VARIANCES IN FINANCIAL MODEL BETWEEN FEASIBILITY STUDY AND AFTER DESIGN STAGE

IN BAU SEN BUILDING PROJECT

By

Vo Thanh Phong

Abstract

             

Variances in the financial model of a project are unexpected by all involved parties at all times since they are the critical items turning the project into a loss from an expected profit. There have been a lot of studies on this subject, but usually it is done after the project completion to find out the causations and solutions to those problems to be referenced in the coming projects.

In this report variances in the financial model between the model being made in the feasibility study and the model made after the detailed design will be analyzed in order to find the critical variant items. Assumptions in the critical variant items will be then investigated to deeply understand the causations. Recommendations will be proposed to improve the process of financial modeling for the coming projects.

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Executive summary

Rationale of research

This research has been conducted to identify the variances between financial model for feasibility and financial model after design.

Objectives of study

To study, and understand financial model at feasibility stage and after stage to identify critical variant items, how they affect cash flow and income of project.ans propose recommendations for improvement.

Methodology  

The exploratory method is used to review the literature and study Design for data to put into financial model. And critical activities of two financial models will be compared to find out the variances and causes to propose recommendation.

Findings and conclusion

 The above analysis illustrates all the problems of this project and shows clearly the responsibilities of all the involved parties in the project.

Why big variances in the financial model made between the feasibility study and after the detailed design occurs is answered here. It is obvious that the owner’s competency, the consultant’s capability and state policies are the main causes of those variances.

Moreover, mal-practices of financial modeling and project management also play an important part in causing those variances.

Also, lack of collaboration among the stakeholders and unsuitable organizational structure of the corporation makes assumptions inaccurate and unreal.

As a result, the owner is the one who will suffer from the loss since those variances increase the total investment cost dramatically and turn the project into a loss.

However, the owner cannot escape due to their big cost input and commitment to the local authority to proceed the project. Moreover, they cannot insult their trade brand in the local area as well as on the market. What they can do is to adjust the project to make it marketable and keep the loss to a minimum level.

Recommendation

·         The owner should use an appropriate procurement process for consultancy to hire a competent consultant from the beginning of a project to carry out the designing of all

·         They should make agreements with all stakeholders in the project to get them assist in comments on assumptions as well as other technical issues in all project stages to make sure the project is on the right track.

·         Matrix structure in the organization should be used and responsible people should be appointed to manage the project effectively.

·         Data for assumptions should be from researches and surveys to be trustable.

·         Components of the financial model and items in those components should be checked carefully to be sure that they are sufficient for effective analysis.

·         There should be an update and forecast for related regulations intended to be issued to reduce political and commercial risks to a minimum level.

Opening Ceremony of MPM intake 2012 in Can Tho city

On March 02, 2012, MPM organized an Opening Ceremony & Welcome Party for the 2nd entry of the Professional Master Program in Project Management in Construction (MPM Program) in Can Tho at the Ninh Kieu 2 Hotel on Friday, 02 March, 2012.

This event was attended by Dr. Amrit Bart, AITVN Director; Dr. B.H.W. Hadikusumo, MPM Coordinator; Mr. Nguyen Thanh Son, Chairman of Can Tho city People Committee; Mr. Duong Thai Cong, Rector of Can Tho In-service University Center; Mr. Huynh Van Duc, Manager of Administration Department, Learning Resource Center, Can Tho University.

Presented at the ceremony, Mr. Nguyen Thanh Son, Chairman of Can Tho People Committee, has given his speech to congratulate MPM program with new batch in Can Tho and wish MPM a strong development for the contribution of developing highly qualified and committed professionals who will play a leading role in the sustainable development of Can Tho and Mekong delta.

The ceremony was followed by dinner party.

Speech of Mr. Nguyen Thanh Son, Chairman of Can Tho city People Committee.

Sharing from MPM Can Tho alumni, Mr. Ta Chi Nhan, Deputy Director of Can Tho Department in Construction.

Group photo with new MPM Can Tho students 2012 intake and MPM alumni.

PROJECT MANAGEMENT COMPENTENCY OF A SMALL CONTRACTOR – A CASE STUDY OF KIEN TAO LTD COMPANY

By

Tu Thien Tu

Abstract

             

It is necessary to assess current project management competencies in the small contractors in Dong Nai province, particularly to meet the needs of the economy and social development in 2010 and 2015. Therefore, this study will provide information related to the project management competency to develop construction industry in Dong Nai Province.

