Riza Yosia Sunindijo1; Bonaventura H. W. Hadikusumo2; and Stephen Ogunlana3
Introduction
The role of project managers is very important as they are the ultimate persons responsible for the success or failure of projects. The human skill is of paramount importance as project managers need to interact with people frequently. In reality, about 88% of project managers spend more than half of their working time interacting with others (Strohmeier 1992). This high level of interaction demands that project managers are able to lead effectively and to manage conflicts continuously in order to build good relationships and ensure the success of their projects.
Project managers also need to possess skills to lead teamwork. Within the internal organization, project managers have to lead their subordinates, a situation which requires them to possess effective leadership skills necessary for facilitating workers to achieve project goals successfully (Lewis 1998; Loo 1996).
Many studies have been carried out on human skills in project management. Some studies suggested critical skills for project managers (El-Sabaa 2001; Strohmeier 1992; Cowie 2003); whereas others recommended effective leadership as a critical factor in project management (Cleland 1995; Keegan and Den Hartog 2004; Zimmerer and Yasin 1998). Rowlinson et al.’s (1993) study on the leadership style of construction managers in Hong Kong revealed that human skills are of paramount importance in project management.
Emotional intelligence (EI) is increasingly being recognized as an important issue in the workplace. There is a surprising finding that intelligent quotient (IQ) is second after EI in determining outstanding job performance (Goleman 1995, 19980. According to Carmeli (2003), emotionally intelligent senior managers perform better on their jobs compared to their contemporaries with lower EI. The benefits of EI to project management are therefore proposed for study in this research.
The objective of the study is to investigate the benefits of EI in project management in terms of its relationship with effective leadership styles. The benefits of EI are being investigated because project managers need good human skills to lead project teams. This research therefore examines whether project managers with high or low EI have different leadership styles.
Emotional Intelligence
According to Goleman (1998), emotional intelligence is the capacity to recognize our own feelings and those of others, for motivating ourselves, and for managing emotions well in us and in our relationships.
Compared to the amount of research already conducted on IQ, the study of emotional intelligence is still relatively new. Nevertheless, EI is increasingly being recognized as an important issue in the workplace. Many studies have shown that high IQ does not necessarily guarantee a successful life. According to Goleman (1995, 1998), emotional intelligence is more important than IQ in determining outstanding job performance. Dulewicz and Higgs (2000) supported this assertion by saying that the IQ test has failed to provide sufficient variance in success criteria both in the educational and in the organizational environments. Research has indicated that emotional competencies (i.e., the potential of EI that has translated into practical capabilities) are twice as important as IQ and expertise in contributing to excellent and effective Performance (Goleman 1998).
Goleman (2001) explained that emotional intelligence has two competencies, the personal competence and the social competence. The personal competence consists of self-awareness and self-management, whereas the social competence consists of social awareness and relationship management. Self-awareness means knowing one’s feelings at the moment and using it for decision making, which is known as “intuition.” A person who has this ability is aware of his/her own strengths and weaknesses, is open to feedback, and is willing to learn from past experiences. Self-awareness competencies are: emotional awareness (recognizing one’s emotions and their effects), accurate self-assessment (knowing one’s strengths and limitations), and self-confidence (a strong sense of one’s self-worth and capabilities).
Self-management is the ability to regulate distressing factors such as anxiety and anger and to restrain emotional impulsivity. Given this ability, a person will be able to hold in mind the positive feelings that arise when he/she achieves goals or inhibit negative feelings, a situation that will help to boost motivation. Competencies of self-management are emotional self-control (keeping disruptive emotions and impulses in check), trustworthiness (maintaining standards of honesty and integrity), conscientiousness (taking responsibilities for personal performance), adaptability (flexibility in handling change), achievement drive (striving to improve or to meet a standard of excellence), and initiative (innovativeness and readiness to act on opportunities).
With social awareness, a person can recognize the feelings of other people. An individual with this ability can read nonverbal cues for emotional currents from others. This is critical for job performance when the focus is on interactions with people. Social awareness competencies are empathy (understanding others’ feeling and perspectives, taking an active interest in their concerns, and cultivating opportunities through them); service orientation (anticipating, recognizing, and meeting customers’ needs); and organizational awareness (reading a group’s emotional currents and power relationships).
Finally, relationship management is the ability to attune oneself to, or to influence, the emotions of other people. The competencies of relationship management are developing others (sensing others’ development needs and bolstering their abilities); influence (welding effective tactics for persuasion); communication (listening openly and sending convincing messages); conflict management (negotiating and resolving disagreements); visionary leadership (inspiring, guiding, and commitment to individuals and groups); change catalyst (initiating or managing change); building bonds (nurturing instrumental relationships); and teamwork and collaboration (working with others to achieve shared goals).
Leadership Behaviors of Project Managers
Mintzberg (1980) identified ten managerial roles performed by project managers. Two of the roles investigated in this research are the ability to act as a leader and as a disturbance handler. A leader should influence people toward the attainment of organizational goals and should be able to manage conflicts whenever disputes or crises arise.
Thirteen leadership behaviors necessary to influence people were identified from extensive literature reviews.
1. Visioning: The leader communicates the vision and helps the team to clarify its goals (Boehnke et al. 1999; Katzenbach and Smith 2003).
2. Inspiring: This behavior is usually displayed by the communication of high expectations, using symbols to focus efforts, and expressing important purposes in simple ways (Boehnke et al. 1999; Humphreys 2002).
3. Stimulating: The leader helps subordinates to look at old problems from new and different perspectives. Intelligence and rationality are used in problem solving (Boehnke et al. 1999; Humphreys 2002).
4. Coaching: The leader pays close attention to individual differences among subordinates; and he/she teaches and advises employees with individual personal attention (Humphreys 2002).
5. Rewarding: The leader provides rewards and positive feedback to employees who meet agreed goals (Boehnke et al. 1999; Humphreys 2002).
6. Punishing: This style is characterized by giving punishment and negative feedback to employees who show undesirable and below par performance (Daft 2003).
7. Delegating: The basic concept of delegation is to transfer authority and responsibility to lower positions in the organizational hierarchy (Daft 2003) and to provide challenging and difficult tasks to subordinates to enhance their development (Boehnke et al. 1999).
8. Leading by example: The leader does the same real work and contributes in the same way like subordinates (Zimmerer and Yasin 1998; Littrell 2002; Katzenbach and Smith 2003).
9. Sharing and open communication: The leader shares all types of information throughout the organization, across functional and hierarchical levels (Daft 2003).
10. Listening: The leader grasps both facts and feelings to interpret a message’s true meaning, and shifts thoughts to empathizing with others (Cacioppe 1997; Daft 2003).
11. Directing: The leader tells subordinates exactly what they are supposed to do. The leader sets the goals, standards, rules, and the regulations (Littrell 2002; Daft 2003).
