Risk Management in the Design of Large - Scale Construction Projects: Case Studies of an Urban Area and a High-rise Building Project

Problems in the design of large-scale construction projects may come from many stakeholders: Owner, Designer, Project Management Consultant and external environment.

There are many kinds of problem arising from the Owner such as (i) sometimes they can’t finalize what they really expect in their project. The requirements are very vague and just base on their feeling; (ii) the structure is not well-organized. Everybody can give out opinions but no one makes decision; (iii) when employing the consultants, owners don’t have the right model of project team structure. The consultants are not put in the right position with proper scope of works and obligation.

The problems of Project Management Consultant are that sometimes they can’t fulfill their duty in assisting Client to conclude their requirements reasonably and to arrange the project team structure in a right way or can’t define the procedure of working and making decisions. Also, they can’t well manage the project team to shorten the time, eliminate the error, and reduce the cost. The project working environment is not efficient and effective because people in the team are not aware of the other member’s duties or how to contact them. In other words, many Project Managers in Viet Nam nowadays are just the Post Men.

As to Designer, most of their problems come from the unclear design contract without necessary conditions binding relevant parties to their commitment. This weak point becomes more serious especially to the large projects owned by many organizations and involve in many parties with different cultures, different customs and constructive understanding.

Last but not least, problems may emerge from the external environment, such as laws, regulations or market. These factors form an uncertain circumstance which needs to be well identified, and planned the measures to deal with.

Mr. Do Tran My Thuy made a case study which objectives were to: (1) identify the key risks affecting time, cost or quality during design process; (2) find out how to mitigate these risks through contract conditions, communication or some other management tools. Also, to define the role, responsibility of three parties: Owner, Project Management Consultant and Designer in mitigating these risks; and (3) identify the activities and required documents in each step of Design process.

Conclusion

In the design of large-scale projects which involved many investors and many professors in different fields, there are usually 12 risks relating to 3 groups of stakeholders such as Owners, Project team and external environment. Two among these risks are from the external environments which are “unpredictable response from Authorities” and “changes by unforeseeable causes”. These are difficult to be prevented, so the mitigation is just the negotiation between Owner and Designer on how to share the consequences if the risks happen. Ten reminders can be prevented or mitigated through a proper working process and three kinds of document.
A proper working process is the one which creates the reliable bases for the Owner to make proper decisions.

Three kinds of document are Design service contract, Design Brief and Project Management Plan. The purpose of these documents is to set out a clear, impartial working environment for all parties in the project. Depending on the specific situation of the project, each document can be amended a little bit, but there are some critical issues in these documents which are necessary to be considered and discussed carefully by the Owner, Designer and Project Management Consultant. The role and responsibility of these three parties during the design process are also found. Details of the finding are summarized in figure 4-1. Apart from these preparations, another tool to mitigate the risk is Communication. Communication should also be planned through three aspects: communication method, communication form and critical points to communicate.


Recommendation

The Project Manager should consider the steps shown in the table to prepare for large-scale construction projects.


His thesis abstract is copied and posted.

Abstract

Managing risks in construction project has been recognized as one of the key factors in the process leading to the success in term of time, cost and quality of a project. However, until now most researches in risk management have focused on the construction phase, rather than design phase. This paper aims to identify the risks in the design of large-scale construction projects and find out how to mitigate these risks. Through the two case studies in two different types of projects (one Urban Area project and one Building project), twelve risks are identified and risk mitigation are proposed. It is concluded that to mitigate these risks, the Project Manager should pay attention in several issues. Firstly, the Pre-design phase at the beginning of each project can not be omitted. This important phase results in a Design Brief and Project Management Plan which together with the Design Service contract made stronger commitments of parties. Secondly, FIDIC- white book which is usually used as the standard form in Architectural Design practice in Viet Nam nowadays needs to be added or amended some conditions. Lastly, communication also needs to be planned and implemented in a right way.

Claim Management And Analysis: A Case Study Of High Rise Building Project

Normally, the success of construction claim management is the satisfaction of all parties involved in the project. This success must be started from the preparation of each claim such as entitlement, cost and documentation.

