Risk Management During the Preconstruction Process for High-rise Commercial Projects in Vietnam

Risks often have negative impacts on project’s objectives during project life cycle which Figure 1 shows that the level of risk versus with the level of knowledge on the project throughout project life cycle. This figure also indicates that pre-construction process is the most risky process. In addition, pre-construction process is very important in the development of commercial project in particular and construction project in general. Because almost the project cost, schedule and quality are defined initially in this process. Therefore, any change at this time is easier and take lower cost and time than the following time (see Figure 1 and 2). Fabrycky & Blanchard (1991) and Paulson (1976) stated that the ability to change decreases continually as the project progresses, from 100% at project sanction to typically 20% or less by the time construction starts (Kishk et al., 2003). However, the pre-construction process in construction industry often involves with risks and uncertainties (Flanagan & Norman, 1993). Political, social, environment and other related risk influence pre-construction process while uncertainties arise from the incomplete knowledge and information of project. Therefore, risk management is important and essential aspects of the pre-construction process. Moreover, as much research suggested, addressing project risks earlier rather than later in the project life cycle can minimize the negative consequence brought by the risks (Ward and Chapman, 1995; Smith, 2003 cited in P. X. W. Zou, Zhang, & Wang, 2006).

In residential real estate, Owner relates with project until construction phase finished and project is delivered to client. On the contrary, Owner involves with whole life cycle of project in commercial real estate. Flanagan & Jewell (2005) state that an office building will consume about three times its initial capital cost over a 25 years period. Therefore, O&M cost is significant element of whole life cycle budget. Risks which related with pre-construction process not only impact on the design phase but also construction phase and O&M phase. According to Kirk & Dell’Isola (1995); Kishk et al. (2003); MacKay (1999), 80-90% percent of the O&M costs is determined at the design stage. Hence, effective risk management in pre-construction process can mitigate negative impact and enhance positive impact of risks on whole life cycle of project.

Although risk management is studied well in theory but its application in Vietnam construction industry is still very poor, especially in pre-construction process. That’s the reason why this research is conducted. The findings of this research are expected to improve current practice of risk management during pre-construction process in Vietnam commercial project.

Figure 1 The relationship between life cycle cost saving and time of implementation

       Source: Flanagan, 1989

Figure 2 WLC committed, cost incurred, knowledge and ease of change

            Source: Fabrycky & Blanchard, 1991

Mr. Tran Thanh Cong made a research aimed to investigate the risk management practice in preconstruction process in Vietnam commercial project and help the practitioner aware of existing critical risk factors associated with early stages of preconstruction process. This research objectives were to:

1. Investigate the critical risk factors and its impact on project life cycle of Vietnam commercial project during the preconstruction process;

2. Assess current practice of risk management during preconstruction process in Vietnam commercial project

3. Propose recommendations for manage effectively the critical risks during preconstruction process for Vietnam commercial project

Conclusions

1. Critical risks in preconstruction process

With the combination of both quantitative data and qualitative data, this study has systematically examined the critical risks affecting Vietnam commercial projects during pre-construction process. Hence, the critical risk factors are identified. These critical risks include the following:

a. Impact on design phase:

i. (A12) Excessive approval procedure in administrative government departments;

ii. (A13) Variations by the client;

iii. (B04) Lack of communication and withholding of information between stakeholders

iv. (C09) Late apply for detailed planning for approval;

v. (C20) Errors, omissions and discrepancies in design

vi. (C19) Design changes by owner or his agent       

vii. (D18) Adversarial relationship between project stakeholders

b. Impact on construction phase:

i. (A15) Change in economic parameters

ii. (C15) Delay in design approval and drawings approval

iii. (C20) Errors, omissions and discrepancies in design

iv. (D18) Adversarial relationship between project stakeholders

v. (D12) Unknown capability of bidder

c. Impact on O&M:

i. (D18) Adversarial relationship between project stakeholders.

These critical risks above should be paid more attention to during preconstruction process.  The result reflect the risk perception in Vietnam commercial industry that the risks during preconstruction process have more critical impact on the design phase and construction phase than O&M phase.

