PRE-CONSTRUCTION DELAY IN BUILDING PROJECT DEVELOPMENT

A CASE STUDY OF “INVESTCO BABYLON” PROJECT

 IN HO CHI MINH CITY

By

Nguyen Tran Toung Ly

Abstract

             

During construction, a project is considered successful when it meets three basic conditions: completed on time within the approved budget with quality to meet customer requirements and current standards quality. As well as in the investment Real Estate projects, the above three important elements are in close contact with each other. The Real Estate needs turnaround quickly, so that the new Real Estate market can be developed.  Furthermore, according to HOUSING LAW, the owner can only sell the product after having completed the foundation works. This means that to have budget to continue to have completed projects, the owner have to accelerate the pre-construction work. However, most current construction projects in Vietnam are delayed, especially in pre-construction phase. This shows that the project manager has not done their job well. Therefore, the investigation the causes to delayed in pre-construction phase and find solutions to reduce this problem is necessary to have better job in management of projects in Vietnam, and help to solve the puzzle of the Real Estate industry.

To solve this problem, first, determine the cause and extent of impact, and then the important factors that need to resolve will be recognized. Therefore, this report will identify, evaluate and analyze the factors that cause delayed in pre-construction phase in Vietnam. Based on the method of assessing the impact of each factor and then suggest prevention solutions, in order to eliminate similar mistakes in the future.

Case study is used for researches and discussions are: INVESTCO BABYLON - The High-Rise Apartment Commercial Office Building Project.

 Executive summary

Rationale of research

This research has been conducted to identify factors involved in pre-construction delay in building project development.

Objectives of study

To identify the delay and causes of delay in pre-construction stage, investigate the impact of delay on overall project, and propose recommendations for improvement.

Methodology  

The exploratory method is used to review the literature and to study, analyze the pre-construction delay in high rise commercial project.

Findings and conclusion

Delay has always been an unsolved problem to the construction industry worldwide since then. However in developing countries, delay is more serious because in addition to those caused by human, the weather, the Government Policies are still inadequate.

“In fact, the administrative procedures in construction investment are still complex and time consuming, especially for the new urban projects, housing projects, the technical infrastructure of industrial parks. Ministry of Construction have already in cooperation with the People's Committee of Hanoi, Ho Chi Minh City and some of enterprises started to review the administrative procedures of a some of projects in the area of ​​Hanoi City Ho Chi Minh and Ha Tay Province and the results showed that the number of project’s procedures are still many (about 33 procedures / 1 project), preparation time was long (average 3 years / 1 project). There are still some procedures issued by local authorities or request the investor to proceed without the provisions of the Government’s permissions, and some procedures in the legal documents are insufficient need to be reviewed to consider improvements to match the fact.”

This led to delay in pre-construction stage is the most significant and take longest time. Therefore, the identification of factors that cause serious delay and then to propose to restrict, prevent or remove are sorely needed.

Recommendation

For Project Manager

·               Each individual responsibilities and rights must be clearly defined.

·               Set up the clear project Development Process Flowchart.

·               The working conditions should be improved gradually aiming at building proper working atmosphere.

·               Project Manager should give feedback to the company Quality Manager to add in personality test forms together with Job Application Assessment Procedures forms base on ISO.

·               Relation divisions always have the plan to solve problems with the method soon.

·               The weekly meeting is very important , all problems will be resolve on that meeting and relation division have limited time to return the request for information to Designer or for Agreement from Government.

·               The payment during project implementation, for example: land using fee, are a big problem. Project will be delay have some reason relate to this problems. So the Project must be actively capital.

For Project Employee

·               Trying to self-improvement skills.

·                Set the interests of work to the highest.

·               Recognize delay problems which will lead to large losses as well as benefits of the project completion on time.

·               Monitor the Design Consultant’s works of every period, if any changes happen, Design Consultant must be accelerate in next period for catch up schedule.

·               Exchange information dissemination and unified design concept from the start to avoid the disagreement.

For Human Resource Department

·               Organization training the Project Construction Management Group in order for them to know how to use the process to accomplish project and contract condition.