Normally, there are two parts of each entitlement for each claim. The first one must set up the legal / law as well as other data base on which normally extracted from the construction contract document. In case there are conflicts, the entitlement must be separated into many branches so that they can be understood easily in a logical express. The second one must describe the variation of the work and express the action of the contractor to each change, especially in quantity and quality.

The cost section is normally based on the available cost in the signed contract. The costs of each work must be considered carefully because they can affect the relationship between each party. In the contract, cost is always limited such as “can not be changed in case the total variation is smaller than 0.2% of contract amount for example”, etc. It is necessary to breakdown and explain the party how the cost is developed in this section.

Documentation seems to be the most important for the success of a construction claim. Generally, all the documents which involve to the claim such as variation order, drawings, contract, specification, etc must be included in this section. Project manager, site manager, engineers, consultant, lawyers and others are always involve supporting for the full success of this documentation.

Base on the above analysis, expert can pick out the weak points and strong points of each company for claim management and they can improve them. The guidelines below would be helpful to companies to improve their claim management :
• The project design and handling must be integrated in claim management
• Make the tight communication inside your company about the claim situations
• Prepare and check carefully the documentation which will support for the claim
• Reviewing all signed contract to check if they are feasible contracts or not
• Have an expert in making decision for the strategic claim

The following normally are the most related potential problems which affect the project entitlement, cost and document in construction claim:
• Scope definition is incomplete and inadequate
• Lack of integrating and understanding of each scope of work
• Not tight contract document
• Not enough condition from the client to support the contractor to execute the work
• Catch up the schedule by accelerating
• Acceleration of contractor without submitting claim to the client
• Delays
• Changes in work because of imperfect contract drawings lead to the disruption

According to Keith Pickavance (2008), “Poor quality of project documentation leads to poor factual evidence and present serious difficulties in identifying the rights of the parties.”

Lack of communication normally leads to the delay of the project and also shows that the project management is bad.

Mr. Giang Thien Duy Nguyen made a case study which objectives were to: (1) study claims in high rise building construction progress; (2) study what analysis method is used for claim; and (3) study the prepare effective claim analysis frame work.

Conclusions

In this study, the framework on claim analysis is designed. This study helped the claimant understand clearly about the claim documentation, the way to prepare a claim, the method to calculate the quantity – cost - profit – overhead, etc. The design documents are the most important thing during construction progress. The fewer the errors, the fewer the missing information, therefore fewer claims. So, the Client just should sign consultant contract with a very experienced Project Management company.

Furthermore, the Contractor’s ability is also very important. Their experience will help the Project Management foresee what would be the errors, and what information should be adjusted instantly. Their experience will both PM and Client to reduce the cost of the project by properly proposing method statement as well as cheaper but good quality material.

Recommendations

• In general, a tight contract such as the signed contract of the above project seems to be unfair with the contractor because of the clause “Contractors have to arrange and execute themselves to complete the project, no claim of weather condition be admitted by the PM, by the Client”, because in fact, contractor can not complete their mission if the weather condition is of disadvantage.

• Claim framework as well as procedure of claim approval should be applied but not in all cases. It’s up to each project character, it’s up to the relationship between the Client, the PM and the Contractor. Personally, the applied solution of the above project (using “technical meeting book”) is highly appreciated. This solution helps all parties speed up the schedule and everything can be solved quickly and fairly.

• Any how, the documentation, the factual support for the claim, etc should be prepared carefully so that every parties can review those easily and also for easy contract liquidation later.

• Careful preparation of all related document will help parties to avoid disputes.

• The level of project manager of the Client, and of the Project management is also very important. Their experience will help all the claims if any, be solved and be approved without disputes.

• Once again, a successful project is a project which brings benefit to all parties involve in the project. Therefore, before the problem starts, all parties must try their best to solve them first.

His thesis abstract is copied and posted.

Abstract

High rise project budget increased, project delayed in construction can be caused by a number of changes in a project such as scope change, extra work, lost productivity, acceleration, contract termination, etc. Many factors by many parties cause those matters. However, in general, cost & schedule control are really complicate. Non-critical activity does not make the affect to the project schedule, does not make the delay, and does not impact to the project amount. On contrary, the delay of a critical activity will make the project delay and impact the project amount also. The delay caused by critical activity will cause the damage to other parties. The reason of delay does not origin from any party but origin from no party (e.g. bad weather conditions). Base on those factors, each party can claim each other to protect the right of them. So, for a high rise building project, what should we do with a claim, when will we claim, how claim can be calculated, etc, that is main content of this case study.

