
The delays absolutely happened 100% in public main subcontractors and only a small % delay of private subcontractors because of unforeseen conditions as very bad weather. Despite of these, contractor almost solved the subcontractors’ delays by using the contractual provisions of back-charge to hire another subcontractor to do the impacted areas. The overall time to be recovered and is similar to required schedule of project.
Conclusions for Subcontractor Control Strategy
It can be concluded based on this study that subcontractor control strategy has been well aligned and well organized in all aspects to international contractor. However, there are some major points that need to be improved in order to strengthen the management efficiency and it effectiveness. These are the following:
1. Consider to the size of scope of work for each package.
2. Consider to the public and private subcontractors in the subcontractor master list and the overall subcontract plan, also their current works at the same time of awarded project as well. They are the main causes of overloading.
3. Study site conditions more carefully in order to consider the proper price of each package that could be awarded to subcontractor.
4. Sharing with subcontractors in risks that could be happened by unforeseen conditions not only generally covered in contractual provisions.
5. Obligate subcontractors must use legal tools for tracking schedule and define delays.
Conclusion for subcontractor Performance Management
It can also be concluded that main contractor maintained a very systematically concise subcontract performance management. However, there are some major points that need to be improved in order to strengthen continually the performance efficiency and it effectiveness. These are the following:
1. Contractor must consider to the prepared schedule may include milestone and interim completion dates that satisfy contractor needs and they should be required in subcontract provisions clearly.
2. Contractor must consider to unforeseen conditions clearly as the bad weather and undiscovered soil conditions.
3. Contractor must consider the progress payments that to be used 100% by subcontractors for project.
4. Contractor must consider the facilities conditions for subcontractors in subcontract before implementing the work at site.
5. Contractor must consider incentive in line of subcontractors’ performances.
Mr. Nguyen Tan Hoang learned from this case study regarding on how the main contractor managed their subcontractors in line of subcontractor control strategy and how they managed the performance in terms of schedule delays together with its strength and weaknesses. In order to improve this, he made some recommendations as follows:
1) Whether the scheduling obligation is to be imposed on a subcontractor, main contractor, the scheduling specification should be as carefully considered and written as any other technical specification.
2) Setting up the rewards for subcontractor performance when achieving each milestone as required in the subcontract in order to increasing the productivity and endeavors from subcontractors.
3) Construct an unforeseen conditions control procedure for applying at site when the parties faced, especially for bad weather and soil conditions not only locked by subcontract provisions.
4) Parties must get resources evaluation for project before implementing the work in the cases of far site location with economic - social centers. They must be considered in the contract negotiation meetings.
5) Maintain the other standby strong subcontractors/ suppliers for cases of back-charge decisions happened. These standby subcontractors could be some ones that are doing other packages of project in order to reuse available resources and facilities.
6) Maintain at least a lawyer for cases of contractual conflictions in a large project in order to solve local rules and regulations, especially when removing any subcontractor out of battery limits.
His thesis abstract is copied and posted.
ABSTRACT
The construction industry has greatly developed and increased in recent years. In most EPC projects, it is common for over 80% of the work to be performed by subcontractors. This has resulted in main contractors concentrating their efforts on managing subcontractor performance rather than employing direct labor to undertake construction work. Therefore, main contractor need to develop a strategy that allow him to control subcontractor effectively and efficiently in terms of schedule delay. In order to understand how the current strategies are being operated together with the strengths and the weaknesses of the strategy, an EPC international contractor who is doing a very large project in Vietnam was investigated through documentation, archival, and interview. Major improvements are needed for the subcontractor control strategy for local subcontractors in order to improve the subcontractor management performance. In contrast, subcontractor control strategy and relationship management from international contractor had been aligned and organized. However, there are some major points, which need to be improved in order to strengthen and continually improve the strategy performance.
Wednesday, 22 July 2009
AN OWNER’S PROJECT COST CONTROL STRATEGY FOR BUILDING PROJECTS
The construction industry plays a vital role in any country’s economic growth, both developed and developing ones. Construction cost control did not consider being a major concern as developers rushed to capitalize on the booming market, as what was happened in Vietnam in the years 2006, 2007 and the beginning of 2008.
However, in the late 2008, the world economy as well as in the Southeast Asia sank into recession. Thus, project cost control became a critical issue for the developers as well as the construction companies in managing construction projects. A significant number of projects in the world had suffered cost overruns as the prices of materials are spiraling with no signs of abating in the near future.
Cost control is the activity which compares cost performance against the cost plan, adjusting one or the other dynamically by reference to the changing circumstances in the project's financial environment. It is a process that should be continued throughout the construction period to ensure that the cost of the building is kept within the agreed cost limits. The cost control can be divided into three major areas: the control of cost during the design stages, the control of cost during the tendering stages and the control of cost by the client once the construction of project has started.
In many large projects, professional construction consultants or senior quantity surveyors play a critical role in estimating construction costs, scheduling construction activities and implementing various techniques to complete the projects. During the current economic recession, the cost of construction tends to exceed the budget. This is one of the major problems that need to be addressed by clients, construction management consultants and contractors. To minimize cost overruns, client, project management and contractors need to improve their skills and abilities in dealing with project cost control. Recessions and poor economic times have put pressure on the average company for better cost control.
Mr. Nguyen Dang Thong Nhat made a case study on “An Owner’s Project Cost Control Strategy for Building Projects” to identify the key components of cost control. How the owner in construction industry can become more efficient and respond better to the current economic recession with non-stop prices increase of material and labor cost.
His other objectives are to (1) identify the problems in cost control in an observed case study in Vietnam’s building project and (2) develop a framework for owner’s project cost control strategy that covers the entire project life span, from the conceptual stage to the construction stage.
Based on his study, there are three components that caused project costs overruns. These were (a) incomplete specifications and drawings; (b) requirements of the owner and; (c) changes from contractors. Although the project management team tried to coordinate all requirements and solve the above problems, there were several factors that made overruns inevitable and certain factors were beyond their ability and responsibility.
According to his research, no matter how good the cost and control system is, problems might occur. Below are common causes of cost problems:
• Poor estimating techniques and/or standards, resulting in unrealistic budgets
• Out-of-sequence starting and completion of activities and events
• Inadequate work breakdown structure
• No management policy on reporting and control practices
• Poor work definition at the lower levels of the organization
• Management reducing budgets or bids to be competitive
• Inadequate formal planning that results in unnoticed, or often uncontrolled, increases in scope of effort
• Poor comparison of actual and planned costs
• Comparison of actual and planned costs at the wrong level of management
• Unforeseen technical problems
• Schedule delays that require overtime or idle time costing
• Material escalation factors that is unrealistic
His conclusions for Owner’ Project Cost Control
Design Stage - the project owner did not define the (a) project scope which is a crucial first step towards making the project a success; and (b) failed to set realistic expectation at the design stage.
He did not know how to manage expectations before going to the designer, consultant and contractors. And it became a struggle when he needed to meet changes along the way. Since he wanted to reduce the fees for architects and engineers, their input became limited and insufficient specifications subsequently caused many problems during construction. Also, he did not give the project management team, designer and consultants the authority. When the contractors suggested changing the amount of materials to be purchased and to import some materials that are out of stock, it resulted to project cost control problem and delayed schedule.
Tendering Stage - the project owner did not conduct face-to-face interviews with the bidders. As a result, the project bidders did not discuss directly with the project owner the changes that were made. A lack of understanding on the owner’s expectations also hindered the process. He did not have any chance to negotiate price and costs with contractors as well.
Construction Stage – the project owner did not give some authority and responsibility to the project management team, designer and consultants. Therefore, they needed to get his approval before sending and approving any change orders.
The project owner did not establish project objectives and project expectations clearly and carefully from the beginning of project. He wanted to reduce the fees for architects, designers and engineer resulting to limited input, insufficient specification, and incomplete detailed drawings and project specifications. In addition, he did not understand clearly the benefits of investment license and he did not hire a third party to evaluate the design drawing to check the quality of site works as required by Vietnamese construction law.
Mr. Nguyen Dang Thong Nhat’s recommendations for owner’s cost control management improvement are:
Project Management - The project owner must work with the project management team to detail five major project issues with a comprehensive list in the project definition phase such as: (1) programming/functional needs of a facility; (2) site questions and concerns; (3) building systems requirements; (4) construction schedule; and (5) project budget.
The owner and the project management team have to make sure that each issue needs to be reconciled with the others and updated frequently. If any issue is ill-defined, there is a chance that the project will go out of control.
Project Change Control - When changes must be made that will change the plan, the project manager must control and track them. The guidelines for controlling changes are as follows:
1. Changes can be requested by anyone associated with the project, but submitting the Project Change Request Form to the project manager and the project change committee will start the change process.
2. Project change requests must be evaluated to determine the effect of a request.
3. The project manager and the team must estimate the effort, dependencies, and resources required to institute the project change.
4. The project manager must communicate the impact of proposed changes in terms of cost, scheduling, and performance to the customer.
5. If a change is approved, the signatures of the client and the project manager authorize the project team to make the requested change.
6. The project plan must be revised after the change has been approved for implementation.
7. The project manager must inform the project team of all approved, unapproved, and deferred changes.
8. The Project Change Request Form must be logged, regardless of its approval or denial.
Cost Control
1. Cost control should be approached as an application of Pareto's Law, which essentially states that 80 percent of the outcome of a project is determined by only 20 percent of the included elements. Thus in establishing a cost control system, the idea is to isolate and control in detail those elements with the greatest potential impact on final cost, with only summary level control on the remaining elements. The greatest variable in the final cost of a construction project is usually the labor cost. Most of the other cost elements in the project are materials, labor, equipment, and overhead.
2. Cost control is a process that should be carried out for all types of construction stages and activities. Comparison with a cost standard method is complicated and expensive but it is more accurate than other methods. Subdivision by detail is a method that is not expensive but risky operation, involves little or no control of cost. The integration with other functions method has to take into account other functions and not as a separate entity and control is kept on the functions combined.
3. Cost Control problems come about for many reasons including incorrect estimating techniques, predetermined or fixed budgets with no flexibility, schedule overruns, inadequate WBS development, and so on. Good project management planning techniques during the planning processes may prevent cost problems later in the project. At a minimum, proper planning will reduce the impact of these problems if they do occur.
4. Cost Control, like many of the other Controlling processes, is concerned with monitoring project performance for variances. As the project owner, we try to keep a close eye on the factors that cause variance to keep their impacts to a minimum. An important thing to remember is that Cost Control makes certain all appropriate parties agree to any changes to the cost baseline. This process is ongoing and continues to manage cost changes throughout the project.
5. It is important to have formally cost control system for contractors. It helps project owner to understand and control project costs easier and faster.
6. Using Computers: It’s hard to imagine a project, especially larger projects, moving forward without the use of computers. Project managers can rely on project management software and spreadsheet programs to assist them in calculating actual costs, earned value, and planned value.
Which Cost-Control Strategies Work Best?
The choice of project delivery method depends on variables like funding, time constraints, and project objectives. This view from the experts substantiates that, regardless of delivery method, effective cost controls depend on a commitment to thorough planning, good communication, and rigorous monitoring of a project from start to finish. Building professionals and owners should find it easy to borrow and incorporate many of these cost-control strategies into their practice (Written by Mary Maher, University of Wisconsin – Madison Department of Engineering Professional Development).
His thesis abstract is copied and posted.
