Improving Quality Assurance in Construction: Can Tho Storage Tank Capacity Enhancement Project Case Study, Vietnam

After implementing the first stage of the quality assurance and product improvement in construction program, Vietnam Minister of construction assessed that although the program has achieved success in the first stage, there are some difficulties need to be overcome comparing with the goal and requirements planned. Annually, accidents still happen on working site due to violation of quality management process and procedure. Lacks of owner’s care, some commissioning buildings have no operation and maintenance manuals. This leads to degradation, reduction of the building’s life span and become unsecured in operation (instruction of Vietnam Ministry of construction, 2006).

Quality in construction is measured through time, cost and scope in traditional way. Andrew argued that these indicators are simple and crude to gauge the project quality. Owners are more quality-driven than price and value driven (Dainty, 2003). Especially, in oil and gas facilities, expensive equipments related to each other in manufacturing line. If one component fails, the other will be affected like the domino effect. So it is necessary to recognize other components affecting construction quality in each stage of project life cycle through assessing effectiveness and efficiency of construction processes. From that point, processes can improve that satisfy the external and internal customers. As a result, the existence and success of Vietnam enterprises are confirmed in local and international arena as well.

Mr. Duong Thanh Hai made a study which main three objectives were: (1) modeling the construction quality assurance activities from design to commissioning in traditional procurement; (2) investigating problems in term of effectiveness and efficiency of processes and sub-processes in the model that affect quality issues; and (3) developing a tentative model that incorporates construction activities and quality improvement approaches addressing such problems.

Conclusion

1. Modeling the construction quality assurance activities from design to commissioning in traditional procurement

The case was the storage tank project using design-bid-build procurement approach. The owner had in-house staff working as construction management. The owner stated their needs to design consultant. The designer mapped out all construction law, codes and standards that have to be complied with and to control and assure project quality.

Based on the design, the owner gave the quality requirements to site surveyor, supervisor, and contractor. Then these people submitted their quality plans that satisfy those requirements. A quality assurance model was developed based on the discussion with project participants and analyzing archive. The model shows interaction among involved parties from design to commissioning.

2. Investigating problems in term of effectiveness and efficiency of processes and sub-processes in the model that affect quality issues

There were five major problems happened in the project because the involved parties violated the quality plan and also because of the gaps on those quality plans itself.

Problem 1: design materials unavailability in the market

The design materials are only available during the time that the consultant planned the design. During the procurement, the owner realized shortage then the designer had to re-work.

Problem 2: delay in pressing piles

Although all operating procedures were clearly stated in the quality plans, mistakes still took place. The bearing capacities of pressed piles were not the same as the designed figures. According to the plan, the contractor would have informed the designer when problems happened but they did not. As a result, the schedule was delayed.

Problem 3: supply delay of floating roofs

Floating roof equipments were supplied two months late. Those equipment trades were solely based on contract which the contractor cannot assure the supply on time. The contract had just compensated direct loss for contractor. Other indirect loss such as reputation, administrative, low morale actually cannot be recovered.

Problem 4: valves leakage

Design valves were not received on time because of the delay in supply. The contractor used temporary valves to replace designed valves during tank process testing. Unfortunately, the temporary valves cannot bear the oil load, so they leaked. Some arrangements should be carried out to make sure that supplies are available when needed rather than recovered from contract breach penalty.

Problem 5: oil leakage of existing tank system

Underground pipeline were maintained every 10 year. However, those pipelines failed one year before that time. Therefore, one burning accident happened during the transferring process of existing tanks. The underground pipeline should be monitored gradually during that period.

3. Developing a tentative model that incorporates construction activities and quality improvement approaches addressing such problems

In Petromekong, most of construction applied traditional procurement. Contractor requested for supplier’s quotation after they had got bid. However in oil and gas industry, oil constructions usually need long lead time materials and equipment. For this reason, the contractor faces delay of supply sometimes. The study illustrated “supplier partnership” approach should be used in such type of construction to improve procurement quality. Petromekong in-house investing department will arrange partnership with suppliers beforehand. Then the owner, suppliers, designer will optimize time, cost, quality and satisfaction trade-off for important long lead time equipments and materials.

A chain of tools is suggested to detect and solve those problems in advance. Quality improvement tools such as flowchart, check sheet, problem source investigating chart, brainstorming, affinity diagram, fish bone diagram, nominal group technique should be used orderly to improve certain construction processes. Such types of process are repetitive, measurable and have clear procedures. Company can monitor and record performance of those processes regularly. Whenever problems happen, company can immediately recognize warning signs and take actions beforehand.

His thesis abstract is copied and posted.

Abstract

Since Vietnam has had oil terminal system development plan, more tank projects have been invested to expand storage capacity. However, quality violation has been alert obviously. From that point, the study suggests model to identify and eliminate those problems beforehand.

The study used one tank project as case study to fulfill three objectives. Firstly, quality assurance processes in traditional procurement were modeled. Then, the researcher investigated problems adhering to these processes. Finally, an improving quality model was suggested addressing those problems.

The case study was collected from Petromekong Corporation located in southern part of Vietnam. The researcher utilized focus group qualitative method. The researcher discussed with investing department of Petromekong to elicit quality assurance activities of project participants. Then, the researcher defined five problems existing in the case: deigning unavailable material on market, delaying in pressing piles, supply delay of floating roofs, leakage of valves and oil leakage of existing tank system. The researcher looked for some quality improvement approaches from manufacturing industry since. Finally, after conducting expert’s assessment, the researcher demonstrated “supplier partnership” approach should be used in long lead time materials and equipment construction to improve procurement quality. Illustrating pile driving and oil transferring processes as examples, the researcher suggested a chain of tools to detect and solve those problems in the case study beforehand. Such tools are flowchart, check sheet, problem source investigating chart, brainstorming, affinity diagram, fish bone diagram, nominal group technique should be used orderly to improve repetitive, measurable and clear procedure construction processes.

Key word: quality assurance, Petromekong, oil storage tank, traditional procurement, quality improvement, construction problems, case study, Vietnam.

Public Private Partnership in Low-Income Housing Development in Vietnam

Infrastructure development plays a vital role in economic growth and poverty reduction (WB, 2003). Traditionally, infrastructure systems have been provided by public sector. However, the increasing need of new infrastructure development and maintenance of existing infrastructure systems demands a huge capital investment which cannot be achieved by public fund. Public-Private Partnership delivery has become a solution for funding problem by mobilizing private sector fund into infrastructure investment (ADB, 2008). With their innovation and management skill, private participation can increase productivity and efficiency of operation, improve the quality of service and reduce service price compared to public sector provision (ADB, 2008).

In order to keep pace with the increase in housing demand and improve poor housing condition, scaling up investment in housing sector is the urgent focus of Vietnamese government. And in order to reduce state budget investment, Vietnam government is currently seeking possible solutions to develop public private partnership in infrastructure investment, and especially in low-income housing development.

Mr. Truong Ngoc Quy made a study which main objective is to propose the possible solution to encourage private participate in low-income housing development in HCMC. In accomplishing the main objective, the following sub-objectives have to achieve:

1. Develop general public private partnership framework in low-income housing development and its assessment criteria.

2. Investigate current practice of public private partnership in low-income housing development in Vietnam using the developed general model

3. Assess current practice of public private partnership of low-income housing development in Vietnam based on developed assessment criteria.

4. Propose the recommendation for setting up applicable public private partnership model in low-income housing development in Vietnam.

Research Findings

1. General public private partnership model in low-income housing development and its assessment criteria

Five factors of PPP in LIH development which are constructed from extensive literature review and expert verification are (1) government support to private participation, (2) government imposition on private party, (3) government subsidies for low-income people, (4) control target group policy, and (5) tenure system. Also from literature review and expert verification, the nine assessment criteria which are constructed and divided into 3 groups related to three main parties in low-income housing development are (1) affordability, accessibility, and availability for low-income people (2) profitability, availability, accessibility of incentives for private developers (3) sustainability, effectiveness, and inclusiveness.