Chuc mung Tet Tan Mao 2011

A Critical Appraisal Of Client Briefing Process In Construction: A Case Study Of Residential Project

Briefing is a communication process combined with record system to publish a set of documents to the design team. It is a process of developing a deep understanding about the client's needs, and it is a continuous interaction and involvement of the client where in this process, the role of professional team is very important. Through good briefing and grasping what the real needs are, client and professional consultants can work more effectively and productively on project and make decisions confidently.

Since Vietnam’s construction industry is attracting investors impressively by the possibility of its profitability, therefore, the development of strategies for international construction demands is very essential to meet the client’s objectives in terms of function, quality, value, time, and cost certainly. In contrary, Vietnam’s big problem is the lacking of skilled person to meet the requirement of construction project which lead to late delivery and over budget. Oftentimes, requirements and demands from clients are not collected adequately to provide solutions and the result is inappropriate.

Ms. Nguyen Chau Dieu An made a case study which objectives were to: (1) review the concepts, definitions of client and client briefing in construction in order to understand the client’s expectation through the client’s briefing process; (2) review the methods for strategic client briefing and other relevant literature on client briefing; (3) present the problems of briefing in a specific project in Vietnam and its solutions; and (4) propose a framework of briefing for next project.

Conclusions

Briefing has long been recognized as an important and essential part in the international construction process. It has a substantial contribution to the success of a project. However, briefing has not been acknowledged in the formal way by client and consultant in Vietnam construction industry. Client and consultants are not aware of the importance of the briefing process and most of them have not been trained with the factors related to the client’s brief.

The literature study shows the essential activities and interactive relationships involving the client organization and the design team as they progress through each phase of the project. It provides valued information to achieve assessments and project objectives.

Some problems in this study revealed that architect is stuck by not admitting what a paramount briefing and clarifies elements which important roles play in a successful project.

To know the client’s objective through the briefing process, the literature has been reviewed on the concepts of the briefing process, the definitions of a client, client’s expectations and the client briefing process within the construction. The investigation tried to understand the expectation of clients through the client’s briefing process.

To apply techniques of briefing process for architect, exploring different methodologies and tools that can be used to establish client’s demand and expectation on construction project such as questionnaire development, need analysis, briefing content, and communication.

To understand the administrative and official process impacting on the briefing process, involvement of client, stockholders, end user, and consultant during the process is very essential. Managing changes of requirement, recording verbal communication, and making decision are factors in briefing administration which has impacts towards the success or failure of project.

Aside form these, this research also provides the methods to the briefing process to get requirements from client such as empowering client, managing project, parties’ involvement, team building and using computer system, communication skill, and record system.

Although there are still some problems in Vietnam construction industry, this study has been achieved by the conclusion that the industry will be focused on a briefing process especially in application methods of briefing, training and proper acknowledgment of a brief to get efficiency and profitability from the project.

Recommendation

Recommendation to improve briefing process in Vietnam construction industry

Perceive role of briefing:
Need to train all parties involved in a project, be aware of how important the briefing is, the role of briefing in a project and contribution of briefing to the success of a project. Through a better briefing, an architect can get what the real client’s wants and client’s expectation. Even the clients will be able to make decisions related to investment with great confidence.

Understand briefing process:
Briefing process is an interactive process between the client and professional teams and briefing happens continuously during a construction process. Briefing process needs many techniques, tools to get requirements and demands from client such as team building, getting information, analyzing, managing changes of requirement, recording, and communicating.

Apply different techniques in construction:
Find out various techniques to apply in a briefing process such as using computer system to improve communication between client and professional team (Science & Engineering Research Council) includes general approach, questionnaire development, data analysis, and system contents.

Her thesis abstract is copied and posted.

Abstract


Client briefing plays a crucial role in success of a construction project. A successful briefing can achieve the target time, cost and quality for a project and make decision on project confidently. Although there are many attempts to approach client’s requirement and needs for a project, it is still not collected adequately to make appropriate solutions in design. In Vietnam, client briefing is not considered an important process and architects usually focus on design without paying any attention what their client really wants.