2. Assessment of current risk management practice

a)      Risk management plan

Risk management planning is often performed in some projects which applied risk management procedure. The risk register is usually integrated into risk management plan which is updated rarely during project life cycle. Although risk management should be carried out throughout project life cycle, but it’s usually performed at early stage of project pre-construction process (inception/ feasibility stage). Because that project managers of three projects agreed that risk management is very important during pre-construction process while almost the options are open to consideration and all of the cost, schedule and quality are estimated initially in this process.

Moreover, the earlier risks are managed in this process, the more effective project implemented. However, risk management process is often performed unsystematically because the lacking of top management’s commitment toward risk management and the lacking of assigned risk management who assist project manager to manage risks.

b)      Risk identification

This process is the most important one in risk management process. In general, this process is well performed in Vietnam commercial projects. The project scope and project management plan are often used as key input for this process. The expert judgment is frequently employed in this process with the expert usually is risk owner. However, project using the first-of-its-kinds technology, should perform brainstorming session technique to identify the project risks. The major difficulties existing in this process are the lacking of historical data and the lacking of top management’s commitment toward risk management.  

c)      Risk analysis

The most common technique employed in this project is expert judgment; the probability and impact matrix. Because the levels of probability and impact are defined in risk management plan, the risk owner who is consider as an expert often judges the level of probability and impact qualitatively. Therefore, bias of risk owner can effect to his judgment. Each risk is rated based on its location in probability and impact matrix which is specified in each project. However, quantitative risk analysis isn’t often conducted. The main reason is the lacking of assigned risk management officer and lacking of knowledge and experience about risk analysis.

d)     Risk response

This study indicated that risk reduction is the most frequently employed during pre-construction process. This response strategy is applied on the basis of reduction of risk’s probability and/or impact. The risk transfer strategy is the second frequently using in this process. This response strategy can influence the procurement strategy and the selection of contract type. The common difficulties in this process are related with the selection of risk response strategy and specific response action.

e)      Risk control and monitoring

This study indicated that the risk control and monitoring is often performed unsystematically. The main reason is the lacking of the top management’s commitment toward risk management. Risk monitoring process should be integrated into project monitoring process in order to assess the effectiveness of risk management process along with the performance of project during project life cycle.

f)       Major difficulties in the implementation of risk management

Based on the result of this study, the most common difficulties in the implementation of risk management are revealed namely: (1) lack of historical data of similar completed projects; (2) Lack of top management’s commitment towards risk management; (3) lack of experience in risk management. By solving these difficulties, risk management have more opportunities to performing successfully in Vietnam commercial projects.

 

His thesis abstract is copied below.

Abstract

During preconstruction process, from project has been established until the end of tendering phase when construction phase prepare to start, the construction project is highly involved with risk and uncertainties. Project risks related with preconstruction process impact on not only design phase but also construction and O&M phase. Therefore, risk management in this process is very important and essential in order to obtain project objectives. Moreover, owner of commercial project has been involved to whole life cycle of project, from inception stage until project disposal. Therefore, the construction cost and long-term O&M cost, which is determined in preconstruction process, can effect significantly into profit margin of Owner Company. For this reason, risk management during preconstruction process is very important aspect of project management for commercial projects. This research focus on the major risks that commercial project in Vietnam encounter during preconstruction process and its impact on the objective of project life cycle. In addition, current practice of risk management during preconstruction process in Vietnam also is investigated to find out the difficulties in the implementation of risk management. Thus, recommendations for improving risk management practice in Vietnam are proposed.

Keywords: Risk Management; Preconstruction Process; Vietnam Commercial Projects; Critical Risks; Project Life Cycle.

  

Critical Success Factors of Owner’s Contract Management for Building Projects in Vietnam

The construction industry is one of the largest industries in Vietnam. In recent years, the construction business has expanded rapidly. Most construction projects are large and more complex than they were in the past. Inevitably consequences are complicated and difficult problems existed in every steps of construction process. The owners required the all parties involved to complete the project on time, within the budget and with high quality and the Construction Management Team has taken an important role to integrate and to manage all these. Every party involved (e.g. the owner, the contractor, the designer, and the Construction Management (CM)) must take their own roles according to the pre-agreed responsibility written in the contract which will make project works efficiently because the construction contracts are covered by laws.

