Globalization presents formidable challenges to developing countries as they struggle to compete in the world market. In Thailand, after the Asian economic crisis in 1997, a few construction firms which had survived through the crisis, needed to thoroughly re-examine the opportunities for previously overlooked cost-cutting and operational improvement. A construction firm often dangles between success and failure due to the fragile makeup of its capital structure, which generally consists of high debt financing rather than the equity. This situation is a result of the limited equity capital and results in high risk, and therefore, a high cost of debt to finance the large amount of money required to facilitate construction operations. To compete successfully, the construction organization has to skillfully and cautiously evaluate the investment in assets in order to obtain the most efficient use of the total available capital. Given that construction organizations generate their main income through contracted projects, managers have put a priority on allocating resources towards construction project needs. However, this practice in resource allocation does not optimize the utilization of organization’s resources as a whole. For sustainable competitiveness of construction organizations, the budget must be allocated with comprehensive strategic considerations. The aim is to continuously cultivate resources and capabilities to cover all the organization’s vital organs. It is hoped that through this approach, the organization’s core competencies can be strengthened.
During the previous decade, the Thai Government has continuously invested in large infrastructure projects such as the Bangkok Sky Train lines, Underground Train lines, Cable-stayed Bridge, as well as the renowned Suvarnabhumi International Airport. These projects require high technological capabilities which can not be fulfilled solely by local contractors. As a result, a number of international engineering and construction firms from Europe, United States, Japan, and China entered the region to undertake these sophisticated projects. Furthermore, following the Free Trade Agreement which Thailand has with many countries, an alarming number of foreign investors invested in large capital projects. Their targets included power plants, manufacturing plants, luxurious hotels and residential projects throughout the country. Local contractors who wish to survive in this new circumstance or enter into emerging regional market need to craft effective strategies and rapidly develop the required resources and capabilities to seize opportunities.
Ms. Piyanut Vorasubin made a research which purpose was to investigate the strategic assets and their mechanism in providing sustainable competitiveness for construction firms. The following research questions are addressed in her study:
1) What are the strategic assets underlying core capabilities of Thai construction firms?
2) How should construction organizations develop strategic assets in order to achieve the sustainable competitiveness of the organization?
The main focus of her study is to provide answers to the question stated above in the following areas:
1) To identify the strategic assets underlying core capabilities of construction firms in the Thai construction industry.
2) To explore how strategic assets drive performance of Thai construction firms.
3) To propose a methodology which guides construction firms to effectively manage strategic assets for the competitiveness of their organizations.
Research Findings
Strategic Assets underlying Capabilities of Construction Firms
Factor analysis with Varimax rotation was used to identify strategic assets underlying the six capabilities of construction firm. The six strategic assets found underlying the three direct capabilities are: 1) reputation development; 2) client relations; 3) networkability; 4) bargaining power; 5) project management; and 6) construction technology. The eight strategic assets found underlying the three support capabilities are: 1) financial stability; 2) risk and investment management; 3) strategic management; 4) organizational culture; 5) human resources management; 6) information technology; 7) learning organization; and 8) development and innovation.
Mechanism of Strategic Assets in Driving Firm’s Competitiveness
Strategic management was found driving all direct strategic assets and also closely correlated with most of the support strategic assets, especially risk and investment management and learning organization. Outstanding human resources management was found to negatively impact networkability and construction technology. However, it was found strongly correlated with other support strategic assets including organizational culture, strategic management, learning organization and information technology. This indicates the indirect effect of human resources on other support strategic assets. Without a firm’s long-term direction and appropriate culture, competent staff could harm the performance of the construction firm. Construction technology, which is a fundamental direct strategic asset required for long-term competitiveness of construction firms, was driven by learning organization and development and innovation.
Most construction firms in Thailand focus on direct strategic assets with the exception of construction technology. Among the eight support strategic assets, development and innovation is rated the lowest. Strategic management is not emphasized as it should be, in fact given an 8th ranking. These three strategic assets are important to long-term success of a construction business. The lack of these three assets would make construction firm vulnerable to changes in the market environment.