12. Participating: The leader consults with subordinates before making decisions. Opinions, suggestions, and participation are encouraged in the decision-making process (Littrell 2002; Katzenbach and Smith 2003; Daft 2003).
13. Proactive: The leader actively seeks information from others and identifies problems at the early stage (Daft 2003).
Conclusion
EI is gaining increasing acceptance as an important success factor in the workplace. In order to extend the usefulness of EI, the study focused on investigating the benefits of EI to project management in terms of leadership styles.
PMEs with higher EI scores tend to use more open communication and proactive leadership styles than PMEs with lower EI scores. Open communication is a key factor in organizational success as it opens up the possibility of getting the best from people. Proactivity is essential to tackle problems at the early stages. Therefore, a PME with high EI can stimulate team performance and innovation.
Positive correlations between leadership behaviors and EI dimensions were observed. These correlations show the dimensions of EI that generate particular leadership behavior. The study also found that EI generates delegating, open communication, and proactive behavior. These relationships support the theory of EI and these three leadership behaviors can bring positive outcomes for the organization if used properly (Goleman 2001; Goleman et al. 2002; TalentSmart 2004).
This study was published in the “Journal of Management in Engineering, Vol. 23, No. 4, October 1, 2007” and full journal article is available upon request.
Abstract is copied and posted.
Abstract: Human factors are of paramount importance to the success of projects. Although a lot of studies have been carried out on human factors in project management, not much research has been done on emotional intelligence (EI). Studies have shown that EI is beneficial to both the individual and the organization. The benefits of EI to project management were investigated in terms of the style of leadership. The study was conducted in Thailand by interviewing project managers and engineers (PMEs); and client representatives. The results showed that EI affected leadership behavior of the project leader. PMEs with higher EI tend to use open communication and proactive leadership styles. It is also found that EI generates delegating, open communication, and proactive behavior, which can bring positive outcomes to the organization.
1 Asian Institute of Technology, Pathumthani, Thailand.
2Asian Institute of Technology, Pathumthani, Thailand.
3Asian Institute of Technology, Pathumthani, Thailand.
Monday, 16 November 2009
Thursday, 12 November 2009
Mr Bui Van Bao is promoted as Director of SCQC Enterprise no. 2
Dear All
I have a good news. Mr Bui Van Bao (MPM1 graduated in 2008) is promoted as the Director of SCQC Enterprise No. 2.
We wish you luck with your new position. We trust that you will perform very well.
Regards
Hadikusumo
I have a good news. Mr Bui Van Bao (MPM1 graduated in 2008) is promoted as the Director of SCQC Enterprise No. 2.
We wish you luck with your new position. We trust that you will perform very well.
Regards
Hadikusumo
Wednesday, 11 November 2009
Gap Analysis Approach for Construction Safety Program Improvement
*Thanet Aksorn and B.H.W. Hadikusumo
Due to its hazardous nature, construction is globally perceived as an accident-prone industry. It has always been reported that construction work has a very high rate of injuries and deaths. Therefore, there is a negative stereotype concerning safety in the construction industry. In recent years, in order to survive in a highly competitive market, many construction companies have begun considering safety to be one of the main factors in reducing costs associated with work-related accidents and injuries.
In Thailand, construction work is generally labor-intensive rather than technology-intensive. Most construction workers are farmers with low levels of education and skills. Many are seasonal workers who divide time between agriculture and construction. Consequently, the rapid expansion of construction work has brought a parallel increase in injuries to unskilled workers. The accident and injuries statistics from 2004 to 2005 showed that the construction industry had the highest rate of deaths, accounting for close to a hundred workers per year, and up to 20,000 workers have suffered minor injuries on sites every year (SSO, 2005). Unfortunately, it has always been higher than all other industries.
To eliminate construction-related accidents, implementation of safety program is regarded as a key strategy by both government and private sectors. Effective safety programs can substantially reduce accidents because they can help management to eliminate unsafe practices by workers and can also create safe working environments (Anton, 1989; Abdelhamid & Everett, 2000). Additionally, Henshaw (2004) stated that an effective safety program could result in a triple win; workers' lives would be saved and protected, cost would be reduced and returns on investments would be maximized, and workers' morale and motivation would be raised which, in turn, would result in the production of high quality products and services.
How can a safety program be improved? Several extended studies have been undertaken to spotlight key activities contributing to strong safety programs such as top management support, sufficient resource allocation, teamwork, worker involvement, etc. In business terms, the key factors are known as critical success factors (CSFs). If these key activities are not implemented successfully, safety programs may fail miserably. Safety researchers have acknowledged and confirmed that safety program performance depends largely upon the satisfactory results of a number of key activities or CSFs. Although the connection between safety programs and safety performance has already been studied extensively, very little research has been undertaken to provide the construction industry with practical guidelines to improve safety programs.
Mr. Thanet Aksorn under Dr. B. H. W. Hadikusumo, his advisor, made a study which aimed at identifying the critical factors affecting the improvement of safety programs from safety literature and previous research and at evaluating these success factors in order to rank the urgency of improving them. To obtain these rankings, gap analysis was carried out to measure the difference between the degree of importance of CSFs and the actual status of CSFs. The results of the study can help the construction industry to identify and improve the high priority CSFs, shown by the large gaps, in order to improve safety programs.
CSFs OF SAFETY PROGRAM IMPROVEMENT
There are a set of factors that have a great impact on the success of safety program implementation. In a business context, those factors are known as CSFs. CSFs can be defined as "areas in which results, if they were satisfactory, would ensure successful performance for the organization" (Rockart, 1979). Rungasamy et al. (2002) viewed CSFs as being essential to the success of any program, in the sense that, if objectives associated with the factors were not achieved, the program would probably fail catastrophically. Top (1991) and Michaud (1995) pointed out that a successful safety program can be measured by the amount or the extent of injuries to people; damage to equipment, machines and tools; damage to environment; loss of market share; damage to company image or brand name; increased productivity; etc. Based on extensive review of safety literature, there are 16 factors that are potentially essential to obtain improved safety programs such as follows.
Clear and realistic goals: Outstanding safety program results can be achieved when safety goals are clearly established (Pierce, 1995a). Safety goals should give a clear picture, direction, and focus for performing day-today activities in order to achieve desired results. When realistic and achievable goals are set up, the progress towards accomplishing such goals can be easily measured and monitored (Weber, 1992a; Blake, 1997).
Good communication: Vredenburgh (2002) stated that when the lines of communications between management and the workforce are open, workers can directly report unsafe working practices and hazardous conditions to management. Management can also communicate
safety concerns and priorities to gain employees' awareness and compliance (Stranks, 1994).
Delegation of authority and responsibility: A safety program cannot be successful if it is implemented by only one individual. Responsibility for accomplishing safety activities must be effectively delegated to individuals at lower levels of authority (Anton, 1989). Effective delegation involves granting adequate authority and assigning clear responsibility for performing specific tasks with enough resources, such as appropriate completion time, money, and cooperation of all involved individuals (Rue & Byars, 2001).