The construction contract is the most important key for project accomplishment. Each party concerned should be satisfied and accept to follow it. The contract will recognize and also influence organizational setting, and process of payment. Whenever one violates the contract, the dispute conflicts and delays are usually occurred.

Hence, weakness of capacity from owner side in contract management lead to the cost of project overrun compared with estimated cost. It can rise from the shortcoming of preparing of project inception such as:

•        - Poor scope of project, definition and control.

•       -  Clients’ design changes.

•       -   Inadequate preparing for bill of quantity (BOQ).

•       -  Various types of construction contract.

•       -  Change orders in construction phase

Besides, there are a number of contractual risks which owner can face as the following:

•         - Unclear contract clauses.

•         - Misunderstanding.

•        -  Different scope of contract.

•         - Insufficient tendering.

•        - Different working conditions of contract.

•         - Delay in signing contracts.

•       -   Inadequate in types of contract.

Ms. Le Hong Ha made a research aimed to:

1. identify the critical success factors of owner’s contract management for building projects in Vietnam

2. study effective owner’s contract management that affect project performance.

Conclusion

1. The critical factors of owner’s contract management for building projects in Vietnam

At first, the ranking by three main parties of project (owners, contractors, and consultants) was conducted to discover the critical success factors of owner’s contract management based on the view of five groups.

Based on the result, the top ten critical success factors of owner’s contract management for building projects in Vietnam are: (1) Employers/ Engineers clearly prepare tender documents (such as: letter of invitation to tender, instructions to renderers, conditions of contract, etc…), (2) Proper technical review of requirement before assignment to contract specialists, (3) Fair progress assessment, (4) Employers/ Engineers complete contract requirement package, (5) Employers/ Engineers obtain performance security from contractor, (6) Customers understanding their role in the contracting process, (7) Good communication with customers/contractors, (8) Employers/ Engineer prepare contract documents signing of contract, (9) Timely receipt of quality contract requirements packages, (10) Clear line of authority in making decision and problem solution.

2. The effects of owner’s contract management in building project performance in Vietnam

Almost groups of owner’s contract management have correlation with three effects of project performance, including time performance (schedule), cost performance (budget) and customer satisfaction.

(i) Time performance

Time performance has correlation with almost groups of owner’s contract management, which created by the special character of project. The consequence described that all success factors of owner’s contract management can impact to time performance. However, there are some relative factors with the character of project such as time line of contract is too short/ not appropriate, legal and disputes, penalties of are not enough power to make certain the implement of process, type of construction contract (DBB, DB…), etc...

(ii) Cost performance

Normally, cost performance will be lead by time performance. Therefore, the correlations between these success factors and cost performance are the same with time performance. This study identifies that almost groups of owner’s contract management impact to cost performance.

(iii) Customer satisfaction

Customer satisfaction is measured through dispute, claims; express the satisfaction about the progress. In fact, contract requirement and condition-related, workforce-related, process-related, relationship-related and leadership-related factors are the major success, which affect the owner’s contract management during construction phrase. Furthermore, the contract content is an important thing to the owners. The contractual clauses are provided well and clear they will become the source of lots successes in the next stage.

Her thesis abstract is copied below.

Abstract

For construction project, contract is the most important key for project accomplishment. Every party concerned should be satisfied and accept to follow it. The contract will identify and also influence organization setting, payment process. Whenever one violates the contract, the dispute conflicts and delays are usually occurred. Besides, contract is the most important to every project’s participation such as owner, contractor, consultant, vendor, supplier, etc…In decade of construction industry, the traditional delivery known as Design-Bid-Build and Design-Build delivery is widely using in building projects. Critical success factors have a direct impact on organization’s project management and contract management process as well as resulting outcomes.  Thus, the purpose of this study is to identify and rank the success factors in owner’s contract management as well as to determine the factors that effectively help the owners to manage contract .The study is based on quantitative research, using questionnaire for data collection and utilizing SPSS software to analyze the data.