ABSTRACT
Nowadays, the construction industry plays a vital role in the healthy growth of the economy of many countries, both the developed and developing ones. Construction cost control did not use to be a major concern as developers rushed to capitalize on the booming market, as was what happened in Vietnam in Year 2006, 2007 and the beginning of 2008. However, in late 2008, the economy of the world and Southeast Asia sank into recession. Project cost control became a critical issue for the developers as well as the construction companies in managing construction projects. A significant number of projects in the world had significant cost overruns as the price of material was spiraling with no signs of abating in the near future.
Cost overruns had been a problem during this period and the use of good project cost control procedures has become a concern of project investors and construction companies in the current world since the recession of the late 2008. Project managers and developers are now aware that the failure of a cost control system or use of a poor system can lead to project failure. Project cost control methods need to be improved to ensure that owners and contractors manage construction costs and meet project goals on time and within budget.
Effective management of construction projects has been a major research subject due to the importance of the construction industry and the amount of investment it attracts. A significant issue facing construction managers is that of inefficient cost control procedures, particularly in developing regions of the world, such as Vietnam. The cost control system is the most important function that facilitates construction organizations in accomplishing profit maximization.
In this study, project cost controls will be examined. These procedures will be researched and it will be illustrated how the project cost control procedures can be applied to the construction industry in Vietnam to increase the awareness of contractors, consultants and client of the functions of cost control in the execution of construction projects.
However, in the late 2008, the world economy as well as in the Southeast Asia sank into recession. Thus, project cost control became a critical issue for the developers as well as the construction companies in managing construction projects. A significant number of projects in the world had suffered cost overruns as the prices of materials are spiraling with no signs of abating in the near future.
Cost control is the activity which compares cost performance against the cost plan, adjusting one or the other dynamically by reference to the changing circumstances in the project's financial environment. It is a process that should be continued throughout the construction period to ensure that the cost of the building is kept within the agreed cost limits. The cost control can be divided into three major areas: the control of cost during the design stages, the control of cost during the tendering stages and the control of cost by the client once the construction of project has started.
In many large projects, professional construction consultants or senior quantity surveyors play a critical role in estimating construction costs, scheduling construction activities and implementing various techniques to complete the projects. During the current economic recession, the cost of construction tends to exceed the budget. This is one of the major problems that need to be addressed by clients, construction management consultants and contractors. To minimize cost overruns, client, project management and contractors need to improve their skills and abilities in dealing with project cost control. Recessions and poor economic times have put pressure on the average company for better cost control.
Mr. Nguyen Dang Thong Nhat made a case study on “An Owner’s Project Cost Control Strategy for Building Projects” to identify the key components of cost control. How the owner in construction industry can become more efficient and respond better to the current economic recession with non-stop prices increase of material and labor cost.
His other objectives are to (1) identify the problems in cost control in an observed case study in Vietnam’s building project and (2) develop a framework for owner’s project cost control strategy that covers the entire project life span, from the conceptual stage to the construction stage.
Based on his study, there are three components that caused project costs overruns. These were (a) incomplete specifications and drawings; (b) requirements of the owner and; (c) changes from contractors. Although the project management team tried to coordinate all requirements and solve the above problems, there were several factors that made overruns inevitable and certain factors were beyond their ability and responsibility.
According to his research, no matter how good the cost and control system is, problems might occur. Below are common causes of cost problems:
• Poor estimating techniques and/or standards, resulting in unrealistic budgets
• Out-of-sequence starting and completion of activities and events
• Inadequate work breakdown structure
• No management policy on reporting and control practices
• Poor work definition at the lower levels of the organization
• Management reducing budgets or bids to be competitive
• Inadequate formal planning that results in unnoticed, or often uncontrolled, increases in scope of effort
• Poor comparison of actual and planned costs
• Comparison of actual and planned costs at the wrong level of management
• Unforeseen technical problems
• Schedule delays that require overtime or idle time costing
• Material escalation factors that is unrealistic
His conclusions for Owner’ Project Cost Control
Design Stage - the project owner did not define the (a) project scope which is a crucial first step towards making the project a success; and (b) failed to set realistic expectation at the design stage.
He did not know how to manage expectations before going to the designer, consultant and contractors. And it became a struggle when he needed to meet changes along the way. Since he wanted to reduce the fees for architects and engineers, their input became limited and insufficient specifications subsequently caused many problems during construction. Also, he did not give the project management team, designer and consultants the authority. When the contractors suggested changing the amount of materials to be purchased and to import some materials that are out of stock, it resulted to project cost control problem and delayed schedule.
Tendering Stage - the project owner did not conduct face-to-face interviews with the bidders. As a result, the project bidders did not discuss directly with the project owner the changes that were made. A lack of understanding on the owner’s expectations also hindered the process. He did not have any chance to negotiate price and costs with contractors as well.
Construction Stage – the project owner did not give some authority and responsibility to the project management team, designer and consultants. Therefore, they needed to get his approval before sending and approving any change orders.
The project owner did not establish project objectives and project expectations clearly and carefully from the beginning of project. He wanted to reduce the fees for architects, designers and engineer resulting to limited input, insufficient specification, and incomplete detailed drawings and project specifications. In addition, he did not understand clearly the benefits of investment license and he did not hire a third party to evaluate the design drawing to check the quality of site works as required by Vietnamese construction law.
Mr. Nguyen Dang Thong Nhat’s recommendations for owner’s cost control management improvement are:
Project Management - The project owner must work with the project management team to detail five major project issues with a comprehensive list in the project definition phase such as: (1) programming/functional needs of a facility; (2) site questions and concerns; (3) building systems requirements; (4) construction schedule; and (5) project budget.
The owner and the project management team have to make sure that each issue needs to be reconciled with the others and updated frequently. If any issue is ill-defined, there is a chance that the project will go out of control.
Project Change Control - When changes must be made that will change the plan, the project manager must control and track them. The guidelines for controlling changes are as follows:
1. Changes can be requested by anyone associated with the project, but submitting the Project Change Request Form to the project manager and the project change committee will start the change process.
2. Project change requests must be evaluated to determine the effect of a request.
3. The project manager and the team must estimate the effort, dependencies, and resources required to institute the project change.
4. The project manager must communicate the impact of proposed changes in terms of cost, scheduling, and performance to the customer.
5. If a change is approved, the signatures of the client and the project manager authorize the project team to make the requested change.
6. The project plan must be revised after the change has been approved for implementation.
7. The project manager must inform the project team of all approved, unapproved, and deferred changes.
8. The Project Change Request Form must be logged, regardless of its approval or denial.
Cost Control
1. Cost control should be approached as an application of Pareto's Law, which essentially states that 80 percent of the outcome of a project is determined by only 20 percent of the included elements. Thus in establishing a cost control system, the idea is to isolate and control in detail those elements with the greatest potential impact on final cost, with only summary level control on the remaining elements. The greatest variable in the final cost of a construction project is usually the labor cost. Most of the other cost elements in the project are materials, labor, equipment, and overhead.
2. Cost control is a process that should be carried out for all types of construction stages and activities. Comparison with a cost standard method is complicated and expensive but it is more accurate than other methods. Subdivision by detail is a method that is not expensive but risky operation, involves little or no control of cost. The integration with other functions method has to take into account other functions and not as a separate entity and control is kept on the functions combined.
3. Cost Control problems come about for many reasons including incorrect estimating techniques, predetermined or fixed budgets with no flexibility, schedule overruns, inadequate WBS development, and so on. Good project management planning techniques during the planning processes may prevent cost problems later in the project. At a minimum, proper planning will reduce the impact of these problems if they do occur.
4. Cost Control, like many of the other Controlling processes, is concerned with monitoring project performance for variances. As the project owner, we try to keep a close eye on the factors that cause variance to keep their impacts to a minimum. An important thing to remember is that Cost Control makes certain all appropriate parties agree to any changes to the cost baseline. This process is ongoing and continues to manage cost changes throughout the project.
5. It is important to have formally cost control system for contractors. It helps project owner to understand and control project costs easier and faster.
6. Using Computers: It’s hard to imagine a project, especially larger projects, moving forward without the use of computers. Project managers can rely on project management software and spreadsheet programs to assist them in calculating actual costs, earned value, and planned value.
Which Cost-Control Strategies Work Best?
The choice of project delivery method depends on variables like funding, time constraints, and project objectives. This view from the experts substantiates that, regardless of delivery method, effective cost controls depend on a commitment to thorough planning, good communication, and rigorous monitoring of a project from start to finish. Building professionals and owners should find it easy to borrow and incorporate many of these cost-control strategies into their practice (Written by Mary Maher, University of Wisconsin – Madison Department of Engineering Professional Development).
His thesis abstract is copied and posted.
ABSTRACT
Nowadays, the construction industry plays a vital role in the healthy growth of the economy of many countries, both the developed and developing ones. Construction cost control did not use to be a major concern as developers rushed to capitalize on the booming market, as was what happened in Vietnam in Year 2006, 2007 and the beginning of 2008. However, in late 2008, the economy of the world and Southeast Asia sank into recession. Project cost control became a critical issue for the developers as well as the construction companies in managing construction projects. A significant number of projects in the world had significant cost overruns as the price of material was spiraling with no signs of abating in the near future.
Cost overruns had been a problem during this period and the use of good project cost control procedures has become a concern of project investors and construction companies in the current world since the recession of the late 2008. Project managers and developers are now aware that the failure of a cost control system or use of a poor system can lead to project failure. Project cost control methods need to be improved to ensure that owners and contractors manage construction costs and meet project goals on time and within budget.
Effective management of construction projects has been a major research subject due to the importance of the construction industry and the amount of investment it attracts. A significant issue facing construction managers is that of inefficient cost control procedures, particularly in developing regions of the world, such as Vietnam. The cost control system is the most important function that facilitates construction organizations in accomplishing profit maximization.
In this study, project cost controls will be examined. These procedures will be researched and it will be illustrated how the project cost control procedures can be applied to the construction industry in Vietnam to increase the awareness of contractors, consultants and client of the functions of cost control in the execution of construction projects.
Tuesday, 21 July 2009
SAFETY AUDIT IN OIL AND GAS EXPLORATION PROJECTS
In the past three decades, the energy demand has increased rapidly in Vietnam due to its stronger economic development. The energy resources are considered as the blood of the Vietnam economy. PetroVietnam has developed rapidly since it was established in 1975. Its activities, through its various companies and wholly owned subsidiaries are now covering all the operations from oil and gas exploration and production to storage, processing, transportation, distribution and services. Oil and Gas exploration in Viet Nam have been developed so fast but until now, no refinery yet. Vietnam’s expanding offshore exploration and production has created a steadily growing market for offshore oil and gas equipment and services.
However, Oil and gas industry in offshore consist of many stages such as search, exploration and construction to explore crude oil. It is one of the most dangerous industries, especially the exploration of the crude oil. It always encounters many different dangers and serious accidents. Oil and gas causes fire and explosion easily. When workers do not comply with safety rules nor has low skill safety and outdated equipment, accidents may happen. When these accidents happened, it has effects on the project cost, schedule, qualities and profit. Thus safety audit must be used as an integral part on Oil and Gas project to mitigate accidents. It plays one of the most important roles for the safety of the exploration project.
The safety audits when properly observe and practice can save lives and minimize the accidents in a work place. The companies are advised to implement the following:
· Persuade workers by explain the results of their safety efforts.
· Improve safety understanding.
· Make sure that in the past recommended corrective action was addressed, initiated or completed. .
· Assess the helpfulness of, or need for, safety instruction.
· Expose weak points in the safety plan.
· Keep up principles by ensuring that staffs pursue established guidelines, methods and procedures.
· Identify where methods or procedures are not enough
Mr. Nguyen Quang Hung made a case study on “Safety Audit in Oil and Gas exploration Projects” in Vietnam which primary objective is to identify an effective safety audit framework to minimize the accidents happening in the oil and gas industries.