Sufficient resource allocation: The desired goal of a safety program cannot be achieved when resources are lacking. An effective safety program is the result of a commitment by top management to give an appropriate level of resources (Erikson, 1997). Management must consider and allocate sufficient resources to carry out day-to-day activities in order accomplish short and long-term goals. The resources required for an effective safety program may include sufficient staff, time, money, information, methods, facilities, tools machines, etc. (Rue & Byars, 2001).
Management support: It is strongly accepted that management plays a very important role in an effective safety program. Management must fully and actively turn ideas into actions. This includes issuing a written comprehensive safety policy, allocating sufficient necessary resources, promptly reacting to safety suggestions and complaints, attending regular safety meetings and training, regularly visiting the workplace, following the same safety rules as others, etc. (Stranks,
2000; Rowlinson, 2003).
Program evaluation: Every safety program should be periodically evaluated to see how successfully it meets its goals and objectives. When the actual operations of a safety program do not meet their defined goals, an evaluation process can help to identify the program's shortcomings so that improvements can be applied (Rowlinson, 2003).
Continuing participation of employees: The success of a safety program depends largely on the level of employee involvement because workers tend to support the activities that they helped to create. According to Ariss (2003) and Smith (2003), workers should be given opportunities to be involved in the design and operation of a safety program, such as joining a safety committee, reporting hazards and unsafe practices to supervisors, identifying training needs, investigating accidents, suggesting required personal protective equipment, etc.
Personal motivation: Although people have sufficient knowledge and skills to accomplish their jobs safely, unless they have motivation, they will not normally perform their work accordingly (Neal & Griffin, 2002). Johnson (2003) suggested that, in order to have a better safety record, all people in the workplace must be motivated to perform their jobs safely. Such motivation can include offering opportunities for achievement and recognition, additional responsibilities, rewards, and personal growth.
Personal competency: A successful safety program is a result of assigning the right person for the right job. The right person is defined as a person who is physically and mentally capable of carrying out the assigned tasks with the right knowledge, experience and skills (Mohamed, 2002).
Teamwork: According to Krause (1997) and Ulloa and Adams (2004), a safety program succeeds when everyone, regardless of rank or status within the company, realizes that accident prevention is everyone's responsibility. Every function must share responsibility in implementing safety activities in order to achieve the goals set by the team. Such goals can be planning and controlling work, handling day-to-day safety problems, etc.
Positive group norms: Group norms are the accepted attitudes about various things in a group of people (Stranks, 2000). In practice, Johnson (2003) explained that members of a group try to conform to accepted attitudes to avoid boycott from other members. If a positive group attitude towards safety can be built and embedded, safety can then be managed successfully.
Personal attitude: Attitude is a tendency to respond positively or negatively to certain people, objects or situations and is built up from experience (Stranks, 1994; Schultz, 2004). Individuals, however, differ in their perceptions of risk and willingness to take risks. A successful safety program can be achieved if a positive employee attitude towards safety is reinforced.
Effective enforcement scheme: Not conforming to safety rules is known as a violation (Pierce, 1995b). Violation can be countered with enforcement. Management must provide the methods for enforcing obedience to the safety rules and regulations. By providing an effective enforcement mechanism, management can achieve employee compliance (Construction Safety Association of Ontario, 2002).
Safety equipment acquisition and maintenance: The workplace must be carefully assessed to determine possible hazards in order to properly select safety equipment. An effective safety program will result in fewer injuries due to good management of safety equipment acquisition and maintenance. Managing a safety equipment program takes up a large percentage of time.
This includes purchasing the correct equipment, maintaining it in good condition, and inventory control. Moreover, it requires cooperation from a number of people: safety personnel, purchasing, production, warehouse supervisor, maintenance managers, etc. (Toole,
2002).
Appropriate supervision: A sound safety program requires employers to provide sufficient supervision in protecting workers from workplace hazards (Weber, 1992b; Levitt &
Samelson, 1993). Successful supervision requires competent personnel for assigning work according to worker's ability, praising workers when they perform their duties safely, communicating by listening and speaking, setting a good example by following safety rules and correcting safety problems (Stranks, 2000).
Appropriate safety education and training: A successful safety program can be achieved if all employees are given periodic educational and training programs to improve their knowledge and skill at workplace safety (Cooper & Cotton, 2000).
This study concluded that safety continues to be one of the major problems in the construction industry. To achieve better site safety performance, emphasis has been placed on implementing effective safety programs. His study identified 16 factors contributing to the improvement of safety programs and then evaluated their degrees of importance and actual status based upon the respondents' perceptions. The results of his study showed that all respondents rate management support as the most important factor, followed by appropriate safety education and training, teamwork, clear and realistic goals, and effective enforcement scheme. On the other hand, positive group norms and personal competency were perceived as the two least important factors. His study also showed that five CSFs, namely appropriate safety education and training, followed by clear and realistic goals, safety equipment acquisition and maintenance, delegation of authority and responsibility, and good communication, have better actual status amongst all factors. In other words, it is implied that these factors have been given appropriate consideration in construction sites. On the contrary, appropriate supervision and sufficient resource allocation were considered the factors with the poorest actual status. Thus, more effort must be made to improve the actual status of these two factors.
In light of his research, gap analysis was carried out to determine how to improve safety programs. This analysis suggested that larger gaps between degree of influence and actual status of success indicate more unsatisfactory practices. Thus, correcting the factors which have large gaps must be emphasized more strongly. His study also found that the first five critical problems of safety program implementation are management support, appropriate supervision, sufficient resource allocation, teamwork, and effective enforcement scheme. These five priority factors should be given more attention in order to achieve a satisfactory level. Meanwhile, there are five factors, namely delegation of authority and responsibility, good communication, clear and realistic goals, appropriate safety education and training, and safety equipment acquisition and maintenance, showing satisfactory practices as characterized by very small gaps.
This study was published in the “Journal of Construction in Developing Countries, Vol. 12, No. 1, 2007” and full journal article is available upon request.
Abstract is copied and posted.
Abstract: To improve construction site safety, emphasis has been placed on the implementation of safety programs. In order to successfully gain from safety programs, factors that affect their improvement need to be studied. Sixteen critical success factors of safety programs were identified from safety literature, and these were validated by safety experts. This study was undertaken by surveying 70 respondents from medium- and large-scale construction projects. It explored the importance and the actual status of critical success factors (CSFs). Gap analysis was used to examine the differences between the importance of these CSFs and their actual status. This study found that the most critical problems characterized by the largest gaps were management support, appropriate supervision, sufficient resource allocation, teamwork, and effective enforcement. Raising these priority factors to satisfactory levels would lead to successful safety programs, thereby minimizing accidents.
Keyword: Critical success factors, Safety programs, Safety management systems, Safety performance, Construction industry
Construction Engineering and Infrastructure Management, School of Civil
Engineering, Asian Institute of Technology, Pathumthani, THAILAND.
