Fifty four students from AIT Center in Vietnam visit AIT Thailand

Fifty four (54) students from Professional Master in Project Management from Vietnam came to AIT, Thailand from 28 Feb. to 7 March 2010 for their internship. During their visit, the professional master students took four courses on applied project managements. The 4 courses are:

1) Applied project management in Housing and Real Estate projects
The lecture was given by Dr. Theerathon Tharachai, Assistant Director, Research and Business Development Property Perfect (Public) Co.,Ltd.

2) Applied project management in Commercial Projects
Mr. Burin Kunnatipapong, Country Manager of Bovis Lendlease, Thailand served as the lecturer.
3) Applied project management in Petrochemical Projects
Mr. Lim Kean Peoh, Operations Manager, Technip Engineering (Thailand) Co.,LTd.and Mr. Polshom Chan-Urai, Managing Director, REPCO (Engineering Company in SCG Chemicals Group) shared their expertise to the students.

4) Applied project Management in Public Infrastructure
Dr. Maitree Srinarawat, Managing Director of Roads Association of Thailand provided the lecture.

Below is the group photo.

Key Performance Indicators For Local Government Infrastructure Development: The Case Of Sub-District (Tambon) Administrative Organization

A series of National Economic and Social Development Plans have been developed and implemented successively by different Thai governments, the latest being the Ninth National Economic and Social Development Plan for 2002-2006. The Ninth Plan decentralizes the responsibility to enhance the Thai people’s quality of life from the central to local governments (National Economic and Social Development Board, 2002). In rural areas, the Plan specifies measurable objectives; the core of which being rural infrastructure projects. However, these objectives should be achieved by adhering to a strict balance among the economic, social, and environmental impacts of development projects.

Rural infrastructure is an extremely important aspect of rural development as a key to rural social and economic life (Csaki and Haan, 2003; United Nations, 2004). In Thailand, rural infrastructure was placed as an important sector to support rural economic, social, and quality of life. The latest Thai National Economic and Social Development Plan (2002-2006) had realized by focusing on encouraging local administrative units to solicit in appropriate standardized infrastructure development. As part of the guideline for the formulation of operational plans and development program, a work plan must clearly identifies and prioritizes programs, projects and measures to assure development outcome accomplishment.

To enhance the capability and to empower the production and service sectors at the grassroots, in 1995, the Tambon Administrative Organizations (TAOs) or the sub-district local governments (the smallest local government units in the country) were established. Under the Sub-district Council and Sub-district Administration Act of 1994, TAOs are responsible for planning and management of infrastructure. These cover the infrastructure development and maintenance. The development endeavors encompasses conceptualization, execution, and operation at local level. It is the mission of TAOs to provide and promote efforts aimed at the availability and accessibility of infrastructure services (Leungbootnak and Charoenngam, 2003).

The successful completion of an infrastructure project in a reasonable time typically needs a large amount of investment funds (Ariaratnam and MacLeod, 2002; Clark et al., 2002; Dvorak et al., 2003). However, it is important to note a limited budget has been made available to the TAOs to support development programs. Accordingly, a decision by a TAO to invest in a particular infrastructure project always involves a trade off between the expected benefits from that infrastructure project and alternative infrastructure of social development projects. Therefore, the central government demands accountability for budgetary investments and disbursements undertaken by local governments. TAOs must therefore carefully select projects that are expected to optimize outcomes from such activities.

Due to the tight financial constraints, the government demands TAOs to enforce transparency and accountability in project investment decisions. The management of such infrastructure facilities and services is therefore crucial to use performance measurement as a tool to give decision makers an idea of how well that services are performing (Andrews, 2004; Gargen, 1997; Kelly and Rivenbark, 2003; Neely, 1999). Performance measurement is the phase of management that assesses how good a job the organization or individual is doing. In the context of rural development projects, performance measurement is an instrument for ensuring that a rural infrastructure investments successfully incorporates the desired development strategies (Ghobadian and Ashworth, 1994; Kloot, 1999; Pollanen, 2005). So, TAOs need performance measurement systems to determine how well the project is performing. This measuring instrument provides the feedback needed to evaluate performance on the entire infrastructure development process, from project planning through implementation, and maintenance.