The objective of this research are to provide a basic knowledge of briefing process which is not consider as a integral process in construction process in Vietnam, present research, analysis of problems of briefing in a project and recommend a briefing framework in order to avoid client’s frequent changes and control information collected systematically.

This Project Report has taken a general view of Briefing Process in theory and analyzing a case study that applied in VN to find out reasons of failure, lack of briefing techniques. The report points out that a framework of briefing need to be established for identification what a client really wand and clarification of client’s demands.

Risk Management in Price Adjustment Contract: A Case Study of a Construction Project in Vietnam

During the past years, Vietnam’s construction projects used lump-sum contract and fixed unit price contract as the universal contracts. The lump-sum contract has advantages of easy acceptance of work and contract payment. If the Contractor implements the drawing and specs correctly as agreed, they would be paid 100% without any dependence on increase or decrease of the original work in the contract, or any price fluctuation in the market. While fixed unit price contract has advantages of enabling all parties to quickly implement contract payment. That is because the unit price is already fixed no matter what the real price in the market. The remained problem is determining the volume of work under actual situation. This part is quite easy to carry out and unlikely to cause argument.

However, both of these two contract forms revealed their big disadvantages in "price-storm" from the end of 2007 through the end of 2008. At that time, prices of fuels and materials such as gas, petroleum, steel, cement, brick, sand, stone, electric cable, wood, glass increased suddenly. Some materials increased the price three times. This is not the first time that contractors encounter problem of price fluctuation. At present, the price is gradually approaching the global price. Therefore, construction projects during this period were affected significantly by the “price-storm” and many contractors face risk of bankruptcy.

To solve this problem, the Prime Minister launched document 164/TTg-CN on January 29, 2008 saying “...deal with construction cost in lump-sum contracts”. After that, some authorized institutions like Ministry of Construction and Department of Construction launched many documents to guide adjusting form’s contractual prices of lump-sum contracts and fixed unit price contracts to contract price based on adjustable price form. The purpose of these documents is to solve the difficulties for Contractors and hasten projects implement.

After this event, contract price based on adjustable price form (volume under actual situation and cost adjusted under conditions in the contract) was preferred to use for many projects. However, most of this type of contract only has a very general content as “adjustment under guidance of the Government in case of price fluctuation” without any specific scope and methods to adjust. The result is, during the process of implementing the contract, there were many arguments on determining the adjusted unit price to pay the Contractor. Until now, many projects cannot execute price adjustment.

Mrs. Hoang Thi Hai Anh made a research in which she wanted to point out the problems in signing and implementation of the contract that has contract price based on adjustable price form of a project in Ho Chi Minh City, Vietnam.

Conclusions

Form and lump-sum or unit price contract is no longer suitable for big construction projects especially those with long construction time due to fluctuation in price of materials in Vietnam as well as in other countries. Using contracts under adjusted cost now is encouraged by the Government. However, during contract signing, all parties need to bring out their own rules clearly and specifically, and have to commit to obey those rules. Through the case study, there are two reasons revealed which lead to troubles when implementing the contract such as:

1. The Contractor intentionally proposed low price to win the tender. However, they misunderstood the meaning of the contract under adjusted cost. They think that although the price bid was low, still, they will be paid according to real price on the market during the time of payment, where actually, price adjustment is just to supplement fluctuated price between the time of signing and paying the contract, not dependent on if the tender price is high or low.

2. The Client was passive and did not foresee difficulties when paying the contract. They also relied too much on Government guidelines. Before planning the contract, they did not put forth conditions in relation with adjustment price such as adjusted scope, formulas, and bases to determine adjusted cost.

Recommendations

In the long term, the contractors need to know how to protect themselves and have to consider carefully when receiving the tender to implement the contract accurately. They should also be fair to accept loss. All parties need to learn experiences from developed countries to apply international rules in construction contracts. At the same time, they should also be more active and fearless to bring out conditions for cost adjustment with appropriate characteristics, scale and schedule for each project.

Her thesis abstract is copied and posted.

Abstract

Risk management in construction contract is always important items helping reduce the arising damage or disputes and is a solid basis to force the parties to fulfill their responsibilities in the contract.

