Before starting any construction project, at least two parties or companies have to prepare or design a contract based on the agreement between them. Once they agreed on each clause in the contract, they will officially enter the contract ruled by laws and other relevant construction regulations.
In Vietnam, all parties working in construction shall sign contracts complying with current laws and rules, Government’s decrees, Ministries’ circulars and local authorities’ regulations. For Foreign Direct Investment (FDI), there are many rules and regulations for them to follow.
By studying the case of a specific project in an FDI investment in Ho Chi Minh City, it was found out that many contractual risks had faced by the SME contractor and obviously taken a serious loss of profit at last.
These risks include: site inspection and work measurement; quantity acceptance and payment certificates; project delays; work omissions by the owner; and payments from the owner.
Mr. Vo Quoc Vinh made a research which objectives were to: (1) identify the risks of a construction contract; (2) verify the causation of contractual risks; and (3) propose possible solutions to protect SME Contractors from uncertain contractual risks.
Conclusion
Contractual risks were found in the contract between two parties or more. Lack of contract review before entering into it would be a failure of a party. Project failure means that the project has failed to meet its cost, schedule and technical performance objectives, or it does not fit in the organization’s future (Cleland and Ireland, 2007:365).
In this report and other similar cases, SME contractors have often taken such risks when dealing with the owner or main contractor whose sizes of business are always larger and stronger in many fields.
That result of project failure came from the way people actively take the chance to prepare, design and compose the contract documents. Instead, SME contractors tend to avoid or ignore the opportunities of transferring the risks by the work of contract design. Moreover, the level of professional policy and working manners in SME contractors cannot compare to big companies, especially the knowledge and experience in legal issues.
The report can be a useful tool for SME contractors in dealing with problematic clauses in similar construction projects in some ways, such as the implementation of current laws, rules and other regulation; systematic frameworks from contract literature reviews; international institutes of contract forms like FIDIC or the organizations of AGC, ASA and ASC or The ICE Conditions of Contract.
The report also raised the way which Lessons Learned documents should be organized to review the good and the bad activities in the project and encourage to be used for future projects in terms of reduction of the same problems in construction contracts.
Last but not least, the report also recommended SME contractors to apply the latest version of ISO 9001 in their businesses for a better quality performance in a rapid competitive market. Invest now, take later!
Recommendations
It is recommended that contractors should avoid or reduce the same type of problems in future projects by applying these approaches as follows:
Post-Project Reviews - offer insight into the success or failure of a particular project as well as a composite of lessons learned from a review of all the projects in the organization’s portfolio of capital projects (Cleland and Ireland, 2007:327-328).
Site Inspection - to maintain smooth operations and the quality of site inspection in construction stage and avoid unforced conflicts from this trade; owner should employ qualified, experienced technical staff. Good coordination and cooperation between project teams are needed.
Project Delays - After being awarded the contract, contractor must prepare and submit a proposed construction schedule for the review and approval of the project owner.
Omissions by Owner
Contingency Cost - To protect from financial loss in a project for any non-prevented reasons, it is important to estimate contingency costs and add them into the tender. These costs are usually expressed as percentage of direct costs or as a specific amount of money in the tender. Mullin and Kantor (1994) compared that “contingency allowances are much like insurance”. Along with contingency cost, hidden costs should be recognized and added to the estimation for bidding. Borg and Borg (1994) advised contractors to examine carefully the general conditions of the contract and visit the site, so as to have a full knowledge of all the possible hidden costs.
Concept of “Unexpected” and “Equitable Price Adjustment” - normally, the specifications give the owner the right to make changes in scope, with specific compensation to the contractor (Borg and Borg, 1994:17-35).
In order to avoid any dispute or different interpretations on this matter, the authors suggested establishing “a formula for pricing changed work” in the contract.
Risk Transfer - “The form of the contract plays a significant role in the respondents’ perception of risk” and “Transferring the responsibilities for the construction documents to another party also transfers the risk” Simu (2006).
Payment Delays - payments from the project owners are considered a vital source of any contractors in construction industry. Late payment will definitely damage contractor’s cash flow in the book of account receivables. Once periodic payment certificates are prepared, properly signed, and forwarded to the owner, prompt payment should be made (ASCE Manual, 1988:145).
Application of ISO 9001 in Quality Management - it is very useful for SME contractors to apply the latest version of ISO 9001 (partial or the whole regulations) to manage their businesses as well as the construction projects in a professional, effective method. This kind of quality control system will need time, effort and some budget to apply ISO in construction but contractors will save a lot and reserve their planned budget.
His thesis abstract is copied and posted.
Abstract
This report reviews the theory of contractual risks in terms of project delays with no compensation, delays in payment with no penalty, work changes by the Client, delays in site inspection and acceptance for quantity of work done, omissions by the Client from the signed contract, and so on.
From a detailed literature review, the report explores major risks that SME Contractors often face during the construction stage throughout a case study. The collected information from the case reflects the hypothesis that the Client has used an unfair treatment to the Contractor by the application of the Contract – obviously prepared by the Client.
The report also suggests some recommendations to minimize the risks from the construction contract in the stake of SME Contractors. These suggestions will somehow help them control the benefits from the protection of losses in the implementation of the contracts. On the other hand, the report asks for a fair treatment from the owners of projects in term of win-win negotiation in the contract preparation by using the theory of FIDIC, ICE Conditions of Contract and other useful, reliable sources.