He found out that many Oil and Gas companies in Viet Nam such as CuuLong JOC, Vietsopetro, JVPC and PTSC have been successfully implementing the safety audit rules. Since no accidents occur in these companies, they gain more profit due to the reduction in the cost and time of the project.
He also found out that Cuu Long JOC strength is that, it is conducting its own safety audit. The Leaders in Cuu Long JOC have the right policies and the objectives of HSE management are very clear. Besides, this Joint Venture Company gives priority on the working condition and safety of Oil and Gas exploration.
However Cuu Long JOC has also weaknesses. Although the company implemented the safety audit following the procedure, still the implementation has many constraints. Almost Safety Audit procedures come from developed countries and when it is applied in developing countries like Viet Nam, it is very difficult because the workers have low safety awareness, careless and do not comply with safety manual. In some case, they do not follow audit report, no commitment to implement the result audit, no independent auditor and unavailability of Audit tool.
Mr. Hung’s thesis abstract is copied and posted.
ABSTRACT
This thesis deals with a Safety Audit in construction industry. However, to understands regarding Safety Audit is difficult and still limited. It’s a very importance key role for the safety management system, especially exploration crude oil, construction of platform to explore crude oil. Safety Audit in the construction industry has always been a major issue. Wherever reliable records are available, exploration and construction platform is found to be one of the most dangerous on safety and health criteria, particularly in developing countries. Though much improvement in construction safety has been achieved, the industry still continues to lag behind most other industries with regard to safety.
Safety was not only a worry of many companies, but also an unavoidable problem of many projects in oil and gas industry exploration which presently was the largest, strongest industry in Vietnamese manufacture and business. Hence, Safety Management System was step by step improved by many new management practices which one of them was the Safety Auditing in Oil and Gas Exploration.
However, Oil and gas industry in offshore consist of many stages such as search, exploration and construction to explore crude oil. It is one of the most dangerous industries, especially the exploration of the crude oil. It always encounters many different dangers and serious accidents. Oil and gas causes fire and explosion easily. When workers do not comply with safety rules nor has low skill safety and outdated equipment, accidents may happen. When these accidents happened, it has effects on the project cost, schedule, qualities and profit. Thus safety audit must be used as an integral part on Oil and Gas project to mitigate accidents. It plays one of the most important roles for the safety of the exploration project.
The safety audits when properly observe and practice can save lives and minimize the accidents in a work place. The companies are advised to implement the following:
· Persuade workers by explain the results of their safety efforts.
· Improve safety understanding.
· Make sure that in the past recommended corrective action was addressed, initiated or completed. .
· Assess the helpfulness of, or need for, safety instruction.
· Expose weak points in the safety plan.
· Keep up principles by ensuring that staffs pursue established guidelines, methods and procedures.
· Identify where methods or procedures are not enough
Mr. Nguyen Quang Hung made a case study on “Safety Audit in Oil and Gas exploration Projects” in Vietnam which primary objective is to identify an effective safety audit framework to minimize the accidents happening in the oil and gas industries.
He found out that many Oil and Gas companies in Viet Nam such as CuuLong JOC, Vietsopetro, JVPC and PTSC have been successfully implementing the safety audit rules. Since no accidents occur in these companies, they gain more profit due to the reduction in the cost and time of the project.
He also found out that Cuu Long JOC strength is that, it is conducting its own safety audit. The Leaders in Cuu Long JOC have the right policies and the objectives of HSE management are very clear. Besides, this Joint Venture Company gives priority on the working condition and safety of Oil and Gas exploration.
However Cuu Long JOC has also weaknesses. Although the company implemented the safety audit following the procedure, still the implementation has many constraints. Almost Safety Audit procedures come from developed countries and when it is applied in developing countries like Viet Nam, it is very difficult because the workers have low safety awareness, careless and do not comply with safety manual. In some case, they do not follow audit report, no commitment to implement the result audit, no independent auditor and unavailability of Audit tool.
Mr. Hung’s thesis abstract is copied and posted.
ABSTRACT
This thesis deals with a Safety Audit in construction industry. However, to understands regarding Safety Audit is difficult and still limited. It’s a very importance key role for the safety management system, especially exploration crude oil, construction of platform to explore crude oil. Safety Audit in the construction industry has always been a major issue. Wherever reliable records are available, exploration and construction platform is found to be one of the most dangerous on safety and health criteria, particularly in developing countries. Though much improvement in construction safety has been achieved, the industry still continues to lag behind most other industries with regard to safety.
Safety was not only a worry of many companies, but also an unavoidable problem of many projects in oil and gas industry exploration which presently was the largest, strongest industry in Vietnamese manufacture and business. Hence, Safety Management System was step by step improved by many new management practices which one of them was the Safety Auditing in Oil and Gas Exploration.
Monday, 20 July 2009
EVALUATION OF PROBLEMS IN INTERNATIONAL CONSTRUCTION CONTRACT CONDITIONS: CASE STUDY OF THE THIRD PROVINCIAL TOWNS WATER SUPPLY AND SANITARY PROJECT
The construction contract is a bridge between owners and contractors for successful completion of a project. It clearly delineates the rights, responsibilities and obligations of each party in terms of project goals and scope. By means of contract form, terms and conditions are set out to serve this purpose and to make part of the contract documents by which the project will be built.
Mr. Bui Quang Luong made a case study that focused in the most significant contract clauses in the construction industry and their impact on project performance under various contract types. His objectives are to: (1) study the problems pertaining to construction contract clauses that have significant impact on project performance; and (2) provide strategic and specific recommendations on the drafting of construction contracts.
His study has successfully demonstrated an intensive exploration on the importance of contract clauses in the international construction business. A focus has been analyzed and found to be the most troublesome clauses that have significant impact in project performance. The findings resulted from thorough analyses based on individual clause, clause family and contract type analysis approaches. it is therefore important to take into special consideration the nine most problematic clauses that statistically and realistically affect contract execution and project delivery in terms of (i) frequency of occurrence; (ii) rates of major disputes; (iii) degree of seriousness; and (iv) frequent clarification.
His thesis abstract is copied and posted.
Abstract
Clauses are an essential part that constitutes a construction contract document. However, throughout its history the industry has witnessed a substantial number of disputes/conflicts of interest unfortunately characterized by the contract itself. Things are nowadays being made more complicated by a trend of long agreements where poorly drafted clauses are held responsible for even further project delays and worse, litigation. The main purpose of the study is to conduct an intensive exploration into the most problematic contract areas and to seek clauses that stand out as the most troublesome, and find appropriate strategic and specific recommendations to improve them. It is of prime importance that the contract strategy be formulated that gives a comprehensive picture of what has to be done to secure successful project delivery and to minimize losses and damages as a result of disputes and litigation. In addition, the careful drafting of contract clauses must be given utmost priority. During the course of execution, the owner’s behaviour towards the contractor should be on a fair and risk-sharing basis through careful risk allocation, cooperation and negotiation. Any negligence or lack of due care in these regards will eventually have to be paid for through large contingencies, disputes and litigation.
Some suggestions have been pointed out throughout his study; it is worth noting that contract preparation among other factors determines project delivery success. The drafting of contracts must receive special care and consideration should successful contract execution be achieved. A summary of the most common problems and proposed practice can be found in the following table.
What is essential to achieve a fitness-for-purpose product on project completion and to ensure compliance by the various contractual stakeholders lies in the terms and conditions of contract. A great deal of difficulty has however been reported throughout the construction industry reflecting the problem area relating to contract clauses. and consequences are of various levels, all affecting costs, human effort, works quality and time.
With the increasing complexity of construction projects and huge funding expended, contract documents are becoming much more complicated to incorporate the objectives, requirements and expectations of owners and contractors. As a result, problems arise and claims are so common that they are becoming a way of life. the following major causes have for decades received special attention.
Mr. Bui Quang Luong made a case study that focused in the most significant contract clauses in the construction industry and their impact on project performance under various contract types. His objectives are to: (1) study the problems pertaining to construction contract clauses that have significant impact on project performance; and (2) provide strategic and specific recommendations on the drafting of construction contracts.
Based from his study, the problems that usually arise in the construction contract are related to international construction contract clauses. Contract preparation is considered vital to achieve improved project performance. Thorough contractual arrangements therefore play a crucial part in the process. It is important that the most problematic clauses be identified so that significant project impact can be successfully controlled. As a result of year-long research using the individual clause, clause family and contract type analysis approaches, nine most problematic clauses were consistently identified as being of primary concern and significantly impacting project success.
His study has successfully demonstrated an intensive exploration on the importance of contract clauses in the international construction business. A focus has been analyzed and found to be the most troublesome clauses that have significant impact in project performance. The findings resulted from thorough analyses based on individual clause, clause family and contract type analysis approaches. it is therefore important to take into special consideration the nine most problematic clauses that statistically and realistically affect contract execution and project delivery in terms of (i) frequency of occurrence; (ii) rates of major disputes; (iii) degree of seriousness; and (iv) frequent clarification.
His thesis abstract is copied and posted.
Abstract
Clauses are an essential part that constitutes a construction contract document. However, throughout its history the industry has witnessed a substantial number of disputes/conflicts of interest unfortunately characterized by the contract itself. Things are nowadays being made more complicated by a trend of long agreements where poorly drafted clauses are held responsible for even further project delays and worse, litigation. The main purpose of the study is to conduct an intensive exploration into the most problematic contract areas and to seek clauses that stand out as the most troublesome, and find appropriate strategic and specific recommendations to improve them. It is of prime importance that the contract strategy be formulated that gives a comprehensive picture of what has to be done to secure successful project delivery and to minimize losses and damages as a result of disputes and litigation. In addition, the careful drafting of contract clauses must be given utmost priority. During the course of execution, the owner’s behaviour towards the contractor should be on a fair and risk-sharing basis through careful risk allocation, cooperation and negotiation. Any negligence or lack of due care in these regards will eventually have to be paid for through large contingencies, disputes and litigation.
Some suggestions have been pointed out throughout his study; it is worth noting that contract preparation among other factors determines project delivery success. The drafting of contracts must receive special care and consideration should successful contract execution be achieved. A summary of the most common problems and proposed practice can be found in the following table.
Wednesday, 15 July 2009
CLAIM AND CONFLICT MANAGEMENT IN INTERNATIONAL OIL AND GAS PROJECTS
Today, many oil and gas projects were set up to satisfy petroleum and natural gas increasing demand caused by dramatically development of global economy. These projects are often large in terms of budget and people. They tend to be complex, with multiple zones, language barriers, and differing legal requirements, as well as cultural differences. Partner selection is very important and is a critical variable because it affects too much on project success and influences the overall mix of available skills and resources, operating policies and procedures of project.
In international oil and gas project, a multi projects group has a much broader range of knowledge, skills, abilities and experiences. The project management team has to deal with many issues such as logistical, governmental, communication due to different languages and values. These issues if not properly deal with, might cause for possible conflicts. The best project manager must know how to manage conflicts using different styles, depending on the circumstances in order to effectively supervise a diverse team.
The worldwide trends of joint ventures are increasing but with very unsatisfying results. To be able succeeding in an international project, major conflicts need to be managed. However, conflict in the workplace just seems to be a fact of life. But conflict isn’t always exactly a bad thing. According to the modern view of organization conflict “conflict within certain limit is essential to productivity”. In many cases, effective conflict resolution can make the difference between positive and negative outcomes.
Mr. Dang Huu Trinh made a case study on”Claim and Conflict Management in International Oil and Gas Projects”. In this study, he wanted to (1) identify types of conflicts and the source of conflicts occur in an international oil and gas projects; and (2) identify conflict management styles which are effective to solve the problems.
