INTERIM PAYMENT & VARIATION ORDER MANAGEMENT FOR  HIGH-RISE BUILDING PROJECT

A CASE STUDY OF INDOCHINA PLAZA PROJECT.

by

Trinh Vuong Duy

Abstract

In recent years, construction industry in Viet Nam is booming. Both Government and private sectors develop many projects in infrastructure and new cities. Especially, high rise buildings become attractive to many developers because of high profit and saving land asset.

In general, to deliver a project, one of the most important parts of process is contract management. A good contract must cover most of the significant cases that potentially happen during process of construction to prevent from disputation. Nevertheless, in the real life, people who control contract management have not got enough experiences to foresee matters may arise in the future. A regular error of contract is the lack of specifications. That will support contractors to apply low quality materials in to project. Above reasons are only examples of insufficient contracts, besides, there are many reasons that cause the contract fail.

The report analyzes to find problems in contract of Project Indochina Plaza Ha Noi, but focus on payment & variation issues. Then report will recommend solutions for specific cases. The report can help the owner to improve contract management of the project, or apply it for other projects.

Executive summary  

Rationale of research

This research has been conducted to indentify the problems of payment and variation in the construction projects and the problems with owner and contractor regarding payment and variation.

Objectives of study

To identify frequent problems, causes in payment and variation in construction projects.  Suggest frame work for payment & variation for improving situation of practice in construction.

Methodology

The exploratory research method is used to study frame work of payment & variation in construction project, application of frame into Indochaina project to identify problems to adjust in contract and to propose suitable solution for future projects.

Findings and conclusion

Contract management being important step in the construction as it control cost of project and rules and regulation regarding cost.

The big issue in construction works is delay of payment which actually is supposed to pay each month to cover expenses and due to this contractor always claim higher then what he did, causes dispute.

The representative of owner intentionally drives design at initial stage to cause variation order at the end to benefit him. Project cost overrun mainly comes from this issue.

Recommendations

The recommendations are divided into groups according to area specific

1.      Payment frame work  

·         What amounts will be paid under payment terms.

·         When a payment will be assessed in contract term.

·         How percentage work done will be defined.

·         What information need to be defined between two parties.

·         Ownership of material should be proven to transferring to owner, to pay for offsite material.

·         Owner has right to access to inspect or collect offsite material.

·         A full refund for the value of materials and components will belong to owner before they move to contractor’s factory.

·         A full refund for the value of any work off site on these materials and components will belong to owner after ownership of those are transferred to contractor.

 ·         The contractor has to buy insurance for materials or goods offsite that used for the owner’s project.

 ·         The amount supposed to be withhold and the basic for withholding payment.

 ·         The notice shall be informed to the contractor before the final date for payment.

  ·      The contractor can suspend work with 7 days notice with reason for suspension.

  ·      The contractor only can suspend the work that is not being paid, but not all the work.

  ·      The contractor shall provided time extension for any delay caused by performance pending, or compensated a reasonable cost by the suspension.

2.      Variation order frame work

To mitigate variations arise in construction project & dispute between parties these issues need to be controlled in Design Stage & Construction Stage.

·         Design stage

The owner is major cause because in variation order sometimes due to lake of experience, for aesthetic appearance and to use cheaper material, so there is need of accurate estimation for financial plan & cash flow will required to reduce issue and review of contract document especially drawings should be clear from ambiguity so that contractor should not take advantage from it.

·         Construction stage

finalize quantity and confirm that is variation or not. So site investigation of variation is

In some cases, the consultant can not assess quantity based on drawing, or doubt on

Need of variation order assessment procedure to be cleared and agreed by parties at initial stage of project to reduce problems, variation orders that involve change in original price will be approved in writing by owner before execution of work.

Owner should hire project management consultant to negotiate rates in variation orders professional team can help in negotiating to minimize negative impacts of variation

 reducing the cost.

the   variation submitted by contractor. He can physical check with the contractor to

The main dispute that occurs is different assessment of work; contractor should explain the procedure of work, expenses of work, material and labor etc.

very important, it would help consultant to assess accurately the variation order.

FEASIBILITY STUDY REPORT FOR URBAN

INFRASTRUCTURE PROJECT

USING LOAN FROM OFFICIAL DEVELOPMENT ASSISSTANCE (ODA).