Hopefully, this report will show the contribution to a better environment of risk reduction in the construction contracts from its findings, analysis and recommendations. It is studied especially for the legal support to SME Contractors in construction industry in Vietnam.
Thursday, 10 March 2011
Tuesday, 8 March 2011
Owner’s Project Schedule Management for High - Rise Office Building Projects: A Case Study of
Applying modern project management techniques in schedule planning and control for high-rise office building projects is not easy. The project schedule is crashed by reasons that are investigated in high-rise office building projects such as the following:
- Using the Work Breakdown Structure (WBS) for schedule planning.
- Using the Critical Path Method (CPM) for schedule planning.
- Proposing the methods for crashing scheduling.
- Making reports for work performance.
- Measuring work performance.
It is very important to explore the project schedule management of the owner. Hence, Mr. Le Nam Binh made a study to enhance understanding of schedule management systems, and how it can be utilized effectively in construction projects. The objectives of his research were: (1) investigating the practice of the owner’s project schedule planning and control for managing high-rise office building construction projects in Vietnam; (2) analyzing the foregoing factors to identify the critical affecting issues, the strengths, weaknesses and consequences of schedule management practices, and (3) proposing particular recommendations and effective methods for managing the project schedule from the owner’s point of view for these projects.
Conclusion
The modern project management era started half a century ago, was the young branch arising from the management discipline, and developed stormily on a stable fundamental with broad application in most of the manufacturing and construction industries over the world. The stream of these scientific technicalities has just been imported into Vietnam along with the expert groups serving the implementation of the petrochemical refinery project and the skyscraper projects of new urbans for the latest ten years.
The project schedule management, or project time management, as one of the four core functions of project management, is an important element contributing to accomplish timely completion of the project through six mutual-interacting processes comprising of activity definition, activity sequencing, activity resource estimating, activity duration estimating, schedule development, and schedule control. The schedule management is the most considerable concern of the project manager as well as the project owner, as an investor, cares mostly about the profitability of the invested capital.
This report develops the framework of project schedule management, which is joined with the selected tools and techniques of schedule planning and control to be applied in practical projects. These theoretical utilizations are monitored, investigated, analyzed and compared with the experienced knowledge of on-site engineers, whereby the rules and principles are generalized to form the more perfect theory.
The case study focused on applying the researched framework to the typical high-rise office building project for checking the applicability and usefulness of the theory with a particular construction project. In consequence of the actual situations in the building site and their profound changes towards better, the fact leads to the conclusion that the application of these techniques has made some considerable improvements to the project schedule, helps the project manager to catch up the target schedule in case of project delay, and lightens the pressure of stakeholders’ workload.
Moreover, the theory is applied to the construction project, which is always unique and temporary in nature, therefore it cannot help exposing the shortcomings in several cases. These particular limitations are also studied in order to propose some useful solutions for the project manager as well as other partners of the project to mitigate the potential contingencies in hazard prevention and controllability.
The project schedule management tools and technique, which are verified through practice and adjusted for specific situations, are given in the table below.
These techniques should be combined to enhance the effectiveness, whereby each of them can minimize its limitations and complement the others.
Recommendation
After studying the theories and the case study of an actual construction project within the analyses of application range and limitations for the implementation in Vietnam, the concise recommendations for project schedule management of high-rise office building projects from the point of view of the project owner are summarized as follows:
- The construction projects are unique and specific entities, no one is like others, except for the buildings of mass housing dwelling. This can be compared in images with human being in the society. The theory of project schedule management with its generalized rules and regulations should be flexibly applied to the construction projects to make use of its academic strength and mitigate its certain limitations. This way of looking at the concepts will facilitate the project stakeholders in planning and controlling the schedule. The experienced qualification of the project manager is a key factor for determining the important degree of schedule management techniques and tools to be used.
- In the initiation stage of the project, when many things are still ambiguous around the project vision, the project manager should make plans for basic tasks, using WBS and CPM techniques to organize all the initial activities into a miniature work breakdown structure as a componential subproject. The total project schedule planning is set up after the approval of the project fundamental design and general description.
- Towards more effective management of large construction projects with less confusion of master schedule chart scale, the project might be organized into smaller work packets in controllable view as separated schedule management charts, which are described in their own work breakdown structure for various monitoring purposes.
- If the project has parallel paths with similar durations, the project manager can utilize heuristics for identifying the essential activities of a selected critical path and focus on enhancing the activities’ quality instead of determining the best critical path. If project’s resources are spreaded and reallocated across different projects and activities, the prime contractor may be forced to undertake supplying sufficient resources for normal project operation and accelerating project schedule in the remaining stage.
- From the beginning of the project, a total quality management should be promulgated widely to all the project stakeholders. This comprises of paperwork transfer process, performance report forms and variance evaluation criteria to unite the comprehension of schedule management techniques through the project process.
- Skill training is an integral demand of the project, which help staff and engineers with specialized professions for such a multicultural working environment as the construction project. This contributes to its smooth run throughout stages. The project should reserve sufficient budgets for investment of management software.