*Corresponding author: artty_th@yahoo.com
Due to its hazardous nature, construction is globally perceived as an accident-prone industry. It has always been reported that construction work has a very high rate of injuries and deaths. Therefore, there is a negative stereotype concerning safety in the construction industry. In recent years, in order to survive in a highly competitive market, many construction companies have begun considering safety to be one of the main factors in reducing costs associated with work-related accidents and injuries.
In Thailand, construction work is generally labor-intensive rather than technology-intensive. Most construction workers are farmers with low levels of education and skills. Many are seasonal workers who divide time between agriculture and construction. Consequently, the rapid expansion of construction work has brought a parallel increase in injuries to unskilled workers. The accident and injuries statistics from 2004 to 2005 showed that the construction industry had the highest rate of deaths, accounting for close to a hundred workers per year, and up to 20,000 workers have suffered minor injuries on sites every year (SSO, 2005). Unfortunately, it has always been higher than all other industries.
To eliminate construction-related accidents, implementation of safety program is regarded as a key strategy by both government and private sectors. Effective safety programs can substantially reduce accidents because they can help management to eliminate unsafe practices by workers and can also create safe working environments (Anton, 1989; Abdelhamid & Everett, 2000). Additionally, Henshaw (2004) stated that an effective safety program could result in a triple win; workers' lives would be saved and protected, cost would be reduced and returns on investments would be maximized, and workers' morale and motivation would be raised which, in turn, would result in the production of high quality products and services.
How can a safety program be improved? Several extended studies have been undertaken to spotlight key activities contributing to strong safety programs such as top management support, sufficient resource allocation, teamwork, worker involvement, etc. In business terms, the key factors are known as critical success factors (CSFs). If these key activities are not implemented successfully, safety programs may fail miserably. Safety researchers have acknowledged and confirmed that safety program performance depends largely upon the satisfactory results of a number of key activities or CSFs. Although the connection between safety programs and safety performance has already been studied extensively, very little research has been undertaken to provide the construction industry with practical guidelines to improve safety programs.
Mr. Thanet Aksorn under Dr. B. H. W. Hadikusumo, his advisor, made a study which aimed at identifying the critical factors affecting the improvement of safety programs from safety literature and previous research and at evaluating these success factors in order to rank the urgency of improving them. To obtain these rankings, gap analysis was carried out to measure the difference between the degree of importance of CSFs and the actual status of CSFs. The results of the study can help the construction industry to identify and improve the high priority CSFs, shown by the large gaps, in order to improve safety programs.
CSFs OF SAFETY PROGRAM IMPROVEMENT
There are a set of factors that have a great impact on the success of safety program implementation. In a business context, those factors are known as CSFs. CSFs can be defined as "areas in which results, if they were satisfactory, would ensure successful performance for the organization" (Rockart, 1979). Rungasamy et al. (2002) viewed CSFs as being essential to the success of any program, in the sense that, if objectives associated with the factors were not achieved, the program would probably fail catastrophically. Top (1991) and Michaud (1995) pointed out that a successful safety program can be measured by the amount or the extent of injuries to people; damage to equipment, machines and tools; damage to environment; loss of market share; damage to company image or brand name; increased productivity; etc. Based on extensive review of safety literature, there are 16 factors that are potentially essential to obtain improved safety programs such as follows.
Clear and realistic goals: Outstanding safety program results can be achieved when safety goals are clearly established (Pierce, 1995a). Safety goals should give a clear picture, direction, and focus for performing day-today activities in order to achieve desired results. When realistic and achievable goals are set up, the progress towards accomplishing such goals can be easily measured and monitored (Weber, 1992a; Blake, 1997).
Good communication: Vredenburgh (2002) stated that when the lines of communications between management and the workforce are open, workers can directly report unsafe working practices and hazardous conditions to management. Management can also communicate
safety concerns and priorities to gain employees' awareness and compliance (Stranks, 1994).
Delegation of authority and responsibility: A safety program cannot be successful if it is implemented by only one individual. Responsibility for accomplishing safety activities must be effectively delegated to individuals at lower levels of authority (Anton, 1989). Effective delegation involves granting adequate authority and assigning clear responsibility for performing specific tasks with enough resources, such as appropriate completion time, money, and cooperation of all involved individuals (Rue & Byars, 2001).
Sufficient resource allocation: The desired goal of a safety program cannot be achieved when resources are lacking. An effective safety program is the result of a commitment by top management to give an appropriate level of resources (Erikson, 1997). Management must consider and allocate sufficient resources to carry out day-to-day activities in order accomplish short and long-term goals. The resources required for an effective safety program may include sufficient staff, time, money, information, methods, facilities, tools machines, etc. (Rue & Byars, 2001).
Management support: It is strongly accepted that management plays a very important role in an effective safety program. Management must fully and actively turn ideas into actions. This includes issuing a written comprehensive safety policy, allocating sufficient necessary resources, promptly reacting to safety suggestions and complaints, attending regular safety meetings and training, regularly visiting the workplace, following the same safety rules as others, etc. (Stranks,
2000; Rowlinson, 2003).
Program evaluation: Every safety program should be periodically evaluated to see how successfully it meets its goals and objectives. When the actual operations of a safety program do not meet their defined goals, an evaluation process can help to identify the program's shortcomings so that improvements can be applied (Rowlinson, 2003).
Continuing participation of employees: The success of a safety program depends largely on the level of employee involvement because workers tend to support the activities that they helped to create. According to Ariss (2003) and Smith (2003), workers should be given opportunities to be involved in the design and operation of a safety program, such as joining a safety committee, reporting hazards and unsafe practices to supervisors, identifying training needs, investigating accidents, suggesting required personal protective equipment, etc.
Personal motivation: Although people have sufficient knowledge and skills to accomplish their jobs safely, unless they have motivation, they will not normally perform their work accordingly (Neal & Griffin, 2002). Johnson (2003) suggested that, in order to have a better safety record, all people in the workplace must be motivated to perform their jobs safely. Such motivation can include offering opportunities for achievement and recognition, additional responsibilities, rewards, and personal growth.
Personal competency: A successful safety program is a result of assigning the right person for the right job. The right person is defined as a person who is physically and mentally capable of carrying out the assigned tasks with the right knowledge, experience and skills (Mohamed, 2002).
Teamwork: According to Krause (1997) and Ulloa and Adams (2004), a safety program succeeds when everyone, regardless of rank or status within the company, realizes that accident prevention is everyone's responsibility. Every function must share responsibility in implementing safety activities in order to achieve the goals set by the team. Such goals can be planning and controlling work, handling day-to-day safety problems, etc.
Positive group norms: Group norms are the accepted attitudes about various things in a group of people (Stranks, 2000). In practice, Johnson (2003) explained that members of a group try to conform to accepted attitudes to avoid boycott from other members. If a positive group attitude towards safety can be built and embedded, safety can then be managed successfully.
