Risks and Cost Escalation of Underground Construction Package of High-rise Building

In the construction process, the underground construction package takes a big ratio of project cost. Underground construction package faces a lot of invisible factors which can affect the project cost a lot such as underground water level, existing neighbor projects, soil conditions, underground obstructions, etc. Furthermore, deep excavation of underground construction is also very important. The unreasonable method can affect the project cost such as: method of excavation, soil disposal, shoring system etc.

In recent years, the urbanization in Vietnam develops so fast, which leads to the requirement of basements for almost high-rise buildings as well as for underground parking, subways, tunnels, etc.

In fact, there are no solutions appropriate enough for underground construction. Moreover, it must be recognizable that excavation methods are applied differently in various locations. Some of the construction technologies can depend on the characteristics as follows:

- Geotechnical conditions

- Relief conditions

- Available equipment

- Construction and design experience

- Neighborhood construction

- Drainage conditions

- Waterproof methods and methods of reducing water flow

- Impacts on underground water level

- Load

- Environment

- Expenditures

- Duration

- Risks

Design consultancy and project management play an important role in the success of the project. Construction consultants are responsible for designing and selecting experienced contractors, controlling risks which may badly affect investors and the community.

Mr. Bien Nam Hai made a case study aimed to:

1. study cost estimation in a construction project in Vietnam as a case study.

2. study cost risks and escalation.

3. discuss strengths and weakness of the cost estimation, control and risk management of the case study.

Conclusion

Methods of basement design and methods of basement construction have a close connection, for the design characteristics of the basement protection structure depend on the construction technologies. The basement protection structure is also the one to stand the permanent force. Therefore, the overall construction methods start from basement design. Currently, the construction technologies are so diversified that the design and construction company has to analyze and present the design and construction methods most appropriate to the available conditions.

Economically, the basement construction is the one that may make a big loss without appropriate design and construction methods.

Technologically, the basement construction is complicated because of being performed in such a depth that the construction itself and the associated construction are likely to have problems. Therefore, design, construction and supervision must be paid much attention to.

Recommendations

The arising problems of the basement and underground construction have been the first concerns in Vietnam, especially to construction engineers, owners and managers. Therefore, knowledge enhancement, experience accumulation, technology exchange, human resource and professional improvement play a crucial role. There must be well-qualified human resources first and then well-qualified basements come. High values, low prices and enhanced quality.

The conditions of geography, hydrography, nature and climate in Vietnam are complicated and diversified as well as a lot of weak ground. Vietnam is among the five countries to be greatly affected by the climate changes. Thus, careful study of design, construction, monitoring, management, exploitation and maintenance of the basement construction must be performed professionally and with good career morality. Only professional engineers are able to take charge of signing the drawings, managing, leading and performing the basement construction. Foreign consultancy is also important, but Vietnam must have strategies to develop the human resource for the basement development technology.

Obviously, without achieving such vital requirements, there must be big losses of labor and property from the state and owners. Also, it costs a lot to repair the mistakes of the basement design and construction.

Abstract

This study, which refers to the theories and the standards system, has expressed the concept of cost estimation, cost control, cost risks and escalation of underground construction package of high-rise building

The next part of this report is the case study of Commercial Center, Textile Fabrics, Department Store and Apartment project, study cost estimation and cost escalation of the basement of high-rise building. This is also the objective of this study.

Contract Project Risk Management Strategy in an Unstable Market Situation in Vietnam

Vietnam joined the WTO in 2006 that gave it opportunity and a major challenge to foreign investors who invest directly in Vietnam as well as local investors. Like in any countries, unstable market as a great impact to real estate business and Vietnam could not avoid it especially that construction industry directly affected when the market goes down. The main reason is because some investors unable to project financial performance until completion of the project.

Nguyen Truong Hung made a case study to: (i) study the behaviour of project owners during slow construction market; (ii) study risks of contractor affected by Owner and market; (iii) study risks management (in term of solutions and strategy); (iv) discuss the strengths and weakness of the solutions

Summary

Risk management is an integrate part of project management. Therefore, risk management should be executes immediately at the commencement of the project and must maintained throughout the course of the project implementation process. Risks can occur in any phase of project, a negative effect of risks to project finance, because of project cost overrun. Contractor cannot avoided risks, however, if contractor implementation of strict risk management system, risk can minimize, transferred or retained. There are several ways of risk dealing such as transfers the risk to another party, as well as avoiding the risk, reducing the negative effect of the risk due to carry project, as well as accepting some particular or all of the consequences of a particular risk. The active and early identification of risks, analysis and evaluation them, with control or measures and reduce the impact of risk is urgently needed, to ensure the feasibility and efficiency of the project. The benefit of risk management as well as effectives of project management is save time, avoid cost overrun, ensuring is project complete on schedule as planned, with good quality.

Conclusions

Report listed the behaviours of investors occurred in construction projects in Vietnam when economic and market decline lead to Owner’s economic risks, and unstable market situation in Vietnam.

This report identify the major risks that construction contractors have occurred in the construction projects , many risks occurred in the construction phase , especially in the economic and slow market situation period .But the report only give particularly serious risks occurred for construction sector in Vietnam due to impact of economic difficulties and market decline sharply, and it real affected contractors.

As a result, the report described how contractor analysis as well as manage the risks, and their strategy to overcome the risk.

The report also highlighted strengths and weakness of contractors when they implementation the risk management system, and suggest solutions as well as give recommendations to manage risks.

Abstract

Construction business and Real estate business began to face difficulties since the first Quarter 2010 due to European economic downturn has affected foreign investment FDI in Vietnam to decrease, and interest bank rate is too high , and significant GDP decline has direct impact on the construction on the construction sector and real estate business. Investors face many risks in the project and this has indirectly affected to contractors, suppliers of projects. Therefore, risk management, especially risk management due to difficulties economic and slow market situation as to be appreciated in order to minimize the risks.   

Risks cannot eliminated, however, if contractor implementation of strict risk management system, risk can minimized, transferred or retained, There are several ways of risk dealing such as transfers the risk to another party, avoiding the risk, reducing the negative effect of the risk, as well as accepting some or all of the consequences of a particular risk. The active and early identification, analysis and evaluation, with control measures and reduce the impact of risk is urgently needed to ensure the feasibility and efficiency of the project. The benefit of risk management as well as effectives of project management is save time, avoid cost overrun, ensuring is project complete on schedule as planned, and good quality.

This study listed Owner behaviours often occur in construction projects when they encounter difficulties in the market, and contractors in risks management strategy to overcome the risks due to operating through the construction projects.