In the context of globalization, Vietnam was chosen the market economy to its economic development. This prompted the development of Vietnam economy and provides many opportunities for the construction industry. But small contractors will face many challenges in the market economy. This study will focus on project management competencies that the small contractors have to face. Due to time limitations, author will just focus on the evaluation of three criterias in the project management competencies; they are cost, quality and time management competency.

For this study, authors will be based on the evaluation criteria to assess the actual situation of cost, quality and time management competency of a small contractor in Dong Nai. As a result, author will find the strengths, weaknesses and propose solutions to improve project management efficiency of this small contractor.

Executive summary

Rationale of research

This research has been conducted to identify project management competencies for small contractor

Objectives of study

To study, clarify the role of project management competency for small contractor company. And develop frame work for improvement of project management competencies in small construction company.

Methodology  

The exploratory method is used to review the literature and study project management competencies in cost, quality and time of Kien Tao Ltd Company.

Findings and conclusion

 The evaluation of the project management competencies for constructional enterprises in Vietnam is now very important because they not only suffer from competition in the domestic but also from foreign countries. This is even more important for small contractors because they are not enough experience and knowledge to promote the advantage of project management competencies. We can assign the function of managing the project into eight specific functions as follows: Project Scope Management, Project Time Management, Project Cost Management, Project Quality Management, Project Human Resource Management, Project Communication Management, Project Risk Management and Project Procurement Management. This study focused in three functions of them, they are Project Cost Management, Project Quality Management and Project Time Management.

·         The project management competency in cost of Kien Tao is at acceptable level. Cost management competency of leaders is good because they have experience and knowledge. Besides they are also paid their time on Cost–Benefits Analysis and Budget Constrains. The baseline cost is implemented in projects. The project manager has good competency in controlling cost during project. However, the size of its own capital is very small, narrow, not enough funding for the production-efficient business, particularly for technology upgrading and development. Leaders play an important role in cost management, but they conduct almost related works. As a result, they don’t have enough time and experience to do anything in the best way. According to the result, their competency in conducting List of Resource Requirements, Cost management plan, Cost baseline and Chart accounts work is needed to improve.

·    The project management competency in quality of Kien Tao stills many issues to improve because the current quality management system is no good. The quality standards of the company's project is based on the criteria given by owners, because most owners have hired consultants to perform the design, set quality standards and supervise works closely. Project’s quality management is under the supervision of the consulting unit and owners. Awareness and skilled workers has contributed to improving the quality of works. However, quality management competency of leadership is not high; they are still heavily dependent on the support and supervision of the consultant and owner. Project manager is the Vice director who have to manage sale, finance as well so that the ability to implement project quality management is limited. The project manager did not pay much attention to the creation of quality documentation requirement, quality management plan, plan metrics and the company's quality checklist for each project. Even they do not make Lessons Learned and Metrics summary report after finish projects.

·    The time management competency of project manager is still many problems to be changed and enhanced. There are still many construction projects were late; this has impact to the company's reputation. Despite the delay caused by many sides such as investors, consultants, weather. but there is still some delay due to low level in time management competency of KienTao.

Recommendation

·         KienTao should apply the international standards ISO 900 to promote the production of high quality goods and services. The application of the ISO standard will help the company operates more efficiently, it also will create confidence among potential customers.

·         The company organization will be restructured to improve project management more efficiency.

·         The teams of the company should be re-organized.

·         Kien Tao needs to open trainings courses for team's members to enhance their knowledge and skills for them, especially the skills to improve cost, quality and time management in projects.

·         Kien Tao should hire a professional project manager with high knowledge and experience to manage its projects.

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.

Recommendation

•  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)

EFFECTIVE PLANNING & CONTROL OF MULTIPLE PROJECTS

A CASE STUDY OF GR60 - NOKIA STORES CHAIN IN VIETNAM

By

Nguyen Thai Son

Abstract

             

The report expresses the key issues in Effective Planning & Control of Multiple Projects that known as the popular trends for many projects of those companies who want to develop marketing strategy in Vietnam.

This study, which refers to the theories and the standards system, has expressed the concept of Project Planning and Controlling. The study has briefed the factors that most effect to multiple projects planning and controlling studied from case study reports and the key points to control multiple projects effectively from the design to construction stage. The report has introduced a Planning and controlling process for the purpose of amendment to the existing Multiple projects Planning and Controlling in order to obtain a complete process for better managing multiple projects.