To ensure that the developed project corresponds to rural people needs, it is crucial that performance measurement tool is designed and maintain. The Balanced Scorecard (BSC) provides the accurate understanding of a framework for the performance measurement (Crager et al., 2005; Kaplan and Norton, 1996a). In order to measure performance, the appropriate Key Performance Indicators (KPIs) need to be determined (Cox et al., 2003; Enos, 2000; Verweire and Berghe, 2004).

This dissertation aims to provide a practical perspective involves the focus of the performance measurement of rural infrastructure development in TAOs. Therefore, this study examines the current use and perception of TAOs regarding such performance measurement systems. The commitment of the TAOs to the implementation confirmed the benefits of the performance measurement intentions. A review is given of relevant literature regarding the evolution of performance measurement systems and their application to rural infrastructure development projects. The review additionally includes: the relationships of rural infrastructure and performance measurement, the function of the Balanced Scorecard, the function of the performance measurement, the function of value-chain and the function of critical success factors necessary for KPIs development.

In an attempt to measure the performance, the indicators are necessary to develop for the interpretation (Bruijn, 2002; Magistretti et al., 2002). The identification of the KPIs as well as align them with TAO strategies then becomes the key to realize:
· National Economic and Social Development Plan which emphasis the aims of sustainable development and well-being of Thai people
· Need for a comprehensive measurement of infrastructure development in rural area
· Importance in clarifying the infrastructure project development in their efficiency and effectiveness, and
· Importance in the approaching to the satisfaction of people in the community.

In response to the government’s obligation, Miss Suchanya Posayanant initiated a project which aim was to develop the indicators to measure the performance of infrastructure development in relation to the TAOs’ strategy of service delivery to the community. The study set out to measure the success level of infrastructure development of TAOs in supporting the delivery of infrastructure services to the community. The basis of the assessment systems is developed with performance measurement perception. To accomplish the set of goals, the main objectives are as follow:

1. Examine the existing practices of performance measurement systems and to comprehend the evaluation problems of rural infrastructure development. So that need and justification for the measurement improvement can be identified
· To measure TAO’s expectations and perceived accomplishments of infrastructure development in the areas of economic, social, and environmental development
· To examine the current practice of performance measurement in rural infrastructure development by TAOs
· To determine level of perception of TAOs’ expectation and accomplishment on economy, society, and environment issues
· To examine TAOs’ needs and awareness by using performance measurement in their rural infrastructure development

2. Design the performance measurement framework and Key Performance Indicators (KPIs) in response to the identification of the efficiency and effectiveness of infrastructure development in the approach of the Balanced Scorecard (BSC), Performance measurement, and Value Chain model.

3. Determine the appropriateness of the KPIs so that proper indicators can be proposed for rural infrastructure development of TAOs. The difference among TAOs characteristics in applying KPIs is the primary focus.

4. Determine the KPIs’ utility. For determining the utility of KPIs, a Prototype KPIs has been developed. The purpose is to fulfill the primary research objectives. The development and testing of a Prototype KPIs help TAOs to identify and measure the infrastructure project success and ultimate achievement.

Conclusions

The performance measurement in TAOs
From the survey results, most TAOs currently do not use and do not have access to a formal performance measurement scheme. Learning and growth was the only area in which over 90% of the TAOs use certain forms of performance measurement systems. In all other perspectives, more than half of TAOs had no measurement systems installed. Among the TAOs that have implemented performance measurement, the systems in use were reported informal systems and are usually based on informal and subjective discussions between TAO chiefs or committee members with the village people during meetings. In general, TAOs could provide an informal determination that rural infrastructure projects in their respective areas had effectively contributed to economic, social, and environmental development. However, because of the lack of formal performance measurement systems, it was difficult for TAOs to provide documentary evidence of the performance measurement of their projects.

It was shown that more than 95% of TAOs stated that formal performance measurement systems were needed to provide feedback on rural infrastructure efforts. They also revealed their intention to adopt these formal systems, if provided. Based on this, the BSC has proven to be an effective tool in evaluating rural infrastructure development performance in TAOs. The BSC allows them to assess performance from four important perspectives - mission effectiveness, people satisfaction, internal process as well as learning and growth. Where specific measures are likely to take place, the value chain provides TAOs with great insights into how development process are aligned and measured. Accordingly, the BSC-based performance measurement was developed for TAOs.

