Owner’s Project Control Strategy

Success or failure of a project relies on how it is being controlled. Project control strategy is an activity which compares overall project performance against the planned project. The purpose of project control strategy is to evaluate and analyze the project situation, generation of forecasts, and definition of actions to be implemented in the whole project process.

That is a process that should be continued during the construction period to make certain that the final product meets the quality, completion and budget expectations of the owners. Project control process can be divided into three major areas: the control of cost, time, and quality during the design phases; the control of cost, time, and quality during the tendering phases; and the control of cost, time, and quality during the construction phases of the project.

Mr. Nguyen Le Thuan made a case study which objectives were to: (1) study the framework and identify the problems of owner’s project control process; and (2) study the practical implementation of the framework in terms of effectiveness and obstacles.

Conclusion

There were too many components that caused problems in project control. Despite of the project owner’s effort to solve the problems and arranged all requirements in suitable order, still there were some causes that made the project out of control. In this case study, Mr. Thuan found some problems in project control such as:
1. Poor estimating techniques and/or standards, resulting in unrealistic budgets
2. The technical design is lack of regulatory system or legal appropriation
3. Database is not correct
4. Value engineering is not popular
5. Awareness of standard design is limited
6. Policies and procedures are always changed
7. Communication and coordination among participants are not homogeneous
8. Need correct awareness to lowest bid.
9. The project owner uses nominated contractor method in tender stage
10. Inadequate work breakdown structure
11. No management policy on reporting and control practices
12. Management reduces budgets or bids to be competitive
13. Inadequate formal planning having unnoticed result, or often uncontrolled, thus increases in scope of effort
14. Poor comparison of actual and planned costs
15. Comparison of actual and planned costs at the wrong level of management
16. Unforeseen technical problems and unforeseen financial fluctuation.
17. Schedule delays that require overtime or idle time costing

Conclusion for Owner’s Project Cost Control in Design Stage

The project owner should specify all performance and design standard. The design professional is responsible for producing a set of preliminary drawings as well as written report for approval by the owner. The responsibility of the designer comprises drafting complete specifications for inclusion in project tender documents, approving or initiating all design related deletions, additions and changes to project specifications and accepting ultimate responsibility for the safety and utility of all project design elements.

In this phase, the project owner must approve all design related work performed and must coordinate the overall design integration, safety of the public, compliance with legal and codes.

Conclusion for Owner’s Project Control in Tender Stage

All services must be specifically required in the contract documents and not be in violation of any applicable law. Tender documents should be clear before they are issued. The content includes tender time, date, approximate contract amount, project location, licensing requirements, approximate size, plus tender, payment bond requirements, performance, etc.

Conclusion for Owner’s Project Control in Construction Stage

The fundamental purpose of the conference is to establish acceptable ground rules for all parties concerned, and to assure that each party understands the complete job requirements and coordinates its work to produce a completed job in a minimum amount of time, with maximum economic gains, and in proper coordination with the owner, architect, engineer, prime contractor, and all subcontractors. The pre-construction conference is primarily concerned with management and operational considerations. It is in these areas of contract interpretation and clarification that the greatest value of the construction conference can be achieved.

Progress payment and management of progress payments begins with the contract specifications clearly stating how the contractor’s work progress is to be measured, how payments are determined based on the measured progress, and what documents and reports are required to be submitted by the contractor to justify the payment request. The project owner should authorize payment only when the contractor’s progress payment request is in full compliance with the contract requirements and the progress claimed has been independently verified by supervisor.

Periodically, perhaps monthly, the project owner should compare schedule progress with that shown on the project program. The purpose is to determine whether those various activities were planned.

Recommended framework for owner’s project control:

Based on the literature review, case study and PMBOK (third edition), Mr. Thuan recommended a framework for an owner’s project control as shown in the table below:

Abstract

The report expresses the key issues in Project Control Strategy that known as the important factor for any owner wants to develop and survive in the construction industry.