2. Investigate current practices of public private partnership in low-income housing development in Vietnam

Many issues related to government support for private sector, imposition on developers, subsidies for LIP, control of target group, and tenure system in Vietnam. Facing the problem related to government support, private developers in Vietnam cannot receive some important incentives such as land and financing subsidies which are promised to give by government. The maximum profit margin of 10% and minimum cost recovery at least for 10 years for both hire-purchase and installment payment or for 20 years for rental houses make this market segment unattractive to private sector. The minimum planning and designing standard, and controlling maximum profit margin are lack of detail guideline for public authority and private developer during implementation. The housing finance subsidy in government policy is not strong to provide affordable loan condition to low-income people. Moreover, the loan condition actual provided to LIP is less favorable than what is introduced in policy. Because of under-table money using in allocation system and lack of detailed guidelines to prevent resale and renting out allocated units, most of the housing units are occupied by ineligible people. The actual tenure system is less favorable to low-income people than the imposed tenure system in government policy due to lack of profit in planning tenure system of government policy.

3. Assess the current practice of public private partnership in low-income housing development in Vietnam

Most low-income people in Vietnam face difficulty in affording payment condition and serving debt due to high debt service, high portion of down payment, and high housing price. The quantity of housing available to LIP is low, and the housing finance subsidy is also low in term of both quantity and quality. Housing subsidies including low-income housing subsidized units, housing finance and subsidized information is difficult to access for LIP. The low-profit margin and long term cost recovery set by government is not attractive for private participation. Some important incentives such as off-take guarantee and faster legislation procedure are not introduced in government policy and most incentives in government regulation are not provided in reality. Moreover, most provided incentives such as tax, financing, and basis infrastructure are not given to developer because they are not included in project cost when calculating profit margin. Complex legislation procedure in receiving incentives makes it difficult for developer to access these incentives. The LIH program does not provide housing for migrant and not focus on non-government officials due to its strict selection criteria, and does not cover other housing need due to unsuitable minimum design standard. Another issue related to effectiveness of program is that it is not effective in attracting private participation due to low profit set by government, reducing housing price because of the profit margin ceiling policy, and allocating housing to eligible people due to under-table money using and unclear controlling guideline after sale. Because of its low actual incentives and low actual subsidies provided, the financial sustainability of government budget is not affected much.
His thesis abstract is copied and posted.

ABSTRACT

One of global problem is inadequate condition of urban housing, and it is most serious issues in developing countries. The pressing issue of Vietnam at the mean time is providing adequate housing for residents, especially for poor people living in urban area. In order to reduce state budget investment in housing development for the poor, Vietnam government is currently seeking possible solutions to develop public private partnership in low-income housing development. However, it is still lack of public private partnership in low-income housing development even though government has implemented incentives policy to encourage private participation since 2001. The purpose of this study is seeking possible solution to develop practice of public private partnership in low-income housing development.

This research was conducted by case study methodology to fulfill four study objectives. Firstly, general framework and its assessment criteria for public private partnership in low-income housing development were developed and verified by expert. Secondly, the current practices of public private partnership in low-income housing development in Vietnam are investigated base on developed general framework. Thirdly, following developed assessment criteria, the current practices of public private partnership in low-income housing development in Vietnam are assessed. Fourthly, recommendation for setting up applicable public private partnership in low-income housing development in Vietnam is made.

The result of this study found there is a big gap between government policy and actual implementation of public private partnership in low-income housing development in Vietnam. The government program is not effective in solving housing needs. Low-income people still face difficult in buying the houses. The low-income housing market is not attractive to private developer. Housing finance institute, housing saving fund, and national housing authority are recommended to be set up and play important roles in supporting both demand side and supply side of low-income housing market.

Development of a Worker Engagement Measurement Tool (WEMT) for Construction Safety Program

Many studies revealed that construction industry has the highest risks compared with other industries, risks that sometimes lead to death.

Each construction companies have their own safety measures implementation. But how to lessen if not totally eliminate this kind of accidents is everybody’s concern especially those who are working in the construction sites.

Dr. Oulawan Kulchartchai made a research to find the answer to the following questions:

• How can worker engagement in safety program implementation be assessed?
- What process should be used to develop Worker Engagement Measurement Tool (WEMT)?
- What are the components/elements of worker engagement?

• What are the factors that affect worker engagement in safety program implementation?
• What are the critical factors contributing to the success of worker engagement in safety program implementation?

The general objective of her research is to develop an assessment tool to measure worker engagement in the safety program implementation. This assessment should allow managers to assess the real status of their workers from the workers’ views, and then provide adequate actions to improve worker engagement. To accomplish these, the specific objectives of the study are set out and identified as the following:
• To develop a reliable assessment tool in order to measure worker engagement in safety program implementation in construction projects.
• To identify critical factors of successful worker engagement (WE) in safety program implementation

Conclusion on Answers to the Questions

In assessing the worker engagement in safety program implementation, two questions must be addressed: first; what are the components/elements of worker engagement? And second; what is that the process that should be used to develop worker engagement measurement tool?

On assessing worker engagement in safety program implementation:

a. What process should be used to develop Worker Engagement Measurement Tool (WEMT)?

The literature reviewed revealed that there is a lack of empirical data on many of the measures of an engagement in construction area, particularly for the workers. The development of a worker engagement measurement tool, which is perceived to be valid, should clearly reflect the emerging research perspectives on engagement. The tool should look at the total context (cognitive, affective, and psychomotor domain) and not focus on a singular dimension (the degree of freedom for workers to make their own decisions regarding health and safety issues).

Ground theory analysis was adopted to define the concept ‘worker engagement’ and associated descriptive elements.

Lawshe's (1975) quantitative content validity technique was used to determine the perception of safety experts based on the model or framework on worker engagement and its descriptive elements. The results derived from the content validity technique showed that fifty-three (53) out of the seventy-eight (78) descriptive elements were included in the validity assessment questionnaire of a worker engagement). The element consisted of cognitive domain (21 items), affective domain (26 items), and psychomotor domain (6 items), and content validity index as perceived by safety experts which are 0.72, 0.60, and 0.43 respectively. It can be concluded that the theoretical construct of the worker engagement model and descriptive elements were verified and thus acceptable for use in the development of a worker engagement measurement tool.

b. What are the components/elements of worker engagement?

To determine the components/elements of worker engagement, a process was needed to initially develop a worker engagement measurement tool. By using triangulation techniques, models including the scale development process were developed. This process was also used by Du Plessis (2004), and was based from DeVellis’s work (1991) as supported by the latter study from Clark and Watson’s (1995). The theoretical model construct was derived from the related literature study. To get the descriptive elements of worker engagement, Grounded Theory’s techniques were applied. The data was verified by safety experts using Lawshe’s techniques. The verified items were subjected to item analysis and exploratory factor analysis techniques using SPSS (Statistical Package for the Social Sciences) software. The reliability test in SPSS was adopted through the Independent sample, t-test.

In conclusion, the questions above could be positively answered from the literature reviewed and qualitative study. These answers provided the background to the empirical part of the study and supported the inputs to the primary objective.

The secondary objective of this study is ‘to identify critical factors of successful worker engagement (WE) in safety program implementation’. To accomplish this objective, two steps were considered: (1) the common factors affecting worker engagement in safety program implementation; and (2) the critical factors contributing to the success of worker engagement in safety program implementation.

Based on a learning theoretical model, factors affecting worker engagement in safety program implementation can be grouped into situation related factors and individual related factor. Although many psychological and management literatures have studied engagement factors, little work in current literature attempted to explore the factors contributing to worker engagement in safety programs implementation at construction projects. Therefore, the qualitative and quantitative studies were carried out.