Personal attitude: Attitude is a tendency to respond positively or negatively to certain people, objects or situations and is built up from experience (Stranks, 1994; Schultz, 2004). Individuals, however, differ in their perceptions of risk and willingness to take risks. A successful safety program can be achieved if a positive employee attitude towards safety is reinforced.
Effective enforcement scheme: Not conforming to safety rules is known as a violation (Pierce, 1995b). Violation can be countered with enforcement. Management must provide the methods for enforcing obedience to the safety rules and regulations. By providing an effective enforcement mechanism, management can achieve employee compliance (Construction Safety Association of Ontario, 2002).
Safety equipment acquisition and maintenance: The workplace must be carefully assessed to determine possible hazards in order to properly select safety equipment. An effective safety program will result in fewer injuries due to good management of safety equipment acquisition and maintenance. Managing a safety equipment program takes up a large percentage of time.
This includes purchasing the correct equipment, maintaining it in good condition, and inventory control. Moreover, it requires cooperation from a number of people: safety personnel, purchasing, production, warehouse supervisor, maintenance managers, etc. (Toole,
2002).
Appropriate supervision: A sound safety program requires employers to provide sufficient supervision in protecting workers from workplace hazards (Weber, 1992b; Levitt &
Samelson, 1993). Successful supervision requires competent personnel for assigning work according to worker's ability, praising workers when they perform their duties safely, communicating by listening and speaking, setting a good example by following safety rules and correcting safety problems (Stranks, 2000).
Appropriate safety education and training: A successful safety program can be achieved if all employees are given periodic educational and training programs to improve their knowledge and skill at workplace safety (Cooper & Cotton, 2000).
This study concluded that safety continues to be one of the major problems in the construction industry. To achieve better site safety performance, emphasis has been placed on implementing effective safety programs. His study identified 16 factors contributing to the improvement of safety programs and then evaluated their degrees of importance and actual status based upon the respondents' perceptions. The results of his study showed that all respondents rate management support as the most important factor, followed by appropriate safety education and training, teamwork, clear and realistic goals, and effective enforcement scheme. On the other hand, positive group norms and personal competency were perceived as the two least important factors. His study also showed that five CSFs, namely appropriate safety education and training, followed by clear and realistic goals, safety equipment acquisition and maintenance, delegation of authority and responsibility, and good communication, have better actual status amongst all factors. In other words, it is implied that these factors have been given appropriate consideration in construction sites. On the contrary, appropriate supervision and sufficient resource allocation were considered the factors with the poorest actual status. Thus, more effort must be made to improve the actual status of these two factors.
In light of his research, gap analysis was carried out to determine how to improve safety programs. This analysis suggested that larger gaps between degree of influence and actual status of success indicate more unsatisfactory practices. Thus, correcting the factors which have large gaps must be emphasized more strongly. His study also found that the first five critical problems of safety program implementation are management support, appropriate supervision, sufficient resource allocation, teamwork, and effective enforcement scheme. These five priority factors should be given more attention in order to achieve a satisfactory level. Meanwhile, there are five factors, namely delegation of authority and responsibility, good communication, clear and realistic goals, appropriate safety education and training, and safety equipment acquisition and maintenance, showing satisfactory practices as characterized by very small gaps.
This study was published in the “Journal of Construction in Developing Countries, Vol. 12, No. 1, 2007” and full journal article is available upon request.
Abstract is copied and posted.
Abstract: To improve construction site safety, emphasis has been placed on the implementation of safety programs. In order to successfully gain from safety programs, factors that affect their improvement need to be studied. Sixteen critical success factors of safety programs were identified from safety literature, and these were validated by safety experts. This study was undertaken by surveying 70 respondents from medium- and large-scale construction projects. It explored the importance and the actual status of critical success factors (CSFs). Gap analysis was used to examine the differences between the importance of these CSFs and their actual status. This study found that the most critical problems characterized by the largest gaps were management support, appropriate supervision, sufficient resource allocation, teamwork, and effective enforcement. Raising these priority factors to satisfactory levels would lead to successful safety programs, thereby minimizing accidents.
Keyword: Critical success factors, Safety programs, Safety management systems, Safety performance, Construction industry
Construction Engineering and Infrastructure Management, School of Civil
Engineering, Asian Institute of Technology, Pathumthani, THAILAND.
*Corresponding author: artty_th@yahoo.com
Tuesday, 10 November 2009
Cost Management Behaviour Under Cost Overruns of Japanese and Thai Construction Companies
Generally, the basic objective of a construction project is to implement the project on time within reliable budget and meet required quality. From the contractors’ point of view, cost control is an extremely important aspect because it is conducted to ensure that the project costs are monitored and kept within the project’s objectives and company’s requirements. Therefore, the contractors have to pay attention to it in order to maximize profit.
However, most of Thai construction companies are still facing with cost overrun and competitiveness nowadays. Previous study by Charoenngam and Sriprasert (2001) found that one reason is cost control systems are unsystematic and ineffective cost information management. Lack of reliable data, ineffective planning, insufficiency of updated data, or ineffective cost management is also critical problem that can lead to cost overruns (Construction Management Committee, 1999). Moreover, several project managers in several projects are incompetent in order to bring successful project within a given budget. Many companies have to face with untimely and meaningless cost status so that project managers cannot make correct decision and take corrective actions. It means that if management does not receive accurate information timely, right decision making will not be effective. As a result, productivity improvement cannot be attained.
Not only internal factors can lead cost overruns but also companies still face with several uncontrollable external factors such as oil price, market conditions, and interest rates. These factors affect project costs that may lead to cost overruns if lack of appropriate cost information management. Furthermore, continuous cost overrun in most of the projects of a company can lead to bankruptcy. Up to now, both inefficient cost information management and uncertain variables factors still are the problems affecting cost overruns in construction companies. In order to control high project cost and accomplish profit maximization, it is necessary to understand the current cost information management and manage problems occurring.
In Thailand, there are several ongoing projects that are managed by Japanese companies. Therefore, Japanese company has much influence to construction industry in Thailand. Moreover, when Japanese companies go and invest in any countries, they bring their culture, organization and management to that country. It is interesting to understand the cost management behavior in situation of cost overruns of Japanese construction companies and Thai construction firms. Therefore, the reactions under each management behavior of both Japanese and Thai firms are generated. Moreover, key factors influencing same or different reaction of both two groups will be understand.
Ms. Narumon Jongcharoensub made a study to understand the key parameters that influencing the same or different reaction of Japanese and Thai construction firms. Her study objectives were to (1) identify key factors affecting the cost management in each stage, warning, detection, analysis, and corrective action; (2) investigate the existing practice of cost overruns management in order to understand the management behavior especially the difference between Japanese and Thai construction companies; and (3) propose recommendation for improving of cost overruns management.
Ms. Jongcharoensub found out that cost management behavior under cost overruns consists of four stages wherein each stage has different key factors that make difference or similar behavior and reaction. These are:
Warning stage where the key factors are purchasing requisition procedures, sub-contractor payment procedure.