This study, which refers to the theories have expressed the concept of project control process in design stage, tender and construction stage. What should the owner control in these stages? How can the owner control in these stages? The study has briefed the factors that most effect to them, they consist of cost, quality and schedule. Through a case study, project control problems will be analyzed. Some proposed solutions are recommended in order to help the owner can be improved in project control process.

Project Management Life Cycle and Risk Managerment in a New Residental Development Project in Vietnam

The development of residential projects in urban areas in Dong Nai province is still not uniform just like in other parts of Vietnam. The nature of this project usually involves large capital and needs long time to accomplish due to many elements concerned such as government regulations and policies which are indispensable.

Mr. Tran Thanh Liem wanted to study the project management life cycle in new residental deveplopment project in Vietnam and the most serious proplems arising from every stage of project life cycle.

The objective of his study were to: (1) identify project tasks and activities for accomplishment and find out proplems affecting the project time; (2) propose strategies to effectively eliminate or mitigate major risks; and (3) propose solutions that identify and prevent risks for the sister projects.

Conclusions

The investment in real estate sector in Vietnam is currently out with a difference. Applying the expertise of professional knowledge and ability to finance is unlikely to succeed when investing in Vietnam.

The case study revealed a practical implementation in the early stages of residential development policy of Dong Nai province in particular and Vietnam in general. The author introduced a project with very nice location in the center of Bien Hoa city which is belong to Company D2D (a Vietnamese company which is knowledgeable on laws and policies in Vietnam and capable of performing the procedures quickly) and Joint venture company Berjaya D2D (having capacity on the implementation of procedures, adequate financial capacity, investment experience and professionalism in the field of real estate investment).

This project has all the favorable factors for success. Currently it is also one of the most successful projects of the company D2D, but the schedule shows that the project still face a lot of problems (risks), which mostly concerned to the management and policies of the government.

The report may not offer the most complete risk factors in various stages of project implementation, but clear description of the risk factors affecting the schedule of most projects in Vietnam are well established such as clearance problem and progress delay. In addition, the author proposed appropriate strategies to mitigate these major risks.

Recommendations

The author had clarified the stages in the life cycle of a project and the main works done at each stage. He also determined main risks causing delay in the implementation of D2D residential projects, its secondary project in particular and all investment projects in the field of real estate in Vietnam in general.

This study proposes some recommendations for each delay problem as shown in the tale below:

When implementing real estate projects in Vietnam, anticipate that there are many negative issues in the system of policies and regulations and have to set the elimination risks that causing uncontrollable delays.

To reduce the delay problems for similar projects in the future, this study proposes some guidelines as follows:

1. To find out carefully the system of Vietnam's policies and continuously update the change of policies during the time of project execution in order to timely adjust work flow at various stages of the project life cycle; identity sufficient risk of external and internal environment of the project in accordance with reality.

2. Together with changing policies, the corruption in Vietnam is an ominous issue and investors even consultants can not understand all the issues for investment. However, the costs for Vietnamese consultants is so cheap compared with other countries, sometimes it is necessary to pay more payola for direct consultant from administrative official.

3. To implement the procedures while waiting for the approval of governments.

4. To survey, evaluate and recommend appropriate solutions for compensation and ground clearance in order to ensure the interests of the parties and minimize delays in this stage.

5. To set up land use planning appropriate with the project requirements in each stage and progress of the mobilization of capital investment

6. To research the plan for construction planning in order to ensure compliance with long-term development strategy, to take factors fluctuations in policy and plan for appropriate preventive.

7. To train or mobilize experts with full experience in the concerned fields such as planning, design, construction techniques and finance and to set up competence project team for the best implementation.

8. To conduct activities in order to control and limit the adverse impact of risks to ensure the project in time. Risk control plan should be implemented in conjunction with several measures from the active standby to deal with the risks, actively avoid and share the risk, promptly response when risks occur.

9. To establish early warning systems and handle risk.

10. To develop a plan for mobilizing capital to response the progress of the project.

11. Risk management should be considered as an important part of project management and construction law , urban planning law, housing law or government decrees.

12. To focus on the initiation stages : Investment report, Feasibility Study, Project planning and Detail Design.

His thesis abstract is copied and posted.