An Improvement Mechanism of Strategic Asset Management
Four parts are required to attain sustainable competitiveness in construction firms. Firstly, construction firm must develop organizational motivation in order to motivate and align the firm’s human resources as well as allocate other tangible and intangible resources beyond project level towards the existence of the firm. A construction firm needs to develop strategic management together with effective risk and investment management in order to drive the organization toward its long-term goals. Secondly, a construction firm should strengthen its operational foundation to guarantee continual flow of projects matched to the firm’s construction capacity. This is so that financial stability can be achieved. Three relational assets, specifically bargaining power with suppliers and subcontractors, client relations, and networkability, drive project procurement and marketing capabilities are necessary for the construction business. Professional project management must be developed to ensure the quality of construction services delivered. The quality of previous work will accumulate and result in an excellent reputation which is the strategic asset providing competitive advantage in the construction industry. However, to sustain financial stability, effective risk and investment management in line with the firm’s strategy must be developed too.
Thirdly, management must create an encouraging working environment so synergy among the firm’s human resources necessary for long-term development of organization can occur. Three strategic assets are required to create such a working environment namely excellent human resources management, positive organization culture and efficient information technology. Construction technology which is difficult or impossible to imitate by competitors is very critical to the long-term competitive edge of a construction business.
Nonetheless, the development of the three parts previously described cannot alone give the firm a technologically leading edge. The last part necessary for sustainable competitiveness of construction firm is development of technological excellence. This requires learning organization and continuous development and innovation to be in place. Not only great effort and time but a significant amount of long-term capital is necessary for such investment. Thus, financial stability, as discussed earlier during the development of strong operational foundation, is the prerequisite to build technological excellence. Sustainable competitiveness can be secured if long-term financial stability together with continuous development of efficient construction technology is successfully developed.
Recommendation for managers in Managing Strategic Asset
The improvement mechanism for strategic assets management, recommendations are made to assist managers of Thai construction firms in securing long-term competitiveness are detailed as follows.
1) Create organization motivation
• Set up an effective firm performance evaluation system to be able to assess firm’s strengths and weaknesses.
• Establish long-range planning extending beyond 3 years by setting long-term goals and identifying firm’s target clientele
• Develop cash together with investment policy and procedure in order to achieve long-term goals including retain earnings during profitable years and upgrade quality of cash flow forecast.
• Keep utmost discipline in matching source and utilization of funding.
2) Develop strong operational foundation
• Create relationship with investors and international construction firms.
• Develop informative client and potential client database.
• Establish procedure for suppliers/subcontractors evaluation and selection in order to develop long-term contractual relationship.
• Establish systematic project cost database for all completed projects.
• Set up periodical meeting to review firm’s cost structure. •Form project team with clear authority and responsibility.
3) Create encouraging working environment
- Develop excellent business philosophy to promote good ethics, team environment, creativity, and adaptability of staffs.
- Enhance staff participation by gathering staff’s feedbacks in development of business plan and policy.
- Establish career development path and fair staff promotion policy.
- Integrate accounting information system with the project tracking system in order to provide effective decision support.
4) Develop technological excellence
• Establish periodical cross-project and cross-department meeting as formal channel to exchange knowledge and experiences for creative problem-solving.
• Develop business operation manual in order to accumulate firm’s knowledge.
• Find opportunities to send staffs to external training, seminar, and continuing education valuable to firm’s long-term goals.
• Constantly monitor best practice from construction as well as other industries.
• Find potential partner for valuable technology transfer.
Her thesis abstract is copied and posted.
ABSTRACT
This study focuses on the management of strategic assets by construction firms in order to achieve competitiveness with the following three objectives: 1) to identify the strategic assets underlying core capabilities of construction firms in the Thai construction industry; 2) to explore how strategic assets drive the performance of Thai construction firms; 3) to propose a methodology which guides the construction firms to effectively manage strategic assets for the competitiveness of their organizations.