A CASE STUDY OF LAOCAI CITY DEVELOPMENT PROJECT

FUNDED BY WORLD BANK

by

Nguyen Viet Cuong

Abstract

The development of socio-economic infrastructure plays a very important role in the country developing strategy, it is a major factor to help developing country reducing the poverty. The fund for the infrastructure development can be from many sources: private sector, counterpart, mixed credit and ODA loan…In order to meet the huge demand on infrastructure project development, the preparations of project investment such as project feasibility study is specially paid attention by Project Management Units.

Furthermore, with the project using the loan from international Donors, the feasibility study is not limited in project financial aspects like loss or profit, it also studies the other social aspect such as safeguard policies, economic benefits, benefit to the residents within project… The project feasibility study report therefore also be considered as approved factor for the Donor to give the loan.

The purpose of this study is to identify the process to prepare a feasibility study report for the urban infrastructure development project using the loan from World Bank. this process of preparing feasibility study report need to be followed the government instruction as well as complying with the World Bank regulation.   

Executive summary  

Rationale of research

This research has been conducted to indentify the course of action to prepare feasibility study report for the urban infrastructure development project using loan from World Bank.

Objectives of study

To prepare feasibility study report following guidelines of five funding agencies (Asian development Bank, French Agency, World Bank, Japan Bank for International Cooperation, German Bank for Reconstruction) to identify risk of unrealistic FS report preparation and to analyze problem during preparation of FS report.

Methodology

In this research methods are followed in accordance with the five funding agencies i-e step by step completion of FS report from collection of data to provincial people approval and World Bank non-objection letter.

Findings and conclusion

Apart from the project financial advantages, the significant advantage from project implementation is that the Project Owner and project shareholders particularly the Consultants are approached to the international standards in project preparation and implementation. Report helps in making decision of either invest or not to invest for construction.

The project shareholders, at any time during project implementation, must take note on the compliance of Donor’s guidelines, as World Bank specialists supervises strictly the project implementation to ensure the effectiveness of fund usage and development criteria are complied.

The project FS report has to be prepared in compliance with both Lender’s guideline and Governmental rule and regulation. This appears to be the biggest challenge for the Project Owner and FS Consultant, that why the selection of FS Consultant need to be always considered carefully with the Non-objection from the Donors.

The other issues such as the sustainable development and Community Awareness in sanitation and environment, institution and capacity building also need to be considered carefully and differently from the normal construction investment project

During the FS preparation stage, the difficulties will be occurred due the lack of experience in project management from project owner to this new concept of total project development, thus, the improvement of project communication and information sharing must be paid attention to avoid the unnecessary delay.

Recommendations

The FS report is more difficult and complicated when compared with commercial project report. The main procedure and guidelines are defined by donor agency and lenders criteria, so I can only give my recommendations to prepare reliable FS report using World Bank loan in particular.

·         Project management unit should be set up at early stage; matrix structure under control of provincial leader.

·         The more accurate data, the more reliable report will be so need of proper survey team and procedure.

·         As FS report preparation will be in direct supervision of World Bank so consultant need to have experience of working with WB and have experience in development of similar projects.

·          As FS preparation team is different from presentation team to World Bank expert, so there is need of proper communication system among stakeholders it can be done by telecom conference with minute notes. 

INVESTMENT COST CHANGES FOR AGRICULTURAL PROCESSING PLANT

by

Nguyen Nam Cuong

Abstract

Vietnam is a developing country with about 70% of the population works in the fields related to agriculture and rural. Through a process of development since the Doi Moi to now, Vietnam has become one of the world’s leading exporters of rice and many agricultural commodities such as coffee bean, cashew nut, black pepper… However, almost of agricultural commodities are exported in raw material types or semi products. On other hand, the procurement and exporting system has not been paying attention enough to develop correspondingly.

As the result, the value of exported agricultural products of Vietnam is normally underestimated in the international markets because of low quality. The low margin of agriculture products, in turn, contributes to increase income gap between rural and urban area. Therefore, one of the key objectives of the Vietnamese Government is to develop systems for storage and processing of agricultural products, improving production and processing capacities, autonomy in purchasing and export of agricultural commodities with quality, contributing to improving Vietnam’s position on world agricultural markets.