The survey of this study was implemented in two big places in Vietnam – Ho Chi Minh City, Binh Duong province. The outcome of data analysis is the ranking of factors in contract management that will help increase the attention of the Vietnamese owners to the critical ones which might threaten their project success.

Key words: Construction Contract Management, Contract Management, Design-Bib-Build, Design-Build, Construction Phrase, Project Delivery, Project Management, Project Owner, Success Factor.

Improving Workflow in High Rise Building through Lookahead Planning: A Case Study in Nepal

In construction projects, variability affects production rates, labor productivity, schedule control, cost control, etc. Although the detrimental effects of variability in construction are well known (Ballard, 1993; Tommelein et al, 1999), the traditional construction planning process does not explicitly consider variability, since projects are incorrectly assumed to be static, leading to poor management decisions (Tommelein et al., 1999). Construction industry has been criticized for being concerned with managing only tasks and neglecting workflow (Koskela, 1992).

Ballard and Howell (1998) through their research on public and private construction projects reported that most of the projects suffered from low levels of workflow reliability, resulting from ineffective planning and high percentage of nonproductive time. They also reveal a poor level of planning resource assignments, not involving operational level staffs in planning, lack of tools and equipment, and failure to complete previous work were other reasons of low workflow reliability. Thus, workflow reliability in the construction field has been constantly measured at the level ranging from 30% to 60% (Ballard 1999).

On the other hand, outsourcing work packages to subcontractors and other specialist has been an integral part of construction system. Commitment, planning must be agreed between these parties and in reality the relationship between them is often opposing and non-collaborative, contractors always struggle to obtain reliable commitments from the subcontractors (Maturana et al, 2007). Also, many contractors contract work to subcontractors based on their personal relation and on the bid amount which in the future has resulted in unreliable commitments (Bustamante, 2007; Sacks and Harel, 2006). This is a prevalent pattern in planning and decision making in construction (Laufer et al, 1994), which may reduce planning reliability at the operational level.

Thus there is a real need of a planning tool which will ensure the smooth workflow at the construction site. Taking the activities from the master plan and collaborating these activities with the weekly work plan of the subcontractors and of the foremen for better reliable workflow and commitment. 

Lookahead planning is tool of a Last Planner System (LPS). LPS is a production planning and control system which is mostly used to overcome the above-mentioned problems by providing a predictable working environment, increasing workflow variability, and creating reliable work plans to maximize project benefits. LPS also helps to change fragile relationship between contractors and subcontractors to a more collaborative environment, which has beneficial impacts on all parties (Alarcon et al., 2005; Ballard 2000). The primary condition in the LPS is that activities should only be committed if they can be performed i.e., all construction preconditions must be available, converting what should be done into what can be done, helping to promote a production environment based on commitment and trust among contractors and subcontractors and among other stakeholders in the process planning.

Sajen Pradhan made a study aimed to:

1.  identify the critical individual factors and the group, interrupting the workflow

2. implement and examine how the Lookahead planning of LPS helps to improve workflow

3. provide recommendation and suggestion

Conclusions    

1. Critical factors affecting the workflow

The first objective of the study was to find the critical factors affecting the workflow. Extensive and comprehensive literature review from various sources was carried out to know the factors affecting workflow. Fifty (50) factors were short listed and these factors were screen out into 8 different main categories of prerequisite works, design and information, labor, materials, tools and equipment, working space, management, and external condition. Before conducting survey expert verification was carried out and the factors were reduced to 47.

The assessment of the factors affecting workflow in high rise building of Nepal was done through survey from 30 respondents of project managers and engineer. The analysis of the survey revealed critical top 10 factors which were 1) coordination between different traders, 2) materials to be arrived at the site, 3) difficulty in coordinating the work space, 4) quality of documents, 5) previous work not completed, 6) lack of skill and experience to perform the assigned task, 7) rework required to the previous work due to poor quality 8) change in scope of work, 9) Unviability of budget for the work and 10) Turnaround time by the engineers when there is a question with a drawing.

As the literature suggests making reliable/ predictable workflow is much more important than doing more work so this study will surely help project managers and project engineers to know in advance what are the factors that they have to focus more so to have better smooth workflow. The spearman’s correlation test among these factors also revealed moderate correlation where significant level from 0.05 to 0.01. 

