An Evaluation Of Client Roles In Projects Procured Through The Traditional Construction Process In HoChiMinh City, Vietnam

For centuries, the construction industry is one of the biggest industries worldwide. Being such a large industry, it has played a pivotal role in the socio-economic development of all nations. Its role ranges from providing infrastructure support to factors of production for other sectors of the economy. In addition, physical objects generated such as infrastructure facilities, roads, bridges, buildings, houses, etc in the construction industry have effects on other industries as a chain of economic activities.

After the economic crisis happening in Asian countries as well as the open-door policy, construction industry in Vietnam has developed considerably in advantage manner of political and fiscal climates. Since then, the need of establishing infrastructure and changing orientation in construction industry to appeal both foreign investment and domestic investors is a major factor of national economic growth. On the other hand, the development flow of project management technique has push construction industry in emergency activities to keep abreast of the customer’s needs and sustain in construction competition circumstances.

As a developing country, Vietnam has changed it’s centrally plumed economy to a market economy with annual index of GDP growth between 7 – 8% in the period of 2000 to 2005 (statistical office in Hochiminh City, 2006). During this process there are many mutual influences among different industries especially in construction industry, the tight relationship between economy development and construction due to positive reforms of policy, social, and economical trends. In current context the construction industry in Vietnam has been developed so fast. The competition of reward projects happening in various areas where potential construction projects are still the demand of investors.

Obviously, the involvement between the many parties in a construction project such as clients, consultants, contractors, subcontractors, and suppliers (Cherns and Bryant, 1984) has exposed many uncertainties and problems associated with the relationship between these parties. As a result, increasing cost, late completions, poor quality, and high accident rates in project activities are usually seen in construction project. The roles and their project management approach can have significant effects upon the attainment of the project objectives from the viewpoints of all the parties involved in the project (Kometa, Olomolaiye, and Harris, 1995).

Many researchers have written on client’s influences in construction projects. For instance, poor project definition/formulation by the client may result in a successful project irrespective of the other parties’ performance. Also, payment delays by clients cause cash flow problems to consulting firms which in the worse possible case may lead to bankruptcy. At the present, the enormous importance of client’s roles that brings success in project performance and outcome in Vietnam is not yet implemented. For that reason, a comprehensive study on these responsibilities of client is actually essential in the construction industry in Vietnam. If both client and the other parties understand the fundamental roles of construction clients and if clients themselves are prepare to take an active role in the construction process, the chances of producing more successful projects will improve as well as the project management in mutual activities among parties will be more efficient.

Mr. Tran Tan Tin made a study which purpose is to discover the leading roles, particularly in design and construction stage by project client in Vietnamese construction industry. These factors were proven influence directly on project performance management in terms of construction duration, cost, quality and outcome from the viewpoint of three main parties, i.e. stated-owners, contractors, and designers, and present a suitable recommendation to mutual operations among parties.

The client may pose risks to project designers and civil contractors by not adequately performing their responsibilities. Active involvement of the client in projects will impact upon the performance, success of the projects and will reflect on the performance of the construction industry in general. For the purpose of understanding, the following specific objectives need to be accomplished:

- identify common public roles in construction process for the civil construction projects with traditional method in the Vietnamese construction industry,
- Explore and rank the major roles of client that having significant influences on other parties (designer and contractor) by stated-owner, designer, and contractor’s perspective respectively,
- classify critical client’s roles in perception and mutual relationship among parties,
- propose recommendations for improving mutual objectives and operations between stated-owners and contractors, designers.

Conclusions

Ranking and perceptive comparison among involved parties

Three parties, namely stated-owner, designer, and contractor were involved in this study as independent samples with 31, 29, 29 respondents, respectively. The relative importance values were carried out to determine and rank the fifty-two common important roles of the client grouped under ten fundamental categories related to project definition, planning and design, politics-social factors, schedule urgency, schedule duration, finance, legal agreement, contracting, project implementation, and human factors in term of the degree of importance.

The overall perception on the client’s roles in construction process by the stated-owner and the other parties were not the same. There were disagreements on the ranking of the common importance factors in construction process. The different parties’ nature is the main cause of the various perceptions among them. Each party, normally, has a set of objectives and establishes plans in advance as the guideline performing and cooperating with other partners. Additionally, it is often seen that in project character the period of involvement of parties is also different. Stated-owners take part in the project process from the beginning to the end while designers have much interact in design stage and less interfere in construction stage and contractors only participant after bidding progress finished. A quite different perception of the client’s role among parties due to mentioned natures is common in construction business.

Classifying critical roles of the client among construction project parties

The analysis procedure was carried out to identify the critical roles of the client among involved parties divided into two groups in which first group comprised stated-owner and designer and the other was comprised of stated-owner and contractor. By applied the expected frequency and Chi-square test, common deduction process was done to extract inappropriate factors that not have the same agreement between two parties. After that remains were classified into three important categories namely high, moderate, and low importance in which important factors in high importance category are seen as critical important roles of the client in construction process affected directly on interactions and performance between parties. The results obtained from classification for each group is presented as follow:

In first group, the four inappropriate factors in agreement between stated-owner and designer are: (1) Using flexible design philosophies where possible, (2) Beware the impact on full discussion by all parties, (3) Beware exchange rate movements, and (4) Recognizing and demonstrating the importance of effective leadership.

On the other hand, the nine critical factors, which have the same agreement in both parties in term of important roles of the client, are: (1) Project is defined comprehensively, (2) Recognizing the extent to which design and development is completed will affect the accuracy of estimates, (3) Design is tested adequately before final project commitment is made, (4) Ensuring break clauses are adequate, (5) Seeking commitment to make contract work, (6) Giving clear client’s guidance, (7) Ensuring there is one person, or group, in overall charge having strong overall authority, (8) Considering full supervision to quality assurance and auditing, (9) Ensuring communications are effective.

In the second group, the twelve inappropriate factors in agreement between stated-owner and designer are: (1) Internal and external communication clearly, (2) Establishing an adequate project-management team, (3) Warning progressive change, (4) Developing accuracy of estimate to an extent concomitant with uncertainties present, (5) Using flexible design philosophies where possible, (6) Freezing the design once agreed, (7) Noting disruptive effect urgency can have on work sequencing, (8) Avoiding over-gearing with debt, (9) Beware exchange rate movements, (10) Seeking commitment to making contract work, (11) Beware having subcontracts from main contractor, (12) Considering which power style is most appropriate. It is strongly affirmed that the attitude between state-owner and contractor is quite different.

Besides, the nine critical factors, which have the same agreement in both parties in term of important roles of the client, are: (1) Project is defined comprehensively, (2) Recognizing the extent to which design and development is completed will affect the accuracy of estimates, (3) Design is tested adequately before final project commitment is made, (4) Ensuring break clauses are adequate, (5) Giving clear client’s guidance, (6) Ensuring there is one person, or group, in overall charge having strong overall authority, (7) Considering full supervision to quality assurance and auditing, (8) Recognizing and demonstrating the importance of effective leadership, (9) Ensuring communications are effective.

In addition to this part, ranking ten fundamental categories of clients’ roles recognized by all respondents was found that the top three of fundamental categories, namely project implementation and management, human factors, and legal agreements, in all respondents with regard to playing an important role in the construction process. It is conclude that all respondents expect the client to pay much attention the construction stage under legal agreements.

Factor analysis of client’s roles

To deeper comprehend the client’ roles in term of mixing all parties’ samples, factor analysis method was utilized in this study in order to reduce multiple variables to a lesser number of underlying factors that are being measured by the variables and interpret any multivariate relationships among the top twenty highly ranked importance roles of client. These factors were also tested by The Kaiser-Meyer-Olkin measure of sampling adequacy testing whether the partial correlations among variables are small and the Bartlett's test of sphericity testing whether the correlation matrix is an identity matrix, which would indicate that the factor model is inappropriate.

These factors could be grouped into five symbolized factors with the most significance for client‘s roles involved in construction process. They are: (1) experience, (2) management ability, (3) commitment, (4) communication, and (5) authority.

His thesis abstract is copied and posted.

ABSTRACT

The client’s roles throughout the construction project process are crucial to the success of projects in the public sector. The aim of this research is to help bridge the existing gap between the client and other parties involved in construction process by presenting the critical roles of the client in construction process in Vietnam among three parties involved stated-owners, designers, and contractors. A survey of a randomly selected sample of 31 stated-owners, 29 contractors, and 29 designer firms from Hochiminh City of Vietnam with the traditional project approaches was made. The survey includes 52 common factors of responsibilities grouped into 10 major headings, in which the participants were asked to indicate the level of importance of each factor. The level of importance of the factor and the headings were analyzed and ranked by the importance index for stated-owners, contractors, and designers. It was found that all three parties generally agreed on the ranking of the major categories of roles in construction process. Results indicate that the nine critical important roles identified by stated-owners and designers at the same time as nine identified by stated-owners and contractors. In addition to this research, there are the five components as groups of important factors of the client’s characteristics strongly regarded in construction projects in Vietnam, they are: experience, management ability, commitment, communication, and authority. If involved parties understand the vital roles of construction clients and clients themselves are prepared to take an active role in the construction process, the chances of producing more successful projects will be enhanced.