 Executive summary  

Rationale of research

This research has been conducted to find out the way for capital estimates and analysis of estimates

Through frame work, the focus of evaluation is on financial problems analyze and change in actual cash flows and why these changes occur.

Objectives of study

To propose a solution through analysis, doing general feasibility study of project and analysis, evaluation of project cost changes.

Methodology

The qualitative approach has been used to resolve issues during construction to achieve performance.

The process includes data collection, processing and data analysis. Considering mutual relationship inside and outside using standards, normative in accordance and propose solution.

Findings and conclusion

Investment project being important document for owner to assess investment decision, owner can see big picture of project.

However the important factor in investment project is construction cost, which always seen with bias. The feasibility study is always dependant on owner and consultant and project management methods so as to reduce risk in cost fluctuation. And owner can control cash flows.

 List of factors affecting investment project

• Expertise and experience in project management of the Owner.
• The financial capability of the Owner.
• The professional ability and knowledge related to the field of investment consultancy and project design.
• Ability to coordinate the implementation of tasks between the Owner and contractors design and consulting in the preparation period of investment.
• Ability to coordinate between the Owners and construction contractors in the construction process.
• The professionalism of the construction contractor.
• Mechanisms and incentives to support investment in the locality.

The agricultural processing plant from initial stage to implementation is long process with constant change; thus success of project depends upon owner control on such movements and ensuring quality and time of investment.

During the project, the change in cost is often by different reasons, divided into four stages.

1.      The cost of construction in terms of rates of investment costs for Feasibility Study.

2.      The cost determined by the total estimated cost.

3.      The value determined by the construction contractor's proposal is approved.

4.      The actual value of the settlement package.

It is almost impossible to determine the final cost of each package at construction stage except package having fix-price, and change in cost can only be observed in above three steps.

For the changes in fourth stage that can determine final value,it is necessary to consider risk in construction process

·         Project area actually decreased compared to the record.

·         The detail design is inappropriate to the construction.

·         Price volatility of construction materials.

·         Difficult to find workers and construction equipment.

·         The impact of weather on the construction process.

·         Fluctuation of currency exchange rates.

The owner can have actively appropriate countermeasures, to minimize the negative impacts, including the choice of contractual form, in accordance, and contract with the consultant of supervisor, design consultants and contractors to strictly control the changes arising in the construction process. These are also the mission of Project Management.

Development of Quality Management System in Hospital Construction Project - A Case Study of the Projects Management Board of Investment and Construction of Thoi Lai Districts

by

NGUYEN TIEN THUC

Abstract

The report raises important issues in quality management systems (QMS), it emphasizes the important factors for any organization that would grow and survive in the free trade market.

In which this study refers to the theory and the standard system, presents the concept of quality in construction, models of quality management systems in the organization, the requirements necessary for system quality management of the Owner in construction and its benefits. The research presented briefly the factors most affecting the quality of the project from the public report and the key points to control the quality of construction from design phase to construction phase. The report introduced a model of QMS for the construction company for the purpose based on the available model of quality control and edit the successful application of model quality management of the company to have is a project that really matter.

Report the results of a study, carried out to examine the basic factors affecting the quality of a construction project. It also aims to identify the factors showed a strong correlation to performance quality. The ultimate goal is to provide clients, project management, monitoring, consulting and contractor information can help them become more effective with their limited resources and achieve the ultimate goal better quality. 

Executive summary

Rationale of research

This research has been conducted to study quality issues in construction projects of Vietnam, in recent years quality of construction works marked as question in public as well as private projects.

Objectives of study

To propose recommendation for improvement in quality of construction by studying and analyzing  quality management systems and practices in construction projects, quality management system in development and implementation in hospital construction project.

Methodology

In this research, case study approach has been used to focus on studying and analyzing different sources of data to develop a quality management model for owner

Exploratory research is used in reviewing the literature to develop a model for building construction projects in Vietnam.

Findings and conclusion

By observing case of hospital construction project based on  available data and observations it is very much clear that the responsibilities at each level are clearly defined. The overall management system of the project is clearly defined and managed, but still there are some problems in some areas which needed to examine.

The project staff needs to train and encouragement for quality of work, leadership and stability within organization.

Morale improvement of staff, customer focused and quality checks from start of conceptual design.