He also wanted to bring out in his study, how to solve fails of international oil and gas projects caused by conflicts during construction and operation. He conducted two case studies on which in this research work mentioned two different conflicts which frequently meet in project, specifically in Vietnam.
Based on the information he gathered, Mr. Trinh found out that the conflicts existed in international oil and gas projects normally relate to culture. Source of conflicts are different personalities and point of views, miscommunication, context and disbursement issue. The research findings revealed that the best approach for project manager to handle conflict in international oil and gas project is an “integrating style”. When working in multi-cultural projects, the project manager must be prepared for conflicts that might arise and must learn how to react with it differently. The project manager working in a multi-cultural project must have the following:
1. Culture awareness and competency: the manager should become aware of the cultural norms. He should understand the specific cultures with which he is working and last but not least he should develop a relevant skill set.
2. Conflict management: the manager should have an array of conflict management skill. He should be aware of how a conflict can arise, how it is dealt with and how to prevent it.
3. Project management: the manager should understand the strengths of his team and should be able to optimize these.
His thesis abstract is copied and posted.
ABSTRACT
Oil and gas projects are established intensely to satisfy the energy demand on the world. To operating effectively, alliance are increasingly being used as strategic organizational form in international in which each of attendant parties possessed strength in field related to project. In cooperating process, conflict and problems among parties are unavoidable; awareness and carefully managing conflict during construction stage play a key role in the subsequent success of projects. The theme of conflict management styles has been the focus of extensive research in social psychology, organizational behavior and the field of cross-cultural management.
By finding out and analyzing the conflict happening in Dung Quoc and Ca Mau project, through collecting data and interviewing staffs and relevant persons, the research study aim to identify and analyze the conflicts and problems as well as resolutions and try to suggest a conflict management styles which are effective to solve the problems.
A conflict management style was developed as a result of the research case study which is helpful for international oil and gas projects wishing to overcome obstacles by identifying the conflicts and solving them.
In international oil and gas project, a multi projects group has a much broader range of knowledge, skills, abilities and experiences. The project management team has to deal with many issues such as logistical, governmental, communication due to different languages and values. These issues if not properly deal with, might cause for possible conflicts. The best project manager must know how to manage conflicts using different styles, depending on the circumstances in order to effectively supervise a diverse team.
The worldwide trends of joint ventures are increasing but with very unsatisfying results. To be able succeeding in an international project, major conflicts need to be managed. However, conflict in the workplace just seems to be a fact of life. But conflict isn’t always exactly a bad thing. According to the modern view of organization conflict “conflict within certain limit is essential to productivity”. In many cases, effective conflict resolution can make the difference between positive and negative outcomes.
Mr. Dang Huu Trinh made a case study on”Claim and Conflict Management in International Oil and Gas Projects”. In this study, he wanted to (1) identify types of conflicts and the source of conflicts occur in an international oil and gas projects; and (2) identify conflict management styles which are effective to solve the problems.
He also wanted to bring out in his study, how to solve fails of international oil and gas projects caused by conflicts during construction and operation. He conducted two case studies on which in this research work mentioned two different conflicts which frequently meet in project, specifically in Vietnam.
Based on the information he gathered, Mr. Trinh found out that the conflicts existed in international oil and gas projects normally relate to culture. Source of conflicts are different personalities and point of views, miscommunication, context and disbursement issue. The research findings revealed that the best approach for project manager to handle conflict in international oil and gas project is an “integrating style”. When working in multi-cultural projects, the project manager must be prepared for conflicts that might arise and must learn how to react with it differently. The project manager working in a multi-cultural project must have the following:
1. Culture awareness and competency: the manager should become aware of the cultural norms. He should understand the specific cultures with which he is working and last but not least he should develop a relevant skill set.
2. Conflict management: the manager should have an array of conflict management skill. He should be aware of how a conflict can arise, how it is dealt with and how to prevent it.
3. Project management: the manager should understand the strengths of his team and should be able to optimize these.
His thesis abstract is copied and posted.
ABSTRACT
Oil and gas projects are established intensely to satisfy the energy demand on the world. To operating effectively, alliance are increasingly being used as strategic organizational form in international in which each of attendant parties possessed strength in field related to project. In cooperating process, conflict and problems among parties are unavoidable; awareness and carefully managing conflict during construction stage play a key role in the subsequent success of projects. The theme of conflict management styles has been the focus of extensive research in social psychology, organizational behavior and the field of cross-cultural management.
By finding out and analyzing the conflict happening in Dung Quoc and Ca Mau project, through collecting data and interviewing staffs and relevant persons, the research study aim to identify and analyze the conflicts and problems as well as resolutions and try to suggest a conflict management styles which are effective to solve the problems.
A conflict management style was developed as a result of the research case study which is helpful for international oil and gas projects wishing to overcome obstacles by identifying the conflicts and solving them.
Tuesday, 14 July 2009
CLIENT’S PROJECT MANAGEMENT STRATEGY FOR FAST TRACK EPC OIL & GAS PROJECT
In today's business world, corporations must be able to react to the changing market needs rapidly, effectively, and responsively. They must be able to reduce their time to market and adapt the changing environments. Decisions must be made quickly and must be done right at the first time. Corporations can no longer wait their time repeating tasks, thereby prolonging the time it takes to bring new products to market. Therefore, completing a project faster than the normal duration is always a challenge to the management of any project, as it often requires changes in prototype.
The Vietnamese Petroleum Industry is also passing through a very dynamic business environment due to the liberalization of many Government policies and the introduction of multinationals, the participation of International major players and the pressure of globalization and attracting Foreign Direct Investment. Development of Petroleum facilities for handling petroleum products is one of them. Moreover, these projects are required to be completed in faster duration compared to normal schedules to be vital and remain competitive, to get faster return on investment, and to give higher return with longer project life. However, using conventional tools and techniques of project management, it is impossible to handle the problem of reducing the project duration from a normal period.
On the other hand “Increasing competition and the growing technical sophistication of construction processes as well as the size of some projects has led to a growing importance of partnership agreements and strategic alliances in bidding for and implementing construction projects” (Construction Industry Institute - Hong Kong, 2002).
Same approach can be applied to the Client’s project as eventually the success of the subcontractors would be the Client’s success especially for the EPC Oil and Gas Project. Project Sanctions and major contracts usually have a lengthy process requiring various approvals from the Government Agencies.
Mr. Nguyen Quoc Hanh made a case study on “Client’s Project Management Strategy for Fast Track EPC Oil & Gas Project”. His study proposed the Client’s approach for the use of concurrent engineering/ fast track approach and alliance sprit in managing projects for radically reducing project duration. The phases of the project are accomplished simultaneously instead of in a series. The required approvals from the Government and relevant authorities are acquired much quicker with the involvement of local partners from the start.
The complexities that arise in managing projects are tackled through management of Government’s approval process, restructuring project organization, management of subcontractors and independent contract packages, improving management commitment, strengthening project-planning activities, ensuring project quality, managing project risk objectively and integrating project activities through information management systems.
These would not only ensure completion of projects in fast track, but also help to improve project effectiveness in terms of quality, cost effectiveness, long-term relationship building, etc. and in turn overall productivity of the project organization would improve.
His study’s objectives are to explore Client’s strategic approach to manage a Fast Tract EPC Oil & Gas Production Facility Development Project including: (1) management of Government’s approval process; (2) management of subcontractors via a strategic Alliance sprit; (3) management of interfaces and overlapping between contract packages over widely separated geographical areas; (4) contract type and commercial compensation scheme selection and breakdowns of contract packages; (5) project organization, authorization and management commitment; (6) communication and collaboration; and (7) procurement and centralization of logistics supports
Conclusions:
Project Owner required preparation
The conclusions he made based from his study is that to ensure a successful implementation of a fast track Project, the project owner must (1) have full support from its Stakeholder and the Government to the implementation of fast track concept; (2) have a strong leadership and commitment from senior management through out the execution of the Project. The availability and competency of the Project Management core team also contribute an important factor during the initial/ preparation phase when the rest of the team will be mobilized. As many cost-schedule trade-off are may be required and; (3) must prepare a strong financial status and willing to accept or compromise some commercial terms.
As the procurement is under Project Owner’s responsibility, which may not be a common practice, the Project Owner must either public its procurement plan or open an workshop/ briefing to all potential Suppliers to ensure the best interest of the Suppliers. The Suppliers might be able to provide a better offers if they are more confident on the Client’s creditability once the overall picture of the project is presented or published.
Review the requirements of the Petroleum Contract that they may have with the Government Agency to ensure the future compliance or any required exceptions/ changes, which must be accepted by Stakeholders/ Government Agency for the implementation of the Project.
Anticipated Obstacles/ Barriers
The Oil & Gas Client/ Project Owner must consider carefully the terms/ conditions/ requirements of the Petroleum Contract that they may have with the Government Agency as some Petroleum Contract require unanimous consents from all involved parties. Different understanding on fast track requirements within and from Client Project Management Team and Top management, Stakeholders, Primary Contractor, Sub-contractor, which lead to inappropriate response (i.e. provide/ supply inadequate resources or over react in spending money to protect the project schedule un-necessarily).
Extra costs are expected in terms of cost-schedule trade off to meet aggressive schedule and overlapping between project phases/ work packages, which would cause rework and cost overrun. It will be difficult to justify those extra expenses at the end of the Project due to different understanding of the fast track requirements and reasonability of the cost-schedule trade off. Therefore, close communication between Project Owner and Stakeholder/ Government Agency is required.
The selection of Alliance/Partnering concept may lead to the contractual differences came at the end of the contract and it would take longer time for closing out of the Project.
Lastly, it will not be easy to benchmark the effectiveness/ successfulness of a fast tract project as the complexity is varied from project to project.
Recommendations
He recommended that that the constancy and level of effort should be maintained not only from the start of the Project when the gaining on the schedule could have been significant but following up the tailed end of each work phase is not less important. The lack of effort and concentration by Client in following up and pursuing the completion of the engineering tailed end works will lead to the delay of the construction works. Impact of late engineering was a problem both contractually and practically. Delaying the start of the project would probably have more impact on overall schedule than engineering/ fabrication overlap.
His thesis abstract is copied and posted.
Abstract
Completing and delivery a project faster than normal required duration is always a big challenge to any Project Management Team and often demands dynamic approach and paradigm shifts. Many projects are required to be completed in faster duration compared to normal schedules to remain economic vital, to get faster return on investment, and to give longer project life. The conventional techniques of project management are impossible to handle the problem of reducing the project duration drastically. This project report provides an introduction to, and a practical exploration and evaluation of Client’s fastracking approach to manage an Oil and Gas Project.
This final project report presents and explores the Client’s dynamic approaches from the conceptual planning, managing contractors via contractual arrangements and strategic Alliance spirit, managing the Government’s approval process and the use of concurrent engineering concept for radically reducing project duration. The phases of the project are accomplished simultaneously instead of in a series across various areas. Along with its benefits, fast-tracking project delivery also has greater potential to impact the project development process than the traditional method. This final project report also presents the key enablers as well as required preparation and obstacles have been encountered during the actual execution of the project.
These approaches if successfully implemented would not only ensure the completion of projects by the required completion date, but also improve project effectiveness in terms cost effectiveness and in turn overall productivity of the project organization would improve.
The Vietnamese Petroleum Industry is also passing through a very dynamic business environment due to the liberalization of many Government policies and the introduction of multinationals, the participation of International major players and the pressure of globalization and attracting Foreign Direct Investment. Development of Petroleum facilities for handling petroleum products is one of them. Moreover, these projects are required to be completed in faster duration compared to normal schedules to be vital and remain competitive, to get faster return on investment, and to give higher return with longer project life. However, using conventional tools and techniques of project management, it is impossible to handle the problem of reducing the project duration from a normal period.