Constraints-Based Scheduling Of Precast Housing Project: A Case Study Of Preuksa Village III

In Thailand, housing projects have become highly competitive between local and overseas developers. The construction firms allocate bigger budget to get proper construction management software tools that can improve building processes, and which will give them higher profits.

Preuksa real estate public company limited, an outstanding firm in Thailand, acquired this newly developed and prefabricated technology from Germany. Preuksa Company tried to adjust the precast system suitable in Thailand and then investing in the precast manufacturing. As a result, Preuksa becomes the leader of the precast housing project.

However, the prefabricated technology from abroad cannot be used completely in Thailand because of the different criteria under consideration like the weather, site access, and resources available. Therefore, in the beginning, when this technology was being implemented in Thailand, many problems were faced. From that time onwards, continuous developing policies have been used. Therefore, this research work focused on how to improve the prefabricated system in Thailand, taking the Preuksa firm as the case study.

Mr. Prawat Tuptone proposed a study on the application of softwares based on the Line-of-Balance principle that is more efficient for real time productivity loss analysis, in preparation for future higher demand of precast housing. His study focused on four main objectives as follows:
1. To identify the constraints or problems on-site of precast housing project.
2. To rank the constraints in order of preference.
3. To minimize the construction productivity loss happening from the major constraints.
4. To analyze the results and make recommendations for improvement of prefabricated firms like Preuksa.

To acquire the knowledge and develop the precast method with necessary adjustments to implement in Thailand.

Conclusion

Recapitulation
It is necessary for the project manager and concerned staff to measure and understand the productivity loss on-site for housing projects. And the value of construction productivity loss and disadvantage of delay should be measured. Such investigation is required for the prevention of the causes of delay and for their correction and recovery. The aim is to identify the priority of factors effecting the commencement of the project. The principle is to do the right thing at the right time. Also, the continuous development policy can be undertaken by the project manager through such practice.

Constraints Chosen by the Research
The constraints for precast housing project were identified through literature review and site survey. Ordinary constraints in housing projects have three categories:
1) External constraints including weather, economic environment, socio- political environment.
2) Management constraints including redoing work in case of prefabrication errors, safety at construction site, the delay (divided into contractors’ delay and owner’s delay) and financial concerns in payment to contractors and vendors.
3) Resources constraints including labor, materials and equipment and tools.

This study emphasized on major constraints that can cause construction productivity loss.

Ranking of constraints in Preuksa’s housing project

The seventeen construction productivity loss constraints were ranked from first to seventeenth. The top four constraints are 1) strict bank policy on loan, 2) higher construction materials prices, 3) higher fuel prices, 4) lack of skilled workers.

From the result, it can be observed that most of the top four constraints are financial constraints. This is due to the higher price of construction materials and higher fuel prices which strongly affect the firm’s income. Also, the Preuksa firm is implementing cost leadership policy, which means that a financial constraint is a very sensitive issue.

External constraints analysis by Easy Plan
Out of four external constraints, the only one chosen by the research is the impact of adverse weather constraint that can be measured as the loss of construction productivity. Information on this constraint was collected with the help of questions in the questionnaire that related seasonal productivity factors in perspective of project managers.

Seasonal Productivity Factors in perspective of Project Manager
Easy Plan program has the option to consider seasonal productivity factors as input. The effect of adverse weather is considered by this program. In fact, Thailand has three seasons which are the winter, the rainy season and the summer, so this factor has been taken into consideration as well. Spring was assumed to change to rainy season and fall to summer. The local weather factor was collected on-site. The input of productivities from the weather has the value between zero to one. The average value of productivities factors from the weather are 0.98 for the winter, 0.92 for the summer and 0.85 for the rainy season.

From the result of loss of construction productivity in case of adverse weather constraint, the project manager must realize that the value of time for manage the smooth-work at the good weather and try to avoid working at adverse weather.

Analysis of productivity loss for precast housing of type D by Easy Plan
The productivity loss analysis of precast housing focuses on constraints that affect construction productivity. Due to time limitation, the researcher has chosen three problems for consideration as follows:
1. Lack of skilled workers
2. Delay in delivery of construction materials
3. Rework

In addition, data has to be collected for making the assumptions of productivity loss, which is a very important point for consideration in each project.

Constraint-free Scheduling
The constraint-free method of calculation was considered as benchmark for comparing with other options such as labor shortage constraint, late delivery of construction materials constraint and rework constraints.

Combined with constraints
The results of analysis can be ranked by constraints affecting construction productivity. The constraint includes: 1) lack of skilled worker constraint, 2) delay in delivery of construction materials constraint, and 3) rework constraint. This approach is necessary to find out all values of actual productivity loss when all the constraints are combined together to affect the project.

Lack of skilled worker constraint
This analysis considered only two finishing works: wall plastering and ceramic tile. From the above discussion and interviews, lack of skilled workers is identified as an important constraint in the Thailand construction industry. Majority of the Preuksa firm’s worker has not gone through any proper training course and most of them are farmers from rural areas. Also their inefficient work performances might affect construction productivity. Therefore, in the aim to deal with this problem, top management should think about encouraging the unskilled workers to become skilled by arranging training programs for them.

Delay in delivery of construction materials constraint
Lack of construction materials management can affect construction duration because the contractor cannot finish the work in due time. For example, hollow core slabs of the first floor were not delivered all in the same time. Besides, it is also affected the contractors because of increased cost for renting the machines. Also, the factory did not deliver all the prefabricated panels that resulted in missing of sequences of work and time loss.

Rework constraints
While this constraint was considered, the analysis found that rework of prefabricated components can affect duration of structural work and finishing work. Otherwise the quality of prefabricated surface might lead to repairing which would cause delay in finishing the project. Estimation of such cost is complicated. For example, in the case of first floor panel installation, if the dowel steel is not in position with the hole underneath the panel, it will cause rework. Also, due to the problem of wrong dimension of dowel steel, a labor has to cut it off. The time for operation in this procedure can take around 50 percent of panel installation time. In addition, these can affect machine cost, labor, safety, and quality of work as well.

Recommendations for improvement

Lack of skilled worker constraint
Potential solutions are as follows:
- It is necessary to create a strategic plan to systematically deal with the issues causing the shortage of skilled workers. Employers, government, and trainers should work together to support the Training program.
- It is necessary to start a program to match young workers with experienced mentors.
- It is necessary to give certificates after testing formally and recognizing the competence of trainees and existing “skilled” personnel working in the construction industry and then to try to increase the number of certified skilled workers.

Delay in delivery of construction materials constraint
The solutions are as follows:

- Strict evaluation is used for suppliers is deemed necessary
- Use of modern technology in logistics to find the status of construction materials’ delivery is deemed necessary
- Planning and scheduling of materials’ delivery and regular update is deemed necessary

Rework constraints
The guiding solutions are as follows:

- Improvement in the process of prefabricated components and construction methods are necessary
- Project Managers should try to control the work by following the sequence of work
- Attempt to train the workers and emphasize on frequently occurring defects of work

In summary, to improve the situation, the firm should use the following approaches:
1. Enforcing liquidated damage and offering incentives for early completion.
2. Developing human resources in the construction industry through proper training and classifying of craftsmen. There is an urgent need for offering training courses in technical skills or finishing work such as wall plastering and ceramic tile installation.
3. Adopting a new approach to contract award procedure by giving less weight to prices and more weight to the capabilities and past performance of contractors.

His thesis abstract is copied and posted.

ABSTRACT

This thesis identifies and ranks the most important on-site constraints of precast housing project. A top management survey was conducted to identify the perceptions of project managers of Preuksa firm in relation to construction productivity. Construction labor productivity is of great interest to practitioners and researchers because it affects project cost and time overrun. This work evaluates and ranks the importance, frequency of project delay factors that affect the construction labor productivity for Preuksa village ΙΙΙ project.

The analysis revealed three most important financial constraints: 1) Strict bank policy on loan, 2) Higher construction materials prices, and 3) Higher fuel prices. The three major productivity loss constraints include: 1) Lack of skilled workers, 2) Delays in materials deliveries to site, and 3) Rework (prefabrication error). Comparing the total duration between constraint-free and other constraints, the productivity loss by 8 hours of work day found that in a single unit: lack of skilled workers loss is 0.7 percent, delays in materials deliveries to site loss is 1.6 percent and rework (prefabrication error) loss is 1.0 percent. The results showed that construction productivity loss of total time is small as compared with total cost because Easy Plan program can trade off time and cost. Therefore, the budget is spent more when the duration is reduced.
The inferences drawn from this study could be used by the project managers to take account of these factors at an early stage, hence minimizing the time and cost overrun. It is hoped that these findings and recommendations will guide efforts to improve the performance of the prefabricated firms.

Enhancing Financial Viability Through Government Support Mechanism In Public Private Partnership (PPP) Contractual Framework

The development of infrastructure such as roads, water, communications, power, and other infrastructure as a means of answering the growing demand associated with economic growth and sustain such growth is extremely crucial. It speeds up the nation's production and distribution of private economic output as well as to its citizens' overall quality of life. A research by Cain (1997) has noted that public infrastructure has potentially strong effects on private economy activity. Easy access to infrastructure such as modern telecommunications services, reliable electricity supply, and efficient transport will lead to more investments, and the investments are more productive. Thus, those public facilities, resources, and services will mobilize the rising in GDP and reduce the poverty in the country. Kessides and Ingram (1995) stated that infrastructure links to economic development work through its contributions to economic growth, poverty alleviation, and environmental sustainability.