The pre-survey consisted of four case studies and in-depth interviews with industry experts. From pre-survey results and previous literature, a preliminary list of 106 resources and competencies valuable to construction firms was developed. The questionnaire was then designed using these 106 items, categorized under six organizational capabilities: marketing, procurement, construction, financial, business management, and learning and innovation. Questionnaires assessing the level of importance given to these resources and competencies were sent to 1,027 Thai construction firms, out of which 258 sets were returned.
Using the factor analysis technique, these 106 items were reduced to 14, termed as the strategic assets. To identify how these assets drive the firms’ performances, they were classified into direct and support strategic assets. The direct strategic assets were those directly related to the firms’ products and services, including excellent reputation, exceptional client relations, strong networking, strong bargaining power, efficient construction technology, and professional project management. The eight support strategic assets, which were indirectly related to the firms’ products and services, included financial stability, effective risk and investment management, explicit strategic management, positive organization culture, efficient information technology, excellent human resources management, effective learning organization, and continuous development and innovation. Multiple regression analysis was used to explain how each support strategic asset affects each direct strategic asset.
The framework in managing these assets was developed by stressing the important role of developing explicit strategic management together with excellent human resources management and positive organization culture. These three strategic assets are the key drivers in generating and upholding effective learning organization and continuous development and innovation which are required for sustainable competitiveness of construction firms. Based on the 14 strategic assets found, recommendations were made for managers of construction firms as follow:1) create organizational motivation; 2) develop strong operational foundation; 3) create encouraging working environment; and 4) develop technological excellence.
Monday, 15 March 2010
Wednesday, 10 March 2010
Delay Causations In Water Supply Projects In Dong Nai Province, Vietnam: A Lesson Learned From Nhon Trach Water Supply Project
In recently years, Vietnam has been remarkably successful in expanding infrastructure construction project. After the planned economy changed to market economy, Vietnam economic development has increased considerably. The key economic zone of the South of Viet Nam is the one which has developed with the fastest speed in the whole country, including triangle of strategic economic: Ho Chi Minh City, Dong Nai Province and Ba Ria–Vung Tau Province, of which Dong Nai province plays an important role in the development of this zone.
During the execution of construction project, timely construction of a project was commonly considered the key of project success. Project time can be evaluated as the vital factor in project management view of point because it affects directly on the profit of project if project time delay happens.
The perception of project time management in construction industry has been applied in Viet Nam for recent years. As at that point Vietnam carried out the open-door policy to attract the investment from FDI (Foreign direct investment) projects. For this reason, it is essential to collaborate with oversea business and knowledge for Vietnam’s construction industry. However, many problems have been revealed due to the deficiency of the proficiencies in project management, such as:
- Project delays take place usually in the development projects due to deficient transmission among other parties, weather condition, social policy or other factors. It is surmised that more than 80% of projects in Dongnai Province have the problems with time project delays.
- Even projects were finished on time; there are still many claims during the execution project.
Besides, the implementation of project time management in construction industry in Viet Nam and Dongnai province does not still achieve the effectiveness. Several projects delayed for a short time while some projects have been gone on for many years. Annually, the result of water supply project delays causes the huge loss of total investment. Because clean water is indispensable for the local citizens, the delay of water supply construction projects emerges as one of the most vital problems in urban management.
Normally, the success of a project is admitted if it was completed punctually, with the reasonable cost and quality. It is proved that the finish of every construction project will be on time and under budget only if it has been managed efficiently and effectively. Particularly, several previous researchers demonstrated that at least a half of project delay causations can be avoided by a proficient policy in project management.
Mr. Vo Hoang Phuong made a case study which two objectives were to: (1) identify delay causations in water supply projects in Dongnai Province, Vietnam; and (2) develop a framework to control and prevent delays in future water supply projects.
CONCLUSION
Delay causations in water supply projects in Dongnai Province, Vietnam.