On the other hand “Increasing competition and the growing technical sophistication of construction processes as well as the size of some projects has led to a growing importance of partnership agreements and strategic alliances in bidding for and implementing construction projects” (Construction Industry Institute - Hong Kong, 2002).
Same approach can be applied to the Client’s project as eventually the success of the subcontractors would be the Client’s success especially for the EPC Oil and Gas Project. Project Sanctions and major contracts usually have a lengthy process requiring various approvals from the Government Agencies.
Mr. Nguyen Quoc Hanh made a case study on “Client’s Project Management Strategy for Fast Track EPC Oil & Gas Project”. His study proposed the Client’s approach for the use of concurrent engineering/ fast track approach and alliance sprit in managing projects for radically reducing project duration. The phases of the project are accomplished simultaneously instead of in a series. The required approvals from the Government and relevant authorities are acquired much quicker with the involvement of local partners from the start.
The complexities that arise in managing projects are tackled through management of Government’s approval process, restructuring project organization, management of subcontractors and independent contract packages, improving management commitment, strengthening project-planning activities, ensuring project quality, managing project risk objectively and integrating project activities through information management systems.
These would not only ensure completion of projects in fast track, but also help to improve project effectiveness in terms of quality, cost effectiveness, long-term relationship building, etc. and in turn overall productivity of the project organization would improve.
His study’s objectives are to explore Client’s strategic approach to manage a Fast Tract EPC Oil & Gas Production Facility Development Project including: (1) management of Government’s approval process; (2) management of subcontractors via a strategic Alliance sprit; (3) management of interfaces and overlapping between contract packages over widely separated geographical areas; (4) contract type and commercial compensation scheme selection and breakdowns of contract packages; (5) project organization, authorization and management commitment; (6) communication and collaboration; and (7) procurement and centralization of logistics supports
Conclusions:
Project Owner required preparation
The conclusions he made based from his study is that to ensure a successful implementation of a fast track Project, the project owner must (1) have full support from its Stakeholder and the Government to the implementation of fast track concept; (2) have a strong leadership and commitment from senior management through out the execution of the Project. The availability and competency of the Project Management core team also contribute an important factor during the initial/ preparation phase when the rest of the team will be mobilized. As many cost-schedule trade-off are may be required and; (3) must prepare a strong financial status and willing to accept or compromise some commercial terms.
As the procurement is under Project Owner’s responsibility, which may not be a common practice, the Project Owner must either public its procurement plan or open an workshop/ briefing to all potential Suppliers to ensure the best interest of the Suppliers. The Suppliers might be able to provide a better offers if they are more confident on the Client’s creditability once the overall picture of the project is presented or published.
Review the requirements of the Petroleum Contract that they may have with the Government Agency to ensure the future compliance or any required exceptions/ changes, which must be accepted by Stakeholders/ Government Agency for the implementation of the Project.
Anticipated Obstacles/ Barriers
The Oil & Gas Client/ Project Owner must consider carefully the terms/ conditions/ requirements of the Petroleum Contract that they may have with the Government Agency as some Petroleum Contract require unanimous consents from all involved parties. Different understanding on fast track requirements within and from Client Project Management Team and Top management, Stakeholders, Primary Contractor, Sub-contractor, which lead to inappropriate response (i.e. provide/ supply inadequate resources or over react in spending money to protect the project schedule un-necessarily).
Extra costs are expected in terms of cost-schedule trade off to meet aggressive schedule and overlapping between project phases/ work packages, which would cause rework and cost overrun. It will be difficult to justify those extra expenses at the end of the Project due to different understanding of the fast track requirements and reasonability of the cost-schedule trade off. Therefore, close communication between Project Owner and Stakeholder/ Government Agency is required.
The selection of Alliance/Partnering concept may lead to the contractual differences came at the end of the contract and it would take longer time for closing out of the Project.
Lastly, it will not be easy to benchmark the effectiveness/ successfulness of a fast tract project as the complexity is varied from project to project.
Recommendations
He recommended that that the constancy and level of effort should be maintained not only from the start of the Project when the gaining on the schedule could have been significant but following up the tailed end of each work phase is not less important. The lack of effort and concentration by Client in following up and pursuing the completion of the engineering tailed end works will lead to the delay of the construction works. Impact of late engineering was a problem both contractually and practically. Delaying the start of the project would probably have more impact on overall schedule than engineering/ fabrication overlap.
His thesis abstract is copied and posted.
Abstract
Completing and delivery a project faster than normal required duration is always a big challenge to any Project Management Team and often demands dynamic approach and paradigm shifts. Many projects are required to be completed in faster duration compared to normal schedules to remain economic vital, to get faster return on investment, and to give longer project life. The conventional techniques of project management are impossible to handle the problem of reducing the project duration drastically. This project report provides an introduction to, and a practical exploration and evaluation of Client’s fastracking approach to manage an Oil and Gas Project.
This final project report presents and explores the Client’s dynamic approaches from the conceptual planning, managing contractors via contractual arrangements and strategic Alliance spirit, managing the Government’s approval process and the use of concurrent engineering concept for radically reducing project duration. The phases of the project are accomplished simultaneously instead of in a series across various areas. Along with its benefits, fast-tracking project delivery also has greater potential to impact the project development process than the traditional method. This final project report also presents the key enablers as well as required preparation and obstacles have been encountered during the actual execution of the project.
These approaches if successfully implemented would not only ensure the completion of projects by the required completion date, but also improve project effectiveness in terms cost effectiveness and in turn overall productivity of the project organization would improve.
Monday, 13 July 2009
FAST-TRACK PROJECT DELIVERY STRATEGY FOR CIVIL ENGINEERING AND ARCHITECTURAL HIGH-RISE BUILDING PROJECTS
Fast Track is known as a method of implementation where construction and design phases are overlapped to expedite completion of the project (Resource for OR design and construction). In addition, it is not only an activity that is simply done fast, but more than that, it refers to an overlap on stages of design and/or construction before other stage is done with the purpose to get an earlier project delivery.
Recently, Fast track has gained the popularity in current project delivery strategies and the popularity keeps on increasing due to its potential advantages in improving project performance. An effective fast track project can bring advantages including: (1) reduced time; (2) lower cost; (3) reduced burden for the project owner by contracting all responsibilities to a single party; and (4) invisible benefits by increasing the reputation of the owner thus offering further business opportunities in a competitive market
On the other hand, fast track project also contains some challenges like: (1) complications and difficulties in; planning procedures for approval; transfer of information; feedback, and evaluation documents (2) requiring a very strict cash-flow; prompt payment; capital resources; (3) requiring strong and experienced manpower resources, especially in project management
Ms. Mai Do Thuy Dung made a case study on “Fast-Track Project Delivery Strategy for Civil Engineering and Architectural High-Rise Building Projects” which goals were to: (1) identify a Fast Track Project Delivery Strategy which is applicable for High Rise Building Projects (private fund); (2) identify advantages and also threats to quality, budget and schedule during applying fast track project.
She concluded that fast track project delivery is a strategy for many high-rise building projects in Viet Nam. By using fast track project, the project owner can gain benefit in terms of earlier revenue and financial return. Aside from that, the unquantifiable benefit is from the improvement of company reputation in the market and the risk on construction can be earlier transferred. Furthermore, due to market demand and its complication, the need of an early deliver project is increasing evidently, especially for high-rise projects at where the footprint area is limited but carries several complicated task at the same time.
Even though fast track delivery is a current strategy for high-rise building, however, there are some problems that can occur when applying fast track due to lack of knowledge and inexperienced consultants. Therefore, the negative effectiveness of unsuccessful fast track projects is significant and can lead to more delay and cost.
The most difficult factor of all fast track projects is negotiating the contract between the owner and contractors and determining price changes. If it is fixed priced contract with changes to be paid by claim each time, it would cause the total cost of the project to overrun budget. But a cost- plus contract with a maximum guaranteed price could cause unnecessary difficulties for the contractors.
On the other hand, fast track delivery gives a limitation to the project owner's ability to make design changes once construction has started. Starting construction before design works are completed can lead to a large number of change orders. More than that it may cause redesign or demolishing and rebuild.
A fast track project method is not a must for all projects, as it depends on each project type and business strategy. The project owners should carry out a benefit analysis and have a business target to decide which strategy is suitable for their case.
Therefore, experienced consultants and project managers should provide a suitable plan for project owners based on analyzed and feasibility studies.
Ms. Dung’s recommended that in using fast track project methods, individual must know how to apply and manage these methods together, and analyzing its strengths and weaknesses.
Her recommendations for efficient fast track project are as follows:
1. A proper and successful fast track project requires skillful and experienced consultants and project management. When a project owner decides on fast track project, designers and contractors should be selected according to their experiences in this construction approach. To make this decision, the project owner should consider using a pre-qualification process to evaluate a contractor's experience.
2. Fast track project requires a clear and simple organization chart and responsibilities, in order to minimize the project confusion about line of approval, comment, who is in charge of what. If the fast track is not done carefully, it becomes a threat to quality, schedule and cost.
Her thesis abstract is copied and posted.
ABSTRACT
Nowadays, with the rapidly growing of economic as well as construction market, the need of effective fast track project is obviously. Many high rise building construction projects are implemented using fast track approaches. With fast track project delivery system, construction tasks begin before design and construction documents are completed, which allow other works to start earlier than with traditional method. Without doubt, fast-tracking offers many advantages and benefits, such as an earlier project completion, a shorter time spent before the work starts compared to the traditional design bid build method, earlier operation and earlier financial return. Therefore, fast track project delivery strategy which become applicable for high rise building projects. In order to understand how the current strategies are being operated together with the strengths and the weaknesses of the strategy, a case study is explored by approaching its documentations, interviewing involved persons. The results show the fast track project is not suitable to all projects, however, there are also some problems that can occur when applying fast track due to many reasons such as unforeseen changes, lack of knowledge and inexperienced consultants. As a result, the negative effectiveness of unsuccessful fast track projects is huge and can lead to more delay and cost. Therefore, in order to apply fast track project successful, owners should have proper plan.
Recently, Fast track has gained the popularity in current project delivery strategies and the popularity keeps on increasing due to its potential advantages in improving project performance. An effective fast track project can bring advantages including: (1) reduced time; (2) lower cost; (3) reduced burden for the project owner by contracting all responsibilities to a single party; and (4) invisible benefits by increasing the reputation of the owner thus offering further business opportunities in a competitive market
On the other hand, fast track project also contains some challenges like: (1) complications and difficulties in; planning procedures for approval; transfer of information; feedback, and evaluation documents (2) requiring a very strict cash-flow; prompt payment; capital resources; (3) requiring strong and experienced manpower resources, especially in project management
Ms. Mai Do Thuy Dung made a case study on “Fast-Track Project Delivery Strategy for Civil Engineering and Architectural High-Rise Building Projects” which goals were to: (1) identify a Fast Track Project Delivery Strategy which is applicable for High Rise Building Projects (private fund); (2) identify advantages and also threats to quality, budget and schedule during applying fast track project.
She concluded that fast track project delivery is a strategy for many high-rise building projects in Viet Nam. By using fast track project, the project owner can gain benefit in terms of earlier revenue and financial return. Aside from that, the unquantifiable benefit is from the improvement of company reputation in the market and the risk on construction can be earlier transferred. Furthermore, due to market demand and its complication, the need of an early deliver project is increasing evidently, especially for high-rise projects at where the footprint area is limited but carries several complicated task at the same time.