Zhang (2005a) reported that improving deliveries of many major public works and services would not have been possible without private finance. The necessity of creating financial return in the infrastructure projects generates an innovative focus to shift the roles of the government to the private participation through infrastructure investment (World Bank, 2005). Government failure - in terms of slow and ineffective decision making, derived externalities, unworkable organizational and institutional frameworks, lack of competition, monopoly, allocative inefficiency, and dysfunction between output and payment—provides a rationale for private involvement (Walsh, 1995; Mustafa, 1999). The involvement of private sector is established with an idea of raising the level of funding available, generating more revenues and reducing deficits/debts, faster market development, increase improving project efficiency synergy, and enhancing better services over project lifetime since the risks are allocated to the best party to manage them. As the operational process is getting more efficient and the profit of the project output is being considered, the project turns to be attractive to the investors and thus, economically feasible.

An autonomous organization within the body of Public-Private Partnership (PPP) project is essential to posit as “the heart” of the project. Many activities in project/ construction management are often confined within national or cultural boundaries due to lack of knowledge, reluctance (inertia) to change, resource constraints, high pressure on growing project. They require immediate results, and the complex nature of issues in this field such as sensitive and confidential data (Loosemore, 1999). Furthermore, the evolving knowledge and expertise in infrastructure PPPs are widely dispersed, inadequately documented, and rarely analyzed or compared (Zhang, 2004). The concessionaire company functions as an independent legal entity, named Special Purpose Vehicle (SPV), must be set up not only to secure the risk allocation and sharing, but also the interest of all parties involved. In addition, PPP project also engages many different stakeholders with different roles such as lenders, financial institutions, public sector, guarantors, suppliers and off-takers. In PPP project, the concession company deals with different participants in the project in terms of legal and financial aspects. The sponsors of the SPV are usually a consortium of shareholders who may be investors or have other interest in the project.

The financing structures, risk sharing arrangement and host government participation have a significant impact on the success or failure of a project. At the same time, the financial evaluation of privatized infrastructure project is complex and challenging because of the complexity of the non-recourse financing techniques and a variety of risks and uncertainties related to project finance, which make the forecasting of cash flows very difficult (Zhang, 2005a). Then, it is necessary to facilitate the aims of public-private win-win principle, considering interests, concerns and requirements between the contracting parties within the PPP project, in order to bind them, defining their relationships and obligations. It is also critical to ensure that PPP delivery achieves maximum Value for Money in the terms of service over the project’s life.

Continuous project funding through numerous project development phases and prediction of revenue stream is required to be ensured in order to achieve the maximum project VFM and to fulfill each stakeholder’s interest and goals as well. The guarantee from project financiers to raise funds throughout the development process is the life-blood of the project. However, the profits are usually gained after the operation phase is initiated, while in the meantime the SPV has the obligation for full financing the development process. Developing and managing funding in PPP project is extremely complex process due to long-term timeframe (± 20-30 years) and various different participants involved with different functions and interests from investing to the project. Instead of all project difficulties, an excellent and careful arrangement and consideration of all the possible related aspects is required to ensure that the project will generate adequate revenue to reimburse the initial funding with the interest. The involvement of government support plays critical role in order to mobilize private loans and equity in developing countries which typically considered having high country risk. It creates favorable political, legal and economic investment environment for the project funders.

Government support and guarantees in long-term PPP scheme is an essential approach in enhancing the financial viability of PPP projects within uncertain environments and involving various kinds of stakeholders. However, many issues can be considered in utilizing such kind of approaches. Ms. Yessie Agustina made a study intended to: (1) identify the essential performance parameters of PPP contract and variables to those parameters concerning PPP risk factors; (2) identify the needs of government support and determine option range level of government support concerning power plant projects in Asian developing countries with emphasize on risk allocation; and (3) assess the effectiveness and deficiencies of government support mechanisms in various project cases and develop guidelines for similar project condition

Conclusion
To facilitate the creating of favorable investment among those many inherent uncertainties and risk of PPP schemes, necessary host government support is needed to optimize the investment security and maintain a balanced risk-return structure. The support and guarantees should then be laid beneath each contract with consideration to the severity of negative consequences emerge from the absence of those support and guarantees to the ability of the project to service its debt on time and in full. Then those support mechanism will provide a sufficient confidence to project investors so that the project becomes financially viable.

Involvement of the government in supporting those four power plant projects were examined based on eight important aspects in PPP contract, which are: (1) land acquisition and site suitability; (2) cost of finance; (3) financial gain; (4) assurance of performance; (5) political, legislative, and regulations; (6) public interest and environmental issue; (7) force majeure; and (8) contract termination and default situation. The conclusions which can be derived from each abovementioned aspects are explained below.

Land acquisition and site suitability: There are two crucial points to be considered in determining the level of government support in acquiring the site. The first issue is associated with the importance of the site to the government after contract termination in terms of ownership and public interest. Second, government should initiate the coordination of land acquisition process whenever it is considered to be time consuming and expensive. Meanwhile, government is only able to provide upfront assistance in choosing the right location of site and addressing existing site deficiencies.

Cost of finance: A reliable sponsor such as World Bank is necessary both in terms of enhancing project creditworthiness and minimizing contractual dispute as it is able to develop pressure to the central government. In PPP, the state government and other government agencies such as the electricity board are often not regarded as creditworthy. Thus, the central government guarantee and counter guarantee are needed. Furthermore, the project performance is assured as the project can utilize reliable project development standards developed by such institutions. Foreign investors are looking for such investment coverage especially in an uncertain political environment. Moreover, competitive bidding and guarantee for currency exchange, convertibility and transferability are believed to maximize the use of budget in an effective and efficient manner.

Financial gain: It is strictly important that the government should guarantee minimum purchase of electricity output. Either onshore or offshore escrow account can be employed to guarantee that the loan will be repaid. Considering the economic standard and political instability in developing countries, tariff must be maintained at par or lower than the project’s competitor. It avoids political influences in the future since the government does not have to subsidize and it reduces dissatisfaction from the public.

Assurance of Performance: Government is expected to furnish a clear, consistence and objective output performance standard. The requirements are higher to open and competitive bidding process. On the other hand, inadequate standard may still generate outstanding performance and low-cost plant on condition that a consortium of experienced and reliable developer is used. The consortium will then conduct all the design, procurement, construction, operating and maintenance at once. Moreover, power purchaser and fuel supplier performance are the most important matters in power project. Any circumstances which may reduce their performance would adversely affect the project company’s ability to pay its debt. Thus, government is obligated to provide guarantee for the continuous performance standard and counter guarantee in the event of default besides maintaining the adequate risk sharing mechanism.

Political, Legislative, and Regulations: Most of developing countries are lack of legal standard to develop such large and long-term project. While on the other hand, the political instability still becomes a major concern. Therefore, government is challenged to develop an adequate legal law and regulations for infrastructure development under PPP scheme. Clear and specific legal guidelines containing the required law, regulations and approval which needs to be taken are necessary. In addition, sovereign guarantee, transparency and commitment of non-corruption are in the primary line of investors’ requirement.

Public Interest and Environmental Issue: The public emphasizes on transparency in the project development process and commitment of non-corruption from the government. The effort to improve the local community’s life and policy for domestic equity investment are also essential to obtain public support for the project. In attempting environmental preservation, the utilization of environmental friendly fuel and worldwide accepted environmental standards and management system such as World Bank standard and ISO 14001 are considered to be important.

Force Majeure: Project lenders and sponsors require government risk sharing in the event of force majeure. However, it should be limited to either the event which has material delay on project completion or material damage. While delay and cost overrun risk caused by temporary inability to produce electricity and adverse geographical location are borne by the private.

Contract Termination and Default Situation: The level of government assistance to ensure ongoing service delivery following contract termination depends on the project strategic importance to the government. At the same time, the project investors require the government to ensure that the asset will meet certain performance standard at the end of concession period taking into account asset depreciation and lower process efficiency. It also has the need to obtain the first priority to seize the project asset and to provide remedy in the event of default.

Recommendations for Contract Competency Improvement through Adequate Government Support Mechanism

The propose guidelines is supposed to lead the optimization of the risk sharing arrangements under the contractual framework. Whenever the private investors are in favor of the supports and guarantees the host government provides, the private capital can be mobilized straightforwardly. It indicates a favorable investment environment, where the private investors are confident that the project is able to provide acceptable returns to equity holders and to service its debt on time and in full. Yet, the government must be able to select the appropriate alternatives of support mechanism at its adequate level regarding to the precise project circumstances.

Her thesis abstract is copied and posted.