In order to identify the affecting factors, a qualitative study was done using the Grounded Theory’s technique. Subsequently, the factors were verified using Lawshe’s techniques. The results indicated that affecting factor consists of situation-related factor (31 items) and individual related factors (12 items) and the content validity index as perceived by safety experts are 0.56 and 0.59 respectively. It can be concluded that the affecting factors which were perceived by experts were valid.

Conclusion and Answer to the Primary Objective Worker Engagement Measurement Tool (WEMT)

A worker engagement measurement tool (WEMT) was developed. This tool has a six-factor scale and a total of 39 items. This was derived from applying the research process which included Grounded Theory’s techniques, Lawshe’s techniques, the development of a scale instrument by using DeVellis’s (1991) process, and a reliability test of the developed worker engagement measurement tool by using Independent sample, t-test

The statistical techniques such as item analysis and exploratory factor analysis in SPSS was applied on the initial 78 variables under the three construct theoretical model developed from a learning theory and Kahn’s initial theoretical model, then worker engagement concept and associated descriptive elements were identified by utilizing Grounded theory and then verified by safety experts.

The final conclusion that can be made to answer the primary research objective is that the worker engagement measurement tool (WEMT) developed through this research is holistic in nature and measures a total worker engagement construct by means of the six factors; is reliable (statistically proven); can be used as a diagnostic tool because it can significantly distinguish between projects; and is perceived to have a valid construct.

Conclusion and Answer to the Secondary Objective Factor Affecting Worker Engagement

The factors affecting worker engagement consisted of six factors and had 29 items in total. This data was the output from series of analysis. After numerous literature researches, the theory was found relevant to this study.

The final conclusion answers “what are the critical factors contributing to the success of worker engagement in safety program implementation?” Safety policy, supportive management and supervisor behavior factor, and individual related factors were considered as the critical factors affecting to worker engagement in safety program implementation, whereas, workplace climate, communication and feedback, and reward and recognition were perceived by the respondents as the factors that need considerable attention in order to improve worker engagement in safety programs implementation.

Her thesis abstract is copied and posted.

ABSTRACT

The construction industry is considered to have the highest rate of fatal occupational injuries in many countries. In Thailand, the accident rate in the construction industry is reportedly the highest compared to other industries. Fatal injuries to workers occur more often in construction industry. Previous research emphases often analyze the effective safety programs rather than those that are geared towards creating safe working environments. Workers are expected to play and act as the “key driver” in safety program implementation. Due to this, worker engagement is now considered to be one of the most important approaches in reducing work-related injuries and diseases. Without this worker engagement, safety programs will be difficult to achieve. It is hypothesized that worker engagement can substantially reduce accidents and improve safety performance continuously.

The primary objective of this study was ‘to develop a reliable assessment tool to measure worker engagement in safety program implementation in construction projects” and ‘to identify critical factors of successful worker engagement (WE) in safety program implementation’. The findings therefore will enable construction firms to identify gaps in worker engagement within the safety program implementation, and facilitate improvements.

This study used triangulation techniques including; theoretical model construct by a thorough literature study, components of worker engagement indicated by Grounded Theory’s techniques, verification of the theoretical model using Lawshe’s techniques, the development of a scale instrument by using DeVellis’s (1991) process supported by Clark and Watson’s (1995) and used by Du Plessis (2004), a reliability test of the developed worker engagement measurement tool by using Independent sample, t-test.

In developing the WEMT, several consultation and tests were conducted with national safety experts. Results showed that worker engagement (WE) consisted of 3 domains; cognitive (21 items), affective (26 items), and psychomotor (6 items). The content validity index of the domains according to safety experts are 0.72, 0.60, and 0.43 respectively. Additionally, the situation-related factor (31 items) and individually related factors (12 items) with respect to the content validity index were 0.56 and 0.59 respectively. A questionnaire with 53 variables in three dimensions of worker engagement and 43 variables in affecting factor was distributed to the sample group of construction workers and personnel basis either by electronic-mail or hand carried to the representative sample group of 494. Approximately fifty two percent (258/494) responded anonymously. A scale instrument was developed through the item analysis and exploratory factor analysis function of the Statistical Package for the Social Sciences (SPSS).

A worker engagement measurement tool (WEMT) comprised of 39 items in a six-factor instrument was developed. It was found that the items in these factors were highly acceptable, receiving a Cronbach alpha coefficient above 0.8.

The developed WEMT was tested in two distinct construction projects in Oil&Gas and Building projects. These test confirmed that WEMT was a reliable diagnostic tool that can discriminate worker engagement level among different projects, particularly in the Thai construction firm context.

This research also determined factors that affect worker engagement within the safety program implementation. These factors are important when guided contractors to increase worker engagement level. This study showed that suitable safety policies, a supportive management team, and individually related factors were critical and directly affects the worker engagement in safety program implementation. Workplace climate, communication and feedback, and reward and recognition were perceived by the respondents as the factors that need considerable attention to improve worker engagement.

This research is relevant because it was able to identify a reliable worker engagement measurement tool that enables projects to identify the overall level of worker engagement in safety program implementation. This tool will serve to facilitate strategic actions to improve the working situations, thereby optimizing safety program implementation for continuous safety movements. The implementation of such strategies will be a forward move towards beginning and sustaining safety program implementation for further safety performance improvement within industries, particularly in Thailand.

Key words:

Worker engagement measurement tools, worker engagement, construction project, grounded theory, scale development, affecting factors.

Project Owner’s Quality Management System – A case study of Estella Residential Development Building Construction Project

In recent years, generally, in construction industry, it is recognized that the construction sector has made a great contribution to national development as investment has been intensified in many fields such as infrastructure development, industry and public projects. However, more attention should be given to quality management because of the poor quality of some construction projects.

To enhance the quality control of construction projects, the Ministry of Construction (MOC) held a seminar on April 28, 2009 which the main concern to ensure the quality of construction projects, especially for large-scale national projects. While most projects have operated on a safe and cost-effective basis, there remain shortcomings in terms of quality at different levels due to international and external causes. Because of these reasons, the development of quality management system is most important not only for Contractors, Quality Consultants, but for the investors or developers as well.

Mr. Tran Hong Quan made a study which primary objective was to study the application of Quality Management System (QMS) of Project Owner in a construction project from design to construction phase.

Conclusions

In general, most of the requirements of quality system have been covered and presented in the existing system. However, the discovered problems that related in missing contract review, improper developed coordination and communication, lack of the process control, control of quality records and the inspection status monitoring during the course of work are the reasons that caused major problems to owner such as schedule delay and generating V.O.

In addition, it was found out that there was inconsistency in decision relating to quality on job site caused rework and schedule delay.

Obviously, besides the reason of work procedures, it would be the reasons of different quality level and quality perception. Therefore, it is necessary to conduct the internal quality audit and provide training at different position in order to gain the same level of quality perception in the project team.

Through the discussion and findings of this study, the causes and the consequences that generated by these missing processes can be summarized in the table below:



To summarize, refer to the study, in order to obtain a complete QMS, the missing requirements as previous mentioned should be added in the existing Quality Management System for fulfillment. More than that, the quality culture in organization should be formed up so that the Company can reach to the Total Quality Management.

His thesis abstract is copied and posted.
Abstract

The report expresses the key issues in Quality Management System (QMS) that known as the critical factor for any organization wants to develop and survive in the free trade market.

This study, which refers to the theories and the standards system, has expressed the concept of quality in construction, the QMS in organization, system requirements for owner’s QMS in construction and its benefits. The study has briefed the factors that most effect to project quality studied from public reports and the key points to control project quality from the design to construction stage. The report has introduced a QMS to the property developer for the purpose of amendment to the existing QMS in order to obtain a complete QMS for better managing project quality.