Even though fast track delivery is a current strategy for high-rise building, however, there are some problems that can occur when applying fast track due to lack of knowledge and inexperienced consultants. Therefore, the negative effectiveness of unsuccessful fast track projects is significant and can lead to more delay and cost.
The most difficult factor of all fast track projects is negotiating the contract between the owner and contractors and determining price changes. If it is fixed priced contract with changes to be paid by claim each time, it would cause the total cost of the project to overrun budget. But a cost- plus contract with a maximum guaranteed price could cause unnecessary difficulties for the contractors.
On the other hand, fast track delivery gives a limitation to the project owner's ability to make design changes once construction has started. Starting construction before design works are completed can lead to a large number of change orders. More than that it may cause redesign or demolishing and rebuild.
A fast track project method is not a must for all projects, as it depends on each project type and business strategy. The project owners should carry out a benefit analysis and have a business target to decide which strategy is suitable for their case.
Therefore, experienced consultants and project managers should provide a suitable plan for project owners based on analyzed and feasibility studies.
Ms. Dung’s recommended that in using fast track project methods, individual must know how to apply and manage these methods together, and analyzing its strengths and weaknesses.
Her recommendations for efficient fast track project are as follows:
1. A proper and successful fast track project requires skillful and experienced consultants and project management. When a project owner decides on fast track project, designers and contractors should be selected according to their experiences in this construction approach. To make this decision, the project owner should consider using a pre-qualification process to evaluate a contractor's experience.
2. Fast track project requires a clear and simple organization chart and responsibilities, in order to minimize the project confusion about line of approval, comment, who is in charge of what. If the fast track is not done carefully, it becomes a threat to quality, schedule and cost.
Her thesis abstract is copied and posted.
ABSTRACT
Nowadays, with the rapidly growing of economic as well as construction market, the need of effective fast track project is obviously. Many high rise building construction projects are implemented using fast track approaches. With fast track project delivery system, construction tasks begin before design and construction documents are completed, which allow other works to start earlier than with traditional method. Without doubt, fast-tracking offers many advantages and benefits, such as an earlier project completion, a shorter time spent before the work starts compared to the traditional design bid build method, earlier operation and earlier financial return. Therefore, fast track project delivery strategy which become applicable for high rise building projects. In order to understand how the current strategies are being operated together with the strengths and the weaknesses of the strategy, a case study is explored by approaching its documentations, interviewing involved persons. The results show the fast track project is not suitable to all projects, however, there are also some problems that can occur when applying fast track due to many reasons such as unforeseen changes, lack of knowledge and inexperienced consultants. As a result, the negative effectiveness of unsuccessful fast track projects is huge and can lead to more delay and cost. Therefore, in order to apply fast track project successful, owners should have proper plan.
Friday, 10 July 2009
Public Private Partnership Project for Bangladesh
Abu Naser Chowdhury (CEIM 2006) finds out what it means for the Bangladesh government to take up this new method of infrastructure financing.
Public Private Partnership (PPP) has become an icon of any public procurement. It has gained a very wide interest around the world and has been used in many infrastructures development with widespread purpose -- ranging from construction of high revenue generating projects, to economic projects, to provision of social services. Various countries have introduced PPP from different backgrounds of thought such as fiscal deficit, budgetary pressure, demand supply gap, inefficient public services to infrastructure.
http://www.thedailystar.net/forum/2009/july/public.htm
Posted by
Hadikusumo
Public Private Partnership (PPP) has become an icon of any public procurement. It has gained a very wide interest around the world and has been used in many infrastructures development with widespread purpose -- ranging from construction of high revenue generating projects, to economic projects, to provision of social services. Various countries have introduced PPP from different backgrounds of thought such as fiscal deficit, budgetary pressure, demand supply gap, inefficient public services to infrastructure.
http://www.thedailystar.net/forum/2009/july/public.htm
Posted by
Hadikusumo
Wednesday, 8 July 2009
A CONCEPTUAL APPROACH TO GREEN BUILDING DEVELOPMENT: PRACTICALITIES AND PROSPECTS
the construction industry nowadays faces a quite number of major challenges that necessitate our constant efforts to change and adapt our activities in a more environment-friendly way. Sustainable construction or ‘green’ building is common knowledge in the developed world, but much less so in developing countries, which are facing major and serious developmental problems. The built environment therefore calls for green innovations and mechanisms that are seen as more urgent than ever.
Energy crisis is currently among the major challenges for the international community. The recent years have seen a surging trend of oil price escalation. Power supply is particularly a major challenge for developing countries, including Vietnam, where approximately 31% of the electricity is generated by hydro-electric power. Although this can be said to be a recyclable source of energy, water supply is not sufficient to meet the demand and power cuts are necessary in periods of high demand, or low water levels.
Current building design is generally not energy efficient, resulting in excessive use of electricity and water. Many buildings are poorly designed and do not always make the best use of natural light and ventilation as a result of owners’ use of excessive power for lighting, air conditioning and ventilation systems.
Mr. Nguyen Le Hoai Tam made a case study on “A Conceptual Approach to Green Building Development: Practicalities and Prospects”. It focused in the context of sustainable construction. The conceptual analysis and evaluation carried out the practicalities and adaptability of green building mechanisms addressed particularly to developing economies. Furthermore, the study focused on three specific objectives such as:
(1) understanding the LEED concept for Green Building; (2) Exploration of the applicability and adaptability of LEED in building design in Vietnam; and (3) discussion of the problem and obstacles in implementing the LEED concept for building projects in Vietnam.
Mr. Tam’s study had successfully discussed and analysed the practicalities and adoptability of the green building concept as a means to achieve sustainable development. For purpose of analysis and illustration, the LEED (Leadership in Energy and Environment Design) concept was introduced as among the world’s most trusted approaches to be applied in the built environment.
He proposed that in the engineering and construction industry, these recommendations should be carefully considered to maintain and improve the effect of LEED or any other universally acceptable methodologies.
1) Enhance biodiversity—not use materials from threatened species or environments and improve natural habitats where possible through appropriate planting and water use;
2) Support communities—identify and meet the real needs, requirements and aspirations of communities and stakeholders and involve them in key decisions;
3) Use resources effectively—not consume a disproportionate amount of resources, including money and land during material sourcing, construction, use or disposal; not cause unnecessary waste of energy, water or materials due to short life, poor design, inefficiency, or less than ideal construction and manufacturing procedures. Buildings have to be affordable, manageable and maintainable in use;
4) Minimise pollution—create minimum dependence on polluting products and materials, management practices, energy, power and forms of transport;
5) Create healthy environments—enhancing living, leisure and work environments; and not endanger the health of the builders or occupants, or any other parties, through exposure to pollutants, the use of toxic materials or providing host environments to harmful organisms;
6) Manage the process—stewardship of projects is a vital and overarching aspect in delivering sustainable projects, both in the first instance and also in ensuring their performance over time. Too many aspirations are undermined by failure to manage the design process, particularly at crucial handover points where responsibilities change. This requires us to identify appropriate targets, tools and benchmarks, and manage their delivery;
7) Looking ahead—teaching the younger generation about sustainability early provides a foundation for green thinking in the future.
His thesis abstract is copied and posted
ABSTRACT
this project report provides an introduction to, and a practical evaluation of, green building development. For the past decade the concept has become well-known in the developed world, but still a challenge for developing and emerging economies, especially. The study focuses in the first place on the concept of green building as part of a practical approach to sustainable development, which is nowadays an emerging and even urgent issue for global development. It goes on to discuss and evaluate the same subject but in a more practical methodology in a case study where the Leadership in Energy and Environmental Design (LEED) Green Building Rating System™ is introduced as one of the desired measures. What is of special interest is that the practicality and applicability are evaluated and analysed for adoptability in Vietnam, a developing country facing serious developmental and environmental problems. The LEED concept and adoptability have been taken into special consideration not only by Government strategic decision-makers, but more significantly by designers in the construction industry. From this introduction, more will hopefully be detailed and reflected in future design works as a contribution to the built environment and construction innovations.
Energy crisis is currently among the major challenges for the international community. The recent years have seen a surging trend of oil price escalation. Power supply is particularly a major challenge for developing countries, including Vietnam, where approximately 31% of the electricity is generated by hydro-electric power. Although this can be said to be a recyclable source of energy, water supply is not sufficient to meet the demand and power cuts are necessary in periods of high demand, or low water levels.
Current building design is generally not energy efficient, resulting in excessive use of electricity and water. Many buildings are poorly designed and do not always make the best use of natural light and ventilation as a result of owners’ use of excessive power for lighting, air conditioning and ventilation systems.
Mr. Nguyen Le Hoai Tam made a case study on “A Conceptual Approach to Green Building Development: Practicalities and Prospects”. It focused in the context of sustainable construction. The conceptual analysis and evaluation carried out the practicalities and adaptability of green building mechanisms addressed particularly to developing economies. Furthermore, the study focused on three specific objectives such as:
(1) understanding the LEED concept for Green Building; (2) Exploration of the applicability and adaptability of LEED in building design in Vietnam; and (3) discussion of the problem and obstacles in implementing the LEED concept for building projects in Vietnam.
Mr. Tam’s study had successfully discussed and analysed the practicalities and adoptability of the green building concept as a means to achieve sustainable development. For purpose of analysis and illustration, the LEED (Leadership in Energy and Environment Design) concept was introduced as among the world’s most trusted approaches to be applied in the built environment.
He proposed that in the engineering and construction industry, these recommendations should be carefully considered to maintain and improve the effect of LEED or any other universally acceptable methodologies.
1) Enhance biodiversity—not use materials from threatened species or environments and improve natural habitats where possible through appropriate planting and water use;
2) Support communities—identify and meet the real needs, requirements and aspirations of communities and stakeholders and involve them in key decisions;
3) Use resources effectively—not consume a disproportionate amount of resources, including money and land during material sourcing, construction, use or disposal; not cause unnecessary waste of energy, water or materials due to short life, poor design, inefficiency, or less than ideal construction and manufacturing procedures. Buildings have to be affordable, manageable and maintainable in use;
4) Minimise pollution—create minimum dependence on polluting products and materials, management practices, energy, power and forms of transport;
5) Create healthy environments—enhancing living, leisure and work environments; and not endanger the health of the builders or occupants, or any other parties, through exposure to pollutants, the use of toxic materials or providing host environments to harmful organisms;
6) Manage the process—stewardship of projects is a vital and overarching aspect in delivering sustainable projects, both in the first instance and also in ensuring their performance over time. Too many aspirations are undermined by failure to manage the design process, particularly at crucial handover points where responsibilities change. This requires us to identify appropriate targets, tools and benchmarks, and manage their delivery;
7) Looking ahead—teaching the younger generation about sustainability early provides a foundation for green thinking in the future.
His thesis abstract is copied and posted
ABSTRACT
this project report provides an introduction to, and a practical evaluation of, green building development. For the past decade the concept has become well-known in the developed world, but still a challenge for developing and emerging economies, especially. The study focuses in the first place on the concept of green building as part of a practical approach to sustainable development, which is nowadays an emerging and even urgent issue for global development. It goes on to discuss and evaluate the same subject but in a more practical methodology in a case study where the Leadership in Energy and Environmental Design (LEED) Green Building Rating System™ is introduced as one of the desired measures. What is of special interest is that the practicality and applicability are evaluated and analysed for adoptability in Vietnam, a developing country facing serious developmental and environmental problems. The LEED concept and adoptability have been taken into special consideration not only by Government strategic decision-makers, but more significantly by designers in the construction industry. From this introduction, more will hopefully be detailed and reflected in future design works as a contribution to the built environment and construction innovations.