ABSTRACT

An appropriate arrangement within the Public Private Partnership (PPP) contractual framework is essential to ensure the financial viability of the project. The project investors are only willing to invest whenever they are confident that their investment will be reimbursed in time and in full with the interest. Due to the complex nature and numerous risks, PPP project will not be able to success unless government gives necessary support. It creates favorable political and legal investment environment as well as maintains a balance risk allocation structure. This research identifies and evaluates government support mechanism in eight PPP contractual framework parameters: (1) land acquisition and site suitability; (2) cost of finance; (3) financial gain; (4) assurance of performance; (5) political, legislative, and regulations; (6) public interest and environmental issue; (7) force majeure; and (8) contract termination and default situation, for the project to work smoothly. Four power plant projects from Asian developing countries are discussed. The research outputs will facilitate both government and private sector in selecting appropriate alternatives of government support mechanism regarding to particular project circumstances.

Stakeholders’ Perspective On Risks And Opportunities Of BOT Infrastructure Projects In Vietnam: A Case Study Of The Yen Lenh Bridge Project

Over the past few years, most of the fast developing countries in Southeast Asia have experienced econ­omic boom that outpaced the development of in­frastructure, and this has threatened a continuing high rate of economic growth. Traditionally in the region, the public sector has financed the construction of infrastructure (Tam, 1998). Faced with pressure to reduce public sector debt and, at the same time, expand and improve public facilities, governments have looked to private sector finance, and have invited private sector entities to enter into long-term contractual agreements which may take the form of construction or manage­ment of public sector infrastructure facilities by the pri­vate sector entity, or the provision of services (using infrastructure facilities) by the private sector entity to the community on behalf of a public sector body (Grimsey and Lewis, 2002).

Public private partnerships (PPP) are intended to harness the incentives of private markets to the public interest criteria of the state. Private capital and private sector companies finance and operate infrastructure that previously was publicly funded and managed. In recent years, PPP have become popular in a number of countries. Governments keen to reduce government spending and borrowing and aware that private enterprise can provide services at lower cost, have introduced PPP programmers in place of or to supple­ment direct state investment (Parker and Hartley, 2002).

Since the early 1980s, there has been a remarkable reawakening of interest in a PPP mechanism such as the Build Operate Transfer (BOT) scheme. The BOT projects include very complex technical, financial, political, and legal transactions originating from the diverse objectives of the various project participants.

Generally, it is very risky to implement a BOT project because of the uncertainty inherent in a long project period and the complexity of the project scheme. Particularly, from the viewpoint of private participants, it is much more risky than traditional project schemes, because governments tend to transfer more risk to private parties. Therefore, careful project selection and a clear identification and assessment of the risks are important in order to guarantee that willing buyers are prepared to pay sufficiently to induce willing suppliers to provide it (Yang and Meng, 2000).

Countries with limited infrastructure and low GDP per capita, such as Vietnam and other developing countries are commonly classified as 'Third World Countries'. The Vietnamese governments are very much aware that if economic growth outstrips infrastructure development, a choke is applied to that growth. With more than 80 million hard-working and large literate people, land rich in natural resources, and a country located in the center of a dynamic economic growth region, Vietnam is an attractive investment environment from the standpoint of foreign investors. The Socialist Republic of Vietnam has promulgated the Law on Foreign Investment in Vietnam with the view to expand its foreign economic cooperation, develop the national economy with a GDP growth rate of 7-9% between 1990 and 2004. Vietnam is now a new potential market for construction activities, especially BOT projects. This is especially for infrastructure development such as: transportation roads and bridges; power plants; offices and buildings; seaports, river ports, and airports, etc.

The Government of Vietnam has recently introduced a scheme for issuing bonds for nationally important transport and irrigation projects, but there still remains a substantial gap between what the Government can raise from the issue of bonds, budget funds and official development assistant (ODA) and the amount it needs to spend annually on infrastructure. One source of funding is the private sector, including foreign investment (Freehills, 2003).

Private participation in infrastructure can:
a) Provide increased efficiency in investment and operations;
b) Provide access to private finance and increase Government revenues;
c) Allow the Government to divert money away from spending on infrastructure into much needed social programs such as health and education.

Privatization of infrastructure development in the Asian developing countries offers plenty of investment opportunities to private developers. The use of BOT can profit the host government in a way that they do not need to pay to get the required infrastructure. Meanwhile BOT can generate potential profits for pri­vate investors. The growing economy in the region can tender a potential long-term profitability of the pro­jects. If BOT projects can be properly managed, both parties can benefit and this results in a win-win scen­ario. However, a failing BOT project will bring about loss and deter investors from investing in similar pro­jects and ultimately, the host government will suffer (Tam, 1998).

Infrastructure privatization involves social, political, economic, legal, and environmental dimensions with long-term uncertainties and wide risk portfolios (Zang, 2005a) Various problems have been encountered in inter­national BOT due to the short history and lack of BOT experience and expertise in many countries, for example, the failure of two BOT transportation projects in Thailand (Ogunlana, 1997) and the privatized national sewerage project in Malaysia (Abdul-Aziz 2001).

From 1990 up to now Vietnam has had over one hundred BOT projects in infrastructure. Some of them could not be finished on time and overrun budget right after the construction stage. Significant reasons affecting BOT projects are lack of procurement knowledge and improper risk assessment when developing them. In addition, the misunderstanding of stakeholders on construction, financial and legal perspectives in BOT projects create disputes among them.

Mr. Nguyen Duy Ninh made a case study which main objective was to study concept, characteristics, and risk perception of the build Operate Transfer (BOT) projects. His sub-objectives were to: (1) determine and analysis major risks in BOT infrastructure project in Vietnam; (2) analysis stakeholders’ perspective on risk and opportunities of BOT infrastructure project in Vietnam; and (3) understand and analysis practical risk management in case of Yen Lenh Bridge BOT project.

Conclusions

This Study Deals With Risks And Stakeholders’ Perspectives On Risk And Opportunities Of Bot Projects In Vietnam. The Case Study Of Yen Lenh Bridge Project Was Studied To Demonstrate Risk Management In Bot Infrastructure Projects In Vietnam.

Major risks of BOT infrastructure projects in Vietnam
With assistance of a practical survey and proper methodology, major risks were determined by calculating total risk weighting scores which were the results of frequency of occurrence and degree of impact. The risks were then ranked according to the total risk average weighting score.

The top-ten important risks identified are: (1) Land acquisition delay; (2) Delay in approval from government agencies; (3) Risk of transportation network in region influencing to BOT project; (4) Cost overrun risks; (5) Unrealistic forecast future economic development and demand of the society; (6) Inflation rate increasing; (7) Incorrect analysis of duration of ownership; (8) Interest rates fluctuation; (9) General corruption and untrustworthiness of public official; (10) Actual traffic revenue lower than estimated.

The most important risks of 63 risk factors were developed on the basis of previous research related to BOT project and pilot test for interviewees in Yen Lenh BOT project. The 63 risk factors were ranked in accordance with the development process of the project and nature of risk such as the feasibility study risks, political and legal risks, financial risks, design and construction risks, operation risks, transfer risks of BOT infrastructure projects.

Stakeholders’ perspective on risks and opportunities of BOT infrastructure projects in Vietnam
Perceptions of project risks will relate to how particular stakeholders are engaged in project decision making at levels concerned with achieving particular project objectives and most respondents have bad attitude toward risks. They consider risks as barriers rather than challenges that they have to overcome.

Furthermore, fifty four point three percent of respondents have conflicts of risk perception with other participant, and fifty one point four percent of respondents think that risks arise out of individual or organizational decision making in BOT infrastructure projects. According to Whitfield, (1994), real causes of conflicts are broad ranging and varied. These can come from misunderstanding, values, interests, and people.

The top-ten important risks in government’s perspective are: (1) Focus on the benefits of the construction rather than the profit of whole life cycle of the project; (2) Poor financial, plant resources of invertors and contractors; (3) Unrealistic forecast future economic development and demand of the society; (4) Poor quality of construction; (5) Not follow the regular facilities maintenance; (6) Incorrect analysis of duration of ownership; (7) Land acquisition delay; (8) Delay transfer due to a desire to collect more profit; (9) The concession consortium convince Gov to agree on converting BOT type into Build-Transfer type after project operate for a short time; (10) Cash flow inadequacy to meet debt servicing due to traffic revenue decline.

The top-ten important risks in investor’s perspective are: (1) Lack of appropriate toll adjustment mechanism; (2) Risk of transportation network in region influencing to BOT project; (3) Incorrect analysis of duration of ownership; (4) Delay in approval from government agencies; (5) Land acquisition delay; (6) Uncertainties in the traffic volume during the long contract period; (7) Poor prospect for economic growth of the local economy; (8) The Gov don’t upgrade/ maintain infrastructure facilities linking to project; (9) Inflation rate increasing; (10) Unsuitable payment structure.

The top-ten important risks in contractor’s perspective are: (1) Delay in approval from government agencies; (2) General corruption and untrustworthiness of public official; (3) Uncertain price of critical raw material; (4) Delay in financial closure; (5) Land acquisition delay; (6) Inflation rate increasing; (7) Unforeseen ground, bad weather condition; (8) Cost overrun risks; (9) Interest rates fluctuation; (10) Actual traffic revenue lower than estimate.

Practical risk management in case of Yen Lenh Bridge BOT project
Risk management needs to be implemented in a systematically process which is risk identification, analysis, and allocation. A risk management system must be practical, realistic and must be cost effective.