Because of the limitation of the scope and time fund of the study, this report has just explored general issues in implementation of project schedule management for high-rise office building projects under the project owner’s point of view. It’s recommended that analytical research of great depth on the specific benefits of this theory to prove its great efficiency should be carried out. Besides, the higher rates of huge skyscraper investment projects with progressive schedule management techniques need to be penetrated. And after all, the further studies should make polydimensional analysis to draw the overview painting of the modern project management discipline.
His thesis abstract is copied and posted.
Abstract
Project schedule management, which is described and analyzed in a mind of great depth in A Guide to the Project Management Body of Knowledge by the Project Management Institute, is one of the most important knowledge areas of modern project management and interacts closely with other processes. It is a really tough challenge that most of project managers today are aware of but not all of them have done well.
The final report focuses on construction project schedule management for high-rise office building projects in Vietnam from the viewpoint of the owner’s project managers. By reviewing several researches and factual studies on this field, knowledge as regards owner’s project schedule management will be explored gradually.
Through the case study of a typical office building construction project, PetroVietnam Finance Centre in Danang City, the critical issues that affect owner’s project schedule management would be investigated and analyzed. Some proposed solutions based on the reviewed knowledge above will be discussed in order to help project managers improve their project schedule management professionalism better.
- Using the Work Breakdown Structure (WBS) for schedule planning.
- Using the Critical Path Method (CPM) for schedule planning.
- Proposing the methods for crashing scheduling.
- Making reports for work performance.
- Measuring work performance.
It is very important to explore the project schedule management of the owner. Hence, Mr. Le Nam Binh made a study to enhance understanding of schedule management systems, and how it can be utilized effectively in construction projects. The objectives of his research were: (1) investigating the practice of the owner’s project schedule planning and control for managing high-rise office building construction projects in Vietnam; (2) analyzing the foregoing factors to identify the critical affecting issues, the strengths, weaknesses and consequences of schedule management practices, and (3) proposing particular recommendations and effective methods for managing the project schedule from the owner’s point of view for these projects.
Conclusion
The modern project management era started half a century ago, was the young branch arising from the management discipline, and developed stormily on a stable fundamental with broad application in most of the manufacturing and construction industries over the world. The stream of these scientific technicalities has just been imported into Vietnam along with the expert groups serving the implementation of the petrochemical refinery project and the skyscraper projects of new urbans for the latest ten years.
The project schedule management, or project time management, as one of the four core functions of project management, is an important element contributing to accomplish timely completion of the project through six mutual-interacting processes comprising of activity definition, activity sequencing, activity resource estimating, activity duration estimating, schedule development, and schedule control. The schedule management is the most considerable concern of the project manager as well as the project owner, as an investor, cares mostly about the profitability of the invested capital.
This report develops the framework of project schedule management, which is joined with the selected tools and techniques of schedule planning and control to be applied in practical projects. These theoretical utilizations are monitored, investigated, analyzed and compared with the experienced knowledge of on-site engineers, whereby the rules and principles are generalized to form the more perfect theory.
The case study focused on applying the researched framework to the typical high-rise office building project for checking the applicability and usefulness of the theory with a particular construction project. In consequence of the actual situations in the building site and their profound changes towards better, the fact leads to the conclusion that the application of these techniques has made some considerable improvements to the project schedule, helps the project manager to catch up the target schedule in case of project delay, and lightens the pressure of stakeholders’ workload.
Moreover, the theory is applied to the construction project, which is always unique and temporary in nature, therefore it cannot help exposing the shortcomings in several cases. These particular limitations are also studied in order to propose some useful solutions for the project manager as well as other partners of the project to mitigate the potential contingencies in hazard prevention and controllability.
The project schedule management tools and technique, which are verified through practice and adjusted for specific situations, are given in the table below.
These techniques should be combined to enhance the effectiveness, whereby each of them can minimize its limitations and complement the others.Recommendation
After studying the theories and the case study of an actual construction project within the analyses of application range and limitations for the implementation in Vietnam, the concise recommendations for project schedule management of high-rise office building projects from the point of view of the project owner are summarized as follows:
- The construction projects are unique and specific entities, no one is like others, except for the buildings of mass housing dwelling. This can be compared in images with human being in the society. The theory of project schedule management with its generalized rules and regulations should be flexibly applied to the construction projects to make use of its academic strength and mitigate its certain limitations. This way of looking at the concepts will facilitate the project stakeholders in planning and controlling the schedule. The experienced qualification of the project manager is a key factor for determining the important degree of schedule management techniques and tools to be used.
- In the initiation stage of the project, when many things are still ambiguous around the project vision, the project manager should make plans for basic tasks, using WBS and CPM techniques to organize all the initial activities into a miniature work breakdown structure as a componential subproject. The total project schedule planning is set up after the approval of the project fundamental design and general description.
- Towards more effective management of large construction projects with less confusion of master schedule chart scale, the project might be organized into smaller work packets in controllable view as separated schedule management charts, which are described in their own work breakdown structure for various monitoring purposes.
- If the project has parallel paths with similar durations, the project manager can utilize heuristics for identifying the essential activities of a selected critical path and focus on enhancing the activities’ quality instead of determining the best critical path. If project’s resources are spreaded and reallocated across different projects and activities, the prime contractor may be forced to undertake supplying sufficient resources for normal project operation and accelerating project schedule in the remaining stage.
- From the beginning of the project, a total quality management should be promulgated widely to all the project stakeholders. This comprises of paperwork transfer process, performance report forms and variance evaluation criteria to unite the comprehension of schedule management techniques through the project process.