The next part of this report is the case study on the NOKIA GR60 Project that have been implementing by DHC contractor in Vietnam in 2011. Through this case study, the findings on the existing Project Planning and Controlling and the application from the previous part to this existing Project Planning and Controlling for improvement will be the foundation for next coming multiple projects. This is also the objective of this study.

Executive summary

Rationale of research

This research has been conducted to identify multiple project management strategies.

Objectives of study

To investigate multiple project management in terms of planning, organizing, communicating and controlling. And propose strategies to manage multiple projects.

Methodology  

The exploratory research method is used to review the literature and case of GR60 project and applying those theories to the existing project planning and controlling, in order to amend and improve it.

Findings and conclusion

Project goals were set very clear to project employees at all levels. Project scope of work was well defined but not detailed enough, Project manager used Work Breakdown Structure to develop the level of work as well as work relationship. Company organization is defined as a matrix organization structure, so the GR60 project is applied project financing to implement from beginning to ending. It is very easy to control the financing statement of the project.

After a month, Project manager use Object Charts and cost variance to review the schedule, cost of the projects that finished in a month. Then he created an evaluation to see if the project schedule is delayed or cost overrun. He also investigated the problems and proposed solutions to avoid problems that effect on schedule happen again.

For external communication, there were many communication problems happened during projects implementation process such as delay in transfer information, delay in change order approval, contractor could not work directly with Distributors as well as store owners. These problems affected too much on projects schedule. Board of directors and Project manager found some solutions to solve the problem effectively such as organize meeting more often, issue new communication procedure to be suitable with the project style.

Recommendation

·          Multiple projects plan must be defined before starting projects. In terms of scheduling, evaluating, coordinating and controlling.

·         The multiple projects plan must be developed with input from people who will be performing the work, and must be communicated to all participants. The tasks, costs, and schedules of the multiple projects plan establish the benchmarks and check points that are necessary for comparing actual accomplishments to planned accomplishment, so the progress of the multiple projects can be measured, evaluated, and controlled.

·         Identification of Project Goals which are specific, measurable and realistic. There must be agreement about Projects goals.  Multiple projects need time frames for the goals.

·         Identification of suitable organization structure to apply to multiple projects. Matrix structure and Functional structure are recommended to control multiple projects

·         Construction companies should select a simple scheduling technique to plan multiples projects schedule because multiples projects including many small projects that have limited task and short interval time.

·          Internal and external communication procedure also must be considered by construction companies during multiple project planning process. Clear and well-identified communication procedure throughout communication channels will contribute a lot to the successful of multiple projects management.

·         To be effective, construction companies should develop a multiple projects control system which must be simple to administer and easily understood by all participants in a project.

·         Line of Balance (L.O.B), a precursor of the network analysis technique, which relates program to forecast targets to determine how well a project is processing, is recommended to maintain control over multiple projects implementation period.

·         Construction companies should use Objective Chart to review and evaluate work schedule of multiple projects

·         Construction companies also can use Cost variance to review and evaluate the costs of multiple project

THƯ MỜI THAM DỰ

HỘI THẢO

PHỐI HỢP GIỮA AN TOÀN LAO ĐỘNG TRONG XÂY DỰNG VỚI NĂNG SUẤT LAO ĐỘNG VÀ CHIẾN LƯỢC KINH DOANH CỦA DOANH NGHIệP
&
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, rủi ro, 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

“Phối hợp giữa an toàn lao động trong xây dựng với năng suất lao động và chiến lược kinh doanh của doanh nghiệp - Integrating construction safety with productivity and corporate business strategy”

được tổ chức lúc
09h00, Chủ nhật ngày 18 tháng 03 năm 2012 tại AITVN, số 45 Đinh Tiên Hoàng, P. Bến Nghé ,Q.1 (đối diện đài Truyền hình HTV), Phòng A1.1.

09h00, Chủ nhật ngày 24 tháng 03 năm 2012 tại AITVN, toà nhà B3, ĐH Giao Thông Vận Tải, P. Láng Thượng , Đống Đa, Hà Nội

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

Trân trọng,


Nguyễn Thị Bích Hòa
Quản lý các chương trình SET - AIT tại Việt nam
Viện Công Nghệ Châu Á tại Việt Nam
---------------------------------------------------------------------------
Nội dung chương trình

 8:45 – 9:00 Đăng ký tham dự

 9:00 – 9:15 Khai mạc

Giới thiệu về AIT-AITVN
 9:15 – 10:00 Phối hợp giữa an toàn lao động trong xây dựng với năng suất lao động và chiến lược kinh doanh của doanh nghiệp - Integrating construction safety with productivity and corporate business strategy