Abstract

Vietnam has just been developing in recent years. Together with urban development, real estate and construction market are growing rapidly. The speed of economic development is growing rapidly but substandard managerial capacity has not satisfy the actual requirements, so great urban areas of Vietnam are now facing with complicated issues of urbanization process and urban development such as migration, accommodation, labor, career, traffic jam, flood, environment pollution.

The real estate and construction fields have reputation of the most opportunity, risk, expensiveness and challenge. The implementation of construction also requires long time with huge investment capital and various participating components.
Besides, there are so many unsound problems, for example government policies in real estate market and construction industry are usually amended and overlapped among authorities. Therefore; the implementing process of project will be usually changed, risks would easily arise and we will meet difficulties in estimation, appreciation and control… All these will make project not completed as expected.

Risk Management of Basement Construction Affecting Adjacent Buildings: A Case Study of Construction Project in Ho Chi Minh City, Vietnam

With restricted height in the central of Ho Chi Minh City, basements for building are even more needed. However, recently, a lot of basement construction has encountered incidents affecting adjacent buildings which may be due to difference in geologic conditions and number of basements, and probably use of different execution method.

Mr. Dang Tuan Anh made a research just to present the risks that are related to basements construction by top-down method with diaphragm wall for soil retaining. This is an advanced execution method and usually use for those buildings having more than two basements. However, if risks in this method were not checked carefully, it will seriously affect adjacent buildings.

The table below shows some typical problems and consequences of basements construction in Ho Chi Minh City:
With these problems, developing risk management frame in basements construction is critically important to reduce impacts on adjacent buildings.

Conclusions

At present, most of the buildings in Ho Chi Minh City have basements. Therefore, risk management to reduce impact on adjacent buildings becomes more and more important. Practice shows that quite many projects caused problems during process of basement construction and create serious consequences such as damages, collapse and casualties.

From data analyses, the problems below still need to address:

The above problems are mainly due to subjective factor and lack of experience of the managers. Besides, awareness of Clients in preparing finance for risk management is one of the key issues. If the budget of risk management is not enough, plans for risk management will be limited and not efficient.

Recommendations

It is necessary to have adequate finance package to cover risk management, and based on that finance, planning risk management will be studied carefully and combined from experts. In addition, advanced techniques and equipments can be used to observe, prevent and deal with incidents when they happen.

For those risks that might cause serious incidents (pierced holes on diaphragm wall, deformation of king-post system, etc), there must have strict observation and control. It is necessary to plan urgent risk-solving methods with respect to manpower, equipment and finance. Moreover, establishing good relationship with people who live around the project is also very important to have their cooperation during the process of observing and solving incidents, even temporary moving if necessary. Therefore, professional verifying teams should be combined to observe and propose solutions when problems occur. This will set surrounding people’s mind as well as local government’s mind at rest.
It is suggested to study carefully risk management frameworks whichever is suitable with each specific project to get the most efficient and which will contribute in achieving the project.

His thesis abstract is copied and posted below.

Abstract

This project report studied about risk management of basement construction affecting adjacent buildings. In the field of construction, basement construction in rural areas is one of the most risky and difficult works.

To limit risks in this issue, it is very important to study about risk identification and solving methods when preparing and constructing basements. Although many projects have risk management system, risk still occurs, even causing very serious damages.

Therefore, experience and thoughts in risk identification becomes more and more critical.

Risk Factors In Resettlement Project Project: A Case Study Of Binh Khanh Development Project

In recent years, Vietnam’s construction industry has improved. However, many projects which invested by the government are still meeting some problems like cost overrun and schedule delay, which are caused not only by weak project management but also complicated legal procedures.

Ho Chi Minh City is one of the centers of Vietnam with a rapid growth in economic. However, the urban projects development in Ho Chi Minh City is not synchronic and slow because problems happened in investment process. The main reason is the land clearance and resettlement. Resettlement projects were built without profit for moving vulnerable people before the main project were deployed.

