Sub-Contractor Management in Gas Projects

Most of the general contractors are not paying attention with explanation on interfaced scopes between sub-contractors, selection contractors, and setting the agreement with sub-contractors.

Based on the contract type, contractor for projects managed by PMC-PV Gas is divided into some types such as:

1. General contractor for Engineering, procurement and construction.

2. General contractor for engineering and construction and sub-contractor for supplying equipments and commissioning.

3. General contractor for construction, sub-contractor for engineering, supplying equipments and commissioning.

Therefore, sub-contractor management in Projects is the challenge of project management board for on-scheduling, on-quality, safety and in budget.

If management board does not pay attention with sub-contractor management, it will be caused the chain of effects in delaying schedule, poor quality and cost impact for the whole project.

One research revealed that the cost of rework and change of sub-contractor is 12 times higher of previous cost.

Therefore, pre-qualification and monitoring performance of sub-contractor is the most important in success of General Contractor and Projects.

Phan Thi Hai Giang made a research to study the management method applied for sub-contractor in engineering, supplying equipments and commissioning. His study started from pre-qualification and monitoring performance of sub-contractor.

The purpose of this study was to quantify the importance of sub-contractor management in construction management especially in EPC contract, its effectiveness with general contractor in schedule, quality and cost.

This research started from bidding stage, performing project of sub-contractor in pipeline projects. The objectives of this study were to:

1. Evaluate the relationship between the subcontractor and general contractor in scheduling management, quality control and cost control in EPC Contract.

2) Identify some problems in subcontractor management that can be improved by the general contractor.

3) Investigate the effect of implementation subcontractor management in early stage of construction management.

Conclusion

 

With the strict management and good coordination between Owner, general contract and sub-contractor, the Project is completed on schedule for first gas from Nam Con Son pipeline that is the best benefit for Owner. With on-time schedule, any Parties from General contractor to sub-contractor/Vendor also have their own benefits from their construction works.

The key factor of project shall be identified in the beginning of Project and general contractor/sub-contractor must be followed and tried to archive this goals. In this case study, the key factor of Project was scheduled. The success of project is good co-ordination with general contractor/Owner such as:

1. For quality management:

• All agreement between general contractor and sub-contract will be submitted and approved by Owner because Subcontracts should be made to conform with the prime contract between the contractor and the project owner, and must be revised in accordance with the changes made to the prime contract throughout the course of the project
• Tight and clear specification
•  Dedicated QA/QC Manager
• On-site Vendor Inspection
• Continuous improvement quality management system
•  Rigid control change order in design stage and in Site 

2. For the cost management:

• General Contractors prefer to structure subcontracts so that the contractor pays the subcontractor only if the contractor receives payment from the owner, arguing that they should not be stuck with paying bills that the owner doesn’t pay them for.
• Accurate cost tracking, analysis and forecast
• QA/QC to prevent and detect defects earlier 

3. For schedule management:

• The good planner and updated schedule for all Site work and procurement work that will affected with on-time schedule of Project.
• Tight project control system and dedicated project controller.
• Given appropriated solution for long-lead item.

4. For safety management:

• Good safety procedures with appointed safety manager will be monitored all construction works at Site.
• Risk response plan, emergency response plan and risk assessment applied for safety management of Project. 

Benefit of project sub-contractor management

In almost all projects, general contractor cannot perform their construction works with their own force, they tried to share responsibilities and risks with their sub-contractor/Vendor.

From the above case-study, the good communication between general contractor and sub-contractor had distributed to the success of Project. It can be described in the beginning of the contract. The content of the service which sub-contractor is to provide for the general contractor must be described; and it also articulates the general contractor's procedure of awarding the subcontractor.

 The general contractor assumes their role and contracts out the construction work, some detail design works to various specialty subcontractors in order to control risk and transfer construction risks. Through sub-contracting, the general contractor can minimize its capital investment and reduce the size of permanent staff.

The general contractor did not understand clearly the local regulation, work permission with existing gas facilities. So they use local sub-contractor to transfer their risks.

With good management of sub-contractors, the general contractors will have a successful project in manner of quality, safety, schedule and cost. And local sub-contractor can become more professional through tight control from general manager.

General Conclusion

This project is successful in the manner of subcontractor's management. According to discussion from the previous chapter, it can be concluded that subcontractor control management in terms of procurement and cost from local contractor has been aligned and organized, but, in terms of schedule, quality and safety aspects, it has been yet organized. Major improvements are needed for the subcontractor control strategy in order to improve the subcontractor management performance. In contrast, it can be concluded that subcontractor control strategy has been aligned and organized in all aspects. However, there are some major points, which need to be improved in order to strengthen and continually improve the strategy performance.