The next part of this report is the case study on the Estella J.V organization that established to run and deliver the Estella Residential Development project, an international project of the Keppel Land Co. Ltd. Through this case study, the findings on the existing QMS and the application from the previous part to this existing QMS for improvement will be the foundation QMS for toward Keppel Land’ projects. This is also the objective of this study.

AIT Thailand August 2010 Intake for CEIM and MPM fields of Study

The AIT in Thailand accepted 49 students for August 2010 semester. The distribution of students enrolled in the Doctoral, Master and Professional Master Programs are 3, 9 and 37 respectively.

Below are names of the current students:

No. Name Degree

1. Mr.Grit Ngowtanasuwan, CAS

2. Mr.Wilson Udo Udofia, Doctor

3. MissSarsinatt Kriwaphun, Doctor

4. Mr.San Visal, Master

5. Mr.Ranjeet Sandeep Pundlik, Master

6. Mr.Senjam Romero Singh, Master

7. Mr.Krisana Juanwanpen, Master

8. Mr.Thanawat Phangchunun, Master

9. Miss Junya Phuangphay, Master

10. Mr.Pham Quang Cuong, Master

11. MissHuyen Thanh To, Master

12. Mr.Tran Phi Long, Master

13. Mr. Nguyen Duc Huan, MPM

14. Ms. Nguyen Thi Minh Ha, MPM

15. Mr. Nguyen Nhat Tai, MPM

16. Mr. Ngo Quoc Thai, MPM

17. Mr. Le Van Tuan, MPM

18. Mr. Nguyen Huu Ky, MPM

19. Mr. Vo Thanh Phong, MPM

20. Mr. Nguyen Ngoc Thi, MPM

21. Mr. Bui Duy Khanh, MPM

22. Mr. Nguyen Thai Son, MPM

23. Mr. Tran Minh Nghia, MPM

24. Mr. Le Anh Thai, MPM

25. Ms. Dang Trinh Thanh Phuong, MPM

26. Ms. Nguyen Tran Tuong Ly, MPM

27. Mr. Le Do, MPM

28. Mr. Nguyen Chanh Trung, MPM

29. Mr. Nguyen Nong Truong Thanh, MPM

30. Mr. Vo Khac Kien, MPM

31. Mr. La Nguyen Bao, MPM

32. Mr. Tu Thien Tu, MPM

33. Mr. Hoang Manh Chi, MPM

34. Mr. Chau Anh Tuan, MPM

35. Nguyen Thi Thu Nga, MPM

36. Mr. Ngo Thanh Duc, MPM

37. Nguyen Trong Hung, MPM

38. Mr. Bui Viet Thi, MPM

39. Mr. Nguyen Anh Tuan, MPM

40. Mr. Vu Van Tinh, MPM

41. Mr. Bui Thanh Nam, MPM

42. Mr. Huynh Thanh Quang, MPM

43. Mr. Do Danh Chi, MPM

44. Phan Hong Ngoc, MPM

45. Vu Kim Dien, MPM

46. Tran Cao Hy, MPM

47. Nguyen Trong Khoa, MPM

48. Nguyen Hong Thanh, MPM

49. Mr. Ha Chi Nghia, MPM

Communication Management within a Construction Project Team: A Case Study of Condominium Project in Ho Chi Minh City

The construction industry in Viet Nam especially commercial building sector, is now suffering from many problems in communication management. Some common problems are:

1. Usually skipping communication management or just approaching it shallowly due to lack of knowledge in this area.

2. Problems related to interpersonal communication (such as face-to-face meetings), intra-group communication (such as interactions between team members) or inter-group communication (such as interactions between main contractors and sub-contractors) occur very frequently at many projects. Consequently, projects communication often breaks down and projects are likely to be failed.

3. Unable to determine project stakeholders’ needs for information, unable to determine communication channels in projects, insufficient interaction between project management and team members or between main contractor and sub-contractors or within team members, inappropriate communication media, etc.

4. Timing of distributing information, correct information to correct stake holders, wasting a large amount of time and resources for unnecessary meetings, etc.

5. Unable to combine verbal communication and non-verbal communication in order to achieve targets.

6. Abusive using of bad emotional methods during interaction between project management and team members such as fear and threats, aversive stimulation, etc.

It is important to understand the nature of the problems and to find ways to solve them in order to be able to develop an effective communication management system in construction projects. Mr. Nguyen Canh Toan made a study which objectives were to: (1) investigate the communication interactions within construction project team so that communication problems causing project interruption can be identified; and (2) propose recommendations on how to improve communication management within construction project team.

Conclusions

The important role of communication management within construction project team was clarified. During construction phase, interactions within the main contractor’s team members and between the main contractor and subcontractors were analyzed. Communication problems were classified into three categories, i.e. coordination, information distribution and interpersonal communication. The problems relating to coordination category occurred most in the project which caused project delay. In order to solve these problems, proposed solutions based on theoretical and recommended practices including guidance from the PMI’s PMBOK guide, one of the world’s most prestigious guides to the project management, were presented. Besides, some useful tools were considered and suggested to use as aids for the project managers to improve communication management in the project.

However, there are some limitations in this study. First, the relationships between communication problems and types of information in action have not been graded in order to figure out which one is the biggest factor that causes communication interruption; or the applicability of the proposed solutions for those problems.

Recommendations

In order to avoid similar communication problems, recommendations are given below:

1. Project Manager shall prepare project management plan including communication plan in the beginning of the project.

2. Strictly following the communication plan. Incentives shall be provided to encourage everybody to carry it out properly, and also treatments or even punishments for bad behaviours.

3. Document controller position must be stable as much as possible in order to ensure that the information distribution process is in order.

4. In case of ISO certified company, Project Manager should give feedback to the company’s Quality Manager to add in personality test forms together with Job Application Assessment Procedures forms. That will save Project Manager’s time whenever there is new job applicant coming to job site for interviewing.

5. Using new information-conveying methods such as: web-based data distribution, e-meeting, etc. in order for easy document control and timing of document distribution.

6. Organizing trainings for the team members in order for them to know how to use both verbal and non-verbal communication effectively.

7. Outside activities such as playing football, parties, etc. are recommended to improve relationships among team members and between the main contractor and subcontractors.

His thesis abstract is copied and posted.

Abstract

Communication management is one of the nine knowledge areas that can be found in the Project Management Institute’s A guide to the Project Management Body of Knowledge. This is a really tough challenge and time-consuming task to any project manager. Despite the fact that ineffective communication management will result in project interruption or even failure, there are not many project managers or site managers in Vietnamese contractors being aware of its importance. This final project report focuses on construction project communication management between the main contractor and subcontractors as inter-group communication and within the main contractor team members as intra-group communication. By reviewing many researches and studies of many authors on this field, knowledge as regards communication management within team and with external party such as will be explored step by step. Through a case study of condominium project in Ho Chi Minh City, communication problems which cause project interruption will be investigated and analyzed. Some proposed solutions which are based on the reviewed knowledge will be discussed in order to help project managers improve communication in the project.

Delays in Construction Projects in Vietnam: A Case Study of Last Section of National Highway No. 51

In recent years, Vietnam’s economy has been grown rapidly and becoming one of the countries with highest growth rate in the world. As a consequence, construction industry grew rapidly while project management could not meet requirement of construction industry.

There is a fact in Vietnam that delay happens in almost all construction projects; especially in projects that are state-funded and contractors are domestic. Projects which were carried out by international contractors are less likely to suffer delay. Responsibility for delay was not clearly defined. Therefore, whenever delay happens, no one was blamed. Because of this, the owner often give contractors extended time to finish the project without any penalty. In very few cases, contractors were given more time but had to pay a penalty.