Detection stage where the key factors are cost detection style, timeliness to detect cost overruns, accuracy of cost overruns.
Analysis/ reporting stage where the key factors are ability to identify cause of overruns, ability to recheck cause of overruns, ability to forecasts cost at completion; .and
Corrective action stage where the key factors are flexible of corrective action, project manager’s behavior, feedback’s evaluation by project manager
Her research revealed that the companies’ strategies vary from one group to other, thus companies’ behaviors about cost management are also different. The Japanese companies try to put customers’ satisfaction as the top target whereas mostly medium-scale Thai companies concentrate on the cost. On the other hand, the large-scale Thai companies are in the middle. They try to trade off and balance between project cost and customer’s satisfaction. The differences in companies’ strategies make the cost management in Japanese companies and large scale Thai companies vary even though they are quite similar in cost management system. The research also found that the companies’ performance and project’s cost management in Japanese are the best while the small-scale companies are in the opposite side.
Key factors that affect cost management behavior in each stage
The similarity of Japanese and Thai (L) companies
The key factors appear in Japanese and Thai (L) is quite similar and the only difference in cost management is the company strategy which is the way manager does on-site. Since owner’s satisfaction is the most concern of Japanese companies, they always follow the owner and do not care in cost especially in urgent situation. Another difference is manager’s behavior. Japanese project manager will not blame the project team in the meeting, but he will call the staff who did mistake to discuss about cause and reason of that problem. This way is motivate the staff who did mistake in order to correct it. On the other hand, project manager from Thai (L) companies blame the staff who did the mistake in the meeting. Moreover, blaming with negative pressure is generated in Thai (L) companies. It discourages the staff who did mistake and indication to other staff to avoid mistake.
The difference of Japanese, Thai (L) and Thai (M) companies
From the findings, most of cost overrun management in Thai (M) companies are quite different. Medium Thai companies still have not got the factors that appear to be positive factor in cost management as follows:
Cost detection is centralized and Timeliness to detect cost overruns
On-site analysis is identified only cost overruns from quantity. Project manager or project engineer cannot save cost or minimize cost overruns at a given progress. This result affects the Timeliness to detect cost overruns which is one factor influences to minimize or prevent cost overruns. Cost overruns from excessive unit price will be known at nearly the end of project. Therefore, cost overruns are not handled at the beginning. Most of Thai (M) companies do not allow site personnel to know and manage cost on –site. This process will not motivate site personnel in cost control. Project manager and project engineer know only cost overrun in term of excessive quantity. This is the indirect way to know cost status but the real actual cost is not recognized from site personnel. However, cost detection is not decentralized in Thai (M) companies because corruption may be occurred. Moreover, money in Thai (M) companies is not much so they cannot give authority to personnel on-site. At this point, corruption is occurred in most of Japanese and Thai (L) companies when cost detection is decentralized. However, the amount of corruption compares with amount of profit is too little. Moreover, Japanese and Thai (L) companies cannot detect cost overruns by centralized because there are a lot of projects.
Timeliness to input data
Accuracy of cost overruns affects analytical cost overruns in term of identifying cause of overrun and the way to take corrective action. All companies, even Japanese, Thai (L), or Thai (M) companies obstruct with accuracy of cost overruns from human behavior. Since the attention and responsibilities of their staffs is limited. Most of staffs always wait to input collected data until report submitting. Therefore, many collected data is not accurate enough for project manager/ site manager to analyze.
Moreover, manipulating to cover up staff’s mistakes is always occurring from all of Japanese, Thai (L), or Thai (M) companies. Although, Japanese and Thai (L) companies still have quite sufficient form of collecting data and clear procedure for working, collected data always inaccurate and insufficient. Furthermore, inaccurate of cost overruns will also affect forecasting cost at completion. If amount of cost overruns are inaccurate so much, clear direction to correct the problems cannot be identified.
Her thesis abstract is copied and posted.
ABSTRACT
In order to maximize profit, cost control is an extremely important aspect because it is conducted to ensure that the project costs are monitored and kept within the project’s objectives and company’s requirements. However, cost overruns are still becoming common problems in the construction industry nowadays. Cost overruns create financial risk to both general contractors and owners. Moreover, Japanese companies have much influence to construction industry in Thailand and many projects on hand are managed by Japanese companies. Therefore, it is important to have a study on cost management behavior.
The purpose of this study was conducted to: 1) identify key factors affecting the cost management in each stage, warning, detection, analysis/ reporting, and corrective action., 2) investigate existing cost management practice in order to understand the behavior, reaction, and key parameters affecting different reaction between Japanese and Thai companies, and 3) To propose recommendation for improving of cost overruns management.
The data was collected from interview surveys in large scale projects of 3 groups consisting of Japanese companies, large scale Thai companies, and medium scale Thai companies. There were 3 companies conducted in each groups. The target group of this research is project managers, project engineers, site engineers. The findings were already discussed in detail and recommendations for improvement of cost overrun management were propose in this study.
However, most of Thai construction companies are still facing with cost overrun and competitiveness nowadays. Previous study by Charoenngam and Sriprasert (2001) found that one reason is cost control systems are unsystematic and ineffective cost information management. Lack of reliable data, ineffective planning, insufficiency of updated data, or ineffective cost management is also critical problem that can lead to cost overruns (Construction Management Committee, 1999). Moreover, several project managers in several projects are incompetent in order to bring successful project within a given budget. Many companies have to face with untimely and meaningless cost status so that project managers cannot make correct decision and take corrective actions. It means that if management does not receive accurate information timely, right decision making will not be effective. As a result, productivity improvement cannot be attained.
Not only internal factors can lead cost overruns but also companies still face with several uncontrollable external factors such as oil price, market conditions, and interest rates. These factors affect project costs that may lead to cost overruns if lack of appropriate cost information management. Furthermore, continuous cost overrun in most of the projects of a company can lead to bankruptcy. Up to now, both inefficient cost information management and uncertain variables factors still are the problems affecting cost overruns in construction companies. In order to control high project cost and accomplish profit maximization, it is necessary to understand the current cost information management and manage problems occurring.
In Thailand, there are several ongoing projects that are managed by Japanese companies. Therefore, Japanese company has much influence to construction industry in Thailand. Moreover, when Japanese companies go and invest in any countries, they bring their culture, organization and management to that country. It is interesting to understand the cost management behavior in situation of cost overruns of Japanese construction companies and Thai construction firms. Therefore, the reactions under each management behavior of both Japanese and Thai firms are generated. Moreover, key factors influencing same or different reaction of both two groups will be understand.
Ms. Narumon Jongcharoensub made a study to understand the key parameters that influencing the same or different reaction of Japanese and Thai construction firms. Her study objectives were to (1) identify key factors affecting the cost management in each stage, warning, detection, analysis, and corrective action; (2) investigate the existing practice of cost overruns management in order to understand the management behavior especially the difference between Japanese and Thai construction companies; and (3) propose recommendation for improving of cost overruns management.