Evidently, it is found that there are several delays causation seriously affecting on time extension and cost. The impact of delays on time can be realized by the comparison between project schedule and the real situation. Throughout the research, the Nhon Trach water supply project can be considered a case study to illustrate the success in control and prevent delays causation. Figure below shows the attempt to control and prevent delays during the construction of Nhon Trach water supply project. In the initial contract, the project is expected to complete within 26 months and it has been maintained 26 months.
A framework to control and prevent delays in future water supply construction projects
In order to significantly prevent and control delays in water supply construction project, five guidelines having the most potential were considered. The result from the real situations showed that delays can be prevented and controlled by carrying out several important strategies during the implementation construction project, including accuracy design in survey and investigation site condition, communication system improvement; qualify subcontractors, the overall standardization and price escalation management strategy.
The following is the guideline to control and prevent delays in water supply construction project:
His thesis abstract is copied and posted.
ABSTRACT
In general, completion project with destined time, cost, and quality is the basic target of construction project management. Regrettably, most water supply projects cannot be finished within intended time, budget and resources. A large amount of projects frequently performed time overruns.
Normally, time delay always happened in water supply construction project. With the purpose to solve problems, it was found that several approaches have been affected project time completion. There are many factors found as the major source leading to manage project time completion affectively.
This report summarized the delay causation factors involved in water supply construction project in Dongnai Province, Viet Nam. This research will be conducted by using qualitative research. Through a case study in water supply construction project in Dongnai Province, the data will be collected to analyze the facing problems. It was discovered from this study that there were many factors causing project time delays in water supply construction project. From the case study, effective solutions for controlling the delays will be investigated. Finally, a framework for controlling and preventing delays in future water supply construction projects is proposed.
Tuesday, 9 March 2010
Assessment and Improvement of a Safety Management System: A Case Study of a Diving Contractor in Vietnam
Offshore diving is reputed a dangerous and risky job because of its working conditions: high pressure and caisson disease, working alone in dark and deep water, using many types of equipment supporting from surface so safety requirements in diving operations are very high and strict.
In tendering for an offshore construction project, diving contractors are required to submit their safety management system to client to demonstrate that their businesses are managed efficiently and responsibly, and that they can provide a reliable service without excessive downtime caused by work-related accidents and incidents.
While offshore diving in some areas is heavily regulated, there are other areas where there may be little or no outside control of diving activities. In such areas the diving contractors themselves are left to establish their own internal controls by means of their company manuals and procedures. (IMCA D014)
To establish and implement or assess OHS MS of a diving contractor, beside applications international standards, national laws and regulations, and diving specific requirements should be considered and complied.
Mr. Dao Manh Tuong made a study which aim is to review requirements for safety management system of a diving organization, assess safety management system for diving services of PetroVietnam Manpower Training College (PVMTC) to identify non-conformances of the safety management system. From result of the assessment, some recommendations are suggested to improve the system. PVMTC is selected for his case study because they are the biggest diving contractor supplying diving services in oil and gas industry in Vietnam. To achieve the main objective, the sub-objectives are defined to: (1) review requirements for safety management system of a diving organization; (2) assess the existing safety management system of a Vietnamese diving contractor – PVMTC and identify the gap and non-conformances of the safety management system; (3) draw some recommendations for improving the current safety management system of the diving contractor.
Conclusions
OHS MS requirements of a diving organization
OHSAS 18001:2007 standard defines a model with elements of an effective OH&S management system for an organization and specifies requirements for the elements of the system. OHSAS 18001:2007 standard can be applied to any type and size of organizations (OHSAS 18001:2007).
The Regulations No. 41/1999/QD-TTg requires organizations operating in petroleum industry to have establish and develop effective safety management system but it does not specify a model of safety management system which organizations have to follow. In IMCA D014 – “IMCA International Code of Practice for Offshore Diving”, it does not require diving organizations to establish and maintain a safety management system for their organization. It requires diving organizations to establish a management system and prepare some documents to manage a specific diving project.