However, in general, delay and cost overrun are the biggest problems in bombing construction field in Vietnam. Mr. Truong Quang Dien made a study which focused on the factors affecting the construction stage construction projects in Vietnam. The objectives of his study were: (1) recognizing frequency causes of delay; (2) defining effects of delay in progress of projects; and (3) solutions to delay problem and how to deal with delay when it happens

Conclusion

The delay in construction projects in Vietnam which was discussed in this paper was focused on frequency, severity and importance of the causes of delay, effects of delay and how the delay was solved.

The frequency and severity causes of delay were identified through previous research, present issues, and widespread contributions of construction field in Vietnam. The construction participants accorded inexact time, slow site clearance, slow government’s permits, poor site management and supervision, financial difficulties, incompetence subcontractor, and unforeseen factors.

Slow acquisition was frequent cause of delay in almost construction projects in Vietnam, which affected the whole schedule of the project. In the Owner’s point of view, the causes of delay were related to the responsibilities of both contractor and subcontractor.

This paper showed that owners and consultants realized that contract awarding to the lowest bidder was frequent causes of delay, meanwhile contractors considered severe causes of delay were related to owners and consultants like unclear responsibilities, slow-making decision from owners about some changed works during construction. One common cause of delay was Change Order initiated by owner during construction. Besides there were many causes between two parties, such as progress payment delay from Owner, ineffective scheduling, poor site management and supervision, shortage of labors and difficulties in financing from contractor.

However, all parties agreed that the following causes rarely occurred and were less important: changes in government regulations, restrictions at site, effect of social and cultural factors.

In general, there were certain interrelationships among the problems. The top-ranked problems including occurrence were grouped under some major factors: site related issues, incompetent designers and contractors, poor estimation, poor site management and supervision, poor contract management, price fluctuations, and improper techniques. It was noted that the findings confirmed previous studies that most of problems in construction projects were related to human behavior and management problems, and not technical in nature.

In order to mitigate delays in construction industry in Vietnam, all required training for engineer for their competency in term of technical, and safety was required. Therefore, there were no more gaps in planning, managing and organizing and safety. Project feasibility study must receive a serious attention and must be done carefully especially on government funded projects. In addition, contract management work should be the focused. Although Vietnamese government has regulated many decrees or circulars ruled on this work and published contract template, it always needs experienced parties to do contract work and suit template to real project conditions.

From above causes, the effects of delay were cost overrun and party’s damages. Third parties were people who would get profit from operating or using the project.

Recommendations

To reduce delays, all parties should consider following important factors:

1. Separate site clearance (acquisition) work from construction work and it must be finished before estimating cost and schedule for construction phrase and bidding work.

2. Make clear responsibilities among parties in the contract document and use CPM (Critical Path Management) to manage schedule during construction.

3. Make Planning and scheduling: they are continuing processes during construction and match with the resources and time to develop the work to avoid cost overrun and disputes.

Besides the three most above mentioned causes, the following points can be recommended by all parties in order to minimize and control delays in construction projects.

• For the Owners

1. Progress payment should be made on time otherwise it impairs the contractor’s ability to finance the work.

2. Change orders should be minimized as much as practical during construction to avoid delays.

3. Avoid delay in reviewing and approving of design documents than the anticipated.
4. Check for all resources and capabilities, before awarding the contract to the lowest bidder.

• For the Contractors

1. Shortage and low productivity of labor: enough number of labors should be assigned and be motivated to improve productivity.

2. Financial and cash flow problems: contractor should manage his financial resources, plan cash flow by utilizing progress payment and ensure financial during construction.

3. Site management and supervision: administrative and technical state should be assigned as soon as project is awarded to make arrangements to achieve completion within specified time with the required quality and estimated cost.

4. Subcontractors and suppliers: selecting subcontractors and suppliers with competence and experience, and also with enough financial resources. Contractors should not select subcontractors and suppliers with low bidding price.

5. Planning and scheduling: they are continuing processes during construction and match with the resources and time to develop the work to avoid cost overrun and disputes.

• For the Consultants

Reviewing and approving design documents: any delay caused by the consultant engineer in checking, reviewing and approving the design submittals prior to construction phase could delay the progress of the work.

Inflexibility: Consultants should be flexible in evaluating contractor works. Compromising between the cost and high quality should be considered.

His thesis abstract is copied and posted.

Abstract

In construction project management, delay means the finish date of the project is beyond the date stated in contract. When delay happens, cost often increases because of inflation or other factors. Most construction projects in developing countries, including Vietnam, are suffering two problems: delay and cost overrun.

For the owner, delay means cost more for capital and loss of income from operating the outcome of the project. For constructors, delay means cost more for construction work because spending on materials, labors and vehicles will increase.

Completing project on time and within in-plan cost is an indicator of efficiency in project management. However, construction progress is often changed and affected by unforeseen factors such as: contractor-related problems: Poor site management and supervision, Financial difficulties, Incompetence subcontractors; owner-related problems, design-related and slow site clearance, etc.

This report will try to find out which reasons are main reasons for delay in Vietnam based on previous researches and personal experience of author. Also, solutions for this problem will be mentioned in chapter IV as a suggestion of author.

Quality Management in Soil Improvement Projects: A Case Study of a Power Plant Project in Vietnam

In Vietnam, the concept and quality management in construction have been used in recent years. Nevertheless, many problems have been exposed because of the lack of managerial skills and competencies as well as the internal capacities of construction organization for satisfying the rapid increase of construction project. Projects delay happened normally in the majority of development projects due to poor communication, resource mobilization or other factors. Poor quality management process has significance on the Client and Contractor as well as to Consultant Client and Sub-contractor. If the performance of the projects is not managed successfully, the parties are likely to fail to meet its goals that they had for the project, associated with the quality management. Such failures may include the delay in schedule, cost overruns, quality, and safety and so on.

Mr. Tran Tuan Binh made a study which focused on soil improvement, construction industry and oil & gas industry; and the advantages and disadvantages of quality management in construction applicable in oil & gas projects in Vietnam. His study focused on several specific objectives as follows:
- To identify the quality management in construction
- To conduct quality management for project construction

The purpose of his research is to study quality management for construction project.
- To study implementation of PVMPC quality management in construction
- To state problems that occurred in the execution of quality project.
- To give out some recommendations to treating principle soil improvement
- To learn lessons from PVMPC project.

Conclusion

Based on the findings, the quality management in construction project is very important and necessary in soil improvement project. Quality management considered in this study is appropriate and applicable in soil improvement of power plant project in Vietnam.

The purpose of project quality management in construction is to manage the quality in order to achieve the objective of the project such as time, cost, quality, safety and environment. In particular, quality management helps people involved as project manager.

Quality management in construction is setting priorities, allocating resources and implementing actions and process to evaluate the risk of project and reduce the cost.

Quality management utilizes knowledge and experienced people to analysis for the better decision making. It supplies the better decision for the whole stage of project such as Project conceptual, Project planning, Project execution, Project termination prevention or risk avoidance.

Management in construction is a very important part of project management process. It is a fundamental to achieve good product.

Recommendation

Considering the quality management application in soil improvement of Power Plan project, below are the recommendations for the most effective quality management in construction:

In Viet Nam, the project managers completely have awareness of the importance of quality management in soil improvement and its efficiency for project success. However, they find difficulties to conform factor: cost, time, quality with Client’s requirements.

Based on the author’s opinion, there are some existing main reasons which the company has to change and improve well if they would like to have good project management:
1. Lack of Communication

2. Responsibilities are not assigned clearly enough to all members: client, design consultancy, project manager, construction.

3. Cost estimate in national norm is not appropriate with actual case.

4. Complex Legal procedures.

In conclusion, a good soil improvement quality management for every stages: engineering, procurement, construction, installation, hook up, pre-commissioning and commissioning in hand is very important, however how to manage and control efficiently and effectively the performance of QMS can lead the success or failure of any projects especially the complicated and big projects in oil & gas governed by soil improvement quality management.