- Skill training is an integral demand of the project, which help staff and engineers with specialized professions for such a multicultural working environment as the construction project. This contributes to its smooth run throughout stages. The project should reserve sufficient budgets for investment of management software.
Because of the limitation of the scope and time fund of the study, this report has just explored general issues in implementation of project schedule management for high-rise office building projects under the project owner’s point of view. It’s recommended that analytical research of great depth on the specific benefits of this theory to prove its great efficiency should be carried out. Besides, the higher rates of huge skyscraper investment projects with progressive schedule management techniques need to be penetrated. And after all, the further studies should make polydimensional analysis to draw the overview painting of the modern project management discipline.
His thesis abstract is copied and posted.
Abstract
Project schedule management, which is described and analyzed in a mind of great depth in A Guide to the Project Management Body of Knowledge by the Project Management Institute, is one of the most important knowledge areas of modern project management and interacts closely with other processes. It is a really tough challenge that most of project managers today are aware of but not all of them have done well.
The final report focuses on construction project schedule management for high-rise office building projects in Vietnam from the viewpoint of the owner’s project managers. By reviewing several researches and factual studies on this field, knowledge as regards owner’s project schedule management will be explored gradually.
Through the case study of a typical office building construction project, PetroVietnam Finance Centre in Danang City, the critical issues that affect owner’s project schedule management would be investigated and analyzed. Some proposed solutions based on the reviewed knowledge above will be discussed in order to help project managers improve their project schedule management professionalism better.
Monday, 7 March 2011
Project Owner’s Quality Management System: A Case Study of Sails Tower Project
In recent years, the construction industry in Vietnam is being been recognized having a great contribution to national development as investment has been intensified in many fields such as infrastructure development, industry and public projects. However, more attention have been given to quality management because of the poor quality of some construction projects. Because of these reasons, the development of quality management system is most important concern not only for Contractors, Quality Consultants, but as well as for the investors or developers.
Mr. Nguyen Trung Kien made a research which primary objective was to study the application of Quality Management System (QMS) of Project Owner in a construction project from design to construction phase.
Conclusion
In general, most of the requirements of quality system have been covered and presented in the existing system. However, it was revealed that problems such as missing contract review, improper coordination and communication, lack of the process control, control of quality records and the inspection status monitoring during the course of work are the reasons that caused major problems to owner and caused schedule delay and generating V.O.
In addition, findings showed that there were problems with decision inconsistency relating to quality on job site caused rework and schedule delay. Obviously, besides the reason of work procedures, it would also be the reasons of different quality level and quality perception. Therefore, it is necessary to conduct the internal quality audit and provide training at different position in order to gain the same level of quality perception in the project team.
The causes and the consequences that generated by these missing processes are summarized in the table below.
The complete QMS would be achieved if the missing requirements as mentioned above should be added in the existing Quality Management System. Aside from that, the quality culture in organization should be set-up so that the Company can reach the Total Quality Management.
His thesis abstract is copied and posted.
Abstract
The report expresses the key issues in Quality Management System (QMS) that known as the critical factor for any organization wants to develop and survive in the free trade market.
This study, which refers to the theories and the standards system, has expressed the concept of quality in construction, the QMS in organization, system requirements for owner’s QMS in construction and its benefits. The study has briefed the factors that most effect to project quality studied from public reports and the key points to control project quality from the design to construction stage. The report has introduced a QMS to the property developer for the purpose of amendment to the existing QMS in order to obtain a complete QMS for better managing project quality.
Report the findings of a research study, which was undertaken to examine the underlying factors affecting the quality of a building project. It also aims to identify factors that show a strong correlation to good quality performance. The ultimate goal is to provide clients, project managers, supervising consultants and contractors with information that can help them become more efficient with their limited resources and, as a result, achieve better quality outcomes.
Mr. Nguyen Trung Kien made a research which primary objective was to study the application of Quality Management System (QMS) of Project Owner in a construction project from design to construction phase.
Conclusion
In general, most of the requirements of quality system have been covered and presented in the existing system. However, it was revealed that problems such as missing contract review, improper coordination and communication, lack of the process control, control of quality records and the inspection status monitoring during the course of work are the reasons that caused major problems to owner and caused schedule delay and generating V.O.
In addition, findings showed that there were problems with decision inconsistency relating to quality on job site caused rework and schedule delay. Obviously, besides the reason of work procedures, it would also be the reasons of different quality level and quality perception. Therefore, it is necessary to conduct the internal quality audit and provide training at different position in order to gain the same level of quality perception in the project team.
The causes and the consequences that generated by these missing processes are summarized in the table below.
The complete QMS would be achieved if the missing requirements as mentioned above should be added in the existing Quality Management System. Aside from that, the quality culture in organization should be set-up so that the Company can reach the Total Quality Management.His thesis abstract is copied and posted.
Abstract
The report expresses the key issues in Quality Management System (QMS) that known as the critical factor for any organization wants to develop and survive in the free trade market.
This study, which refers to the theories and the standards system, has expressed the concept of quality in construction, the QMS in organization, system requirements for owner’s QMS in construction and its benefits. The study has briefed the factors that most effect to project quality studied from public reports and the key points to control project quality from the design to construction stage. The report has introduced a QMS to the property developer for the purpose of amendment to the existing QMS in order to obtain a complete QMS for better managing project quality.