In the contract, payment issues are always the core issues and often controversial if it's not really clear. Contract price adjustment due to price fluctuation is quite outstanding issue in Vietnam from 2008 to now; it has made the authorized agencies issue up to ten guiding documents within only one year to settle the problems during contract performance. With my own experiences, in this report I would like to talk about the popular errors while preparing the terms of payment of contract, especially the contracts in which form of contract price is based on adjustable price of the State-funded projects in Vietnam.

I do hope that my ideas shared above will help the Contractors and the Clients of the similar projects minimize the risks in the construction contract.

Environmental Impacts Assessment of Nam Ly Bridge – Ho Chi Minh City, Viet Nam

Given Vietnam’s newfound prominence in Asia as the “The New Land of Opportunity”, people search for every opportunity to develop the economy and to satisfy the increasing demands especially in construction of infrastructure. When people gets profit in exchange of other use of land, water and other natural resources, there will be an equal impact in the environmental condition both natural and social.

The question is how to reduce these changes, while still aiming for economic growth.

Ms. Trinh Thi Thu Ha made a case study which main objectives were to: (1) study environmental impacts assessment methods; (2) compare of the Viet Nam’s policies and ADB’s policies in EIA; and (3) study environmental impacts assessment of construction project in Viet Nam

Conclusion

EIA is one of the policy tools that are used to evaluate project proposals. It is also a relatively recent development when compared to use of economic appraisal methods in Viet Nam.

Most of the construction projects in Vietnam which will invest funds from many different capitals are required to comply with laws and regulations to implement the project, and EIA must be researched in Preparation stage and presented in the Appraisal stage.

The contents of the EIA is usually consists of 9 parts such as: Introduction; Description of the Project; Description of the Environment; Alternatives; Anticipated Environmental Impacts and Mitigation Measures; Economic Assessment; Environmental Management Plan; Public Involvement and Disclosure; and Conclusions.
The EMP explains how the measures will be managed, who will implement them, and when and where they will be implemented.

During project implementation, the clients must implement properly the approved content of the EIA to ensure that the negative impacts have been mitigated so that the environment and the community have been protected for the sustainable development objectives.

There are differences between Vietnamese policies and the sponsors’ policies for EIA in Vietnam. With ODA projects, World Bank and Asian Development Bank have also established regulations and guidelines to ensure that EIA applies to projects funded. Possible policies and activities required them in different way, but the process is relatively the same for the building and approving the EIA. In Vietnam, in addition to the applicable policies of the sponsors for the project, the EIA also have to establish compliance with current policies of the government of Vietnam.
However, if there are differences between the policies of Vietnam and the donor's policies, they must apply the policies of the donors, which is required in the loan terms.

Recommendations:

1. Adjustment or harmonization of policies and laws in the implementation of EIA, without gaps to the policies of the donors (ADB, World Bank, etc.).

2. The Government should establish training programs for students of the EIA and raise awareness and capacity about the protection and management for environmental leaders, department managers and community;

3. Establish public databases and share the parameters of environmental quality for other projects in Vietnam;

4. There should be public participation during the implementation of EIA. The project must be publicly reviewed and evaluated by the public.

5. Full finance for the EIA study.

Her thesis abstract is copied and posted.

Abstract

The demands of people increase rapidly while the resources are limited. To satisfy the increasing demands, people search for every opportunity to develop the economy. Because of that, investing for construction of infrastructure is a need to develop economic regions, is a progress in the development of the society.

When human bring in financial to change the patterns of use of land, water and other natural resources, they will receive back profit from economy development, but will also change the other elements of the environment like natural condition and social.
Reducing the burden of environmental impacts is necessary if development is to become sustainable. Environment Impact Assessment (EIA) has become of ever increasing importance as a tool for development decision-making.

Environmental impact assessment, as a national instrument, shall be undertaken for proposed activities that are likely to have a significant adverse impact on the environment and are subject to a decision of a competent national authority.
In practice, EIA is applied primarily to prevent or minimize the adverse effects of major development proposals.