Ms. Jongcharoensub found out that cost management behavior under cost overruns consists of four stages wherein each stage has different key factors that make difference or similar behavior and reaction. These are:
Warning stage where the key factors are purchasing requisition procedures, sub-contractor payment procedure.
Detection stage where the key factors are cost detection style, timeliness to detect cost overruns, accuracy of cost overruns.
Analysis/ reporting stage where the key factors are ability to identify cause of overruns, ability to recheck cause of overruns, ability to forecasts cost at completion; .and
Corrective action stage where the key factors are flexible of corrective action, project manager’s behavior, feedback’s evaluation by project manager
Her research revealed that the companies’ strategies vary from one group to other, thus companies’ behaviors about cost management are also different. The Japanese companies try to put customers’ satisfaction as the top target whereas mostly medium-scale Thai companies concentrate on the cost. On the other hand, the large-scale Thai companies are in the middle. They try to trade off and balance between project cost and customer’s satisfaction. The differences in companies’ strategies make the cost management in Japanese companies and large scale Thai companies vary even though they are quite similar in cost management system. The research also found that the companies’ performance and project’s cost management in Japanese are the best while the small-scale companies are in the opposite side.
Key factors that affect cost management behavior in each stage
The similarity of Japanese and Thai (L) companies
The key factors appear in Japanese and Thai (L) is quite similar and the only difference in cost management is the company strategy which is the way manager does on-site. Since owner’s satisfaction is the most concern of Japanese companies, they always follow the owner and do not care in cost especially in urgent situation. Another difference is manager’s behavior. Japanese project manager will not blame the project team in the meeting, but he will call the staff who did mistake to discuss about cause and reason of that problem. This way is motivate the staff who did mistake in order to correct it. On the other hand, project manager from Thai (L) companies blame the staff who did the mistake in the meeting. Moreover, blaming with negative pressure is generated in Thai (L) companies. It discourages the staff who did mistake and indication to other staff to avoid mistake.
The difference of Japanese, Thai (L) and Thai (M) companies
From the findings, most of cost overrun management in Thai (M) companies are quite different. Medium Thai companies still have not got the factors that appear to be positive factor in cost management as follows:
Cost detection is centralized and Timeliness to detect cost overruns
On-site analysis is identified only cost overruns from quantity. Project manager or project engineer cannot save cost or minimize cost overruns at a given progress. This result affects the Timeliness to detect cost overruns which is one factor influences to minimize or prevent cost overruns. Cost overruns from excessive unit price will be known at nearly the end of project. Therefore, cost overruns are not handled at the beginning. Most of Thai (M) companies do not allow site personnel to know and manage cost on –site. This process will not motivate site personnel in cost control. Project manager and project engineer know only cost overrun in term of excessive quantity. This is the indirect way to know cost status but the real actual cost is not recognized from site personnel. However, cost detection is not decentralized in Thai (M) companies because corruption may be occurred. Moreover, money in Thai (M) companies is not much so they cannot give authority to personnel on-site. At this point, corruption is occurred in most of Japanese and Thai (L) companies when cost detection is decentralized. However, the amount of corruption compares with amount of profit is too little. Moreover, Japanese and Thai (L) companies cannot detect cost overruns by centralized because there are a lot of projects.
Timeliness to input data
Accuracy of cost overruns affects analytical cost overruns in term of identifying cause of overrun and the way to take corrective action. All companies, even Japanese, Thai (L), or Thai (M) companies obstruct with accuracy of cost overruns from human behavior. Since the attention and responsibilities of their staffs is limited. Most of staffs always wait to input collected data until report submitting. Therefore, many collected data is not accurate enough for project manager/ site manager to analyze.
Moreover, manipulating to cover up staff’s mistakes is always occurring from all of Japanese, Thai (L), or Thai (M) companies. Although, Japanese and Thai (L) companies still have quite sufficient form of collecting data and clear procedure for working, collected data always inaccurate and insufficient. Furthermore, inaccurate of cost overruns will also affect forecasting cost at completion. If amount of cost overruns are inaccurate so much, clear direction to correct the problems cannot be identified.
Her thesis abstract is copied and posted.
ABSTRACT
In order to maximize profit, cost control is an extremely important aspect because it is conducted to ensure that the project costs are monitored and kept within the project’s objectives and company’s requirements. However, cost overruns are still becoming common problems in the construction industry nowadays. Cost overruns create financial risk to both general contractors and owners. Moreover, Japanese companies have much influence to construction industry in Thailand and many projects on hand are managed by Japanese companies. Therefore, it is important to have a study on cost management behavior.
The purpose of this study was conducted to: 1) identify key factors affecting the cost management in each stage, warning, detection, analysis/ reporting, and corrective action., 2) investigate existing cost management practice in order to understand the behavior, reaction, and key parameters affecting different reaction between Japanese and Thai companies, and 3) To propose recommendation for improving of cost overruns management.
The data was collected from interview surveys in large scale projects of 3 groups consisting of Japanese companies, large scale Thai companies, and medium scale Thai companies. There were 3 companies conducted in each groups. The target group of this research is project managers, project engineers, site engineers. The findings were already discussed in detail and recommendations for improvement of cost overrun management were propose in this study.
Monday, 9 November 2009
The Practices of Thai Contractors in Cross Border Procurement
During the end of the 20th century, many accomplishments of multilateral trade diplomacy were established. The effect of globalization has brought a new trend in trading and has much changed the world economy. Presently, the share of services in the world-wide economy has expanded greatly. Since the establishment of the GATT (General Agreement on Tariffs and Trade) in 1947, it has generally been considered a success in reducing tariffs and increasing trade volumes around the world. The finalization of the Uruguay round of the General Agreement on Tariffs and Trade (GATT) 1994 and the establishment of the World Trade Organization (WTO) has further enhance the movement to trade liberalization. Since then many trade agreements consisting of bilateral and multilateral have been formed until today. As an emerging country, Thailand is not far behind. Until the year 2006, Thailand has formed many FTA’s with other countries.
FTA offers not only opportunity but also threat especially to those local construction companies. For those companies who understand the importance of integrating FTA and the supply chain, they strive in aligning their strategies towards that direction. They will then partake the benefits and gain competitive advantage. As FTA is unavoidable, companies that fail to evolve will loose their competitive edge. This has made it difficult for construction companies to align their strategies for the future.
Another problem faced by Thai contractors these days is the fear of going global. Most contractors fear the risk and do not understand the procedures involved in global procurement which put them to a disadvantage situation.
Mr. Arasavindiran Mariappan made a research which aimed to find out how construction companies can improve their strategies and competitiveness with relations to globalization especially FTA. The focal point of his research was large scale contractors. His objectives were to (1) develop a supply chain framework showing different participants in construction service; (2) survey the perception of large scale contractors in terms of their procurement practices and flow of materials, equipment and labor globally; (3) identify the mechanisms affecting the global procurement practices and analyze the relationship affecting the parties of the supply chain; and (4) propose guidelines for construction companies to align their strategies towards competing in international trade and gain benefit from the FTA phenomenon.