Report the findings of a research study, which was undertaken to examine the underlying factors affecting the quality of a building project. It also aims to identify factors that show a strong correlation to good quality performance. The ultimate goal is to provide clients, project managers, supervising consultants and contractors with information that can help them become more efficient with their limited resources and, as a result, achieve better quality outcomes.
Friday, 4 March 2011
AITCV students visit AIT main campus in Thailand
The AITCV Students from Hanoi and Ho Chi Minh City arrived on February 26 for a week-long site visits, lectures and field trips. They will be here in Thailand until March 6, 2011.
In this photo: 1st Row (L-R): Mr. Bui Viet Thi, Mr. Tran Xuan Canh, Mr. Tran Viet Sinh, Mr. Nguyen Nam Cuong, Dr. Theerathon Tharachai, Dr. BHW. Hadikusumo (MPM&CEIM Coordinator), Dr. Nitin Afzulpurkar (SET Dean), Prof. Said Irandoust (AIT President), Prof. Joydeep Dutta (AIT Vice President for Academic Affairs), Mr. Noppadol Jaisue, Dr. Oulawan Kulchartchai, Ms. Kieu Phuong Ly, Ms. Nguyen Thi Thu Nga, Ms. Tran Ngoc Bich Tram, Mr. La Nguyen Bao.
2nd Row (L-R): Mr. Pham Viet Cuong, Mr. Chau Anh Tuan, Mr. Tran Minh Nghia, Mr. Vu Van Tinh, Mr. Bui Thanh Nam, Mr. Nguyen Trong KHoa, Mr. Nguyen Nhat Tai, Mr. Ngo Quoc Thai, Mr. Nguyen Thai Son, Mr. Tu Thien Tu, Ms. Phan Hong Ngoc, Ms. Dang Trinh Thanh Phuong, Miss Junya Phuangphay, Miss Huyen Thanh To, Mr. Vuong Hoang Thang, Mr. Pham Quang Cuong, Mr. Tran Phi Long, Mr. Thanapon Buaklom, Ms. Woranuch Chumchat, Mr. Ngo Hoang Linh
3rd Row (L-R): Mr. Nguyen Duc Huan, Mr. Nguyen Thanh Tung, Mr. Huynh Thanh Quang, Mr. Nguyen Anh Khoa, Mr. Ngo Thanh Duc, Mr. Hoang Manh Chi, Mr. Nguyen Viet Cuong, Mr. San Visal, Mr. Le Quang Son, Mr. Vo Khac Kien, Mr. Nguyen Hong Thanh, Mr. Puoy Puthitha, Mr. Hout Venghong, Mr. Nguyen Thanh Tam, Mr.Senjam Romero Singh
Thursday, 3 March 2011
Risks Affecting Construction Cost in Vietnam
In project management, there are four core functions: scope, time, quality and cost. In private or business project, cost considered the most important thing. In fact, it is difficult to find a project which initial and final cost are the same despite of owner’s best effort to control the cost.
In any construction project, there are many risks affecting construction cost including, external (economic, politic, legal problems), internal risk (design, contractual, technical), direct risks (inflation, changing of government regulations) and indirect risks (technical problems, delay, contractor capability). In general, risks affect project costs.
Ms. Le Ngoc Diep made a study on the managing risks affecting construction cost in construction phase including evaluation, analysis and response to help owner control the construction cost within authorized budget. The main objective of his research is to study owner’s management status of risk affecting construction cost in Vietnam construction project and suggest recommendations to improve it. In order to achieve this main objective, sub-objective were needed to accomplish such as follows: (1) study the risks affecting construction cost in construction phase and response applied in specific urban center project; (2) study other common risk affecting construction cost in Vietnam construction projects; and (3) assessment and suggestion in order to help owner manage risk more effectively
Conclusions
Construction project is risky due to huge capital, long time implementation and many stakeholders. The awareness on risk management is not that good in Vietnam construction project. In order to limit the effects of risks and control the cost within authorized budget, the owner should carry out appropriate management risk and involve all systems in this process.
In this report, Le Ngoc Diep wanted to study on the status of risk management, in terms of risk affecting construction cost and response applied of one specific construction project which is Chi Linh urban center project.
Over view of managing of risks affecting construction cost in Chi Linh urban center project
- There is no appropriate risk identification (risk list and risk symptom) in the project, and the risk management is not deeply comprehended.
- Awareness of the top management is limited, which lead to design change in construction phase.
- The cost of topography and geological survey is limited.
- The contract document and personnel management is inadequate.
- Risk monitoring and control is passive.
- Awareness of project manager and project team member is not high.
The risks affecting construction cost in Chi Linh urban center project
- Wrong estimate
- Design changes
- Inflation
- Site condition difference
- Poor capability of PMU
- Unclear contract conditions
- Poor site management
The other most popular risk affecting construction cost overrun according to Construction Magazine Census in 2009
- Poor financial capacity of the owner
- Poor financial capacity of the contractor
Responses applied in the project and recommendations are given below
His thesis abstract is copied and posted.
Abstract
The construction industry is one of the most dynamic, risky and challenging businesses because of implementing time is very long with huge capital and many stakeholders.