The risk management perceivers are the project stakeholders, and a stakeholder is any entity which has the power to influence project decision making directly. Related to experience, 62.85% of respondent affirmed that they have experience of risk management. Most of them are manager and have more than ten years experience. It proofs that the relationship between risk perception and experience of stakeholders. And 88.5% of interviewees answered that systematic risk management is very important, almost everyone is aware of the importance of risk management in decision-making. They suppose that it would help managers clearly identify the potential risks to be prepared with appropriate responses. Thus, systematic risk management helps mitigate all kinds damage of caused by risks.

The process of risk management is broken down into the risk management system which can deal efficient with risks. Naturally the risk management system must be applied to each option under consideration. It is suitable to consider risk in construction, finance, legal and political perspective in BOT infrastructure projects.

Risk identification
There are different tools and techniques which are useful in risk identi­fication in the construction phase such as (1) Check list; (2); Experience; (3) Intuition; (4) Site visit; (5) Diagramming techniques; (6) Database; (7) Case study; (8) Brainstorming; (9) Workshops; (10) External consultants.

Construction risks impact on time and require money to be re-addressed. Construction risk identification is very useful and important. It relates to construction contractor, sub-contractor more than other stakeholders.

In financial risk identification, most of the respondents reported that their financial organization had a standard format or scheme for the identification of relevant risks. This scheme is typically based on knowledge from previous projects (experience, 91.4%) and includes a checklist (85.7%) for the main risk cate­gories such as construction risks, operational risks. External consultant (65.7%) only employed when they faced difficult project or dilemma problems.

Most respondents agree that it is very difficult for them to identify relevant political and legal risks. Process of identification requires respondents to have knowledge of law system and overview trend of politic movement as well as relationship between legal, political and economic.

Risk analysis
Risk analysis composes of qualitative analysis and quantitative analysis. Qualitative analysis is often used theory of probability and impact base on experience, knowledge, history documents, and Gov publications. Quantitative analysis is a process involving mathematical models and analytical techniques, often using computers, to evaluate and quantify the impact of risks.

In terms of construction risk qualitative analysis practice, the most used tool is probability/impact analysis with 80% of respondent agreement. And the followings the most popular tools and techniques are technique experience, intuition (71.43%), and influence diagram (57.14%) often used. In quantitative analysis, 79.29% and 62.86% of respondents ranked the expected monetary value and sensitivity analysis as the most used technique.

In terms of financial qualitative analysis, external consultant (60%) and experience, intuition (54.29%) tools were applied. In quantitative analysis, sensitivity analysis (91.43%) and expected monetary value (80%) were the most effective tools to analyze financial risk.

The first most tool and technique used to analysis legal and political risk is checklist (85.71%) and influence diagram (71.43%). Quantitative analysis can not be applied in legal and political risk. Because it demands availability, accuracy of information, data and the cost, time are constraint.

Risk allocation
The objective of BOT project risk allocation is to allocate risks to the parties best able to manage them (Ogunlana, 2005). There are four general risk allocation strategies, namely: risk elimination, risk reduction, risk transference, risk retention. In managing risks through one of the above strategies, a number of tools applied are (1) Guarantees; (2) Insurance; (3) Contract.

Design and construction risks should always be transferred to the BOT contractors through (1) Fixed price contract; (2) Design risks; (3) Fund operations. Contractors can reduce construction and design risks by risk premium and buy premium insurance.

Lenders seek to be fairly certain that most relevant risks have been passed on to other parties. They allocated the risks to other parties, financiers transfer all major construction risks to the construction companies; e.g. construction time and cost overruns, design. All operational risks such as escalating life cycle costs or technological changes are usually transferred to the operational companies, while the political and some legislation risks are transferred to the public sector.

Legal and political risks should be retained by Government. Stakeholders, the reason is that investment fund cover the method of BOT project are tight, so if change in law, regulation, political will be strongly affected BOT project that other stakeholders can not resist. In addition, the risk of land acquisition delay is better retained by the Government, because the Government. has the experience and resources to deal with this risk.

Other risk as demand risk, transfer risk should be share between Government, users, investors and operators.

His thesis abstract is copied and posted.

ABSTRACT

The Build- Operate- Transfer (BOT) approach for developing infrastructure projects provided effective routes to mobilize private sector funds, innovative technologies, management skills, and operational efficiencies. This process is full of risks, mainly due to the complexity and level of the discipline, different interest and conflict on risk perception of stakeholders involved. This study deals with major risks, stakeholders’ perspective on risks and opportunities, and possibility of applying practical risk management in BOT projects in Vietnam. This is achieved through properly analyzing the case study of Yen Lenh Bridge BOT project based on questionnaires and interview questions. The finding of this research would facilitate the overview of understanding mutual objectives of each type of stakeholders and best solutions for risk management which will reveal good opportunities for private sector to invest in infrastructure

Investment Analysis Model from Outputs/Outcomes Framework of Public-Private Partnership (PPP) Project:The Case Study of The Bangkok Mass Rapid Transit

The heart of the investment evaluation process is the identification and analysis of options. Financial analysis is a method of measuring and evaluating the relative merits of public or private investment projects which identifying the option that best conforms to the financial and economic goal. Financial analysis is useful in planning and decision-making as it provides a common framework in which all of the important effects of investment choices can be made visible and, to the extent possible, quantified. It is a key tool in the quest for value for money.

Bangkok is one of the fastest-growing, most economically dynamic and socially progressive cities in Southeast Asia. For transportation, today almost all are filled in and converted from using canals into traffic-filled streets. Several elevated highways, and a partially-finished ring roads around Greater Bangkok, have been built to overcome the jams.

In 1999 an elevated two-line Sky train (officially called BTS) metro system was opened. The first line of the underground Bangkok Metro opened to the public in July 2004. In July 2004, a new MRT subway system was launched connecting the northern train station of Bang Sue to Hua Lamphong railway station near the city center, going through the eastern part of the city. It connects to the BTS system at BTS Stations of a Mo Chit, Asok, and Sala Daeng.

Figure 1 Existing Route of Bangkok Mass Rapid Transit Map

As the transportation system has become more complex, its impacts have become more pervasive. A mass rapid transit network will provides mobility and access is essential to Bangkok and its economic resurgence and social interaction. In response, efforts to improve transportation involve consideration of a variety of issues. Therefore, public sector need to fixing problems with the existing transportation infrastructure and expanding capacity to meet future needs. Moreover, developing a framework for considering the public investment for transportation will affect and be affected by future changes in land-use, social, economic, environmental characteristics and concerns.

Figure 2 New Route of Bangkok Mass Rapid Transit Map

Bangkok Mass Rapid Transit (BMRT) is the one of mega-project in Thailand which expands the transportation capacity and improves efficiency of mobility and accessing to important areas in Bangkok. With the project’s characteristic which complex and using large amount of money to capital, government or public sector can not subsidize alone by the limited budget and capability. The government is encouraged to prepare capital investment programs, covering periods of at least 3-5 years. The first year would typically form the basis for a capital expenditure budget. This would impact upon the current budget, for contributions to the capital budget on a pay-as-you-go basis. Moreover, it would also impact on future current budgets, including provision for expenditure on debt service for loan financing and for operation and maintenance of the assets so provided (Jones, 2001).

The government found that their tax revenues are not providing sufficient resources to meet these needs, and official development assistance has not been able to fill the gap. The government for realize that their limited financial resources are not sufficient to cover the needed capital the project. It is becoming increasingly clear that governments cannot meet the continually growing demand transportation services acting alone. The government need more investment for the project coupled with constrained government financial resources is prompting a search for new ways to develop capital projects by think of alternate sources of finance, technical excellence and support

One of the most viable options is to involve the private sector. This is done through association with private sector on a project-to-project basis and generally termed as PSP-private sector participation, PPP- Public private partnerships, PFI -Private Finance Initiatives etc. These usages though done interchangeably have slight differences in their specific definitions and operational frameworks but for the genera understanding it conveys the meaning of involvement of private sector in public services. The term “public-private partnership” (PPP) describes a spectrum of possible relationships between public and private actors for the cooperative provision of the project.

The project is crucial to develop a base case financial plan and assesses the sensitivity if the profitability of the project and the projected return on equity investment to various contingencies. Analysis of these factors almost always requires modeling and extensive sensitivity analysis. In order to select the best possible investment program, operation criteria are needed which enable the decision having the greatest project efficiency to be determined with sufficient exactness. The financial analysis is tool for appraisal capital investment of the project to optimize the type of mass rapid transit system installed to meet the well-being of people and private sector participation. In particular, it is the concern to show how far the financial analysis can assist public decision-makers in preparing their investment plans. However, even in these cases financial analysis contributes to rational decisions, insofar the (empirical) effects of investment projects is of major importance for all decision, even when in situations economic efficiency is not the standard governing the direction of political action (Georgi, 1973).

Moreover the government pays little attention to classical financial and economic analysis techniques in order to identify its strengths and weaknesses. Therefore, to optimize the best alternative on appraisal or analysis the project to gain the most financial and economic returns, it is essential to focus on activities, output and outcome on proposed infrastructure projects set by either public or private.

