Project Time and Cost Management in Water Supply Pipeline Construction in Dong Nai Province, Vietnam: A System Dynamics Approach

The primary objectives of any construction projects are to complete the project within the limited period of time, to meet the determined quality based on the standard and specifications, and to keep the project cost under the estimated budget. The concept and practice of project time and cost management in construction industry have been used in recent years in Viet Nam, since at that time, the country had the open-door policy to lure the investment from FDI projects.

It has been proven that, in construction industry especially in water supply pipeline construction, time and cost management played an important role among several construction project management activities. The efficiency of time and cost management can result in the success or failure of construction projects. Hence, it is considered that there is the necessity to develop the model for effective project time and costs management in water supply pipeline construction in Dong Nai province.

Mr. Tran Minh Tung made a case study which objectives are to (1) find out critical factors affecting the project time and cost in water supply pipeline construction project and analyzing the relationship of these factors and thereby enhance understanding of construction delays and cost overruns; (2) develop a generic model based on the factors identified using system dynamic approach; and (3) formulate implementable policies that may aims to reducing project time and costs in water supply pipeline construction project in Dongnai Province, Viet Nam.

He found out that the problem of time delays and cost overrun in the construction industry is a global phenomenon. Project delay and cost overrun have frequently happened in most of construction project and water supply pipeline construction project is not exception. Below are his conclusions and discussions:

1. The critical factors and their interrelationship
By using exploratory research, he found out that there are several critical factors affecting the project cost and time in implementing a water supply pipeline construction project. Project cost and project time completion are significantly influenced by factors in six aspects such as:
a. Labor - by hiring the seasonal laborers, the labor cost can be reduced but the quality and labor productivity will also be affected. However, ‘training’ can enhance the workforce’s productivity; reduce rework and supervisor on site. Besides, ‘Financial difficulties of contractor’ along with ‘late monthly payment’ can negatively influence the ratio of labor turnover which causes laborers shortage.
b. Quality – from this point of view, project cost and time completion rate have related with rework that causing by ‘errors in construction pipeline’. The higher schedule pressure increases, the more ‘errors in construction’ happen. Conversely, the increase of ‘tighter in control and monitoring’ results in ‘error in construction pipeline’ reduction and therefore ‘fault in testing pipeline’ will be increased.
c. Schedule pressure - project cost and time can be influenced by the variance of ‘schedule pressure’, ‘speed up work’ and ‘work remaining’. The increase of ‘speed up’ helps reducing ‘work remaining’ which decreases the project time completion. Also, ‘coordination closely among other Department’ in Dongnai province also helps decreasing ‘the necessary time to consult among these departments’, which can reduce project delay and cost overrun.
d & e. Material and equipment - ‘accuracy material planning design’ helps delivering material on time, saving material and increasing ‘purchasing coordination’ which reduces ‘late delivery of material’. The effectiveness in ‘accuracy material planning’ has positively affected to project time completion. However, ‘late delivery of material’ can happen by the consequence of ‘late payment to suppliers’, ‘financial difficulties of contractors’. In another aspect, the result from simulator shows that ‘qualified subcontractor’ can increase quality of equipment, which reduces rework, leading to accelerate project time completion rate.
f. Safety - project cost and time have the relation with ‘labor productivity’, ‘the rate of labor turnover’, and ‘unsafe act and condition on site’. The higher schedule pressure increases, the more ‘unsafe act and condition’ happen. Conversely ‘safely construction method’ and ‘supervisory effort and monitoring’ help reducing ‘unsafe act and condition’ on site.

2. The system dynamics modeling

It is not difficult for the practitioners to capture the behavior of construction project. The dynamics model will facilitate practitioners to identify the problems related to performance gap by adjusting inputs of exogenous variables with their real scenario. It also makes possible for practitioners to find out the reasonable strategy to implement project in an effective way. Beside, in order to reach the usefulness of system dynamics model, the managers should develop the ability to understand construction project as a whole rather than simply concentrating on the detail of specific issues.

With the aim of setting up the model, the critical factors that have a potential to affect project cost and time in water supply pipeline construction project were identified and analyzed in term of their probable impact on construction process. Then, adopting by system dynamics approach, the generic system dynamics model has been formulated in this study by integrating a number of endogenous and exogenous factors to make dynamic interactions visible.

The generic performance model, when calibrated and tested with data from Nhon Trach water supply project in Dongnai Province, Vietnam, the simulated behavior (base run) of the adopted model has been replicated with the historic behavior (reference mode). This implied that the generic model dynamics performance model can be able to simulate the dynamic of project cost and time during implementing project.

3. Policies for improving

In order to considerably improve project time and cost performance in water supply pipeline construction project, five policies having the most potential were evaluated. The result showed that delay and cost overrun can be reduced by carrying out several important policies during the construction phase, including accuracy design, quality improvement; qualify subcontractors, multi-skilled training and material management.

His thesis abstract is copied and posted.

ABSTRACT

Normally, achieving the project within predetermined time, budget, and quality is the basic purpose of construction project control. Unfortunately, most water supply projects can not be completed within specified time and budget. Most projects showed massive cost and time overruns.

In general, the problem involved with project delays and cost overruns are avoidable. In an attempt to solve these problems, there are various strategies have been applied. Among them, many factors were found as the main source lead to manage time and cost in project efficiently.

This thesis analyzes factors affecting project time and costs in water supply pipeline construction in Dongnai Province, Viet Nam. The qualitative research is conducted to fulfill the objective of the research. Data collection is based on case study in water supply pipeline construction in Dongnai Province. It will be found out from this study that there are a lot of factors affecting project time and costs in water supply pipeline construction. Research objectives is the development of the model involved with the factors affecting project time and costs in water supply pipeline construction project.

In analysis, the model including the factors for reducing project time and cost in water supply pipeline construction projects will be built by using system dynamics modeling. Finally, some strategies deal with project delays and cost overruns are proposed.