Mr. Le Minh Dang made a case study to research and find out the risk factor occurs in each stage of a resettlement development project, and then analysis impact of some typical risk factors, and propose effective method to mitigate them and ensure project objectives. The objectives of his study were to: (1) identify risks create in resettlement development project in each stage and find out risk factors effect to project finance, implementation; (2) propose strategies to effectively eliminate or mitigate major risks; and (3) propose solutions that identify and prevent risks in similar projects and improve management of Resettlement development project.

Conclusions

The case in this report described a special project implementation of urban development in Ho Chi Minh City, and obviously revealed high-risk factors that can seriously affect the success of the project. Actually, the government has enormous efforts to overcome policy and reduce the cumbersome procedures in investment, but investors still face a lot of problems (risks) when implementing project.

The report may not define all problems in various stages of project implementation because the author only analyzed main problems that may affect the efficiency of the projects such as: progress delay and project costs incurred compared to initial estimates. Based on the analysis, the author proposed appropriate strategies to mitigate these major risks and problems as shown in the table below.

Recommendations

In scope of this report, the author just emphasized major problems effecting on Binh Khanh project objective. The findings of this study are expected to contribute to identify major risks and more effective project management process in project. To achieve this objective, this study proposed some recommendation:

1. Researched carefully feasibility study, legal procedures, investment policies to ensure compliance with long-term development strategy, taking factors fluctuations in policy and plan for appropriate preventive.

2. To train or recruit experts with full experience in the concerned fields, such as planning, design, construction techniques, financial ... to set up competence project team for the best implementation.

3. Investigate and research risk factors of project, impact of risks to the investment effectiveness of the project. Setup the risks control plan to minimize impact of risks to project, especially in project finance.

4. Setting up risk monitor plan for opportune action such as dealing with the risks, actively avoid and share the risk, promptly response when risks occur.

5. Develop a plan to mobilize capital to meet the progress of the project.

6. Propose and persuade Director Board to approve risk management and risk management cost.

7. Especially focus on the initiation stage: Investment report, Feasibility Study, Project planning and Detail Design.

8. The Investors should monitor to changing of investment policies to avoid the risk factors effect to project planning.

9. Design&Build contractor must be selected by biding. The contractor must have appropriate capacity management and experience in Design&Build method.

His thesis abstract is copied and posted below.

Abstract

Social projects that change patterns of use of land, water, and other natural resources can cause a range of resettlement effects. Resettlement losses most often arise because of land acquisition, through expropriation and the use of eminent domain or other regulatory measures, to obtain land. Housing, community structures and systems, social networks, and social services can be disrupted. Productive assets, including land, income sources, and livelihoods can be lost. Cultural identity and potential for mutual help may be diminished. Loss of resources for subsistence and income may lead to exploitation of fragile ecosystems, hardship, social tensions, and impoverishment. In urban areas, displaced people might swell a growing squatter population. The people affected have no option, and must try to rebuild their lives, incomes, and asset base elsewhere.

To ensure that some people are not disadvantaged in the process of development, the Government tries to avoid or minimize resettlement effects by Real estate law.
The law stipulated the rate of land for resettlement and business. The investor have to develop the resettlement projects for vulnerable people.
So, the management of resettlement projects is an important issue for the investor because the resettlement projects are always low benefit and affect to time schedule and cost of the main project.

The purpose of management of resettlement project is identify all problems before they occur so that management may be planed and mitigate adverse impacts on achieving objectives. To effectively manage the resettlement project, it is necessary for organizations to identify important issues in time, cost, quality and safety , then provide a suitable method to manage in each stage of resettlement project life cycle and suggest the effective solution methods as minimized, shared, transferred, avoided or accepted but can not be ignored.

Assessment of Risks on Design Management Aspects in Luxury Hotel Development Projects

Each building project has a unique process. Thus, requirements for planning, construction, and service systems of most modern buildings are really complex, and taking control of the process becomes a continuing issue for management, as the pressures to satisfy these diverse requirements are often conflicting.
The hotel that was being studied in this case has many complex issues which required comprehensive incorporation with a great diversity of technological inputs and diverse requirements from clients to adapt the market needs. This is the first issue for the design management team to focus on & build their competency.