Planning for Improving Efficiency of Housing Project’s Development Process

The increase in housing demand and the high cost of land in big cities in Vietnam such as Hanoi and Ho Chi Minh create a huge market for high-rise housing projects. However, development of these housing projects face many obstacles such as low income, high inflation, high bank interest rate, high land price, increasing construction materials and labor cost. In addition, the long project development period due to lack of transparency in local regulations and authority submission procedure also makes the investment projects less efficient. It requires the project managers / project planners having a good understanding on Vietnam law and regulations, and good planning skills to improve the development process of housing projects.

According to the 2009 Governmental Investment Project Assessment Report by Ho Chi Minh City People’s Committee, there are 1,177 projects completed until the end of the year 2009, which are currently equal to 20% of 5,886 operational projects in Ho Chi Minh City. However, 65% of the projects were delayed and only 20 projects achieved the 30% target progress. The obvious reasons for these are:
1. Weak financial capacity of the project owners.
2. Lack of experienced project managers and project management human resources.
3. Long period for authority submission and lack of transparency of Vietnam law and regulations.
4. Land clearance and resettlement

Mr. Bui Quang Huy made a study to investigate the basic requirements by Vietnam law and regulations, the common practice of housing development projects in Vietnam complying with Vietnam law and regulations; and to find out a more efficient process for developing a housing project in Vietnam.

Conclusions:

- The housing development industry has its own characteristics. Every single activity in the project development process has to comply with local law and regulations. Hence, the good understanding about local law and regulations is very useful for developers in their business. The success of the case project in this study also greatly depends on the understanding about local law and regulations beside the project management knowledge.

- The old practice of housing project development process complying with Vietnam law and regulation is not efficient, it takes 60 – 78 months to finish the project from the feasibility study and planning phase to handing over and obtaining the ownerships for the house buyers. The longer the project development period is, the more costly the investment in housing projects. Besides, Vietnam population and housing demand are developing very fast, the supply could not satisfy the demand. Hence, the housing price could not be reduced and a major part of people with low and medium income cannot afford to buy houses. It causes a lot of social issues in Vietnam.

- With the improved housing development process proposed, it takes 45 – 57 months to finish the project. If we only consider the Project Launching Preparation phase, 15 – 21months would be saved, then it takes 12 -15 months in the improved process instead of 27 - 36 months of the old process. This is a valuable improvement. The investment in housing project becomes more efficient when the developers can recycle their investment faster and cut down financial cost in housing projects. It helps to increase the supply of housing products and reduce house price.

- Besides the understanding about Vietnam market, the knowledge from lean production and last planner theory also offers a basis for evaluating the whole development process of housing projects and identify waste times in the process. The project manager/ planner should examine and schedule the project with all constituent and continuous activities as a whole. By implementing that, it will make the timing of whole project period more efficient, rather than only taking care of shortening the period of its individual activities. The application of lean theory is absolutely suitable for the current situation of Vietnam housing market. It helps to shorten the project development period and make the process more efficient by ignoring waste time. There are no additional costs to apply these theories.

Recommendations:

- In general, when the understanding about local law and regulations is very important in housing project development, the developers should continuously update and study local law and regulations, especially, the new issuances.

- A good relationship with government also helps developers in their submission works. This relationship could be created by contributing to society and maintaining the good image in the local market. The developers should properly deliver what they committed to the government and buyers.

- The developers are recommended to maintain their efforts in evaluating the working and project development process to find any problems for improvement, not only waste of time, but also any other wastes such as cost, manpower, etc.

- Lastly, the good schedule should never achieve the good actual result if it is not well controlled. The control system also needs to be established to monitor the execution of the project to ensure it is carried out in accordance with the plan.

His thesis abstract is copied and posted.

Abstract

Vietnam is a developing country, it means that the country need a lot of knowledge for development, especially in the field of construction project management.
Some “old men” think that all the construction projects are similar, about the process, technology and method, especially housing development projects. They are actually not similar, there are many projects carried out in such a way of wasting time and cost; and achieving bad quality.

In this study, a more efficient process for housing development project is introduced. Hopefully, it could help the project managers / planners schedule and execute their projects strictly complying with the local law and regulations, in shorter cycle without any additional costs for advanced technology and materials.

This study also affirms that there is always inefficiency in project development process of every construction projects. The project managers should always spend enough efforts to identify wastes and improve them. This is helping the projects, the company and the country, in a wider angle of view.