Then the most critical group/category hindering workflow was also analyzed. This analysis is believed to assist in development of the whole project management system as the finding of the result highlighted the weak part of the organization and directed the project heads in the specific direction where the improvement is needed. The outcome of the study revealed that management and supervision was the most critical group hindering the workflow as per survey, followed by prerequisite works and drawings, and materials group were also very critical. 

2. Improvement of workflow though Lookahead planning

The second objective of the study was to implement and examine how the lookahead planning of LPS helps to improve workflow. This objective is the major objective of the research and for this two case studies were carried out in high rise buildings that were under construction in Nepal. The criteria, tool, and the check list that were used for the assessment of workflow was based on the finding from the literature reviews on lookahead planning and on its components. The procedure was verified by the 3 experts. The experiment was scheduled for 4 week, and both the case study nature of data collected was qualitative. Then after the data collection, data analysis was carried out to check the improvement in PPC and in LU in the project after the introduction of the lookahead planning tool. It was seen that both PPC and LU increased in the 2 case studies satisfying the objective of the research.

Apart from the improving the reliability of the plan, lookahead planning also had many benefits like enhancing teamwork, developing the knowledge of lower level staff to make decision, better communication, utilization of resources, and minimizing time wastage. But there was still room for improvement in terms of PPC level which was till moderate, thus the reasons for failing the work as planned were investigated and it was found that issues related with management, drawing and materials were the main reasons. This analysis was important to prevent the same type of failures from recurring. All these reasons can be eliminated through lookahead planning with its tools of collaborative meeting, collaborative planning, and early constraint analysis, making work ready against definition, soundness, sequencing, and size.

The findings of this research can help project managers and consulting companies. The results can help project managers better understand the relationship between work flow variation and productivity and improve productivity by reducing work flow variation. Workflow variation is significantly correlated with labor productivity performance. This helps the company to pin point the weakness in the project management system. But it has to be noted here that making reliable depends upon type of project and management practice of the Project heads as well. Thus workflow should be taken as a continuous improvement process where there should be analysis of plan failures, finding root causes and suggesting improvement strategies that prevent the same type of failure from recurring.

The thesis abstract is copied below.

Abstract

Architecture, Engineering, and Construction (AEC) activities are naturally full of variables and uncertainty and consist of many tasks which are to be performed in a sequence. Variation in timely completion of these tasks can be high and can have significantly negatively affect impact on project performance index and results in waste, inefficiency, and productivity loss. To execute an elementary construction task most efficiently, at least seven preconditions must be fulfilled. But due to construction peculiarities, these preconditions may not be satisfied, and thus the probability of missing one or many of these preconditions is greatly high and which results in failure of the project in terms of schedule overrun, cost overrun and disputes and claims. Thus improving the reliability of planning is the first step to have stable construction workflow, and as affect their will be high productivity and improved quality.

Studies have shown that to keep the workflow activity stable the use of collaborative and flexible planning method is the key. Thus, lookahead planning of Last Planner System (LPS) has been used for the research case study. Lookahead planning is a mid-level planning which take the activities from the overall project master schedules and aligns it with the short term crew-level commitments. Lookahead planning filters out scheduled activities that “should” be done but cannot be done and improves the success rate of completing the tasks assigned in weekly and daily plans. It achieves the above mentioned goals through:

1. Breaking down tasks into workable packages under the collaboration of Project head with those who execute the work

2. Identifying and removing constraints to make task ready for execution and

3. Designing operations through first run studies

Keywords: Architecture, Engineering, Construction, Variables, Lookahead Planning, Last Planner System, Workflow

Management of Cost Estimation in Post Disaster Renovation Projects

The facilities in most of the countries have been built about 75 to 100 years back. All structures have a definite life and require renovation/refurbishment after a certain period of time to upkeep the structure/facilities running. This results in the need of the renovation sector, which may include works in any of the civil and infrastructure facilities around. The present trend of renovation works can be observed in Figure 1, which depicts that there is a constant need of this sector as compared to the new construction works taking place.