Ms. Tran Thi Thien Trang made a case study which main objectives were to find out the risks or obstacles in a hotel construction projects and to conduct a risk mitigation to improve the situation. In order to achieve her main objectives, the following sub-objectives needed to accomplish: (1) to identify the risk factors by averaging different views of project experts, PM, CM, DM for the hotel project through project phases impacted by design management aspects; and (2) propose mitigation for the major project risks averaged by different views of PM, CM, DM and literature review.

General conclusion for the risk identified of this case study

This research found out series of consequences caused from management aspects to the project. Mitigation for the shown obstacles are systematized under scheme by necessary activities remarked in each stage. With appropriate project coordination, stake holder requirement and adequate management tools will lead to the success of the project.

Causes of the risks discussed are mostly come from:
1. Lack of the process for controlling project program, un-stable program, restrain schedule

2. Defining scope and client/operator requirement.

3. Inadequate in contract review, procedures and strategy in tender

4. Organization between construction and design management team with other department
and lead to negative results to project

5. Obstacles caused to next stages to be run.

6. Project delay from sub-key project mile stone to potential delay in final completion date.

7. Reworks are often occurred due to the project condition of management, which in turn lead to cost overrun,

8. Project quality would be potential affected since design deliverables under expected.

Design management responsibilities and scope of work

The list below shows the design management responsibilities and scope of works. Based on this, it is clear that design management team is one of the most important key departments in a project that contribute much to reducing project risks impacted by design factors as well as improve project quality in general. These responsibilities are as follows:

1. DM prepares coordinating schedule with required inputs, outputs, its milestones to ensure clear project targets and programs.

2. DM establishes tools to control design quality and to manage project requirement coming from owner, operators and other.

3. DM identifies additional consultants, pre-selection, evaluation and final selection (such as kitchen and laundry, lighting, SPA specialists or any other required consultants...) to ensure required inputs for project on time.

4. DM reviews consultant contracts to ensure required scope of services in lined with project program and DM reviews contractor contracts to ensure arranged scope of work reflected on design document to be bound in contracts, to ensure contractor service or their deliverable/ offers met project requirement.

5. DM sets up target dates for design output and to ensure the timely submission of the design so as to obtain expected project milestones and in line with intended purposes.

6. DM sets up program required operators, owners and third parties review and approval to ensure designs complies with requirements and design can be moved to next stage.

7. DM reviews with clients and design consultants to clarify required code and standard for project, in compliance with government.

8. DM manages and coordinates all issues on design aspects in during project phases so as to ensure design quality, project budget, project schedule in lined with project program contracted with owner and operators.

9. DM coordinates design during phases and with cost estimation to ensure design within budget, and DM evaluates and prepares MEMOs, letters for phase completion record to owner.

10. DM develops/ monitors/ controls drawing schedules in coordination with the design consultants.

11. DM establishes design procedures with associated flowcharts, forms and reports during phases.

12. DM develops/ monitors and controls drawing schedules in coordination with the design consultants.

13. DM effectively communicates & coordinates with various designs to ensure conformity of designs as well as minimize conflict among designs.

14. DM chairs design review workshops and meetings.

15. DM verifies design development against the agreed brief to ensure designs met project, owner / operators objectives.

16. DM verifies design deliverables with contract, with owner and operator requirement.

17. DM organizes value-engineering workshops.

18. DM prepares scope of work of contractor to ensure design consultants providing comprehensive design information for tender purpose.

19. DM prepares tender document to call contract together with relevant parties.

20. DM evaluates tender submission by coordinate with experts in the project.

21. DM reviews shop drawings together with CM, then works with design consultant and owner, operator to ensure latest design come to site for executing on time.

22. DM prepares plan for solving and updating changes to construction works, changes management during construction stage.

23. DM controls also the proper coordination between the Architect, the C&S and the Engineering Consultants and others.

24. DM manages design information filing well in a system.

25. DM is a center to manage, to coordinate with all design consultants, owners, operators, independent checkers, QS department and construction management team to ensure quality for project optimized in term of design impacts.