 10:00 – 10:15 Giới thiệu về Chương trình Thạc sĩ Chuyên nghiệp của AIT trong Quản lý Dự án xây dựng
• Giới thiệu Chương trình đào tạo – các đặc điểm chính
• Giới thiệu về yêu cầu tuyển sinh
• Học phí và các chi phí liên quan
 10:15 - 10:45 Hỏi – đáp


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)

OWNER’S EPC PROJECT MANAGEMENT IN POWER PLANT PROJECT A CASE STUDY OF NHON TRACH 2 POWER PLANT PROJECT (750 MW)

By

Nguyen Nhat Tai

Abstract

             

In recent years, construction industry in Vietnam has been developed dramatically, contributing to national development. Besides civil construction, infrastructure, residential development, there are a large number of Power plant projects are and will be implemented in the next 20 years.

Similar to other types of construction project, power plant project must also deal with risk of quality, time, cost on construction stage. As a large scale project with thousands of activities, power plant project requires a very carefully planning, scheduling and monitoring to avoid these risks.

There is a fact that in reality, implementation of power projects usually goes behind the schedule, causing a huge loss to social economy and obstructs the development of local construction market.

The purpose of this report, by studying a real case in Nhon Trach 2 Power Plant Project, is to analyze EPC management strategies in such power plant projects; from that, to suggest a framework of EPC management strategy for Power Plant Projects in future.

Executive summary

Rationale of research

This research has been conducted to identify project management strategies in EPC contract (Power plant projects).

Objectives of study

To study and propose strategies for EPC power plant project in construction stage for thermal power plant project and develop project management frame work for owner.

Methodology  

The exploratory research method is used to review the literature and journals and understanding phases of power plant projects

Findings and conclusion

Demand of electricity in Vietnam within next 10 years will increase highly, the current Power Plant Projects in Vietnam are meet problems in terms of schedule, cost, quality, and those are results of poor project management in Power Plant Project. The research study summarized and proposed a strategy to manage EPC Power Plant Project in EPC stage by the following activities:

·         Management of Engineering;

·         Management of Procurement;

·         Management of Construction.

The research study showed an overview of a thermal power plant project in terms of characteristics, technology, facilities, contract, process and risks.

Through collecting related documents as well information from interview from experts as well as people participated in Nhon Trach 2 Power Plant Project, problems and risks were anticipated, controlled closely during process of Project.

The problems and risks in terms of quality, schedule and cost did not occurred during process of Project through making a copy of Ca Mau 1 and Ca Mau 2 Projects. However, there was a waste of money in construction by making a copy of Ca Mau 1 and Ca Mau 2 Projects in terms of soil improvement and foundation. Concurrently, according to guideline of Petro Vietnam about proving internal force as well as utilizing manpower of subsidiary, therefore, some unqualified and inexperienced subcontractors were allowed to participate in Project.

Recommendation

·         Optimizing design in Feasibility Study by arranging layout most properly and selecting the most proper technical solution: this stage is one of the most important stages, technology and conceptual design were selected from this stage, then after that, to determine total cost investment as well as EPC Contract price properly;

·         In bidding stage, review/update latest technical specifications and put strict requirement for subcontractors into Bidding document: because Power Plant Project is a complexity project in terms of civil, mechanical and electrical. Therefore, subcontractors assigned to conduct separated packages in scope of EPC package have to have capability as well as experience about construction in Power Plant Project;

·         In engineering stage, conducting value engineering in foundation solution: because the price of EPC Contract is lump sum, therefore, EPC Contractor always wants to conduct engineering according to their standard designs and procedures. However, implementation of value engineering not only avoid waste of money but also reduce schedule of construction;

·         In procurement stage, increasing Owner’s/PMC’s involvement in controlling QA/QC works of procurement: under EPC Contract, volume of electrical and mechanical works makes up more than 60% volume of EPC works, in order to risks in procurement resulting in claim, cost variation, Owner/PMC should participate in inspection of fabrication and manufacture of equipments in foreign.

·         In construction stage, coordinating with EPC Contractor to increase inspection of works conducted by subcontractors and site preparation : suggest EPC Contractor to replace unqualified and non-experience subcontractors if works are delayed and construct temporary drainage system before starting up;

·         In commissioning stage, considering standby alternatives before commissioning: commissioning is one of the most important stage of Power Plant Project, if failure, it will result in delay in completion and handover in order to put into operation.