The development of KPIs and its framework
The BSC provides a comprehensive framework to define set of KPIs that reflect the CSFs of TAOs. The KPIs are classified and more clearly recognized by adopting the value chain model of TAOs as a framework. This section involves the development of the KPIs by providing concrete example on how the KPIs would look and support the rural infrastructure development in TAOs. As a result, the three phases approach for developing and using the KPIs are:

1. Identify critical success factors (CSFs) for TAOs
The CSFs represent key area of activities that TAOs must meet in order to improve their performance in the development of rural infrastructure. These CSFs established by the BSC approach during the data collection. This focus directly linked to the mission, vision, and strategy, and four performance perspectives: (1) mission effectiveness, (2) people satisfaction, (3) internal process, and (4) learning and growth. Each perspective is analyzed through a set of CSFs: (1) achievement of infrastructure to support social-economic development; (2) people participation; (3) effectiveness of project delivery; and (4) employee competency. These critical areas ensure strategic success achieving in order to provide public facilities and services.

2. Identify value chain model of TAOs
The value chain model for TAOs provides a template that offers a way of analyzing sequence of the infrastructure development activities. Observations and interviewing to TAO chiefs during the second visits to TAOs were found to be valuable in developing and refining the value chain model. The study proposes the value chain model as instrument to align performance measurement along the different development stages. Figure 1 shows a template of CSFs meant to measure project development performance that parallel among the value chain processes.

3. Identify key performance indicators (KPIs)
Once the BSC and CSFs are defined, the KPIs are necessary to specify both to measure the objective’s performance in such critical areas and to demonstrate a tangible success in the extended value chain. Based on these factors in mind, a total of 31 KPIs were developed to measure rural infrastructure development shown in Table 1. KPIs can be classified and more clearly recognized by adopting the value chain model of TAOs as a framework (Figure 2).






Testing the appropriateness of the KPIs
The third research objective was to test the preliminary KPIs appropriateness in different TAO characteristics. Where a set of 31 KPIs was defined, it was found that a statistically significant difference existed among the TAOs. The appropriateness test was grouped into the following four categories:

1. Acceptable: the KPIs measure and track TAOs performance success of the infrastructure project towards (1) Economic development; (2) Social development; and (3) Environmental development.

2. Importance: the KPIs can be used to support and make more effective management decisions.
3. Database readiness: the availability and accessibility to the database which enable TAOs to keep track of the KPIs’ role in the organization.

4. Information Accuracy: the accuracy of information becomes important to certain the KPIs that give sufficient accuracy to the rural infrastructure concern in TAOs.

The majority of the TAO respondents agree that the preliminary KPIs are acceptable for TAOs. However, the TAOs may be counted in a different infrastructure project with different objectives and providing different appropriateness of the KPIs. Due to the priorities and performance criteria, some of the KPIs applicability perceptions are different. Further analyses reveal significant differences among the TAOs, depending on their region and level. The information accuracy of the KPIs depends on the “Personnel Proficiency”, which is determined by the experience and knowledge the employees gained from their individual projects. The scorecard perspectives are considered as a framework approach to the performance measurement indicators.

Implementation of KPIs
This section has presented to support TAOs in practice to better handling and ensure the success of their infrastructure development. In addition to the previous section, the prototype KPIs was perceived as a helpful tool that encourages the performance measurement that reflects the efficiency and effectiveness of the development projects. The results were then subjected to an expert opinion focus group to further verify the KPIs appropriateness.
This phase describes the findings from the focus group interview, which was gathered from participants across 12 TAOs with four types of development focus area – agriculture, industry, commerce, and tourism. The participants have experience in rural infrastructure development more than five years. All of them worked in the first-level TAO, which generates income more than 20 million baht per year. Below is a summary of the guidelines and findings on transcribing interview data:

Applicable to TAOs
- TAOs use these KPIs as measurable indicators of their project development success towards achieving their mission.
- The KPIs were tied to the four BSC perspectives. The indicators clearly assign proper target measures for each rural infrastructure development objective.
- The KPIs in the mission perspective were considered as the most concrete indicators.