Her thesis abstract is copied and posted below.
Abstract

Project outputs are in lined with client’s expectation in term of time, cost and quality, which is one of the targets of a project and the competitive factors among organizations. On PMC aspect, how to sail successfully the wind for obtaining objectives is a critical point that I focus to study. My research is based on surveys about the project risks on design management aspect impacted by planning stage and been causes for other next stages. Risk assessment is studied together with theory application for reducing the consequences of poor performance; What to be prepared, done shall be systemized as a well being prepared for future projects (Risk management) and a contribution to improve overall project management performance through project phases.

The Le Meridien Saigon Hotel is the case for this thesis, it is located in heart of the center of Ho Chi Minh city, invested by TP& 990 co. Ltd and operated by Starwood organization with Le Meridien brand name, a mix project with 5 star international hotel and office grade A. Thus, it seems challenge for management!

‘Do the right thing at beginning stage’.

Project Organizational Structure Roles and Responsibility: A case study of Marriott Five-Star Hotel

Organizations are often complex with internal and external relationship intertwine with each other and difficult to apprehend. In the construction industry, the situation may worsen as a real estate development project may employ hundreds or thousands of people. It is crucial to understand the key concepts of organizational management and appreciate how to organize, lead and motivate people to make projects successful. Good organization management structure will safeguard the firm’s long-term survival. These reasons lead to Mr. Tran Duc Quang to study in depth the subject of organization management. His research main objective was to study the application of Project Organizational Structure Roles and Responsibility in a construction project from Appraisal, Feasibility Decision to completing -handing over phase.

Conclusion

In conclusion, the report has attempted to explore and study in depth the key concepts of organizational management and appreciate the various organizational structures that are relevant to the real estate and construction industry.

Given the very complicated nature of construction whereby each constructions project is unique and may involve many stakeholders, the real estate developer needs to consider both vertical and horizontal ways of structuring its organization and project. That is why matrix structure is proven very useful. Furthermore, in different stages of the project life cycle, the tasks required are different and hence need for different structure during different phases of the project. Knowing when to employ which structure is important, as organization structure is a tool for managers to carry out the strategies set forth.

Having the appropriate organizational structure is essential for the real estate developer, as having an appropriate framework and good organization management structure, the organization will enjoy many benefits such as appropriate use of resources and prevention of many possible risks. The tool will also help to close up the gap in project governance, as good structure will allow constant interaction in between different levels. A well-run project will generate both financial benefits and high satisfaction to the stakeholders involved. It will help the firm stand strong in terms of crises and thus safeguard firm’s long-term survival.

Recommendations

The rational of organizational management is to facilitate the application of knowledge, skills, tools and techniques to project activities to meet project requirements in terms of Scope, Cost, Time, Quality, Participant satisfaction. In organizational management, the important steps include:
1. Choosing the right people
2. Setting up the right organization
3. Using the right system

The concept of how to choose the right people for the task and how to set up the right organization was also discussed in this study. There are many organizational structures and each one of them has its own application, advantages and drawbacks. Selecting the appropriate structure for an organization will therefore be dependent on the task, the size of the firm, the subordinates, the managers and the environment. Managers, in choosing the right organizing structure, need to study its vision, mission and its strategic intent and then strive to pick strategies and structures that are congruent. In choosing the right people for the team, managers need to define what kinds of skills are required, what kinds of individuals required in what time frames and then select the right people.

The Case Study of Marriott Hotel based revealed that implementing the best organization management system involves a few stages, starting from finding out the right strategies, to matching the project life cycle stages to the correct type of structure. The case study of Marriott Hotel is a very good example that other real estate developers can study and replicate.

Organizational management aspect of project management includes Human Resource Planning, Acquire Project Team, Develop Project Team and Manage Project Team. Therefore, choosing the right people and organization structure alone is not enough. Managers need to be aware of many other factors that can be crucial success factors in running the organization such as managing culture issues and facilitating good communication channel. Organizational management also includes active management of the employees in the organization. Making sure that employees are well motivated is crucial for organizational management. Below are some examples of how to manage the employees that other firm can adopt:

Providing Constant feedback to employees
1. Progress Reports: Reports providing feedback to the project team about performance against the project plan.