His thesis abstract is copied and posted.

Abstract

In construction project, quality management is a very important sector using particular method to achieve the best practices in the project of company. Quality management is a systematic approach to managing unexpected issues circumstances related to a threat through a sequence of human activities including: Quality identification, Quality classification, and Quality control and Quality improvement

In the organization, there are some ways of quality management such as quality management in construction, quality management in operation and quality management in business.

The purpose of Quality management is to reduce risks. It may refer to numerous types of threats caused by environment, technology, human, and organization and politic. On the other hand it involves all means available for human, or in particularly, for a quality management entity.

Sub-Contractor Management in Gas Projects: A Case Study of PVGas Gas Distribution Centre Project

The development of petroleum industry during the past years has created bigger demand and bigger market on both size and scale. The international integration has also created opportunities for service companies of Petrovietnam to access the newest technologies and more investment in the Oil and Gas industry. The improvement of project management shall be applied to create opportunities for project management boards in order to perform project on schedule, on budget, good quality and safety.

In recent year, in order to maintain and increase the oil and gas exploitation output, Petrovietnam has cooperated with national and international petroleum companies to speed up the plan of developing and building new fields or expanding the field’s exploiting scale.

In order to invest more facilities for development purpose, more Contractors are involved in PetroVietnam Project. Through previous experience, the sub-contractor management has lack of experience such as uncontrolled schedule, uncontrolled scope of work, incorrect materials, and poor quality of construction.

According to contract type, contractor for Projects managed by PMC-PV Gas is divided into three types such as:

1. General contractor for Engineering, procurement and construction.
2. General contractor for engineering and construction and sub-contractor for supplying equipments and commissioning.
3. General contractor for construction, sub-contractor for engineering, supplying equipments and commissioning.

Therefore, sub-contractor management in projects is the challenge for project management board regarding on-scheduling, on-quality, and safety and in budget.

If the management board is not paying attention with sub-contractor management, it will have caused the chain of effects in delaying schedule, poor quality and cost impact for the whole project. One research said that the cost of rework and re-chose sub-contractor is 12 times higher of previous cost. Therefore, pre-qualification and monitoring performance of sub-contractor is the most importance in the success of General Contractor and Projects.

Mrs. Phan Thi Hai Giang made a study which main purpose was to quantify the importance of sub-contractor management in construction management especially in EPC contract and the effectiveness of sub-contractor with general contractor in schedule, quality and cost. Her research focused from bidding stage and performing project of sub-contractor in pipeline projects.

The objectives of her study were to: (1) evaluate the relationship between the subcontractor and general contractor in scheduling management, quality control and cost control in EPC Contract; (2) identify some problems in subcontractor management that can be improved by the general contractor; and (3) investigate the effect of implementation subcontractor management in early stage of construction management.

Conclusion

This project is successful in the manner of subcontractor's management. Based on the result, it can be concluded that subcontractor control management in terms of procurement and cost from local contractor has been aligned and organized, but, in terms of schedule, quality and safety aspects, it has been yet organized. Major improvements are needed for the subcontractor control strategy in order to improve the subcontractor management performance. In contrast, it can be concluded that subcontractor control strategy has been aligned and organized in all aspects. However, there are some major points, which need to be improved in order to strengthen and continually improve the strategy performance.

They project’s key factor shall be identified in the beginning of the project and general contractor/sub-contractor must follow and try to achieve these goals. In this case study, the key factor of Project is schedule. The success of project is the good co-ordination with general contractor/Owner such as follows:

1. For quality management:
a. All agreement between general contractor and sub-contract will be submitted and approved by Owner because Subcontracts should be made to conform with the prime contract between the contractor and the project owner, and must be revised in accordance with the changes made to the prime contract throughout the course of the project.

b. Tight and clear specification.

c. Dedicated QA/QC Manager.

d. On-site Vendor Inspection.

e. Continuous improvement quality management system.

f. Rigid control change order in design stage and in Site

2. For the cost management:
a. General Contractors prefer to structure subcontracts so that the contractor pays the subcontractor only if the contractor receives payment from the owner, arguing that they should not be stuck with paying bills that the owner doesn’t pay them for.

b. Accurate cost tracking, analysis and forecast.

c. QA/QC to prevent and detect defects earlier.

3. For schedule management:
a. The good planner and updated schedule for all Site work and procurement work that will affected with on-time schedule of Project.

b. Tight project control system and dedicated project controller.

c. Given appropriated solution for long-lead item.

4. For safety management:
a. Good safety procedures with appointed safety manager will be monitored all construction works at Site.

b. Risk response plan, emergency response plan and risk assessment applied for safety management of Project.

Benefit of project sub-contractor management

Almost in all projects, general contractor can't perform their construction works with their own force; they tried to share responsibilities and risks with their sub-contractor/Vendor.

From the above case-study, the good communication between general contractor and sub-contractor will be contributed to the success of Project. It shall be described in the beginning of the contract. The content of the service which sub-contractor is to provide for the general contractor must be described; and it also articulates the general contractor's procedure of awarding the subcontractor.

The general contractor assumes their role and contracts out the construction work, some detail design works to various specialty subcontractors in order to control risk and transfer construction risks. Through sub-contracting, the general contractor can minimize its capital investment and reduce the size of permanent staff.

The general contractor didn't understand clearly about local regulation, work permission with existing gas facilities. So they use local sub-contractor to transfer their risks.

With good management of sub-contractors, the general contractors will have a success project in manner of quality, safety, schedule and cost. And local sub-contractor can became more professional through tight control from general manager.

Recommendation for sub-contractor management improvement

After studying how main contractors managed their subcontractors together with the strength and weaknesses of each strategy, the recommendation for improvement can be proposed as follows:

1) It is important to have formal procurement standard for subcontractors. It helps main contractors to make decision easier and faster whether the subcontractors are qualified with the main contractor’s commitment.

2) Always have two-way lead times built into subcontract agreements. Two-way means that the main contractor and subcontractors agree on an appropriate time for the main contractor to notify the subcontractor when to begin work and an appropriate amount of time for the subcontractors to inform the main contractor of any conflict. Main contractor should monitor subcontractor’s schedule by developing a system or adopting advanced technology software that allows main contractor to track causes of schedule variance.

3) Top management should take a lead role in commitment toward quality. There should be quality policy and activities performed in an effort to implement the quality policy. Subcontractor should understand the quality policy and follow it as a work quality standard. The problems related with low quality can be prevented.

4) By establishing a subcontractor database, main contractors are able to know the information about subcontractors. It helps main contractors to have better understanding subcontractors’ performance.

5) Main contractor should develop comprehensive project safety policy and safety programs which make provisions for subcontractor safety. Subcontractor has to obey the main contractor’s safety policy and follow the main contractor’s safety programs by the inclusion of specific language to that effect in their contracts.

6) Main contractor may consider employing subcontract coordinator in order to improve coordination and communication with subcontractors.

Her thesis abstract is copied and posted.

Abstract

Because of the increased project complexity and the highly competitive nature of the construction industry, a construction project often is executed by several subcontractors. Hence, effectively managing the numerous subcontractors involved in a construction project becomes a crucial challenge for the general contractor in ensuring timely project completion with acceptable quality.

Managing subcontractors does not simply involve asking them to allocate resources (labor, material, and machinery/equipment) into the jobsite whenever an activity is scheduled, and then pushing them to speed up the work without a clear consciousness of schedule risk. Factors (or uncertainties) such as weather, labor, site conditions, material delivery, and equipment breakdown can influence the time performance of subcontractors, affecting total project duration.

But almost General Contractor is lack of management sub-contractor and it caused many difficulties and conflicts during performance, management of projects.