The case study of BMRT is analyzed on selecting the type of mass rapid transit and its PPP structure which optimize social, economic and financial term. Especially, consideration of the project output in term of finance is very significant to meet the private sector participation.

Mr. Warut Neamnoi conducted a study which main objective was to develop the suitable Capital Investment Analysis (CIA) framework recognizing activities, output, and outcome of BMRT project. In order to achieve the main objective, the 3 sub-objectives were also needed to accomplish: (1)to develop the structure of activities, output, and outcome of BMRT project; (2) to investigate parameters of the classical financial and economic analysis techniques in order to identify its strengths and weaknesses (coverage of activities, output, and outcome) spanning all project life cycle; and (3) to propose and test the analysis model applicable to serve as a framework for decision making on selection of mass transportation modes (Bus Rapid Transit, Light Rail Transit, Heavy Rail Transit, etc.) applicable for BMRT project.


Conclusions

The proposed CIA has been developed from the study of many CIA of important/reputation organizations and CIA of developed country by capturing the essence process and cutout redundant processes, and developed as the new standard for CIA. The OOF is developed as the enhancement tool for CIA, not only the proposed CIA but it also can be applied to any CIA to improve discovering project parameter in order to make CIA more accurate in the analysis process. CIA with OOF has been successfully developed by combining the strengths and deplete the weakness of them and set as the new standard CIA.

According to the Case study, the CIA with OOF has been applied with Purple-Line of BMRT project. Since, the project is mega-project which is very complex and the project owner is GOT which some information is classified, the CIA with OOF was applied as best as it can. The CIA of Purple-Line of BMRT project is gone through 16 steps by combination of the Proposed CIA 14 steps which are: 1) Project Purpose and Identification; 2) Traffic Analysis; 3) Demand Analysis; 4) Feasibility and Option Analysis of System; 5) Procurement and Technology Analysis; 6) Price Analysis; 7) Financial Capacity Analysis; 8) Financial Analysis; 9) Economic Analysis; 10) Sensitivity Analysis; 11) Risk Analysis; 12) Social Analysis; 13) Environment Analysis; 14) Project Evaluation. OOF has been applied to every step of CIA by improve the quality of parameter. Although, the CIA of Purple-Line of BMRT project is not specify which MRT system should be installed for this line and how should the values capture setup with the project, depending on the government make the policy with the project that the government expect for overall economic return or prefer on financial return or project financial sustainable.

His thesis abstract is copied and posted.

ABSTRACT

Capital Investment Analysis (CIA), is using as a tool for project feasibility analysis which very essential for design the project to ensure an adequate demand, financial, and economic to access the investor objectives. Without CIA process, the project cannot safely implement and successful as it might wish. Unfortunately, traditional CIA that has been used by each different organizations, some of them are not complete with adequate analysis functions to deal with standard CIA and affect to unsuccessful of the project or make loss. To address this problem, the CIA is developed for standardize the CIA to compatible with all projects and scenarios.

The Output Outcome Framework (OOF) is developed by validating of cause-effect in term of activity, output and outcome of the project. The developed OOF is then integrated into CIA. The case study of Bangkok Mass Rapid Transit is presented in order to exemplify the application of the developed OOF into CIA.

Risk-Based Multi-criteria Decision Management for a Railway System in Thailand

Infrastructures Management includes a wide range of activities that are essential to efficient working of country utilities and services. The nature of infrastructure management involved a variety of operations such as planning, design, construction, condition evaluation, maintenance, improvement and so on. Infrastructure Maintenance Management System has gradually become an important field for not only developed countries but also for developing countries particularly Thailand. This is because of nature of the infrastructures deteriorate over time and it is crucial to maintain them in order to preserve their condition or performance to be at the acceptable level which satisfies the user’s needs. If the maintenance is neglected, it can lead to disruptions in services for example, traffic accidents, water leaks, or power cuts.

Among different facilities, railway is one of the important infrastructures. A railway system combines several objectives, such as provision of an adequate level of service or safety, preservation of the facility of a number of physical facilities that include railways, bridges, terminals, and traffic control devices. Once these facilities deteriorate, the suitable maintenance action needs to be taken. Most of maintenance policies have been developed in order to reach the most beneficial plan under the budget initiation. However, in the long-term planning, most projects or programs are subjected to risk and uncertainty. The expected maintenance costs of facilities increase as the measurement of uncertainty increases (Madanat and Ben-Akiva, 1994).

Maintenance practice and strategies have a strong impact on the management cost of a facility. Deferred maintenance results in increased life-cycle costs rather than a cost saving (NCHRP 58, 1979). The total ownership cost of infrastructure system is greatly influenced throughout different its lifecycle from the beginning to disposal includes maintenance costs, which are affected by the types of maintenance selected and implementation schedule for these policies. Maintenance costs are also affected by the risk associated with unplanned or unscheduled repairs arising from contingencies such as accidental damages (Ayyub and Popescu, 2003). The decision makers have to establish an optimum maintenance management strategy for an infrastructure system which can reduce or minimize the aforementioned cost effectively and efficiently, while ensuring that the system goals are conformed. The main objective of a decision-making process is to maximize the benefits to its customers and users, based on well-defined goals and with available resources (NYSDOT, 1998).

The current maintenance practice of State Railway of Thailand (SRT) is based on Cyclic Maintenance. Cyclic maintenance is the maintenance program which indicates the exact time and the duration of maintenance. The decision-making of selection of maintenance alternatives is based on track condition inspection i.e. Track Quality Index (Q.I.) (SRT, 1995). However, the development of maintenance management system for individual objective is not effective because it does not take into account all the needs of the system. Without the effective decision-making process, the agency cannot claim that each maintenance alternative meets the obligation to maintain the railway network effectively. Because of the variety of system objective of railway maintenance management, the decision-making process takes into consideration of a multicriteria decision-making process. In addition, the benefits under different measurement units make the decision-making process more complicated. Therefore, the decision makers have to evaluate properly among competitive maintenance alternatives (Li and Sinha, 2004). In order to mitigate this complication, multiobjective decision-making approaches would be useful. It provides a convenient set of mathematical tools to identify an optimum alternative given a set of competing objectives (Clemens, 1997). In this study, one of multiobjective decision-making technique called Analytic Hierarchy Process (AHP), is employed to identify an important of objectives to use in a multicriteria decision-making process. With AHP, weighting factors of all objectives can be identified so that the decision makers can be easily used in a calculation of decision-making.

Mr. Arthit Krachang’s study proposed to develop risk-based multiobjective functions that influence the railway maintenance management. In addition, weighting factors of individual objective provides a non-dimensional output so that planners or decision makers can use those functions for decision-making about a suitable action in railway maintenance management system.

The main objective of his study is to develop a risk-based multicriteria decision framework for the railway system in Thailand. The basis of the decision-making is to maximize the overall benefits as well as to minimize the maintenance costs and risks regarding to the budget constraint. In order to achieve the main objective, secondary objectives were defined as follows: (1) determine objectives of railway maintenance management system and develop the objective functions regarding to influencing parameters as well as their weighting factors; (2) respond to risk through an effective and efficient decision-making process by using quantitative analysis of the effect of influencing parameters that are subjected to risk; and (3) develop an overall risk-based decision-making process for the railway maintenance management system.

Conclusion

In this study, the risk-based multicriteria decision-making process for the railway maintenance selection is carried out by using risk simulation technique. The weighting factors and objective functions are used to setup an overall objective value optimization framework. The developed cost effectiveness and overall objective value optimization model are used to identify the optimal maintenance plan. Finally, the cost effectiveness method is carried out to present the results comparison. The Northern line and the Eastern line are selected to present a case study.

Questionnaire surveys were carried out among the SRT experts who involved in the railway maintenance. The outcome of the questionnaire surveys present the objectives, influencing factors, and their weighting factors that involved with the railway maintenance selection. The obtained weighting factors are determined and then, validated by consistency ratio in the AHP methodology. According to the SRT expert opinions and the obtained weighting factors, all of objectives are the important objectives for the railway maintenance while some of influencing parameters have less important but not the negligible factors. The most three important objectives are safety, costs, condition.

The deterioration model is developed from the historical railway condition and integrated into cost effectiveness optimization model and overall objective value optimization model for the Track Quality Index (Q.I.) prediction. The developed deterioration model is based on the regression analysis of historical Q.I. value and then, the coefficient R2 is used for the model validation. The processes of deterioration model development are discussed in section 4.4. The predicted track condition is used to calculate the cost effectiveness ratio and the objective value.

Development of objective functions of different railway maintenance objectives is the important part of this study. Interview and discussion with SRT experts were carried out to develop the objective functions and validate the results. The objective function refers to a function that quantifies the quality of a solution in an optimization model. The objective function returns an unknown quantity representing the quality measurement of a decision that needs to be made. In this study, there are two optimization models were created for results comparison that are the deterministic model and the probabilistic model.

The development of the optimization model consists of decision variables, objective function, and constraints. The first step when formulating a model is to identify and assign names to the decision variables. The decision variables are the variables that can be directly controlled by the decision makers and those values determine the solution of the model. In this study, the decision variable is the maintenance type. In the optimization model, the maintenance plan which gives either the maximum or the minimum value of the objective function needs to be determined. The second step is to develop the objective function in terms of the decision variables. The objective function is the formula which specifies the goal that is trying to achieve. The goal can either be to maximize or to minimize the value of the objective function.