2. External Feedback: The project team must periodically measure itself against the performance expectations of those outside the project.

3. Project Performance Appraisal: Performance appraisal objectives include re-clarification of roles and responsibilities, development of team member’s training plans and establishment of specific goals for future periods.

4. Performance Reviews: Meetings will help to access project status or progress.

Provide various trainings to employees

Other things that a project management team can do are to send employees for courses to increase his skills. The courses that a company can consider are:
1. Conflict Management: Successful conflict management results in greater productivity and positive working relationships.

2. Cultural Management: With cultural management skills, employees will be more confident in dealing with people from various backgrounds, especially for the large-scale joint venture project.

3. Trend Analysis: Forecasting project results over time to determine if performance is improving or deteriorating.

Finally, managing an organization is an ongoing process, and managers need to be actively engaged in running their own company. Once the situation changes, managers need to be nimble in adapting to the changing environment by changing the organization structure.

His thesis abstract is copied and posted below.

Abstract

This report focuses on various aspects of the main theme - Organization Management, which is a crucial factor for the success for real estate project.

Year 2007 was a booming year for real estate in Vietnam. Many housing development projects were successful built. However, as the financial turmoil started since 2008, the real estate industry globally has encountered one of the worst hit in the recent history. Competition for developing new housing projects with high quality yet low cost in order to win customer base is intense. In order to survive in this tough environment and emerge as winner, there is an urge for real estate developers to re-look in to building up their organizational structure in order to carry out smoothly the projects in accordance with customer’s expectation and international standards. In general, the success or failure of the real estate development project is dependent upon the quality of the employees, the clarity of the operation, the availability of the resources and most importantly, the appropriateness of the structure and the management system adopted.

This study, which refers to different theories and standards, has studied in depth the concept of organization management. The project indentifies the key concepts of various types of organization and its relation with the construction phases. It spells out the core governance tasks in the area of strategy, structure and organizational culture and suggests the best strategy that a real estate developer should adopt in order to cope with the increasing pressure of the internal and external environment. It further elaborates how to exercise authority and allocate power within an organization.

Finally, the real life case study of building the Five Star Marriott Hotel in Nha Trang City, a complex project that involves various team and parties, will demonstrate the key concepts and application of these concepts.

Risk Factors in Vietnam Power Plant Projects – Case Study of Nhon Trach Power Plant and Camau Gas Power Fertilise Projects

Recently, the oil and gas prices increase day by day which makes difficulties for developing countries to have a stable economic condition. In addition, the demand for oil and gas all over the world is increasing, therefore the services required in developing new offshore facilities and its exploration also increases.

In developing the facilities for an offshore oil and gas field such as platform, normally Oil and Gas Companies (hereinafter referred as the Project Company) sign an EPC (Engineering, Procurement and Construction) contract with the EPC contractor through the international bidding tender. The major factors for executing an EPC project are the contract clauses which are normally generally stipulated, with unclear understanding and interpretation when having disputes between the contractor and the project company.

In the past, risk management has been an important tool to control safety-related risks. However, we see the shift away from the traditional compliance and insurance-motivated risk management to one that is closely linked to business performance and long-term society commitment. In order to minimize the interfaces and risks between the separated contractor and the project company during the execution of an oil and gas project, the oil and gas companies normally prefer to award and sign an EPC contract with the EPC contractor, however this project delivery method will take a lot of time to make clarification, explanation and get the mutual agreement on the contract clauses between the contractor and the project company. The following problems are normally involved with the EPC contract clauses:

1. Take time to make the clarification and finalization before contract signing;
2. Wrong understanding and interpreting of stipulated clauses in the contract;
3. Conflict between contractor and the project company during project execution

An EPC contract is generally applied for developing the oil and gas project. In case of problems or disputes during the project execution, then these problems and disputes shall be resolved in accordance with stipulated clauses in the signed contract. Mr. Nguyen Duc Thanh made a case study which objectives were focused in the issues related to EPC contract: (1) to study the contract of EPC project and contractual risks; (2) to study contractual problems occurring in a project; and (3) to propose a recommendation for improvement

Conclusion

The research study summarized the concern and the risks we often meet when executing EPC oil and gas project in Vietnam. It also mentioned and suggested effective solutions that can be performed to avoid or overcome the obstacles in contractor management.