A comparison of requirements shows that there are correspondences between OHSAS 18001:2007, Regulations No. 41/1999/QD-TTg and IMCA D014. Documents of a safety management system comply with OHSAS 18001:2007 standard is also fulfilled requirements of Regulations No. 41/1999/QD-TTg. These documents could be reviewed and revised periodically or when necessary as defined by organizations. Documents required by IMCA are more detailed and extended for OHSAS requirements to control operations of a diving organization. Documents required by IMCA have to be reviewed and revised for each diving project.
Assessment of PVMTC’s OHS MS for diving services
The documentations of OHS MS in PVMTC are in general compliance with the Vietnam legal requirements. There are only two documents need to be prepared as required by regulations. Those are lists of relevant regulatory requirements and lists of specific requirements that fulfill the regulatory requirements in the area of safety and working environment.
The review of documentation and records of diving systems and of diving projects in Technical Services Department has shown that documentation; procedures and guidelines, and records for routine activities of diving system are prepared and performed very good and fulfill IMCA requirements. However, documentation required by IMCA to manage a diving project is not prepared adequately and regularly. They are prepared only when clients request. For example:
Diving project plan
Safety management system interface documents
Risk management process matrix
Risk assessment
Management of change procedure
Procedure for site-specific risk assessments
Procedures for control assessed hazards and risks
Recommendation to Improve the Existing OHS MS of PVMTC
From findings of the assessment some recommendations are suggested to improve the existing OHS MS of PVMTC to desired safety management system which complies with OHSAS 18001:2007 and fulfills specific requirements to which the organization subscribes.
1. Adapt the existing OHS MS to conform to OHSAS 18001:2007 and integrate with quality management system.
Improve organization structure focus on project management structure.
3. Identify and assess applicable legal requirements and other requirements.
4. Perform risk & hazard assessment for all activities of a diving project.
5. Standardize and document procedures for some routine activities and processes of a diving project.
6. Implement and maintain OHS programs and procedures
His thesis abstract is copied and posted.
ABSTRACT
Offshore diving is reputed a dangerous and risky job. Safety requirements in diving operations are very high and strict. A commercial diving contractor has to conform to various regulations, standards, codes and guidelines from local governments, the clients, and the insurers of the diving contractor or other outside organizations, societies, advisory committees and associations. To establish, implement or assess OHS MS of a diving contractor, beside applications international standards, national laws and regulations and diving specific requirements should be considered.
The aim of this thesis is to review requirements for safety management system of a diving organization, assess safety management system for diving services of PetroVietnam Manpower Training College (PVMTC) to identify non-conformances of the safety management system. From result of the assessment, some recommendations are suggested to improve the system.
The OSH MS assessment was conducted using checklists based on reviewing of requirements of OSHAS 18001:2007, Vietnamese applicable laws and regulations, and of diving specific requirements of IMCA. The assessment consisted of review of written documentation and performance of the existing OHS MS. No formal interviews or walk-through inspections of operations and work areas was done.
Finally, conclusions and recommendations for improving the existing system of PVMTC are drawn from findings of the assessment.
In tendering for an offshore construction project, diving contractors are required to submit their safety management system to client to demonstrate that their businesses are managed efficiently and responsibly, and that they can provide a reliable service without excessive downtime caused by work-related accidents and incidents.
While offshore diving in some areas is heavily regulated, there are other areas where there may be little or no outside control of diving activities. In such areas the diving contractors themselves are left to establish their own internal controls by means of their company manuals and procedures. (IMCA D014)
To establish and implement or assess OHS MS of a diving contractor, beside applications international standards, national laws and regulations, and diving specific requirements should be considered and complied.
Mr. Dao Manh Tuong made a study which aim is to review requirements for safety management system of a diving organization, assess safety management system for diving services of PetroVietnam Manpower Training College (PVMTC) to identify non-conformances of the safety management system. From result of the assessment, some recommendations are suggested to improve the system. PVMTC is selected for his case study because they are the biggest diving contractor supplying diving services in oil and gas industry in Vietnam. To achieve the main objective, the sub-objectives are defined to: (1) review requirements for safety management system of a diving organization; (2) assess the existing safety management system of a Vietnamese diving contractor – PVMTC and identify the gap and non-conformances of the safety management system; (3) draw some recommendations for improving the current safety management system of the diving contractor.