Figure 1 New building works vs. renovation works

(Source: Green, building.co.uk, 2012)

However, the renovation projects are not composed of simple construction works and generally need to have an integration of the construction activities with the ongoing building operations and the surrounding environment. This calls for special attention from all the stakeholders involved in the projects. Nonetheless, though there have been theoretical developments in this front regarding scheduling of activities in the renovation projects (Whiteman, 1987; Whiteman and Irwig, 1988), the basic framework is also not practically followed in most projects, without any consideration for special requirements.

This lack/ minimal use of framework or technique in the practical scenario leads to untoward situations during the execution stage, thus, leading to lot of changes and modifications, known as additional works and/ or variation orders, which could lead to claims.

The pricing of the activities in the execution stage are also not given proper consideration in many projects. This is much more prominent for the indirect work activities, the price for which are generally established as a percentage of the entire direct cost, similar to those in the new construction projects, though in the real scenario both of these are quite varied. Proper care should be taken to clearly estimate the pricing of each activity, including both direct and indirect costs. This estimate needs to start early in the project, to have a better idea of the required budget and feasibility of the project based on the available budget. In most cases, due to lack of a proper procedure to estimate the cost values, the projects go over-budget, putting forward negative impacts.

The renovation industry is a new commercially active sector, and there has been little research on these in comparison to the new construction works. Moreover, there is minimal research available on the cost estimation process exclusively for the renovation projects due to the inaccurate and non-standardised pricing and accounting of the works. This area, thus, need to be studied properly, to eliminate escalated prices in work and encourage more contractors for diversification into this subsector. Hence, in order to explore solutions to the above mentioned issues, Ms. Nishat Farhin Islam made a study aimed to:

(1) identify the unique features in renovation projects those need to be considered during the estimation process.

(2) develop a framework for cost estimation in renovation projects and analyze each stage of a renovation construction project in details.

(3) determine improvement measures that can be brought in the estimation process of the case study and provide recommendations as per research and for further study.

Conclusions

 1. Unique features in renovation projects to be considered during estimation

 The first objective of the study dealt with the identification of the unique features in renovation projects that were required to be considered for the estimation process of the same. To achieve this objective, extensive literature review was done by using varied sources of conference papers, journals, books, previous theses, etc for understanding the whole process of renovation projects, basically building works. To understand the concepts conceived from the literature review regarding renovation works, pre-surveys and data were collected through a case study. Literature review was carried out simultaneously to understand the general estimation procedures followed in various construction projects. This led to the findings on the key features of both renovation projects and estimation procedures. These were then studied together and combined to finally derive the 9 unique features of renovation projects that affect estimation, and thus, need to be considered during the estimation process.

Hence, the first objective of the research study was achieved and has been detailed in Table 1. The results of this were then used to carry out the second objective of framework development.

2. Development of estimation framework for renovation projects and analysis of each stage in details

The results of the first objective and the concepts and data available during the process of achieving the first objective were then used to develop an estimation framework which could be exclusively used in renovation projects to have better projection of costs and minimise cost escalations towards the end of the project. The framework developed was then checked and validated by three (3) experts with experience of working in renovation projects. Considering the comments and practical advice from the experts, the framework was then modified to be clear and consider all the aspects. The framework was divided into the five (5) major stages of a construction project. These were then detailed out for each of the stages and compared with the process followed in the stages of the case study considered.

The case consisted of various projects and for the research study, only 6 projects were considered based on the completeness of available data and observations on-site that were available. The loopholes and inadequacies of the case and the effects of these were then noted.

The second objective was, hence, achieved and the loopholes in the projects were listed down to be considered for the next objective.

3. Improvement measures to be brought in the estimation process of the case study

The loopholes and inadequacies that were observed during the study of the earlier objective were listed along with the positive features that were noticed in the case study. The negative features were then supported by the recommendations for improvements that need to be brought in the projects. These are comprehensively presented in Table 2. The recommendations as per the research and the recommendations for further study shall be discussed in the following section, which then completes the third objective of our research study.