The literature review sections introduced and covered the form, phases and activities for general EPC project. It also listed advantages or disadvantages and challenges when we apply EPC model to manage project, especially managing Vietnam EPC project. The advantages under investor’s point of view of EPC contract model in respect of following:
- Reduction in project management works for an investment owner;
- Reduction in risks of difference between design and construction;
- Costs for an EPC package are easier to estimate and control because it is lump sum contract.

The chapter also raised reason which case EPC should be applied in Vietnam such as:
- Project with multiple options of construction methods;
- Projects in which whose design and equipment production cannot be separated
- And in case a project has urgent progression.

In two case studies revealed that through collecting related document and attending as one of duty to solve these problems, Risk in Vietnam appeared in oil and gas projects normally come from what parties haven’t defined or stipulated in contracts. Moreover, maybe some contractors want to expand profit as much as possible, so they change some conditions except in some case which is compulsory for pushing project schedule.

According to studies and data statistic, client needs to play as interface when many contractors participated in project. It requests a professional team to monitor, assess and can hold point the whole activity of contractors. Schedule is always updated and mobilization plan of employee and equipments must comply with master schedule.

Through the review of literature on EPC model and risk in EPC contract, it is proposed that solutions of effective EPC risk management needed as stated below:

The problems often appear in the execution stage of the project and we have difficulty in avoiding them. However, we can ignore or minimize the problems through understanding by clarifying the term and the scope of work in contract. In addition, these problems can be predicted or determined to happen in the next phases which can’t solve at this time, therefore we need to stipulate them in the contract on how to find the solutions to control, monitor or solve.

In conclusion, for each EPC project, the risks are not the same. The risks depend on whole EPC project such as: scope of work, material specifications, equipment style and requirements of client. Therefore, risks management application for the kinds of EPC projects will be different. So, application should be considered via EPC project style.

His thesis abstract is copied and posted below.

Abstract

Oil and gas projects are established intensely to satisfy the energy demand on the world. In an EPC contracts help provide ‘turnkey ‘systems for companies. This is where a single point of contract is given which includes the design work, engineering procurement, installation works, commissioning, start up, supply chain materials, testing activities. Due to this single point of responsibility, almost all the risk is transferred from the owner to the contractor. In this contract, there are guaranteed completion dates, performance, clear division of obligations and liabilities. EPC projects which are also known as turnkey project service face many challenges to stay in the competitive within the industry business environment despite of the efforts made towards compressing activities by phase overlapping, in order to reduce time scale and to obtain better EPC projects. These project challenges lead to cost overrun and schedule delay. Understanding the function of EPC Project Risk Management is important to protect interest of both parties and to engage tools and techniques to allocate risks between the owners and contractors.

Most projects are bound to be affected risks such as construction risks, operational risks, financial and economic risks, legal risks etc. All these risks are interrelated and have a chain effect in overall start-up and commissioning. Common delays and cost overruns can have severe effects and causes as a primary effect on construction risks. Therefore it is important in a project when structuring EPC contract. EPC contract comes many new risks that are often severe due to the complex nature and high cost frequently associated with this type of project involved

By finding out and analyzing the problems happening in Nhon Trach power Project and Ca Mau Project, through collecting data and assessing status of project in each phase, the research study aim to identify and analyze problems that often occurring as well as resolutions and try to suggest solutions which are effective to solve the problems.

Solutions to manage Risk in EPC project was developed as a result of the research case study which is helpful for Vietnam oil and gas projects wishing to overcome obstacles by avoiding or minimizing these risk.