However, the deterministic cost effectiveness optimization model is the used traditionally in the policy analysis by treating the input variables as exact value. The probabilistic cost effectiveness optimization model is a modified optimization model which takes risk and uncertainty into account. In the probabilistic model, the variables that are subjected to risk are treated probability density function (PDF). In this study the track initial condition is the parameter which is subjected to risk. The historical data is fitted with the best fitted probability density function (PDF) based on chi-square test. The developed PDF of track condition is used in the simulation process. It was randomized treated in the cost effectiveness function until the cost effectiveness ratio is statistically converged.

The optimization results which obtained from both model show that the most effective maintenance plan is 4-year maintenance cycle and in middle of 4 years are do nothing. There are some difference is that the maintenance type in some first year are different. The optimization results were introduced to the SRT experts to validate in term of acceptance. Both of the obtained optimal maintenance plan yield very close maintenance costs and effectiveness ratio. The maintenance costs for both of the optimal maintenance plan are under the budget limitation which is specified by SRT policy. The predicted conditions of the railway are above the minimum acceptable level.

An effective railway maintenance selection is the multiobjective decision-making process. Since the cost effectiveness optimization is solely based on single objective optimization, this situation leads this study to modify the cost effectiveness optimization by applying the concept of multiobjective optimization. According to the results of the questionnaire survey, there are 6 objectives and 19 influencing parameters in railway maintenance selection. In order to accumulate all of objectives in railway selection process, creation of 19 objective functions must be carried out. Due to the time and historical data limitation, the safety and cost objective are selected the present the case study.

According to SRT expert discussion and the obtained weighting factors, railway safety is the most important objective for the railway maintenance. Therefore, the agency maximizes the railway safety by applying the cyclic maintenance policy. However, the maintenance costs are required to be minimized due to the budget limitation. In this study, safety objective function and costs objective function are developed to present the multiobjective optimization. In addition, each objective has more than one influencing parameter. Under this circumstance, weighting factors of different influencing parameters of an objective are used. A product of objective function and weighting factor of influencing factor represents an objective value of an individual influencing factor. The summation of these values represents a total objective value of an objective. The summation of a product of weight and total objective value of an objective represents the overall objective value of each maintenance plan.

The result of the overall objective value optimization reveals that the most effective maintenance plan is 4-year maintenance cycle. It should be noted that the obtained optimal maintenance plan is similar with the optimal plan which obtained from the cost effectiveness optimization. However, the type of maintenance in first year is different. In addition, for the sections that their rails have reached the service life the heavy or medium maintenance are applied in first years.

The overall risk-based decision-making process is completed by accumulating the weighting factors and objective functions for the railway maintenance. The optimal maintenance plans which are obtained from the cost effectiveness and the overall objective value optimization, and current SRT maintenance policy are simulated to identify the PDF of cost effectiveness ratio. Among three maintenance plan the optimal maintenance plan which obtained from the cost effectiveness optimization yields the highest cost effectiveness ratio, the optimal maintenance plan which obtained from the overall objective optimization is the follower, and the SRT current maintenance policy yields least one. In comparison, the maintenance plans which yield the higher cost effectiveness are subject to higher variation of the cost effectiveness ratio.

The mean of cost effectiveness ratio or the standard deviation can be used for prioritize the prefer maintenance alternative in the decision-making process. In this study, if the decision maker prefers only the maximum benefit of the maintenance plan, the optimal plan which obtained from the cost effectiveness optimization is the final decision. In comparison, if the decision maker prefers the less variation of the benefit, the current SRT maintenance policy or the optimal maintenance plan which the overall objective value optimization are the better decision. The developed risk-based multicriteria decision framework is recommended to apply in the network-level management for planning purposes.

An overall risk-based multiobjective optimization reveals the other view point of railway maintenance selection that should be incorporated into the decision making process. The risk-based simulation does not intend to show that the result yields the better maintenance plan or higher accuracy than the deterministic one or the current SRT maintenance practice, but it demonstrates that the risk-based simulation reveals the possible cost effectiveness ratio that are neglected in the deterministic one. Moreover, the risk-based simulation results encourage decision makers to be concerned not only with the outcome value but also with the amount of risk each decision carries.

His thesis abstract is copied and posted.

ABTRACT
State Railway of Thailand (SRT) is a public agency which has the responsibility for planning, constructing, managing, and maintaining railway network in Thailand. Due to the maintenance budget limitation, SRT has established the Railway Maintenance Management System to manage their railway network. SRT has conducted the cyclic maintenance and collected their railway inventory data and its condition data. However, the determination of railway maintenance management system is solely based on the inspected track condition data.
However, an effective railway maintenance selection is the multiobjective decision-making process which is very complex and it is subjected to risk and uncertainty. This situation leads this study to modify the existing determination by applying the concept of objective function. The overall objective value is the summation of objective values for different objectives, influencing parameters, and their weighting factors which obtained from the Analytical Hierarchy Process (AHP). Moreover, some influencing parameter can be changed over time or beyond the control of agency. Therefore, the decision-making process may still expose to risk by invisible risky information.

To address this problem, a framework which takes risk into account is developed for selecting optimal maintenance alternatives. Incorporation of risk analysis by considering the inputs variables in the form of probability density function (PDF) then simulated by using Monte Carlo simulation technique. The result of a risk-based decision-making process can help SRT determine the optimum maintenance alternatives those are targeted towards maximizing benefits and minimizing cost under risk control. Finally, Northern and Eastern routes are selected to present as a case study of an overall risk-based decision-making process.

An Assessment Of The Performance Of Public Hearings As A Vehicle For Public Participation In Infrastructure Development Projects In Thailand

As the world of globalization evolves, there are inevitable and rapid needs of developments to fulfil global and domestic, social and economic demands. Infrastructures are part of those basic requirements. These include transport, communication, energy, water supply, mining, construction, chemicals and petrochemicals, and other relatively large-scale industries. The planning and implementation of these projects present unanticipated difficulties and risks. As a result, with the necessity of both international financial funds and investments, those development projects require many special considerations, especially Social Impact Assessment (SIA) and Environment Impact Assessment (EIA). Public participation has increasingly become a key element for development projects, creating new ground rules and new expectations for a host of funded actions. These are being addressed in developed countries.

In the past decades, many of the infrastructure development projects in Thailand have been initiated and constructed with total ignorance of the public opinion on the project. Moreover, the resource utilization was not clearly specified by development planners at the national level. They may have identified resources only indirectly in the national plans. These deficiencies caused many projects to be unsuccessful both in terms of national investment and the benefit to the public. It is even worse when the deficiencies in planning for construction projects lead to a high level of undesirable conflicts between the public and the project initiators, causing both reluctance on the part of investors or lenders and undermining the nation’s opportunity for faster development.

The important decisions have, traditionally, been made by the public bureaucrats who possess a high degree of technical expertise but who are not directly accountable to the citizens of the affected localities or states. More recently, there have been groups of people formed to express dissatisfaction with the outcomes of this kind of administrative process and have called for even more appropriate public participation.

In recent years, there have been attempts to resolve the conflicts by introducing a method that allows public participation, Public Hearing. Public hearing is one mechanism of public participation that enhances public involvement in decision-making of development projects. However, the full objectives of Public Hearing attempts are not yet achieved due to a number of difficulties such as the knowledge and familiarity of the people with the process, the understanding of their rights and roles to participate, and the process of the public hearing itself. Academicians have recently joined the process. They have assisted in setting up some kinds of people-centered planning and a reorganization of bureaucracies to effectively initiate and carry out infrastructure development projects.

Problem Statement
It is believed that public hearing could be an effective channel for public participation in obtaining public consent and, hence, reducing undesired conflicts during the execution of infrastructure development projects. Nevertheless, conflicts at public hearings conducted in Thailand have repeatedly been obstacles to expediency in the country’s construction of its infrastructure projects. Although it is perceived that public hearing can be the key activity that brings benefit in collecting useful information from stakeholders for government’s decision-making, the principles and the processes for conducting public hearing are rather complicated (Bureekul, 2000). Therefore, it has been evidently and continuously seen that the public hearings conducted in Thailand have hardly been successful. In most of the cases, it appears that public hearings create conflicts and dissatisfaction.
Lack of information, participation from people, sufficient publicity, and misconduct of public hearing, etc., can be considered as some of the factors responsible for insufficiencies and failure in project planning and execution. These issues make it particularly important to study the public hearings. Questions needing answers include:
· What are the benefits of public hearings?
· How are public hearings conducted?
· What are the purposes of public hearings?
· What are the problems being encountered in public hearings?
· What can go wrong with public hearings?
· How effective are the public hearings?
· How can public hearings be improved?

A study is necessary in order to identify and conceptualize the related factors for effective practice of public hearings. Mr. Ektewan Manowong’s previous special study has brought the fundamental area of knowledge concerning public hearings, including basic answers to the questions mentioned above. However, a more comprehensive study on the matters regarding the theoretical and practical aspects of public hearing is yet to be conducted. The above basic questions were basically answered with the broad understandings and explanations that have yet to be thoroughly examined in order to assemble knowledge concerning public hearings.