·               Build an ideology for all employees so that they can recognize delay problems which will lead to large losses as well as benefits of the project completion on time. Simultaneously, top management should establish a fair reward and punishment policy which has to be strictly applied.

·               Wage policy should meet the minimum standard of living. This will reduce the pressure of economic and help managers focus on their work fully and integrally.

·               It is necessary to build up the relationship between benefits from the project completed on schedule and the benefits of project manager and participants.

·            The project management training should be paid more attention in the future. It should be the main    goal in Construction University. It is not only reduces delay problem but also enhances the success probability of construction project. Not only project manager must be educated professionally, but also their capacity has to comply with the assigned duty.

·            Employees of Government could make difficulties for process. This intricate question not only happens in Vietnam but also in developing countries. To restrict this problem to a minimum, the wage policy should satisfy actual living standard and establish a strictly reward or punishment

·            The procedures of legal regulation in imports and some other areas have remained very limited and inadequate. To be the member of WTO is a challenge which forces Vietnam to improve this legal procedure. This legal process not only in import-export but also in the other fields must be clear and transparent. This will help project planners to have the basis to plan for their projects accurately. If this procedure is not improved soon, Viet Nam will be left behind, compared to other countries in the region and we, will be faced with great damages.

ANALYSIS OF DEVELOPER’S MISTAKES IN APPRAISAL, APPROVAL AND PERMIT ISSUANCE OF THE CONSTRUCTION INVESTMENT PROJECT IN HO CHI MINH CITY

By

Nguyen Thi Thu Nga

Abstract

             

For construction investment projects, the investment project time of performance directly affects the investment efficiency. However, in the recent years, in Vietnam, the management and the control of “the time of performing construction investment project in Vietnam” has not been interested in and strictly managed, thus leading to many projects delayed in a long time, badly affecting the economic development and social living, especially as for projects using State budgets. Accordingly, the time of performing the procedures of submitting and approving investment project documents and asking for the permit of constructing the project is always troubling the heads of investors and spends so much time. Thus, it seems challenge for project management consultant, the owner, especially to the foreign investors!

On PMC aspect, how to ensure reducing the time for doing project procedures is one of the critical points that I focus to study. My research is based on surveys about the normal problems on approvals and permit phase of the construction project. This assessment is studied together with theory application for the process, procedure of the construction investing project approval and construction permit, the regulation compliance in the construction; What to be prepared, done shall be systemized as a well being prepared for future projects and a contribution to improve overall the quality of the construction project document through approval and permit phase.

Executive summary

Rationale of research

This research has been conducted to identify mistakes in investment project document for approval.

Objectives of study

To study, and find the appropriate investment project document without errors to get approval, identify difficulties, mistakes and causes in different stages to suggest recommendation for getting approval of construction investment project.

Methodology  

The exploratory method is used to review the literature and analyze the survey difficulties and mistakes happened in project approval document.

Findings and conclusion

Through this research, we can identify faults discovered during the appraising process of  the construction investment project document and document asking for construction permits

The common mistakes in investment project document are follows:

·    Procedure for adjusting the total investment quotation in the designing process

·    The manner and the form of capital contribution

·    Fees of evaluating the working drawing design and the cost estimations

·    Procedure for approving and re-adjusting the project

·    Estimation about the whole investment quotation

·    Constructive criteria and norms for the emergency

·    Constructive criteria and norms for disable people

·    Conformity of the connection with the technical infrastructure of the area

·    Design for the basement

·    Concerning the anti-shaking

·    Design for traffic inside the building

·    Concerning the project of total height > 45m

·    Designing ventilating height of the rooms

·    Designing the size of the public community hall

·    Not conforming to Design /Construction Standards & Construction Rules

·    Demonstrating wrongly or not clearly the road limits of the lanes adjacent to the site proposed for construction, leading to a wrong indentation of the project.

·    Lacking or not conforming to detailed planning legality

·    Lacking ideas of one or several relevant authorities about the proposed project

·         Lacking land legality

Recommendation

For Project Planning Consultant

·    Paying more attention for frequent mistakes and often review design before submitting document for approving.