The most difficulty of sub-contractor management is deviation scope of work between sub-contractors, controlling schedule and interfacing between subcontractors.

In managing project subcontractors, a general contractor must determine the items of work to be subcontracted, select subcontractors, set subcontract agreements, and control the subcontractors during construction.

Some Main Factors Affecting Quality of Construction Projects: A Case Study of Expanding Phase III Port – Petroleum Technical Service Base in Vung Tau

In recent years, Vietnam have been investing and constructing many big projects by many different sources of capital: national budget, ODA, public private capital. However, we have to admit the fact that there have been some of those projects received rather much claims or comments from public. On the other hand, some of construction works have had disadvantages and is unsuitable to current demands. In circumstances, the schedules of those projects are always the question mark for users.

Those above problems shown us the fact that the Quality issue has not been cared properly by Viet Nam Project Management teams. What are the main factors affecting Project Quality and how influencing in each phase of project life cycle?

A successful project begins with the owner (or the official representative of the owner). The broad responsibilities of the owner to achieve a quality construction projects include two main factors. The first is the development of complete and realistic requirements and objectives for the project. The second factor is to provide a thorough understanding to other team members of the objectives, expectations, role and responsibilities of the owner.
The owner is substantially responsible for the quality and success of any constructed project.

The key to fulfilling an owner’s objectives and expectation is being known and understood what they are. Objectives are likely to be easily understood and quantifiable. On the other hand, expectation, though very important to the owner, may be abstract and difficult to understand.

By analyzing the framework of Project Quality Management in its life-cycle, Mr. Pham Xuan Thinh, the author, tried to raise out some main factors affecting the Quality of a construction project.

Based on that framework, he dissected the Quality management of a specific constructed project named: “Expanding Phase Iii Port – Petroleum Technical Service Base in Vung Tau, Vietnam” and specified the issues which have impacts on conformance to quality requirements. The final objective of his study is to find out the best solution of each issue and recommend to relevant subjects in some similar projects.

Conclusion

As discussed, quality in construction is directly related to time and cost, and vice-versa. A poor quality managed project can result in extra cost and time extensions, a poor time and cost controlled project can affect the conformance of requirements. Therefore, it is vital to understand the client’s requirements in terms of cost, quality and time.

Management has to be aware of customer requirements and be responsible for creating the right environment for a stewarded and progressive improvement. It also has to produce realistic estimates that match these requirements.

In Viet Nam, the project managers completely have awareness of the importance of Quality management and its efficiency for success of the project. However, they find difficulties to conform factors: cost, time, quality with Client’s requirements.

Recommendations

Mr. Pham found out that the reasons below have to be changed and improve drastically if the company would like to have a good project management:

• Lack of Communication.
• Responsibilities are not assigned clearly enough to all members: client, design professional, consultancy, project manager, and constructor.
• Cost estimate in national norm is not appropriate with actual case.
• Complex legal procedures.

His thesis abstract is copied and posted.

Abstract

The concepts and practices of Quality management in construction industry have been used and applied widely in Viet Nam also for long time ago. But how can apply sufficiently in managing Viet Nam construction projects still have some issues for discussion.

In the industrialization, modernization and global integration and in particular construction industry, Vietnamese authority agencies and project management teams have been finding out the best solution to execute projects efficiently. So far, we have had many definitions of project quality management, ways of understanding as well as applying it into each real case.

Look at some recent construction projects and some initial achievements we have obtained, Project Quality management has been promoting considerably. However, we have to continue improving and adjusting to modern management model. To do that task, the project team has to know and understand The Factors influencing Quality of Construction projects and what are consequences and how to solve?

Engineering, Procurement, Construction (EPC) Contract Management: A Case Study of Rang Dong Full Field Development Block 15-2 Offshore, Vietnam

Engineering, Procurement, Construction (EPC) Contracts are a common form of contract used nowadays in Vietnam to execute construction on large scale and complex oil and gas projects. Under an EPC Contract a contractor is obliged to deliver a complete facility to a Client/Owner/Employer/Project Company who needs only ’turn a key’ to start operating the facility. Hence EPC Contracts are sometimes called turnkey construction contracts.

Engineering, Procurement, Construction, Pre-commissioning, Commissioning for the well, wellhead platforms, offshore facilities are considered to be very risky because of their complications and large money required, therefore we need to have good contract management to check whether the obligations, rights, specification, performance, commitment and so on are met properly and to optimize contract performance, eliminate risk involved in EPC contract throughout the lifecycle.

Not having a good contract management process in place has consequences both to the Client and the Contractor as well as to Consultant Company, Vendor, Sub-contractor (if applicable). If the Contract Management is not managed, controlled, monitored, and implemented properly, the parties are likely to fail to meet its goals that they had for the project associated with the contract. Such failures may include delayed schedule, cost overruns, quality, safety and more.

Mr. Phan Tuong Liem made a study which focused on the use of one of EPC Contracts in the Oil and Gas sector in Vietnam – Rang Dong Phase 2 Project (hereinafter referred to as JVPC-Japan Vietnam Petroleum Co., LTD), its implementation, problems of EPC contracts applicable in Oil & Gas projects in Vietnam. How to resolve the problems in exercising EPC contracts and measures to be taken to prevent the problems was also raised in this study.

EPC contracts have been used in both medium and complicate large scale oil and gas projects in Viet Nam since 1990s in. By studying EPC Contract Management in our own project (Rang Dong Full Field Development Project Block 15.2 Offshore Vietnam), the aims of Mr. Liem’s study were to: (1) study implementation of JVPC EPC contract management; (2) state problems that occurred in the execution of EPC project; (3) give out some recommendations to EPC contracts; and (4) learn lessons from JVPC project.

Conclusion

In order to have a successful project, Contract Management played an important role. During the administration of a project, any major or minor activities involved a sequence of activities that were covered by different Clauses and Sub-clauses in the Contract. However, in reality not all Clauses/Sub-clauses covered all activities without unchanged, unrevised because of modification, design change so on, which were not fully mentioned in the Contract and cost of extra work.

The Contract usually had at least three copies to be distributed: original copy for The Client, Contractor and filed Field Contract Manager to follow.

To manage well the contract, the Owner had enough qualified manpower to take care for each particular part and or area of the project such as Supervisor, Superintendent, QA/QC Engineer, Cost Control Engineer, Scheduling Engineer, Administrator, Coordinator and so on who are involved in the project, the Project Manager himself could not take care the whole contract management.

Contractor knew how to allocate manpower, material, and equipment to meet the project target. Any personnel involve in the project especially key personnel had their CV’s profiles to show that they were qualified, competent and approved by the Client.

The below table summarized how the project went through.



Contract Management included all Terms and Conditions mutually agreed by both parties in writing and signed in the Contract but not limited to the following:
• Execution Plan, Quality Assurance Plan for the project
• Mobilization plan
• Kick off meeting
• Indemnity and Insurance
• Liquidated Damage
• Progress Reporting (monthly, weekly, daily report)
• Contractor Scheduling
• Requirement
• Change Order
• Negative Change Order (Reduce the scope of work, avoid payment for cancelled work)
• Work Order
• Contract close out.

By implementing all above mentioned issues correctly, the company managed well the project. In other word they had good contract management in hand to implement, execute, manage, and control the project.

In conclusion, the project was successful because they had good EPC contract management for every single stage: engineering, procurement, construction, installation, and hook up, pre-commissioning and commissioning. During the project execution as discussed in the report, there was a little bit over run cost due to bad weather, however it cost less than 1% of the total project budget, this amount was acceptable.

The project was completed on time because they had good scheduling especially as discussed good float time among sequence activities; therefore even though bad weather lasted for a long time, the project was still not delayed. Moreover there was another alternative solution/method applied by hiring one bigger barge and crane that could work in severe weather which leads to project success in term of scheduling on time for critical works.