Conclusions
OHS MS requirements of a diving organization
OHSAS 18001:2007 standard defines a model with elements of an effective OH&S management system for an organization and specifies requirements for the elements of the system. OHSAS 18001:2007 standard can be applied to any type and size of organizations (OHSAS 18001:2007).
The Regulations No. 41/1999/QD-TTg requires organizations operating in petroleum industry to have establish and develop effective safety management system but it does not specify a model of safety management system which organizations have to follow. In IMCA D014 – “IMCA International Code of Practice for Offshore Diving”, it does not require diving organizations to establish and maintain a safety management system for their organization. It requires diving organizations to establish a management system and prepare some documents to manage a specific diving project.
A comparison of requirements shows that there are correspondences between OHSAS 18001:2007, Regulations No. 41/1999/QD-TTg and IMCA D014. Documents of a safety management system comply with OHSAS 18001:2007 standard is also fulfilled requirements of Regulations No. 41/1999/QD-TTg. These documents could be reviewed and revised periodically or when necessary as defined by organizations. Documents required by IMCA are more detailed and extended for OHSAS requirements to control operations of a diving organization. Documents required by IMCA have to be reviewed and revised for each diving project.
Assessment of PVMTC’s OHS MS for diving services
The documentations of OHS MS in PVMTC are in general compliance with the Vietnam legal requirements. There are only two documents need to be prepared as required by regulations. Those are lists of relevant regulatory requirements and lists of specific requirements that fulfill the regulatory requirements in the area of safety and working environment.
The review of documentation and records of diving systems and of diving projects in Technical Services Department has shown that documentation; procedures and guidelines, and records for routine activities of diving system are prepared and performed very good and fulfill IMCA requirements. However, documentation required by IMCA to manage a diving project is not prepared adequately and regularly. They are prepared only when clients request. For example:
Diving project plan
Safety management system interface documents
Risk management process matrix
Risk assessment
Management of change procedure
Procedure for site-specific risk assessments
Procedures for control assessed hazards and risks
Recommendation to Improve the Existing OHS MS of PVMTC
From findings of the assessment some recommendations are suggested to improve the existing OHS MS of PVMTC to desired safety management system which complies with OHSAS 18001:2007 and fulfills specific requirements to which the organization subscribes.
1. Adapt the existing OHS MS to conform to OHSAS 18001:2007 and integrate with quality management system.
Improve organization structure focus on project management structure.
3. Identify and assess applicable legal requirements and other requirements.
4. Perform risk & hazard assessment for all activities of a diving project.
5. Standardize and document procedures for some routine activities and processes of a diving project.
6. Implement and maintain OHS programs and procedures
His thesis abstract is copied and posted.
ABSTRACT
Offshore diving is reputed a dangerous and risky job. Safety requirements in diving operations are very high and strict. A commercial diving contractor has to conform to various regulations, standards, codes and guidelines from local governments, the clients, and the insurers of the diving contractor or other outside organizations, societies, advisory committees and associations. To establish, implement or assess OHS MS of a diving contractor, beside applications international standards, national laws and regulations and diving specific requirements should be considered.
The aim of this thesis is to review requirements for safety management system of a diving organization, assess safety management system for diving services of PetroVietnam Manpower Training College (PVMTC) to identify non-conformances of the safety management system. From result of the assessment, some recommendations are suggested to improve the system.
The OSH MS assessment was conducted using checklists based on reviewing of requirements of OSHAS 18001:2007, Vietnamese applicable laws and regulations, and of diving specific requirements of IMCA. The assessment consisted of review of written documentation and performance of the existing OHS MS. No formal interviews or walk-through inspections of operations and work areas was done.
Finally, conclusions and recommendations for improving the existing system of PVMTC are drawn from findings of the assessment.
Monday, 8 March 2010
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.
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.
Wednesday, 3 March 2010
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.
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.
Tuesday, 2 March 2010
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.
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.
Monday, 1 March 2010
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.
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.
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