Risk is inherent in construction projects and risk management in construction projects has been recognized as a very important management process in order to achieve the objectives in terms of time, cost, quality, safety and environmental sustainability. Let say, we are going on the road with the definitive finish, but on that way many obstacles, difficulties facing. So if we do not manage we cannot reach the finish or waste time and energy to reach it.
In construction there are some objectives, but one of the most important thing is cost of project is in authorized budget. There are many risks affecting cost and profit of project from initial to close out phase. In this study I concentrate on risks affecting construction cost and solutions helping owner manage the cost effectively and efficiently to ensure the cost is in budget of project.
In any construction project, there are many risks affecting construction cost including, external (economic, politic, legal problems), internal risk (design, contractual, technical), direct risks (inflation, changing of government regulations) and indirect risks (technical problems, delay, contractor capability). In general, risks affect project costs.
Ms. Le Ngoc Diep made a study on the managing risks affecting construction cost in construction phase including evaluation, analysis and response to help owner control the construction cost within authorized budget. The main objective of his research is to study owner’s management status of risk affecting construction cost in Vietnam construction project and suggest recommendations to improve it. In order to achieve this main objective, sub-objective were needed to accomplish such as follows: (1) study the risks affecting construction cost in construction phase and response applied in specific urban center project; (2) study other common risk affecting construction cost in Vietnam construction projects; and (3) assessment and suggestion in order to help owner manage risk more effectively
Conclusions
Construction project is risky due to huge capital, long time implementation and many stakeholders. The awareness on risk management is not that good in Vietnam construction project. In order to limit the effects of risks and control the cost within authorized budget, the owner should carry out appropriate management risk and involve all systems in this process.
In this report, Le Ngoc Diep wanted to study on the status of risk management, in terms of risk affecting construction cost and response applied of one specific construction project which is Chi Linh urban center project.
Over view of managing of risks affecting construction cost in Chi Linh urban center project
- There is no appropriate risk identification (risk list and risk symptom) in the project, and the risk management is not deeply comprehended.
- Awareness of the top management is limited, which lead to design change in construction phase.
- The cost of topography and geological survey is limited.
- The contract document and personnel management is inadequate.
- Risk monitoring and control is passive.
- Awareness of project manager and project team member is not high.
The risks affecting construction cost in Chi Linh urban center project
- Wrong estimate
- Design changes
- Inflation
- Site condition difference
- Poor capability of PMU
- Unclear contract conditions
- Poor site management
The other most popular risk affecting construction cost overrun according to Construction Magazine Census in 2009
- Poor financial capacity of the owner
- Poor financial capacity of the contractor
Responses applied in the project and recommendations are given below
His thesis abstract is copied and posted. Abstract
The construction industry is one of the most dynamic, risky and challenging businesses because of implementing time is very long with huge capital and many stakeholders.
Risk is inherent in construction projects and risk management in construction projects has been recognized as a very important management process in order to achieve the objectives in terms of time, cost, quality, safety and environmental sustainability. Let say, we are going on the road with the definitive finish, but on that way many obstacles, difficulties facing. So if we do not manage we cannot reach the finish or waste time and energy to reach it.
In construction there are some objectives, but one of the most important thing is cost of project is in authorized budget. There are many risks affecting cost and profit of project from initial to close out phase. In this study I concentrate on risks affecting construction cost and solutions helping owner manage the cost effectively and efficiently to ensure the cost is in budget of project.
Wednesday, 2 March 2011
The Delay Factors in EPC Contracts in Viet Nam: Case study of Uong bi Thermal Power Plant
Delay in any construction project is inevitable. In construction stage of the project, anticipating many factors that cause delay is one of the important works of the project manager. Therefore, project managers should give solutions for these before the construction starts. However in Vietnam, sometimes both owners and consultants do not care about this, which is why many construction projects are delayed.
In particular, all thermal power plants, fertilizer plants and other projects executed by EPC contractors were delayed by usually 1 to 2 years.
Even though various studies have been considered to know the causes of delays, still, seldom discuss about the common and general causes of delay in construction projects. Thus, comprehensive study on these delays is essential. Since the problems are rather contextual, the study needs to focus on specific causes of delays. Mr. Tran Van Trung made a case study to find out the main factors causing delay and affecting other aspects in Thermal Power plants in Vietnam at all stages of projects.
The objectives of his study were to (1) identify major delays in Thermal Power Plants in Vietnam; (2) identify the major cause (reasons) of delays in Thermal Power Plants in Vietnam; and (3) recommend strategies for improving project delivery based on the finding from the study.
Conclusion
Delay in the construction industry is a serious problem in general and in all the coal-fired Thermal Power plant in Vietnam in particular. The project which was investigated in this study exhibits a delay like in all power plants in Vietnam. Therefore, the results of the research provided a framework for project managers who can better understand the dynamics of project management and taking efforts to reduce incidences of delay.
By administering and analyzing factors affecting the project, this research has identified problems related to delays during construction phase. From these results, once again, it is noted that most causes of delay of the project related to Consultant Company of owner who set up F/S and surveyed site conditions before, and Fishner Company as A/E of owner. Furthermore, subcontractor as PM caused delay in the highest impact, since the quality of its equipment was not reliable and the quantity was not asynchronous in delivery.