Tuesday, 7 July 2009
RISK MANAGEMENT IN THE PRE-COMMISSIONING PHASE OF AN OIL AND GAS PIPELINE PROJECT
The transportation of gas from fields (offshore) to the shore is normally by using the sub-sea pipeline. The constructions of Offshore Gas Pipelines are quite complex, in which pre-commissioning activities contains high risk that cause schedule and cost impact. In some case, the risk occurrence leads to the delay of the whole project complex and have negative impacts to Client and Contractors. And sometimes even serious disputes between the involved parties if no precautions are undertaken.
To run the project at highest efficiency, Contractor must look the whole picture of construction phase including pre-commissioning phase.
Due to special conditions of Construction of Offshore Gas Pipelines such as ocean conditions, weather, marine activities and seabed conditions, the pipeline installation is normally contained high risks. The risk management works are normally carried out at starting of design. However, the risk management for pre-commissioning phase is not taken care sufficiently.
Mr. Khuong Minh Dat made a case study on “Risk Management in the Pre-Commissioning Phase of an oil and gas pipeline project” to offer a risk management methodology, especially for pre-commissioning phase of Offshore Oil and Gas Pipeline Project.
His conclusions are:
1) Pre-Commissioning Process of Oil and Gas:
The pre-commissioning process is normally performed by Construction Contractor to ensure that the pipeline construction is completed successfully before handover to start-up activities and put project into operation. It determines how well the construction phase is done; how the project quality is met; stipulates the minimum requirements for the flooding, cleaning, gauging, hydrostatic testing, dewatering, drying and commissioning of the offshore Oil/Gas pipeline; and is the last and important process of offshore pipeline construction.
2) Risk identification for Pre-Commissioning Process
There are many risks can occur from some sources. However, one of the major problems is the risk related with Piping Internal Gauging (PIG) operation that may get stuck inside a pipeline section due to many reasons. The contractors need to develop a strategy that allows him to manage their process effectively and efficiently. The risk identification has crucial role throughout Pipeline Risk Management. The six typical hazards identified in this study are (1) Accident; (2) Gas Explosion; (3) Pig is stuck; (4) Bad gauging performance; (5) Bad cleaning/testing/drying performance; and (6) Schedule delay.
3) Propose Risk Management for Pre-Commissioning Process
There are three frame works recommended for risk management such as:
Ø The systematic approach to risk management for construction” by Anthony Mills (2005)
Ø Risk management Approach in “Managing Risk in Large Projects and Complex Procurements” by Dale F. Cooper et al (2004)
Ø Practical Risk Management in Construction Industry” framework by Leslie Edwards (1995)
Based on the above three typical frameworks which are advisable for Pre-Commissioning Pipeline Risk Management at their practical recommendations, the author offers the PPRM frame work.
His recommendation are as follows:
o It is important to have a good plan is not only for pre-commissioning work but also for the whole construction phase, in which the bad weather window of the sea must avoid. The necessary equipment for work must be arranged probably. Review the quality document and certificates completed with conformance inspect of materials and equipments are also conducted probably.
o The design of pipeline is important requirement. The designer has to foresee construction requirements and all project constrains have to be incorporated in his design. Any insufficient design can cause of problems for construction and pre-commissioning phase.
o The manufactures of line pipes and equipment preparation are taken a very important part of the PPRM. The most finding is the awareness of the preparation work’s impact on PPRM performance.
o PPRM not eliminate almost risks but the risks are minimized and concentrated to acceptable level. Hence, PPRM can save the cost of risk transfer.
o PPRM is recommended applying for the Oil/ Gas pipeline projects not only in Viet Nam but also on the worldwide.
His thesis abstract is copied and posted.
ABSTRACT
Many pipeline projects have been continuously building to get the gas and oil from sea to the shore. The transportation of gas from fields (offshore) to the shore is normally by using the sub-sea pipeline. The constructions of Offshore Gas Pipelines are quite complex, in which pre-commissioning activities contains high risk that cause of schedule and cost impact. In some case, the risk occurrence leads to delay the whole project complex. The negative impacts to project (cost and schedule) at Client and Contractors, or even serious disputes between the involved parties could be raised if no precautions are undertaken.
Risk management is an important part of the decision-making process of all construction companies. Risk and uncertainty can potentially have damaging consequences for some construction projects. Risk can affect productivity, performance, quality, and the budget of a project. Risk cannot be eliminated, but it can be minimized, transferred or retained (Burchett, 1999).
In this report, a risk management for pre-commissioning phase of oil and gas project is presenting. Six important risks
To run the project at highest efficiency, Contractor must look the whole picture of construction phase including pre-commissioning phase.
Due to special conditions of Construction of Offshore Gas Pipelines such as ocean conditions, weather, marine activities and seabed conditions, the pipeline installation is normally contained high risks. The risk management works are normally carried out at starting of design. However, the risk management for pre-commissioning phase is not taken care sufficiently.
Mr. Khuong Minh Dat made a case study on “Risk Management in the Pre-Commissioning Phase of an oil and gas pipeline project” to offer a risk management methodology, especially for pre-commissioning phase of Offshore Oil and Gas Pipeline Project.
His conclusions are:
1) Pre-Commissioning Process of Oil and Gas:
The pre-commissioning process is normally performed by Construction Contractor to ensure that the pipeline construction is completed successfully before handover to start-up activities and put project into operation. It determines how well the construction phase is done; how the project quality is met; stipulates the minimum requirements for the flooding, cleaning, gauging, hydrostatic testing, dewatering, drying and commissioning of the offshore Oil/Gas pipeline; and is the last and important process of offshore pipeline construction.
2) Risk identification for Pre-Commissioning Process
There are many risks can occur from some sources. However, one of the major problems is the risk related with Piping Internal Gauging (PIG) operation that may get stuck inside a pipeline section due to many reasons. The contractors need to develop a strategy that allows him to manage their process effectively and efficiently. The risk identification has crucial role throughout Pipeline Risk Management. The six typical hazards identified in this study are (1) Accident; (2) Gas Explosion; (3) Pig is stuck; (4) Bad gauging performance; (5) Bad cleaning/testing/drying performance; and (6) Schedule delay.
3) Propose Risk Management for Pre-Commissioning Process
There are three frame works recommended for risk management such as:
Ø The systematic approach to risk management for construction” by Anthony Mills (2005)
Ø Risk management Approach in “Managing Risk in Large Projects and Complex Procurements” by Dale F. Cooper et al (2004)
Ø Practical Risk Management in Construction Industry” framework by Leslie Edwards (1995)
Based on the above three typical frameworks which are advisable for Pre-Commissioning Pipeline Risk Management at their practical recommendations, the author offers the PPRM frame work.
His recommendation are as follows:
o It is important to have a good plan is not only for pre-commissioning work but also for the whole construction phase, in which the bad weather window of the sea must avoid. The necessary equipment for work must be arranged probably. Review the quality document and certificates completed with conformance inspect of materials and equipments are also conducted probably.
o The design of pipeline is important requirement. The designer has to foresee construction requirements and all project constrains have to be incorporated in his design. Any insufficient design can cause of problems for construction and pre-commissioning phase.
o The manufactures of line pipes and equipment preparation are taken a very important part of the PPRM. The most finding is the awareness of the preparation work’s impact on PPRM performance.
o PPRM not eliminate almost risks but the risks are minimized and concentrated to acceptable level. Hence, PPRM can save the cost of risk transfer.
o PPRM is recommended applying for the Oil/ Gas pipeline projects not only in Viet Nam but also on the worldwide.
His thesis abstract is copied and posted.
ABSTRACT
Many pipeline projects have been continuously building to get the gas and oil from sea to the shore. The transportation of gas from fields (offshore) to the shore is normally by using the sub-sea pipeline. The constructions of Offshore Gas Pipelines are quite complex, in which pre-commissioning activities contains high risk that cause of schedule and cost impact. In some case, the risk occurrence leads to delay the whole project complex. The negative impacts to project (cost and schedule) at Client and Contractors, or even serious disputes between the involved parties could be raised if no precautions are undertaken.
Risk management is an important part of the decision-making process of all construction companies. Risk and uncertainty can potentially have damaging consequences for some construction projects. Risk can affect productivity, performance, quality, and the budget of a project. Risk cannot be eliminated, but it can be minimized, transferred or retained (Burchett, 1999).
In this report, a risk management for pre-commissioning phase of oil and gas project is presenting. Six important risks
Monday, 6 July 2009
KEY INTERACTIVE ACTIVITIES AND RISKS OF PPP INFRASTRUCTURE DEVELOPMENT PROJECTS: THE MASS RAPID TRANSIT IN THAILAND
Construction industry has played the vital role in world’s and country’s economic growth. Large construction project such as infrastructure needs to be proposed to cover the national strategic investment and national demand including community needs resulting to the increase in national growth rate. Therefore, infrastructure development and growth rate become linked.
In Thailand, government initiates to invest the physical and social infrastructures in 2008 such as mass transit rail (ADB, 2007). But due to political instability, the construction industry growth is declining. In order to develop successful infrastructure, the attractive alternative for government is to use the privatization approach called called “Public Private Partnerships” (PPP). In this approach, the government will allow the private sector to finance, design, construct and operate depending on the contract or procurement option. The private sectors use their technical and financial expertise to put a viable infrastructure project.
Since Thailand is one of the developing countries that have many infrastructure development projects, the Royal Thai Government (RTG) also has difficulty to propose infrastructure project because the infrastructure development project has high capital investment cost. The public private partnerships are used by RTG or state-own enterprises as the tool to provide the infrastructure service for community. The RTG increased the participation of private sector in infrastructure development.
Therefore, it is important to have a study public private partnerships in order to understand the interactive relationship and risks along development process between public and private sector. By understanding this interaction and risks between public and private sector, the PPP infrastructure projects will be completed with effective and efficient management.
Mr. Thotsaphol Rattananapalai made a study that aimed to investigate the interactive activities, relationships and risks between public and private sector in PPP infrastructure projects.
His results from the data analyses were found that the case study met twenty-six risks along the project development. It has nine, two, one, four, five and five risks in conceptual, tendering, financing, design and planning, construction and operation and maintenance phase, respectively. However, the concession agreement between public and private sector had covered only nine risks without any clause in first four phases. The key activities in PPP project development were found out: demand-supply assessment, signing concession agreement, developing financing plan, procuring outline and definitive design, revenue service commencement and operating and maintaining facilities. Then the key risks were found out: uncertainty of government policy, poor public decision making process, delay in financial closure, unavailability of fund, service commencement delay and revenue shortfall. Finally, the interactive model between public and private sector and risks relationship model were illustrated in this research.
His thesis abstract is copied and posted.
ABSTRACT
Due to increasing of the infrastructure projects, the public private partnership approach is getting more using. However, the public private partnership project development is complicated with the interrelation between public and private sector. For that reason, both public and private sector are getting into many problems along project life cycle. Therefore, it is necessary to have a study concerned with the development of public private partnership project along project life cycle. This research aims to investigate the interaction between public and private sector in project life cycle of PPP project. It also identifies the key risks and key activities along the project development.
In order to achieve the objective of research, the research uses case study approach as a research design. The process begins with framework identification that comprises of activity identification, framework development and framework verification. The selected PPP case study is the first underground mass rapid transit in Thailand. It continues with the data collection that uses the documentation, archival record and interview. The data analysis is conducted towards the case study evidences using explain and describe method to reveal and explain the important evidences.