Based on the analysis of cases, several trade mechanisms were identified that allowed free flow of materials, equipment and labor. Although the general FTA parameters were initially identified from literatures, a detailed screening was done to get an in depth information of all the existing mechanisms. After a thorough analysis of each case, the impact of each mechanism on the cases was identified. Analysis shows some mechanism giving benefit and some not. He found out that each mechanism can contribute to the benefit of the contractor or otherwise give disadvantage to them. This is because in order for the mechanism to function depends on the country of project being undertaken and also other parties in the supply chain such as the supplier, the bank and the freight company. In order to conclude this study, a proposed guideline was constructed to help Thai contractors with global procuring in their mind. This guideline is meant to assist them in assessing all the possible impact from each participating party so that a strategic for procuring international project can be created.
The Road towards Globalization
The road toward globalization is never a smooth path. Most contractors learned the hard way in order to grasp the true benefit or FTA and the use of each mechanism. One of the interview respondent stated that 5 years ago, the Letter of Credit (L/C) was not know by contractors. Today it has become an important mechanism for transaction and a driving mechanism for easier flow of materials and better finance. Many contractors before fear of exploring the global market because of the many risk involved. Those who dare are mainly large scale contractors. Times are changing, contractors nowadays are slowly moving towards globalization due to tight competition and untapped advantages in the global market.
Another driving force for contractors is the recent trade agreements between Thailand and other countries. For the years to come, many more trade agreements will exist and Thai contractors will be force to join the global market or lose competitiveness.
His thesis abstract is copied and posted.
ABSTRACT
The shift of procurement methods in the construction industry is inevitable as Thailand moves towards globalization. Many contractors are slowly shifting their mindset towards the global market. Nevertheless, some contractors are still keeping their legs crossed because of fear and the risk involved in global procurement. This study aims to identify and analyze the mechanism that affects the free flow of materials, labor and equipment into other countries. The result of this study proposed useful guidelines for contractor in procuring oversea projects in terms of material, labor and equipment. In the analysis, the researcher found out that effect of each mechanism on the parties can be different according to case. This is because in order for the mechanism to function depends on the country of project being undertaken and also other parties in the supply chain such as the supplier, the bank and the freight company. The study is concluded by proposing some guidelines for contractors to check and measure when procuring international project. This model is done based on free trade mechanisms of the analyzed cases. To make a sound decision, the contractor should also consider other important factors such as cost, time, distance, political conditions and others.
FTA offers not only opportunity but also threat especially to those local construction companies. For those companies who understand the importance of integrating FTA and the supply chain, they strive in aligning their strategies towards that direction. They will then partake the benefits and gain competitive advantage. As FTA is unavoidable, companies that fail to evolve will loose their competitive edge. This has made it difficult for construction companies to align their strategies for the future.
Another problem faced by Thai contractors these days is the fear of going global. Most contractors fear the risk and do not understand the procedures involved in global procurement which put them to a disadvantage situation.
Mr. Arasavindiran Mariappan made a research which aimed to find out how construction companies can improve their strategies and competitiveness with relations to globalization especially FTA. The focal point of his research was large scale contractors. His objectives were to (1) develop a supply chain framework showing different participants in construction service; (2) survey the perception of large scale contractors in terms of their procurement practices and flow of materials, equipment and labor globally; (3) identify the mechanisms affecting the global procurement practices and analyze the relationship affecting the parties of the supply chain; and (4) propose guidelines for construction companies to align their strategies towards competing in international trade and gain benefit from the FTA phenomenon.
Based on the analysis of cases, several trade mechanisms were identified that allowed free flow of materials, equipment and labor. Although the general FTA parameters were initially identified from literatures, a detailed screening was done to get an in depth information of all the existing mechanisms. After a thorough analysis of each case, the impact of each mechanism on the cases was identified. Analysis shows some mechanism giving benefit and some not. He found out that each mechanism can contribute to the benefit of the contractor or otherwise give disadvantage to them. This is because in order for the mechanism to function depends on the country of project being undertaken and also other parties in the supply chain such as the supplier, the bank and the freight company. In order to conclude this study, a proposed guideline was constructed to help Thai contractors with global procuring in their mind. This guideline is meant to assist them in assessing all the possible impact from each participating party so that a strategic for procuring international project can be created.
The Road towards Globalization
The road toward globalization is never a smooth path. Most contractors learned the hard way in order to grasp the true benefit or FTA and the use of each mechanism. One of the interview respondent stated that 5 years ago, the Letter of Credit (L/C) was not know by contractors. Today it has become an important mechanism for transaction and a driving mechanism for easier flow of materials and better finance. Many contractors before fear of exploring the global market because of the many risk involved. Those who dare are mainly large scale contractors. Times are changing, contractors nowadays are slowly moving towards globalization due to tight competition and untapped advantages in the global market.
Another driving force for contractors is the recent trade agreements between Thailand and other countries. For the years to come, many more trade agreements will exist and Thai contractors will be force to join the global market or lose competitiveness.
His thesis abstract is copied and posted.
ABSTRACT
The shift of procurement methods in the construction industry is inevitable as Thailand moves towards globalization. Many contractors are slowly shifting their mindset towards the global market. Nevertheless, some contractors are still keeping their legs crossed because of fear and the risk involved in global procurement. This study aims to identify and analyze the mechanism that affects the free flow of materials, labor and equipment into other countries. The result of this study proposed useful guidelines for contractor in procuring oversea projects in terms of material, labor and equipment. In the analysis, the researcher found out that effect of each mechanism on the parties can be different according to case. This is because in order for the mechanism to function depends on the country of project being undertaken and also other parties in the supply chain such as the supplier, the bank and the freight company. The study is concluded by proposing some guidelines for contractors to check and measure when procuring international project. This model is done based on free trade mechanisms of the analyzed cases. To make a sound decision, the contractor should also consider other important factors such as cost, time, distance, political conditions and others.
Thursday, 5 November 2009
Dr Shamaz joined UNSW
Dr Shamaz-Ur-Rehman Toor has joined UNSW as faculty member in the School of Built Environment.
http://www.fbe.unsw.edu.au/staff/shamas.toor/
Congratulations for your excellent achievement!
Regards
Hadikusumo
http://www.fbe.unsw.edu.au/staff/shamas.toor/
Congratulations for your excellent achievement!
Regards
Hadikusumo
Riza Yosia received PhD scholarship from UNSW
Good morning
I have a good news to share with you that Mr Riza Yosia is now pursuing his PhD in UNSW. He receives full scholarship from UNSW.
Regards
Hadikusumo
I have a good news to share with you that Mr Riza Yosia is now pursuing his PhD in UNSW. He receives full scholarship from UNSW.
Regards
Hadikusumo
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