In this study, twelve major factors were analyzed to find out the causes, impacts and solutions of delay problems during the construction stage. Although these problems may be unprejudiced or subjective reasons, they were also originated from carelessness in the implementation, management or supervision. Then, this research had deeply analyzed other factors that also affect schedule for each case and summarized some reasons behind these delays, and proposed some recommendations belowwhich might enable to develop the main contractor organization to achieve one of the major goals in power plants which the on time completion.
His thesis abstract is copied and posted.
Abstract
In construction industry, a project is known to be successful when it meets three fundamental criteria such as finishing on time within the budget, the prescribed quality requirements such as satisfying customer’s demand and adapt safety in operation stage. Unfortunately, all of Thermal Power Plants built in Viet Nam had problems of project management leading to their delay. Investigating these problems has become project manager’s indispensable demand.
In general, the problems involved with project delays are solvable. In making effort to solve these problems, the critical factors influencing negatively on construction duration need to be discovered. Hence, it is very important to establish a systematical approach that will be used as a tool for the investigation.
This report will assess and analyze twelve factors causing the delay problems in Uong Bi Thermal Power Plant was executed in the North of Viet Nam. The qualitative method, basically is based on the principle of assessing the risk level of factors impacting negatively on the progress of the project, and it is conducted to fulfill the objective of the study.
Finally, some solutions dealing with project delay problems in construction executing stages are proposed.
In particular, all thermal power plants, fertilizer plants and other projects executed by EPC contractors were delayed by usually 1 to 2 years.
Even though various studies have been considered to know the causes of delays, still, seldom discuss about the common and general causes of delay in construction projects. Thus, comprehensive study on these delays is essential. Since the problems are rather contextual, the study needs to focus on specific causes of delays. Mr. Tran Van Trung made a case study to find out the main factors causing delay and affecting other aspects in Thermal Power plants in Vietnam at all stages of projects.
The objectives of his study were to (1) identify major delays in Thermal Power Plants in Vietnam; (2) identify the major cause (reasons) of delays in Thermal Power Plants in Vietnam; and (3) recommend strategies for improving project delivery based on the finding from the study.
Conclusion
Delay in the construction industry is a serious problem in general and in all the coal-fired Thermal Power plant in Vietnam in particular. The project which was investigated in this study exhibits a delay like in all power plants in Vietnam. Therefore, the results of the research provided a framework for project managers who can better understand the dynamics of project management and taking efforts to reduce incidences of delay.
By administering and analyzing factors affecting the project, this research has identified problems related to delays during construction phase. From these results, once again, it is noted that most causes of delay of the project related to Consultant Company of owner who set up F/S and surveyed site conditions before, and Fishner Company as A/E of owner. Furthermore, subcontractor as PM caused delay in the highest impact, since the quality of its equipment was not reliable and the quantity was not asynchronous in delivery.
In this study, twelve major factors were analyzed to find out the causes, impacts and solutions of delay problems during the construction stage. Although these problems may be unprejudiced or subjective reasons, they were also originated from carelessness in the implementation, management or supervision. Then, this research had deeply analyzed other factors that also affect schedule for each case and summarized some reasons behind these delays, and proposed some recommendations belowwhich might enable to develop the main contractor organization to achieve one of the major goals in power plants which the on time completion.
His thesis abstract is copied and posted.Abstract
In construction industry, a project is known to be successful when it meets three fundamental criteria such as finishing on time within the budget, the prescribed quality requirements such as satisfying customer’s demand and adapt safety in operation stage. Unfortunately, all of Thermal Power Plants built in Viet Nam had problems of project management leading to their delay. Investigating these problems has become project manager’s indispensable demand.
In general, the problems involved with project delays are solvable. In making effort to solve these problems, the critical factors influencing negatively on construction duration need to be discovered. Hence, it is very important to establish a systematical approach that will be used as a tool for the investigation.
This report will assess and analyze twelve factors causing the delay problems in Uong Bi Thermal Power Plant was executed in the North of Viet Nam. The qualitative method, basically is based on the principle of assessing the risk level of factors impacting negatively on the progress of the project, and it is conducted to fulfill the objective of the study.
Finally, some solutions dealing with project delay problems in construction executing stages are proposed.
Tuesday, 1 March 2011
Effectiveness Of Feasibility Study Analysis In Apartment Building Project
The construction projects present a unique situation where each project has different situation and parties. One of the important stages involved in a construction project is the preparation of the feasibility study. Feasibility study is conducted during the formulation phase of Project Cycle. This verifies whether the proposed project is well founded, and is likely to meet the needs of its intended target groups/beneficiaries. The study should design the project in full operational detail, taking account of all policies, and technical, economic, financial, institutional, management, environmental, socio-cultural, and gender-related aspects.
Construction is a complex field, costly and risky. In recent years, the construction industry in Vietnam is having a good reputation of rapid development. However, many large projects invested by private investors are still facing incorrect cash flow, missing indirect cost, less profitable or cost overruns, and feasibility study is not suitable according to economic environment.
To minimize these problems, client needs to improve their skills and abilities in dealing with project Financial Feasibility Study. Recessions and poor economic times have put pressure on the average company for better using effectiveness tools in this stage.