There were no accidents/incidents from the beginning till the completion of the project because there were good safety management, method, procedure, guidelines, rules, commitment and so on that were followed by all involved parties and personnel. In short, EPC Contract Management was executed, controlled, managed in an efficient and effective way that lead to the success of the project in term of quality, cost, schedule and safety.

Recommendation:

Even though all terms, conditions, specifications, qualification, regulations and requirements are mentioned in the contract, however change orders always occur due to change design/equipment/process. In order to avoid disputes, all changes related to EPC contract should be mutually agreed because sometimes changes are within the scope of work, schedule, and quality but sometimes not. The Contractor should be well-experienced and has expertise in EPC Oil and Gas Project and has competent personnel from Management level to Operation level for engineering, procurement, construction, hook up, pre-commissioning, commissioning the project in order to achieve these. The project will not be considered successful if it is over budgeted, delayed or has quality problem.

Lessons learned from this case, without good scheduling, the overrun cost of the project should have been occurred. Therefore in this case when making scheduling, they must look at the good window forecast for long period of time and give enough float time among critical activities, in worst case (if any) about unexpected bad weather occurs longer than the expected, then the project would not be delayed.

His thesis abstract is copied and posted.

Abstract

Contract Management is the process that enables both parties to a contract to meet their rights, duties, obligations and responsibilities (i.e. allocate the risks) in order to deliver the objectives, services, required from the contract.

It also involves building a good working relationship between the customer and provider in general, and between Owner and Main Contractor or Main Contractor and Subcontractor so on. It continues throughout the life of a contract and involves managing proactively to anticipate future needs as well as reacting to situations that arise.

The main purpose of contract management is to obtain the services, performance, commitments as agreed in the contract between the Client and the Contractor. This means optimizing the efficiency, effectiveness and economy of the service, the performance, or relationship described in the contract, balancing costs against risks and actively managing the Clients/Owners and the Contractors relationship. Contract management may also aim for continuous improvement in performance over the life of the contract.

Owner’s EPCI Contract Management for Oil and Gas Development Projects: A Case Study of the Vietnam Oil and Gas Project

EPCI contracts for the construction of oil and gas facilities have has a poor track record recently. As owners, Oil and Gas Companies want facilities delivered on time, on budget, and with high quality. For various reasons, contractors rarely reach performance goals set by the owner.

The Oil and Gas industry as a whole has seen a dismal failure of large EPC projects over the last decade. Reasons range from aggressive appraisal strategy by operators leading to poor definition of the project to sloppy performance by contractors whose focus is only on protecting profits and avoiding penalties.

Many owners have experienced massive losses due to time and cost overruns in their EPCI contracts, which in turn has made their profits less significant in the light of a discounted cash flow analysis.

Mr. Tran Dang Thuyet made a study which main goal is to learn owner’s EPCI Contract Management for Oil and Gas development project and to develop a guideline for Oil and Gas owner to perform EPCI Contract Management successfully and effectively.

Conclusion

1. Based on the result, the EPCI Project Contract Management of Owner is considered performing effectively if the following conditions are met:
a. Minimizing delay of the project
b. Minimizing overrun cost
c. The quality of facility met the requirement for the purpose of procurement
d. Build a good relationship between the owner and the contractor

2. However, minimizing the delay and overrun cost are difficult tasks which were rarely reached by almost owner of the projects, especially by Vietnam Oil and Gas project’s owner. And the Owner in this studied case was also not able to manage the contract effectively and successfully in order to minimize delay and overrun cost.

3. A key point is that business risk can never be transferred to the provider. Although the provider may be under severe financial pressure for non-fulfillment, this will not compensate the department for failing to fulfill its obligations and deliver key outcomes. Therefore selection of the right contractor and placement of right contract is very important, this is critical factor decide the success of overall contract management.

4. Installation barge for offshore project is a critical factor for success of an offshore development project. Selecting an appropriate contractor for an EPCI contract for Oil and Gas must base on their availability of the installation barge.

5. One fact that the cap of penalty of delivery liquidated damage as per Vietnam Construction Law which does not exceed 10% of the contract price normally does not cover the cost impact to the owner and the lost business interest causing by the delay.
Recommendations

1. Recommendations to Owner of the studied EPCI Project for the Improvement of Contract Management Process:

i) Select right provider (bidder):
• Bidder Pre-qualification and Bidder Qualification should be considered as important activities of contract management process.
• For the offshore development project, the availability of installation barge must be considered as a critical factor to select bidder.

ii) Place right contract:
• Risk: Analysis and allocate risks properly in the EPCI contract, for example: If the project delay cause by contractor side, all contractor’s claims relating to weather standby or company force account during the extension period will be rejected.
• Contract Form: Should develop flexibly standard EPCI contract form based on the experience of past projects.
• Clause and Conditions:
• Clauses and Conditions should be drawn basing on win-win negotiation strategy with involvement of experts in all disciplines.
• DLD should be increased to reasonable level (higher than 10 % of Contract price) to force contractor focus to the contract performance, especially to force contractor to provide the dedicated installation barge for the offshore development project.

iii) Maintain data record of completed project: The lesson learnt and project
data record should be recorded properly for future project.

2) Recommendation for Project Organization Improvement:

• Develop and reorganize the EPCI project organization.
• Get personnel to be trained properly.
• Use outside manpower resource (consultant service) if need.

3) Recommendations for Improvement of Procurement Systems

• Develop the procurement procedures and standard forms properly.
• Use consultant service in preparing procurement documents if need.
• Develop Procurement Data Record for each project.
• Develop and implement Lesson Learn after each project.
• Create, develop and apply the tool and techniques in selection sellers properly.
• Propose to the Government Office/Authorization to change and the bid evaluation laws and cap of penalty of Liquidated Damage which cause disadvantages to the owner (owner) of project (contract).

Recommendations to all Owners of Vietnam Oil and Gas EPCI Projects

i) The Owners of Oil and Gas EPCI project should get lesson learn from their previous projects as well as from other owner’s project.

ii) Create and develop their own procurement system, procurement documents and organization properly.

iii) For the owners who do not experience in EPCI project should use EPCI Management service.

iv) Study guidelines, standards, regulations and laws issued by Government to find out disadvantages causing to the owner of project to propose changes to these guidelines, standards, regulations and laws to the Government Office.

His thesis abstract is copied and posted.

Abstract

The primary consideration in the procurement of Oil and Gas Development projects is the need to obtain best value for money in the whole life of the service or facility. The design and operation of the facility should maximize the delivery of effective required services; this is most likely to be achieved through integration of the design, construction, operation and ongoing maintenance.

Engineering, Procurement and Construction, Installation (EPCI) Contracts are a common form of contract used to undertake construction works by the private sector on large scale and complex oil and gas projects. Under an EPCI Contract a contractor is obliged to deliver a complete facility to a developer who need only 'turn a key' to start operating the facility, hence EPCI Contracts are sometimes called turnkey construction contracts. In addition to delivering a complete facility, the contractor must deliver that facility for a guaranteed price by a guaranteed date and it must perform to the specified level. Failure to comply with any requirements will usually result in the contractor incurring monetary liabilities.

However, EPCI contracts for Oil and Gas Development project have has a poor track record recently. As owners, Oil and Gas Companies want facilities delivered on time, on budget, with high quality. For various reasons, contractors rarely reach performance goals set by the owner.

It is timely to examine EPCI Contracts and their use on oil and gas Projects and the problems impact to the Owner of the contract. In this study, the author focus on Owner’s EPCI Contract Management in order to find out the causes of problems occur and impact to the Owner Contract Management and also to find out the factors causing un-success and inefficiency of the owner’s EPCI Contract Management and through that, propose recommendations of solutions enabling the Owners of Oil and Gas project perform their EPCI Contract Management more effectively and successfully.