Recommendations

Need of a clear mechanism from project manager to improve quality in construction and to reduce risk of early quality.

·         Control measures must be designed from the product when completed.

·         To determine the quality control tasks from the beginning.

·         To select the contractor fully qualified and experienced.

·         Regular training and quality control training for staff.

Need of developing evaluation system from owner side, which will collect and store updated data the contractors completed projects. The evaluation system clearly defines the method of assessment.

·         Develop a quality benchmarking assessment skills of construction contractors, materials and equipment during construction.

·         Establishing a benchmark for assessing the safety and sustainability of the project.

·        Establishing a benchmark for assessing the response of work with the regulations on construction rules and technical standards may be applied to build the project.

·         Establishing a benchmark assessment of the art construction.

·      As a basis for evaluating and scoring capabilities businesses such as contractors involved in tendering for   other projects.

·         As a basis, the documentation for quality control of a new work.

·       Making facilities and materials for the workshop on improving quality control in order to draw experiences for subsequent work.

QUALITY MANAGEMENT FOR BUILDING CONSTRUCTION PROJECTS

A CASE STUDY OF RESIDENTIAL AREA FOR CANTHO UNIVERSITY STUDENTS

by

Le Thanh Phieu

  Abstract

The thesis shows the key issues in Quality Management System (QMS) considered as the essential factor for any organization that wants to develop and survive in the free trade market.

This thesis reviews the theory about quality management and its importance in construction project. In fact, this theory shows the important role, requirements and benefits of applying o construction quality management. The thesis briefs the factors that most effect to project quality and the key points to control project quality from the design to construction stage. The thesis has introduced a QMS to the construction contractor and the investors that they really need to be familiar with at present.

The other part of this thesis is the case study on Residential Area for CanTho University Students where the quality management system is applied. During this project, the system is well applied leading to great achievements despite some unexpected problems. Through this research, there are several good lessons that the parties related to the project should realize and study. They should have owned a quality management system, well-trained staff and disciplined top executive managers looking for high quality.

  

Executive summary  

Rationale of research

This research has been conducted to propose suitable solution to quality management system by undergoing into case study of Can Tho University student residential area.

This research is also important to study quality management systems and its application in government projects in Vietnam.

Objectives of study

To propose recommendation by studying quality management system and practices in building construction projects, analyzing quality management practices in Can Tho University students residential project.

Methodology

In order to conduct research there is immense need of a frame work, which will describe how research will be conducted.

In this research case study approach has been used to focus on studying and analyzing different sources of data; i-e project documents, news papers, local construction law and standards etc.

The research design is based on single-case and single unit of analysis, exploratory research is used in reviewing the literature to develop a frame work for building construction projects in Vietnam.

Findings and conclusion

There are some puzzlement regarding understanding the philosophy of QMS by the project managers and it is not yet established to work in construction industry .it may be difficult to implement QMS by the contractors because they more focused on profit generation. Initial cost of QMS is considered to be high; there might be offsets in decline of quality and it not practicable for small firms.

It might be more difficult to put into operation onsite due to resistance from other parties than to implement in an organization, employees can also resist in implementation of QMS that will turn into the education more difficult.

Based on this study the  project of  residential area for Can Tho University students, the theory of quality management is well analyzed and applied to meet the high quality requirements of investors.

The project is role model for future projects of CTU for getting high quality projects.QMS provides a base for getting quality construction through procedures and practices to satisfy customer needs and business performance in industry.

Recommendations

o   Need of speedy financing for the project, which can save time.

o   Need to provide updated QMS to contractor prior to construction to avoid quality risks.

o   Need of QMS to be applied according to regulations and requirements of standard construction.

o   Need of project staff to be trained for internal quality audit procedure to ensure quality construction.

AIT-Chuong trinh Thac si Quan ly du an Xay dung: Thu moi hoi thao

THƯ MỜI THAM DỰ

HỘI THẢO

NÂNG CAO NĂNG LỰC QUẢN LÝ CÁC DỰ ÁN XÂY DỰNG

ĐÀO TẠO CAO HỌC AIT VỀ QUẢN LÝ DỰ ÁN XÂY DỰNG - KỸ THUẬT XÂY DỰNG VÀ QUẢN LÝ CƠ SỞ HẠ TẦNG

Viện Công nghệ Châu Á tại Việt Nam (AITVN) xin gửi lời chào trân trọng.