Mr. Truong Ngoc Dung made a case study about the Twenty Six Storey Apartment projects which was invested by Company ABC. The objectives of his study were to: (1) conduct an exploratory study on the factors and process used in financial feasibility study; (2) develop a framework for an effective financial feasibility for Apartment Building Project; and (3) conduct a case study to validate the effectiveness of the framework
Conclusions
The case in this report describes a practical implementation of the Feasibility Study stages in Apartment Building Project of Vietnam in general and Ho Chi Minh City in particularly, and obviously revealed the factors which can seriously affect the success of the project. In fact, Vietnam at present has enormous efforts to overcome policy and reduce the cumbersome procedures in investment, but investors still face a lot of problems (Financial Feasibility Study) which occur during project implementation.
In conclusion, the report may not only offer the effective method to make Feasibility Study in the first stages of project implementation, but also clear description that the major factors may affect the efficiency budget projects, that most projects in Vietnam are all experiencing: the problem of cost overrun, bankrupt and project costs incurred up compared to initial estimates.
Recommendations for further study
- This research was concentrated on finance like estimated cost, revenue and how to analyse project financial. However, other influence factors such as local politics, public relationship and strategy of the owners did not mention.
- It is recommended to make a Feasibility Study at difference stages such as design stage, construction stage and after operation and transfer stage for the main purpose of improving the projects later.
- Sensitivity Analysis is also needed to recognize the priority factors after calculating financial factors for the Apartment Building project. These factors are of big concern and have the ways to manage it.
- Mores projects have to be studied in order to get a better result and it is highly recommended to investigate the effectiveness of each strategy by quantitative data.
His thesis abstract is copied and posted.
Abstract
The Real Estate investment is one of the most dynamic, risky and challenging businesses because of their implementing time is very long with huge investment capital and various participating components. Furthermore, this field has poor skills for making Feasibility Study, with many major projects failing to finish on time and cost targets.
Feasibility Study of construction project used to get the alternatives of optimal land use that give the highest profits. Feasibility study analysis also gives information about value of investment and the benefits that investors will get. Define return of investment can be seen from feasibility study. Commonly, Net Present Value (NPV), Internal Rate of Return (IRR) and Benefit/Cost (B/C) are the values that used by investor to consider this project is feasible or not.
The purpose of this study to identify effectiveness methods, main major estimated factors that will be occurs in this stage. To effectively making the financial feasibility study in construction project, it is necessary for oriented path to identify important factors, then provide a suitable tool to measure their effects in each stage of Financial Feasibility Study life cycle and suggest the effective solution methods as minimized/maximized, shared, or accepted.
Construction is a complex field, costly and risky. In recent years, the construction industry in Vietnam is having a good reputation of rapid development. However, many large projects invested by private investors are still facing incorrect cash flow, missing indirect cost, less profitable or cost overruns, and feasibility study is not suitable according to economic environment.
To minimize these problems, client needs to improve their skills and abilities in dealing with project Financial Feasibility Study. Recessions and poor economic times have put pressure on the average company for better using effectiveness tools in this stage.
Mr. Truong Ngoc Dung made a case study about the Twenty Six Storey Apartment projects which was invested by Company ABC. The objectives of his study were to: (1) conduct an exploratory study on the factors and process used in financial feasibility study; (2) develop a framework for an effective financial feasibility for Apartment Building Project; and (3) conduct a case study to validate the effectiveness of the framework
Conclusions
The case in this report describes a practical implementation of the Feasibility Study stages in Apartment Building Project of Vietnam in general and Ho Chi Minh City in particularly, and obviously revealed the factors which can seriously affect the success of the project. In fact, Vietnam at present has enormous efforts to overcome policy and reduce the cumbersome procedures in investment, but investors still face a lot of problems (Financial Feasibility Study) which occur during project implementation.
In conclusion, the report may not only offer the effective method to make Feasibility Study in the first stages of project implementation, but also clear description that the major factors may affect the efficiency budget projects, that most projects in Vietnam are all experiencing: the problem of cost overrun, bankrupt and project costs incurred up compared to initial estimates.
Recommendations for further study
- This research was concentrated on finance like estimated cost, revenue and how to analyse project financial. However, other influence factors such as local politics, public relationship and strategy of the owners did not mention.
- It is recommended to make a Feasibility Study at difference stages such as design stage, construction stage and after operation and transfer stage for the main purpose of improving the projects later.
- Sensitivity Analysis is also needed to recognize the priority factors after calculating financial factors for the Apartment Building project. These factors are of big concern and have the ways to manage it.
- Mores projects have to be studied in order to get a better result and it is highly recommended to investigate the effectiveness of each strategy by quantitative data.
His thesis abstract is copied and posted.
Abstract
The Real Estate investment is one of the most dynamic, risky and challenging businesses because of their implementing time is very long with huge investment capital and various participating components. Furthermore, this field has poor skills for making Feasibility Study, with many major projects failing to finish on time and cost targets.
Feasibility Study of construction project used to get the alternatives of optimal land use that give the highest profits. Feasibility study analysis also gives information about value of investment and the benefits that investors will get. Define return of investment can be seen from feasibility study. Commonly, Net Present Value (NPV), Internal Rate of Return (IRR) and Benefit/Cost (B/C) are the values that used by investor to consider this project is feasible or not.
The purpose of this study to identify effectiveness methods, main major estimated factors that will be occurs in this stage. To effectively making the financial feasibility study in construction project, it is necessary for oriented path to identify important factors, then provide a suitable tool to measure their effects in each stage of Financial Feasibility Study life cycle and suggest the effective solution methods as minimized/maximized, shared, or accepted.
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