Recommendations as per research study

As per the research study conducted, there are certain recommendations for consideration during any renovation project. These have been observed during the fulfillment of the objectives and understanding of concepts and can be listed as follows:

a      -  During the renovation projects, exploratory demolition should be considered as one of the most important steps to understand the conditions of the existing structures and then narrowing on the scope of renovation of the considered structure. This also minimizes the costs of activities in the later stages of the project and the additional works and/ or variation orders reduces to a negligible amount unless there are certain drastic change of plans during the course of the project.

b   - As-built drawings of each building, at least for those with longer design life, should be preserved for any renovation works in future. As-built drawing s are very important to understand the present systems in the building structure, so that the renovation works plans could be carried out accordingly and, thus, reducing the pressure on detailed designs, which are very difficult to be prepared for a completed structure without any proper information.

c   -  Detailed design inspection and/or evaluation should be necessarily conducted by the contractors during the pre-construction stage to remove the discrepancies left by the consultants, if any, and check the quantity takeoffs very accurately.

Her thesis abstract is copied below.

Abstract

Renovation works is a prominent sub-sector of the construction industry in today’s world due the extensive improvement works required in the various structures all around. The design life of a building is generally 50 to 100 years and, thus, renovation works are necessary around every 20 years, figures indicating that especially green renovation is expected to increase to around 90%. However, the renovation sub sector is very unsafe due to the various unique features and unseen conditions. In addition, most of the renovation activities are required to be carried out in buildings with ongoing business or operations, which pose safety and other risks, thus, increasing the time and cost of the projects. The cost estimation works of these projects need to be carried out very carefully in a detailed manner considering all the unique features of renovation. Cost estimation of any project should be very accurate to avoid cost escalations towards the end of the project which would add to the burden of the owner and also lead to claims and disputes in many cases.

Hence, a proper framework for cost estimation for renovation project was developed during the study. A case study with multiple projects was conducted to understand the practical scenario and conceptualise the information from literature review, leading to the framework. Each stage of the renovation projects in the case was then studied in details. The positive and negative features were also observed and improvements measures were suggested.

Keywords: Renovation projects, cost estimation, exploratory demolition, as-built drawings

Factors Affecting Construction Productivity in Cambodia

In majority, the time and cost over-run in the project can be assumed to either unforeseen or foreseen events for which uncertainties are not properly accommodated (Perry & Hayes, 1985). Similarly, the construction industry in Cambodia is also currently suffering from project delay and cost over-run because of low productivity. The main reason is being almost all contractors have a very limited knowledge in construction management. They persist on their past experience and professional ability only.

Moreover, in the book “The Construction Industry” (WorldBank, 1984) concluded that due to the limited skills, knowledge and resources on developing countries, a large amount of projects were won by foreign contractors. Other problems identified in the report included inefficiencies in using material, tool and equipment, imbalances in organizational structure, limited funds, poor planning and lack of human resource development. Many of these problems are endemic within the Cambodia construction industry nowadays.

In other to deal with this problem, the current weaknesses must be found out. It means one of the important things that have to be considered now is the productivity. It has been remarked that productivity improvement can significantly reduce overall project costs and schedule delays. Failure to improve productivity to match the increasing labor wages has pushed the construction cost. Then, productivity improvement is something that every Cambodian contractors should be aware of advantage pursue. Construction personnel understand the importance of productivity improvement and know how to improve productivity is prerequisite of productivity improvement.

The site productivity problems/inefficient encountered by the construction workforce first has to be tackled as they are the root causes leading to the low productivity. If the most important affecting factors in any contracting organization are identified, measures can then be taken to apply them in order to upgrade the contractor’s performance (Ofori & Chan, 2001). With an increasing productivity, the local contractors are able to mitigate the construction cost and therefore benefit from a higher profit. Likewise, the contractor can even offer a lower bidding price to increase his competitiveness. That is the reason why a site level investigation is conducted in this research. Mr. Hong Meng made a case study to assess the management understanding on productivity. The knowledge and understanding in productivity among the construction personnel is the basement of productivity improvement. His research also aimed to:  

(1)     study the productivity of small and medium project in SMEs in Cambodia.

(2)     investigate what are the management practices effect construction productivity of Small and Medium Project in SMEs in Cambodia.

(3)     investigate the critical factor effecting construction productivity in Cambodia.