·    Collecting and carefully considering all codes and standards usually used in design/construction activity in order to appropriately applying with each function of building.

·    Clear descriptions of using size and sort of functions have been showed on design document

·    Doing well the survey of the current technical infrastructure before designing the technical infrastructural system of the project

Project-planning stage:

·    The project-planning work is clearly carried out for the whole project in all stages.

·    Conduct socio-economic survey in detail, using the survey information from independent survey sources.

·    Research and offer all technical arguments to justify the selection of the site of developing the project.

·    Analyze and calculate intangible elements affecting the project such as the inflation element, spiraling price; new guidelines and new policies of the Government directly affecting the project.

For Owner

·    Together with consultants well preparing all procedure for defining deliverable, evaluation, report, assessment. (Quality assurance system)

·    Choosing a potential, experienced and prestige design consultancy unit in the designing work;

·    The more detailed the economic contract contains, the easier the faults are handled once faults caused during the stage of making and evaluating the project appraisal

·    Should use the model design of several social infrastructure works such as apartment buildings, schools, head offices of commune-level people's committees and health clinics to reduce the cost of design consultancy

·    Prepare reality design management program for obtaining target expected (containing time for review, revising, approval)

·    Verify scope signed in contracts for anticipating gap in the approving work and asking for permit.

·    Monitor designs and project works to be integrated with operators closely.

For Government

·  Encourage an architectural design contest for the projects financed by the State budget in addition to compulsory projects for pre-qualification in order to exclude the less capable units. Therefore, the design quality will be assured.

·  All of detailed plans in the territory of Ho Chi Minh City completed as soon as possible.

·  Build the mechanism of transparency in the field of investment planning.

·  It is to further speed up administrative reforms, reducing troubles in fields as granting building licenses and granting investment licenses. . 

·  The implementation of strict sanctions against violation of rules

CONSTRUCTION MANAGEMENT IN PROCESS

PIPING INSTALLATION

CASE STUDY OF DUNG QUAT POLYPROPYLENE PROJECT

By

Vu Van Tinh

Abstract

             

Petroleum industry has had a lot of contributing to the economics of Viet Nam country since the first flow of crude oil was exploited in 1986. Specific that, every year, petroleum industry contributes from 20 percentages to 30 percentages of gross domestic product and becoming the key industry in Vietnam. Petroleum industry is one of high technology and complex technology that require attending all the main technology such as civil, mechanic, electric, instrument…in to one to contribute the project. Especially, refinery plant and petrochemical plant where normally to use high technology in process industry. Process piping installation is one important item in building the refinery plant and petrochemical plant.

In the side of contractor, this project case study will concentrate to provide basic knowledge of construction management that applies in process industry.

The project case study will consider to real process piping installation in the project that is Dung Quat Polypropylene project in Quang Ngai province of Viet Nam. Actual subject will show, analyze, evaluate and with draw and recommendations.

Finally, the project case study will compare the construction management in actual project with basic knowledge to have some conclusions.

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Executive summary

Rationale of research

This research has been conducted to identify the problems in project management of piping installation projects.

Objectives of study

To study, and understand project management process of piping installation project and to discuss strengths and weakness for project management procedure to suggest recommendation for improvement.

Methodology  

The exploratory method is used to review the literature and study installation of gas pipe line process and project management methods.

Findings and conclusion

Construction management in process piping installation is difficult and complex work that requires us must to have high effort to reach the target of project. Through the case study we can understand the main factors.

Basic knowledge of construction management in process that include some factor such as organization management, resource management, quality management, health and safety management, risk management, construction planning and control.

The case study also provides some feature and main factor in the contract that normally apply in construction of process industry. The case study also introduces one real project – Dung Quat Polypropylene project. Almost the factors in construction management in process piping installation were implemented by one mechanical division. So, we can understand the important of knowledge of construction management.

Recommendation

·         Working method statement must be made with care by considering all factor including inside and outside of project.

·         Work checking system must be maintained on regular basis, that include understand exiting status of work and having predict the situation in the future.

·         Fast response to any condition

·          Good communication in construction is contributing the effective of work.

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.