Mr. Ektewan Manowong conducted a case study for his dissertation in which the key issues to be addressed were as follows;
· What are public hearings intended to do?
· Do public hearings work properly?
· Why are there problems with public hearings?
· How have public hearings been disrupted?
· Where do the conflicts originate from?
· How to effectively implement public hearings?
· How have public hearings been conducted elsewhere?

Conclusion

Major conclusion from this research is summarized according to the following concerns.

Attitudes towards public hearing
In the five main case studies, the hearing participants had overall positive attitudes towards public hearing as a method of public participation in infrastructure development projects in Thailand. However, there were some concerns on appropriateness of implementing public hearing in the cases studied, as it was considered that many project stakeholders still lack knowledge and understanding on public hearing procedures. As such, there were still different opinions on acceptability of the hearings conducted in these projects. This reflects that the attitudes towards public hearing as participation method usually create expectation of good practices of public hearing. When the hearing fails to meet such expectation, it can be considered unacceptable. Qualitative analysis of additional cases supports this statement: if the hearing is not accepted by prospective participants or project stakeholders, the initiated process is regarded as meaningless/unaccountable, resulting in distrust and more conflicts.

Evaluation and satisfaction with public hearings
Generally, public hearings in the five main cases were found to be good and satisfactory. However, when considering details of each performance aspect, it was found that the “participation” aspect was rather poor and unsatisfactory. The public hearing rated to have good and satisfactory process integrity was the most recent one (Ta Chin). Many unsuccessful public hearings previously conducted in several projects may have led to awareness on implementing effective participation. Lessons learned from previous hearings were recognized and applied. However, many of public hearing performance criteria were still poorly achieved and the participants were dissatisfied with them.
Satisfaction with public hearings’ results and contributions
The participants were satisfied with public hearing output (result: report, conclusion, and decision) and outcomes (contributions) when they thought they achieved what they expected. On the contrary, those who thought their concerns/input not adequately listened to or incorporated into the decision-making process were dissatisfied. In addition, if the hearing participants were satisfied with the hearing result, they would also be satisfied with the hearing’s influence on conflict resolution. Since the interface conflicts among project supporters and opponents were not yet dissipated, the influence of public hearing in conflict resolution was considered to be rather poor.
Effectiveness of public hearings
Public hearing effectiveness was examined by considering the combined result of process evaluation and satisfaction with both the process integrity and output/outcomes. The studied public hearings were found to have rather low to moderately low effectiveness, as they have low to moderate evaluation and satisfaction scores. The effective participation process is better structured, participative, better managed, and more supported by the resource required by the process resulting in better contribution or sharing of benefits of the hearing process and, hence, satisfying the hearing participants/project stakeholders.

Structure of public hearing process
The research found that the current public hearing regulation B.E.2539 was considered to be generally good and acceptable by the survey respondents. The regulation provides rigid guidelines to facilitate the public hearing committee to conduct the hearings. However, it needs some degree of flexibility in order to appropriately implement it in unique situation. As learned from cases studied, the widely and adequately publicized hearing better covered the relevant stakeholders. The adaptable hearing process structure is a key influence that exerts and facilitates proactive participation, convenient access to project information, adequate procedural education, and good arrangements of the hearings.

Participation in public hearing process
Although it is a heart of participatory activities, participation in the hearings was found to be generally poor. Public consultation was not adequately carried out at low degree such that most of the initiatives were planned by the authorities. Good participation in the hearing process would allow project stakeholders, especially the members of the public, to get involved early in the process initiation and preparation such as setting up the committee and public hearing issues. At the hearing, due to ineffective control and cooperation from participating groups, it was found that the principle of participation was hardly met. Two-way communication was hardly achieved and most participants still lack of competence to effectively participate. As such, the studied hearings exhibited evident barriers to participation, resulting in poor ratings and dissatisfactions with the hearing performance.

Management of public hearing process
Management of public hearing process involves consideration of what means is to be used to ensure that the manner in which the work handled in hearing preparation and execution stages creates a sense of trust among groups of project stakeholders/hearing participants about the fairness and neutrality of the process. Public relation was found to be a managerial weakness of the case-studied hearings, as it was carried out mainly to convince the public on benefits of the project without real intention to early and consistently provide adequate education on the project and participation through appropriate media. Although the hearing structure provide instructions, the hearings can be poorly managed. Arrangements of hearings play a major role in facilitating convenient and satisfactory hearings such that participation is more encouraging. Fair control with established communication rules at the hearing are also part of well managed public hearing. Besides, the effective hearing process needs to be managed by experienced and effective independent facilitator, which would be more accountable to the public.

Resources required by public hearing process
Information, education, funding, and time were all regarded as important factors for public hearing process. The agencies responsible to conduct public hearing are required to commit sufficient funds and staff to support the process. In the cases of Thailand, limited budget and inexperienced staff were found to be major obstacles to prepare and conduct the hearings. However, more important resources of effective public hearings are not direct financial prospect. The public demands project information to be timely provided. Educational and technical assistance were also considered to be essential to hearing participants, not only for the affected people but also the other groups who had less capability to comprehend complicated issues and bureaucratic procedures of public hearings. As such, in order to enhance participants’ competence, it is essential to simplify the issues into the language of the people, facilitate fundamental and local participation, and allow longer time to participate in the hearing process. Satisfaction with hearing process and its contributions was considerably driven by the communication in the process. Well-informed and educated public would understand more on the subjects under discussion. Failing this, the hearing participants felt they could not competently and effectively participate.

Significance of the Dissertation
This dissertation addresses the results of research on whether the public hearing in Thailand’s infrastructure development projects can be an effective vehicle for the project’s public participation and conflict resolution on projects. It presents a scientific assessment of public hearing performance, constituting a significant step towards understanding and implementation of public hearings in the Thai context as well as their influence on the efficiency and effectiveness of the project management concerning stakeholder values. The research’s results and findings will benefit the government in helping it to define a public participation policy as well as to establish plan for conducting and evaluating future public hearings in infrastructure development projects. Also, by learning from the case studies presented here, the project owners will be able to better plan public hearing, as a public participation scheme, in their future projects.

It is already proved here that proactive public participation is essential for project decision-making during the phases of initial planning, site selection, design, construction, and operations. It is also learned that, through enhanced public hearings, project planners and managers could improve decision-making by including early public consultation in project planning as well as conducting thorough study on project impacts to assure stakeholders’ acceptance and satisfaction with projects.

His abstract is copied and posted.

Abstract
Many infrastructure development projects in Thailand have recently faced unanticipated difficulties and risks during the planning and implementation stages, mainly due to social and environmental conflicts. Project delays and objections are undesirable because of the large amount of investment and associated costs involved. Public participation has increasingly become a key element to promote socially and environmentally sound development. There are wide arrays of public participation methods but public hearing is the most commonly used in many countries. Despite its popularity, public hearing has been criticized as being ineffective as a method of participation. In Thailand, public hearing was introduced only a decade ago. Project owners, mostly government agencies, employ public hearing mainly to settle disputes in projects. Public hearing in Thailand also faced problems and disruptions resulting in skepticisms on its performance. However, since there is no other official method of public participation available in Thailand, public hearing is always called for when public participation is needed. Although many attempts have been made to initiate and implement public hearing, there has been little research on the evaluation of this method of participation. Since more resources are being committed to public participation in projects, it is necessary to derive a framework for assessing public hearing conducted in Thailand’s infrastructure development projects. The findings can be used to improve the effectiveness of public hearings and the quality of public inputs into project decision-making.

In this study, five cases of public hearing conducted in different infrastructure projects were selected for detailed study. Public hearings in the cases were analyzed quantitatively and qualitatively. Quantitative analysis was carried out mainly by means of questionnaire survey. The questionnaire asks public hearing participants to express their attitudes toward public hearing as a means for public participation, their evaluation of the hearing they participated in, and the level of satisfaction with the hearing process and outputs/outcomes. Participants’ rating on preparation and execution of public hearing performance criteria were analyzed through four aspects of public hearing process: structure of the process, participation in the process, management of the process, and resource required by the process. Apart from the five cases, secondary data on other cases of public hearing were also analyzed qualitatively using the same criteria. In the quantitative analysis of the five cases, the ANOVA test was used to explore attitudinal differences on public hearing method. Next, the Principal Component Factor Analysis was employed to group potential factors that have influence on hearing participants’ evaluation and satisfaction with public hearing. Finally, the Multiple Regression Analysis was performed to investigate the level of influence of the identified underlying factors upon the hearing evaluation and satisfaction.

Findings show that the public has positive attitude towards public hearing, believing that hearings provide opportunity to officially participate in projects. However, major problems are that the process is often poorly prepared and executed, making the hearing process to be of low effectiveness such that the hearing results and contributions are not satisfactory. Stakeholder consultation, information, education, participants’ role and competence, hearing arrangements and facilitation, and finally, publicity and incorporation of hearing results are among the major factors that drive successful public hearing. Since positive attitude towards public hearing opens the gateway for public hearing success, achieving the performance goals and satisfying the participants would make hearings more meaningful and constructive.