(4)     provide some recommendations and suggestions for productivity improvement under the construction situation in Cambodia.

Conclusion

1. Study the productivity of Small and Medium project in SMEs

The finding indicated that in term of Labor Productivity (LP) and Percentage Plan Complete (PPC), Small Project had higher productivity than in Medium Project. The main reason is that Small project has smaller scope of work than the Medium one. By the way, there is no significant difference between the productivity of Small and Medium Company because they are both using similar management style: follow pass experience, same technologies and type of labor skill.

2. Effect of management practice on productivity of Small and Medium Project in SMEs

The outcome of this objective is that in Cambodia, there were similarly seven factors of practical management which has effect on productivity between Small and Medium Project. There are payment to staff on time, conduct activity checklist, develop WBS, assign the work base on their skill, reward outstanding performance, recruit skill worker, and team building trust.

Likewise, there were also seven critical factor of management practice which affect the productivity between Small and Medium Company such as assign the work base on their skill, payment to staff on time, conduct activity checklist, reward outstanding performance, team building trust, develop WBS, and assign clear responsible to staff.

All in all, among 30 factors of management practice improve construction productivity in Cambodia, the majority of respondents agreed that the first top ten critical factors needed to consider in order to increase productivity of small and medium project in SMEs are ranked from the most important to the less important as following; Rank1:Assign the work base on their skill, Rank2: Conduct activity checklist, Rank3: Payment to staff on time, Rank4: Reward outstanding performance, Rank5: Develop WBS, Rank6: Recruit skill worker, Rank7: Develop method statement, and Team building trust, Rank9: Develop site layout plan, and the last ranking is Assign clear responsible to staff.

3. Factors effecting construction productivity in Cambodia

The results from the analysis showed that the top ten critical factors which have positive effect on productivity are: (1) Skill & Experience workers, (2) Good site layout, (3) Competent and Experience manager, (3) Quality Construction, (5) Qualify sub-contractor, (6) On time procurement and material supply, (7) Good project scheduling, planning, and controlling, (8) Competent supervisor, (8) Provide complete and accurate drawing, and the last one (10) No change order from owner.  Among overall factors affecting construction productivity, it was found out that Engineer and Sub-contractor are the most critical group and the second one is H.O & Management factor. Material, equipment and tool are the third important group.

Recommendation

Base on the result of this study, construction productivity shall be improved and met their goals if they will be able to alleviate the effect of adverse factors, and be focused on the top 10 critical factors as mentioned above. Moreover, more effective management methods and techniques are required to improve the construction productivity too. Since the productivity improvement will not only make an organization more profitable, but also increase its chance of survival in the industry, especially as there is very high competition due to economic crisis. If improvement in many organizations’ productivity can be facilitated, overall construction productivity in Cambodia will also be improved.

Further recommendations from the respondents reveal that construction productivity could be improved if contractor must have enough assets for processing the project and have clearly contract with the owner.

His thesis abstract is copied below.

Abstract

Construction productivity in Cambodia is still low which required to be improved in order to compete with foreign contractor. As we know that in a rapidly developing and competitive market, the importance of delivering a project on schedule within cost and quality is high priority. Moreover, by running the project with high productivity, the contractor can gain benefit in terms of earlier revenue, financial return. And more than that, the unquantifiable benefit is from the improvement of company reputation in market, and the risk on construction can be earlier transferred. On the contrary, the local contractor company nowadays, they are mostly managing the project by following their pass experiences which is often delayed with overrun budget.

By the questionnaire survey and data analysis, the results of this study show that construction productivity in Cambodia shall be improved and met their goals if the contractor be able to alleviate the effect of adverse factors. The outcomes show that the high impact productivity improvement factors are (1) Skill & Experience workers, (2) Good site layout, (3) Competent and Experience manager, (3) Quality Construction, (5) Qualify sub-contractor, (6) On time procurement and material supply, (7) Good project scheduling, planning, and controlling, (8) Competent supervisor, (8) Provide complete and accurate drawing, and the last one (10) No change order from owner.

Keyword : Construction Productivity, Labor Productivity, Percentage Plan Completed, Small and Medium Project,  SMEs