DELAYS
AND CLAIMS IN HYDROPOWER PLANT PROJECT
A
CASE STUDY OF DONG NAI 4 HYDROPOWER PLANT PROJECT
IN
VIETNAM
By
Tran
Cao Hy
Abstract
Executing a scope of project works within the right
time is clearly one of the key components of project success but it is not easy
to achieve in construction industry. Indeed, many construction projects have to
face with delay problems in which the causes come from many different sources.
More importantly, delays are almost always accompanied with cost and time
overruns. Construction project delays often results in adverse relationships
between construction stakeholders (client, contractor, consultant etc.),
distrust, litigation, arbitration, cash-flow problems, and a general feeling of
apprehension towards each other.
Due to inherent risk and complexity of modern
construction project, delays and delay claims have become common facts in
construction industry. While delays are life of construction projects, delay
claims tend to be some of the least understood and frequently confusing claims
in the construction field. Therefore, a clear understanding of the basic
elements necessary to prove delay claims is invaluable in the processing of
complex construction claims.
The main purpose of this report is to identify the
major causes of delays and types of claims in construction projects. The
qualitative method of risk management theory is used to analyze and rank delay
factors and their impact in construction progress. Besides, claims analysis
framework and construction claims resolution process is also developed for
claims management.
Executive summary
Rationale of research
This research has been conducted to identify the delay cause,
effects and claim procedure in hydropower plant projects.
Objectives of study
Study
major delays, its causations and investigate, evaluate impact level of delay
problems affecting on construction projects by using risk management theory.
Study
types of claim and claims settlement procedures in construction field, to
propose recommendations for reducing impact of project delay on project
delivery.
Methodology
The exploratory method is used to review the literature of some
previous studies on delay problems to summary major delays, its causation and
claims in construction industry. And a case study on hydropower plant project.
Risk management model is also applied to analyze and evaluate
impact degree of delay factor to construction project. For construction claims,
common claim types and effective claims preparation is studied based on
literature.
Findings and conclusion
Delays
and delay claims in construction projects often result in adverse relationships
between construction stakeholders (client, contractor, consultant etc.),
distrust, litigation, arbitration, cash-flow problems, and a general feeling of
apprehension towards each other.
Delay causations in construction project are much diversified and
the magnitude of these delays varies considerably from project to project. We can also see that the
causations come from not only Contractor but also either Owner, Consultant or
external factors. For Dong Nai 4 Hydropower plant project, the following delay
causations found are at the top critical factors.
·
Defective
design document (errors, omission)
·
Delay
in providing owner’s material or components
·
Inadequate
contractor’s experience and capacity
·
Unfavorable
weather conditions
·
Delayed
payment
·
Acts
of government
·
Adjustment
of salary and material price
·
Accidents
·
Failure
to provide proper equipments
·
Materiel
is incomplete and non-synchronous
·
Delay
in site clearance
·
Change
in design or construction equipments
·
Slow
mobilization
·
Delay
in change order
The majority of claims found in Dong Nai 4
hydropower plant project only focus on claims for extra work. Claims for
extension of time often was negotiated and established a new date for completion in the meeting of monthly work progress
review. In such meetings, the compensation issues for claimant to cover his
damage caused by delay often are not mentioned. Claims for delayed payment
founded in this project only asked about payment for completed works, the
claimant’s damage caused by delayed payment has not been stated yet.
- Hire international sub-consultancy service for reviewing design investigation documents
- International bidding method
- Contractor’s capacity (staff, equipments, finance and project management) must be clearly identified in contract
- Speed up construction works in comfortable weather seasons to cover the difficulty in adverse weather condition.
- For RCC dam, at least two types of puzzolan need to be researched
- Improve health and safety management
- Award and punishment need to be applied strictly
- Strengthen supervision activities of relevant parties for making decision timely
- Choose supervision consultant with good enough capacity to strengthen assistance to project management board
- take advantage of EVN support in conducting local electric supply company for priority project
- Private investigation should be encouraged to reduce financial burden for EVN
- Revise some necessary procedures in tender evaluation criteria in order to choose better equipment supply contractors (reduce score rate of price in winner collection formula)