Đa số các nhà quản lý dự án và điều phối các dự án phát triển cơ sở hạ tầng của Việt Nam đều có cơ sở tốt về kỹ thuật như kỹ thuật xây dựng, cơ khí, điện, v.v… Để có thể là nhà quản lý chuyên nghiệp điều hành và tham gia các dự án lớn họ cần được trang bị đầy đủ kiến thức và các kỹ năng cần thiết cho quản lý dự án như quản lý về quy mô, hợp đồng, thu mua, tài chính và thời gian hoàn thành dự án,... Do đó, nâng cao năng lực về quản lý dự án xây dựng là một trong nhiệm vụ trọng tâm phát triển nhân lực quản lý cao cấp của các tập đoàn xây dựng lớn, các công ty đầu tư xây dựng cũng như các nhà thầu.

Để đáp ứng nhu cầu ngày càng cao đội ngũ cán bộ chất lượng cao về lĩnh vực kỹ thuật và quản lý xây dựng dân dụng của Việt Nam, Viện Công nghệ Châu Á đã triển khai rất thành công các Chương trình đào tạo chuyên gia về Quản lý dự án xây dựng, chuyên gia kỹ thuật xây dựng về quản lý cơ sở hạ tầng từ 2007 đến nay tại Hà Nội, Thành phố Hồ Chí Minh, Vũng Tàu, Cần Thơ,…Trong khuôn khổ Chương trình, AITVN xin trân trọng kính mời Quý vị đại diện tham dự Hội thảo “Nâng cao năng lực về Quản lý Dự án trong Xây dựng”, được tổ chức lúc 09h00, Chủ nhật ngày 08 tháng 01 năm 2012 tại AITVN, số 45 Đinh Tiên Hoàng, P. Bến Nghé ,Q.1 (đối diện đài Truyền hình HTV), Phòng A1.1.

AITVN xin mời Quý cơ quan, đại diện phụ trách Nhân sự, cán bộ và đào tạo, các chuyên viên kỹ thuật, các nhà quản lý các dự án đầu tư/xây dựng lớn, các cá nhân quan tâm đến Hội thảo và các chương trình đào tạo của AIT tới tham gia Hội thảo.

(gửi kèm chương trình Hội thảo)

Xin liên hệ địa chỉ sau để đăng ký tham gia:

Chị Lê Tường, Điện thoại: 08-910 7423/7472/7473/số nội bộ 117; 01 285 265 168

Eemail: ngletuong@aitcv.ac.vn

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Trình bày: Tiến sĩ Hadikusumo

Trưởng khoa, Khoa Quản lý Xây dựng, Kỹ thuật và Cơ sở Hạ tầng,

Trường Kỹ thuật và Công nghệ - Viện Công nghệ Châu Á (AIT)

CEIM-SET Congratulates the Graduates of the 116th Batch

We would like to congratulate the new graduates who received their diploma during the 116th AIT Graduation Ceremony on January 21, 2011 at the Thailand Science Park Convention Center (TSPCC), National Science and Technology Development Agency (NSTDA). The names of graduands and their Thesis/Project title are listed below:

Master of Engineering (Professional) (Inter-semester 2011)

1. Doan Thai Duong

Project: Owner’s Project Quality Management: A Case Study of Northern PVOil Petron Station

2. Pham Van Hung

Project: Safety and Health Management in Oil and Gas Construction Projects: A Case Study of Block-O-Mon Gas Pipeline Construction Project

3. Ho Chi Linh

Project: Delay and Contract Management in Construction: A Case Study of Administration Centre and Postgraduates Trainings at Can Tho University

Master of Engineering (August 2011 Semester)

1. Khaing Kay Thwe

Thesis: Project Management Competency in Myanmar Construction Projects

Master of Engineering (Professional) (August 2011 Semester)

1. Pham Viet Cuong

Project: Project Owner’s Quality Management System: A Case Study of Quality Management System in Bong Do Housing Development Project

2. Nguyen Viet Cuong

Project: Feasibility Study Report for an Urban Infrastructure Project Using a Loan from Official Development Assistance (ODA): A Case Study of Laocai City Development Project Funded by World Bank