2. Importance for Decision-Making Process
- The KPIs are relevant enough to support the measurement of infrastructure development success.
- The KPIs are a helpful performance management tool for evaluating of the management processes and results of infrastructure development.
- The improvement of infrastructure development is based on planning and actual data in the KPIs database.

3. Database Readiness
- The KPIs provide specific predefine measures which enable TAOs to focus on database access.
- TAOs have database gathered from the planning and output data of infrastructure projects to support those KPIs.
- TAOs need to keep information database current.

4. Information Accuracy
- The KPIs require unbiased personnel to measure performance based on these indicators.
- TAOs can provide accurate information to fill in the KPIs for measurement decision.

The example detailed of the prototype KPIs demonstrates the usefulness to measure accurately the TAO’s rate of improvement. The prototype provides two levels of measures. The executive report highlights the development performance against four perspectives. And the operational reporting is designed to support the detailed measurement. The approach was therefore, first, TAOs set targets for each KPI based on information from the past year. Then, measure performance against the KPIs and compare with target performance. The results of the comparison support the understanding and clarifying of key development problems. These KPIs aid decision making for improvement in the process of generating planning and execution of infrastructure. The use of KPIs will help TAOs move towards the kind of performance improvement desired.

Her dissertation abstract is copied and posted.

Abstract

The purpose of this study was threefold. One, the study was to examine the perceptions and current practice of Tambon Administrative Organizations (TAOs) in rural infrastructure development regarding the performance measurement systems. The aim was to determine TAOs’ commitment to adopt formal measurement system if provided. Two, the key performance indicators (KPIs) appropriateness was accordingly explored to provide accurate picture for TAOs to the satisfactoriness of the development results. Three, a prototype KPIs was developed for TAOs that help define and measure the project success and ultimate achievement.

In order to examine the existing practices of performance measurement systems, documentations and personal interviews was conducted. To explore in depth of TAOs’ performance measurement practices, the questionnaire survey was administered to a sample of 120 TAO chiefs, who had extensive experience in infrastructure development and management. 43 responses were returned representing a 36% response rate. Descriptive statistics and chi-square analysis showed that while most respondents have developed informal means to evaluate the effectiveness of infrastructure initiatives, the TAOs have realized the importance of performance measurement. The TAOs have affirmed to formally adopt performance measurement if such systems were made available to them. Based on the results, the commitment confirms the significance of the KPIs development and application.

To further create KPIs, documentation, observations, and expert focus groups were held to give an insight into the adaptation of the Balanced Scorecard (BSC) framework which link critical success factors (CSFs) and TAO’s value chain. This had led to a specific measure of TAO’s performance in rural infrastructure development. To test and further determine the KPIs’ appropriateness, the method used was questionnaire survey and included both descriptive and Kruskal-Wallis one-way analysis of variance. The sample was purposively selected from 617 TAOs that were first established administration and have become a dominant in infrastructure development activities at the local level. 298 questionnaires were returned, generating a 48.30% response rate. There were ten experts to the focus group interview held to summarize the data for analysis from the meaningfulness of the experience from the participants’ perspective. The results from Chapter 5 denote a number of findings. First, the KPIs are acceptable to the majority of TAOs. Second, the applicability perception differences on each of the KPI were obvious among the four regions of TAOs. TAO’s choice of indicator will depend on its strategy which coordinates people living and working in the areas. Finally, results of the research data revealed that the TAOs from the five levels place differences applicability perception on each of the KPI. The KPIs applicability perception is based on three-year rolling budget plans that will enhance the quality of infrastructure and services for the community.
Lastly, in this dissertation, a prototype KPIs was developed and tested to determine the KPI’s utility. Data are collected from 12 TAOs. The prototype KPIs illustrates a quantifiable measure that the TAOs use to communicate development performance for the success. It supports the recommended infrastructure project improvement activities. The focus group, convened ten experts, validated that the prototype KPIs is successfully formed and implemented by the TAOs. The prototype encompasses two sections, one to measure overall success of TAOs, which associates executive view with the scorecard. The second section addresses operational report, which details the KPIs measurement in each perspective of the BSC. This report enables the executive to pinpoint the decision to the most suitable infrastructure projects where the TAO chief can maintain success and improve on the most severe performance degradations. Focus on the KPIs, it is expected that the central government could instantly provides advisory and support for the projects necessary to achieve the performance goals for each Tambon.

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.