Results from the analysis were found that the case study met twenty-six risks along the project development. It has nine, two, one, four, five and five risks in conceptual, tendering, financing, design and planning, construction and operation and maintenance phase, respectively. However, the concession agreement between public and private sector had covered only nine risks without any clause in first four phases. The key activities in PPP project development were found out: demand-supply assessment, signing concession agreement, developing financing plan, procuring outline and definitive design, revenue service commencement and operating and maintaining facilities. Then the key risks were found out: uncertainty of government policy, poor public decision making process, delay in financial closure, unavailability of fund, service commencement delay and revenue shortfall. Finally, the interactive model between public and private sector and risks relationship model were illustrated in this research.
In Thailand, government initiates to invest the physical and social infrastructures in 2008 such as mass transit rail (ADB, 2007). But due to political instability, the construction industry growth is declining. In order to develop successful infrastructure, the attractive alternative for government is to use the privatization approach called called “Public Private Partnerships” (PPP). In this approach, the government will allow the private sector to finance, design, construct and operate depending on the contract or procurement option. The private sectors use their technical and financial expertise to put a viable infrastructure project.
Since Thailand is one of the developing countries that have many infrastructure development projects, the Royal Thai Government (RTG) also has difficulty to propose infrastructure project because the infrastructure development project has high capital investment cost. The public private partnerships are used by RTG or state-own enterprises as the tool to provide the infrastructure service for community. The RTG increased the participation of private sector in infrastructure development.
Therefore, it is important to have a study public private partnerships in order to understand the interactive relationship and risks along development process between public and private sector. By understanding this interaction and risks between public and private sector, the PPP infrastructure projects will be completed with effective and efficient management.
Mr. Thotsaphol Rattananapalai made a study that aimed to investigate the interactive activities, relationships and risks between public and private sector in PPP infrastructure projects.
His results from the data analyses were found that the case study met twenty-six risks along the project development. It has nine, two, one, four, five and five risks in conceptual, tendering, financing, design and planning, construction and operation and maintenance phase, respectively. However, the concession agreement between public and private sector had covered only nine risks without any clause in first four phases. The key activities in PPP project development were found out: demand-supply assessment, signing concession agreement, developing financing plan, procuring outline and definitive design, revenue service commencement and operating and maintaining facilities. Then the key risks were found out: uncertainty of government policy, poor public decision making process, delay in financial closure, unavailability of fund, service commencement delay and revenue shortfall. Finally, the interactive model between public and private sector and risks relationship model were illustrated in this research.
His thesis abstract is copied and posted.
ABSTRACT
Due to increasing of the infrastructure projects, the public private partnership approach is getting more using. However, the public private partnership project development is complicated with the interrelation between public and private sector. For that reason, both public and private sector are getting into many problems along project life cycle. Therefore, it is necessary to have a study concerned with the development of public private partnership project along project life cycle. This research aims to investigate the interaction between public and private sector in project life cycle of PPP project. It also identifies the key risks and key activities along the project development.
In order to achieve the objective of research, the research uses case study approach as a research design. The process begins with framework identification that comprises of activity identification, framework development and framework verification. The selected PPP case study is the first underground mass rapid transit in Thailand. It continues with the data collection that uses the documentation, archival record and interview. The data analysis is conducted towards the case study evidences using explain and describe method to reveal and explain the important evidences.
Results from the analysis were found that the case study met twenty-six risks along the project development. It has nine, two, one, four, five and five risks in conceptual, tendering, financing, design and planning, construction and operation and maintenance phase, respectively. However, the concession agreement between public and private sector had covered only nine risks without any clause in first four phases. The key activities in PPP project development were found out: demand-supply assessment, signing concession agreement, developing financing plan, procuring outline and definitive design, revenue service commencement and operating and maintaining facilities. Then the key risks were found out: uncertainty of government policy, poor public decision making process, delay in financial closure, unavailability of fund, service commencement delay and revenue shortfall. Finally, the interactive model between public and private sector and risks relationship model were illustrated in this research.
Saturday, 4 July 2009
Professor Christian Brockmann delivered Applied Project Management in Highway Project Lecture on 26-28 June 2009 in Vietnam
Prof Christian Brockmann has delivered his lecture on applied Project Management in Highway Construction. He discussed effective project management approach and technology for highway construction. He presented some highway projects that he managed in the past, including Expressway BangNa Trad in Bangkok Thailand.
Students were very pleased to learn his practical knowledge in highway project management.
We will invite him again next semester! and he has agreed to come to Thailand and Vietnam to teach in our CEIM and MPM program.
Posted by
Hadikusumo
Wednesday, 1 July 2009
PROJECT MANAGEMENT COMPETENCY DEVELOPMENT: A CASE STUDY OF VIETNAMESE SMALL AND MEDIUM-SIZED CONSTRUCTION FIRMS
As one of the most dynamic cities in Viet Nam, Ho Chi Minh City has numinous changes in both its image and infrastructure. In the year of 1998, there were few buildings, most of which were located in the downtown area. However, for the last decade, many large scale projects have been built.
Following Vietnam’s economic growth, the demand for high-rise buildings increases and the need for efficient construction are therefore evident. However, like other developing countries, Vietnam is also facing many weaknesses in project management that weakened domestic competitiveness.
Improper project management competency is present both in the public sector and private sector and in small and large scale projects. Seminars and workshops have been held to discuss and explore the effectiveness of this issue in term of project cost, time and quality, as well as to seek for an enhancement of project management competency.
Mr. Chu Bien Cuong made a case study to (1) identify the project management competency of an SME construction company in Vietnam; and (2) identify on how to enhance project management knowledge and skills for human resources.
Mr. Cuong analyzed the weakness and identified the root causes attributable to project management competence. And based on which, he gave recommendations to solve the problems peculiar to a real-world project, while highlighting the expected enhancements of a real contractor. After all, a project management competence framework was developed for projects under the administration of a small or medium-sized construction firm.
Through this case study, Mr. Cuong found out that among small and medium sized construction firms, the competency of SMEs still does not meet the project management in terms of effectiveness and efficiency. Most SMEs are restricted in applying the management system. Besides, the management knowledge is the most important thing that SMEs have to improve in order to obtain the potential competition with other rivals.
Through various assessments and analyses, his study successfully explored insights in project management competency. The findings are found to be practical for small and medium-sized construction firms. His recommendations are the following:
1. Individual competency. The use of suitable leadership style is of prime importance in the firms. In addition, the individuals should be aware of the necessity to acquire knowledge as well as fundamental project management skills. Lessons from project failures can be a source of experience to learn. Beside, the project management should have full support of his top management and colleagues to carry out project tasks successfully.
2. Team competency. Group leadership and cooperation is crucial for the survival and development of any organization. A good system should therefore be established to address at least the following issues:
(i) line of communication;
(ii) vague and ambiguous defined responsibilities;
(iii) individual relationships;
(iv) decision-making processes;
(v) high cooperation.
3. The organization institutionalization is very important for its own development and as a good working environment for its staff. The organization should be structured in such a way that divisions, departments or strategic development, etc. can meet the project-focused objectives. In addition, the employees also contribute greatly to the development of the organization itself. It is strongly recommended that in setting rules and policies, the top management should, among other things, focus on enhancing individual and team competency through special-purpose capacity-building programs designed for its responsible staff.
His thesis abstract is copied and posted.
ABSTRACT
For the last decade, most projects in Vietnam were in small and medium scales. So with crowded labor sources at that time, contractors satisfied the basic project requirements with inefficient outputs and outcomes. However, construction projects have nowadays been developing in scale as well as in quantity. As a result, the requirements on improvements in competition in terms of quantity, cost, and technology are increasing.
The role of contractors in construction projects is very important since their performance brings successful or failure to these projects. In Vietnam, project management competence of local contractors has recently not satisfied market demand and project requirements. Such low project management competence has resulted in poor performance and side effects. These not only have a direct impact on the stakeholders but also on the project objectives and social interests. To enhance project management competence is therefore required by and from individuals and organizations.
Project owners have been seeking for efficient and effective contractors who can deliver a promised project. As stated, contracts are often awarded to foreign contractors who have experience and capacity to meet their client’s expectations. Meanwhile, the chance to lose contracts in high demand markets is obvious for local contractors due to limited abilities.
The need of approaching and improving project management competence is critical. This study will therefore address the project management competence by investigating a project by a construction firm, and then recommending solutions to improve project management competence in small and medium-sized construction firms in Vietnam.
His research framework is illustrated below.
Following Vietnam’s economic growth, the demand for high-rise buildings increases and the need for efficient construction are therefore evident. However, like other developing countries, Vietnam is also facing many weaknesses in project management that weakened domestic competitiveness.
Improper project management competency is present both in the public sector and private sector and in small and large scale projects. Seminars and workshops have been held to discuss and explore the effectiveness of this issue in term of project cost, time and quality, as well as to seek for an enhancement of project management competency.
Mr. Chu Bien Cuong made a case study to (1) identify the project management competency of an SME construction company in Vietnam; and (2) identify on how to enhance project management knowledge and skills for human resources.
Mr. Cuong analyzed the weakness and identified the root causes attributable to project management competence. And based on which, he gave recommendations to solve the problems peculiar to a real-world project, while highlighting the expected enhancements of a real contractor. After all, a project management competence framework was developed for projects under the administration of a small or medium-sized construction firm.
Through this case study, Mr. Cuong found out that among small and medium sized construction firms, the competency of SMEs still does not meet the project management in terms of effectiveness and efficiency. Most SMEs are restricted in applying the management system. Besides, the management knowledge is the most important thing that SMEs have to improve in order to obtain the potential competition with other rivals.
Through various assessments and analyses, his study successfully explored insights in project management competency. The findings are found to be practical for small and medium-sized construction firms. His recommendations are the following:
1. Individual competency. The use of suitable leadership style is of prime importance in the firms. In addition, the individuals should be aware of the necessity to acquire knowledge as well as fundamental project management skills. Lessons from project failures can be a source of experience to learn. Beside, the project management should have full support of his top management and colleagues to carry out project tasks successfully.
2. Team competency. Group leadership and cooperation is crucial for the survival and development of any organization. A good system should therefore be established to address at least the following issues:
(i) line of communication;
(ii) vague and ambiguous defined responsibilities;
(iii) individual relationships;
(iv) decision-making processes;
(v) high cooperation.
3. The organization institutionalization is very important for its own development and as a good working environment for its staff. The organization should be structured in such a way that divisions, departments or strategic development, etc. can meet the project-focused objectives. In addition, the employees also contribute greatly to the development of the organization itself. It is strongly recommended that in setting rules and policies, the top management should, among other things, focus on enhancing individual and team competency through special-purpose capacity-building programs designed for its responsible staff.
His thesis abstract is copied and posted.
ABSTRACT
For the last decade, most projects in Vietnam were in small and medium scales. So with crowded labor sources at that time, contractors satisfied the basic project requirements with inefficient outputs and outcomes. However, construction projects have nowadays been developing in scale as well as in quantity. As a result, the requirements on improvements in competition in terms of quantity, cost, and technology are increasing.
The role of contractors in construction projects is very important since their performance brings successful or failure to these projects. In Vietnam, project management competence of local contractors has recently not satisfied market demand and project requirements. Such low project management competence has resulted in poor performance and side effects. These not only have a direct impact on the stakeholders but also on the project objectives and social interests. To enhance project management competence is therefore required by and from individuals and organizations.
Project owners have been seeking for efficient and effective contractors who can deliver a promised project. As stated, contracts are often awarded to foreign contractors who have experience and capacity to meet their client’s expectations. Meanwhile, the chance to lose contracts in high demand markets is obvious for local contractors due to limited abilities.
The need of approaching and improving project management competence is critical. This study will therefore address the project management competence by investigating a project by a construction firm, and then recommending solutions to improve project management competence in small and medium-sized construction firms in Vietnam.
His research framework is illustrated below.
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