3. Le Do

Project: Delays in Flood Prevention Projects: A Case Study of Urban Drainage Project Management Unit

4. Nguyen Thi Thu Nga

Project: Analysis of Developer’s Mistakes in Appraisal, Approval and Permit Issuance of the Construction Investment Project in Ho Chi Minh City

5. Ha Chi Nghia

Project: Maximize Profit of Construction Contractor: A Case for Nam Thinh M & E Contractor

6. Linh Hoang Ngo

Project: Causative Factors Leading to Cost Overrun in EPC Power Project: A Case Study of Vung Ang Power Plant Project in Vietnam

7. Dang Quang Ngoc

Project: Owner’s Quality Management: A Case Study of a High Rise Building Project for Resettlement of People Relocated

8. Nguyen Nhat Tai

Project: Owner’s EPC Project Management in a Power Plant Project: A Case Study of the Nhon Trach 2 Power Plant Project (750 MW)

9. Le Thanh Phieu

Project: Quality Management for Building Construction Projects: A Case Study of Residential Area for Cantho University Students

10. Tran Viet Sinh

Project: Cost Estimation Problems in Thermal Power Projects: A Case Study of Thai Binh 2 Thermal Power Project

11. Nguyen Thai Son

Project: Effective Planning and Control of Multiple Projects: A Case Study of GR60-Nokia Stores Chain in Vietnam

12. Nguyen Binh Son

Project: Risk Factors and Management in a Cable Stayed Bridge Project: A Case Study of Nhat Tan Bridge Project in Hanoi

13. Ngo Quoc Thai

Project: Cost Escalation Management in a Low-Income Apartment Project

14. Le Anh Thai

Project: Business Process Management and Key Performance Indicators in Real Estate Construction

15. Nguyen Xuan Thang

Project: Project Delays in Construction of Taxiway S1 in Noi Bai International Airport

16. Nguyen Ngoc Thi

Project: Owner’s Project Quality Management System: A Case Study of Imperia An Phu Project in Ho Chi Minh City, Vietnam

17. Bui Viet Thi

Project: The Delay Factors During Construction Phase of a Residential Project in Binh Duong, Vietnam: A Case Study of An Dien Urbanized Residential Commercial Zone

18. Nguyen Tien Thuc

Project: Development of a Quality Management System in a Hospital Construction Project: A Case Study of the Projects Management Board of Investment and Construction of Thoi Lai Districts

19. Vu Van Tinh

Project: Construction Management in Process Piping Installation: A Case Study of Dong Quat Polypropylene Project

20. Tran Xuan Canh

Project: Project Management in High Risk Basement Construction: A Case Study of Construction Project in Hanoi City, Vietnam

21. Tran Cao Hy

Project: Delays and Claims in Hydropower Plant Project: A Case Study of Dong Nai 4 Hydropower Plant Project in Vietnam

22. Duy Vuong Trinh

Project: Interim Payment & Variation Order Management for a High-Rise Building Project: A Case Study of Indochina Plaza Project

Master of Science (Professional) (August 2011 Semester)

1. Nguyen Duc Huan

Project: Owner’s Tendering Strategy to Obtain a Qualified Contractor

2. Nguyen Tran Tuong Ly

Project: Pre-Construction Delay in Building Project Development: A Case Study of “Investco Babylon” Project in Ho Chi Minh City

3. Phan Hong Ngoc

Project: Human Resource Management in a Construction Project: A Case Study at the Foundation Phase of a Construction Project Executed by Saigon-RDC Workforce

4. Cuong Nam Nguyen

Project: Project Financial Feasibility Study for an Agricultural Processing Plant

5. Vo Thanh Phong

Project: Variances in Financial Model between Feasibility Study and after Design Stage in Bau Sen Building Project

6. Vuong Hoang Thang

Project: Owner’s Project Scheduling Management Strategy: A Case Study of SHB-Da Nang F. C Sports and Training Complex Center Project

7. Tu Thien Tu

Project: Project Management Competency of a Small Contractor: A Case Study of Kien Tao Ltd., Company

8. Le Van Tuan

Project: Risk Factors in a Water Environment Improvement Project: A Case Study of Bien Hoa City in Dong Nai Province