1. Recommendation for sub-contractor management improvement

After learning on how main contractors managed their subcontractors together with the strength and weaknesses of each strategy, recommendation for improvement can be reliably proposed as follows:

i) It is important to have formal procurement standard for subcontractors. It helps main contractors to make decision easier and faster whether the subcontractors are qualified with the main contractor’s commitment. 

ii) Always have two-way lead times built into subcontract agreements. Two-way means that the main contractor and subcontractors agree on an appropriate time for the main contractor to notify the subcontractor when to begin work and an appropriate amount of time for the subcontractors to inform the main contractor of any conflict. Main contractor should monitor subcontractor’s schedule by developing a system or adopting advanced technology software that allows main contractor to track causes of schedule variance.

iii) Top management should take a leader role in commitment toward quality. There should be quality policy and activities performed in an effort to implement the quality policy. Subcontractor should understand the quality policy and follow it as a quality standard of the work. The problems related with low quality can be prevented.

iv) By establishing a subcontractor database, main contractors are able to know the information about subcontractors. It helps main contractors to have better understanding subcontractors’ performance.

v) Main contractor should develop comprehensive project safety policy and safety programs which make provisions for subcontractor safety. Subcontractor has to obey the main contractor’s safety policy and follow the main contractor’s safety programs by the inclusion of specific language to that effect in their contracts.

vi) Main contractor may consider employing subcontract coordinator in order to improve coordination and communication with subcontractors.

2. Recommendation for further study

i) This research was concentrated on main contractors’ behavior in managing subcontractor. However, there are owner, consultant, and subcontractors whose self involving in the construction project. Further study should be carried out to find the influence of owner, consultant, and subcontractor itself for subcontractor management improvement.

ii) Due to time limitation, only one international contractor was included in this study. Further study should include more contractors in order to get better result.

iii) It is highly recommended for further study to investigate the effectiveness of each strategy by quantitative data.

Abstract

Because of the increased project complexity and the highly competitive nature of the construction industry, a construction project often is executed by several subcontractors. Hence, effectively managing the numerous subcontractors involved in a construction project becomes a crucial challenge for the general contractor in ensuring timely project completion with acceptable quality.

Managing subcontractors does not simply involve asking them to allocate resources (labor, material, and machinery/equipment) into the jobsite whenever an activity is scheduled, and then pushing them to speed up the work without a clear consciousness of schedule risk. Factors (or uncertainties) such as weather, labor, site conditions, material delivery, and equipment breakdown can influence the time performance of subcontractors, affecting total project duration.

But almost General Contractor is lack of management sub-contractor and it caused many difficulties and conflicts during performance, management of projects.

The most difficulty of sub-contractor management is deviation scope of work between sub-contractors, controlling schedule and interfacing between subcontractors.

In managing project subcontractors, a general contractor must determine the items of work to be subcontracted, select subcontractors, set subcontract agreements, and control the subcontractors during construction.

Matrix Structure in Small Scale & Fast Track Construction Project

Vietnam is a developing country which needs a large amount of investment especially in infrastructure and   construction industry from ODA and FDI. In infrastructure and construction industry, the technology of Project Management is one of the most important factors leading to successful projects. Most of these projects in Vietnam are under the Project Management Unit of a state company (PMU), and PMU will be released after the project has finished. If there is a new investment, a new PMU has to be set up which wastes human resource, time, cost and accompanied with that is most of the large scale projects in Vietnam now are usually late in delivery and over budget, while productivity & effectiveness are common goals of whatever modern project management process. The unsuccessful resource allocation of large scale projects in Vietnam now is also a problem.

The lack of skilled persons to meet the requirement of construction projects in an emerging market as Vietnam is a big issue especially in small and medium companies which proceed small scale and fast track projects. The functional organization is not suitable for Project Management in construction because of not using & not salvaging all capability of white collar worker. Pure project structure is also not suitable because it has hard structure and it is unflexible in temporary sharing human resource, and experience. So, the project matrix structure which is more efficient using resource than other single hierarchy is a new model which can be reviewed and considered as a suitable model for Vietnam situation now especially in medium & small scale companies, accompanied with small scale and fast track construction project.

Nguyen Phong made a case study which focused on the following:

1. Study the literature of Project Matrix Structure in construction project

2. Analyze a Case Study in application of Project Matrix Structure in Small Scale and Fast                 Track Project in            Vietnam

Conclusion

Most of the private businesses in Vietnam have just established around 15 years, a short of time compare with international business, so the application of a new concept in management is a risky selection. Project Matrix Structure was applied all over the world but it is still a new concept in Vietnam especially in small scale and fast track project.

The changing from functional structure to Matrix Structure is a process of deep thinking and careful selection which need a lot effort of all members and long time in restructure organization. Furthermore, the discussion and analyses revealed that Matrix Project Structure is a good choice to bring out a great successful organization in Vietnam in which TTT Corporation is one of the most successful. From a no-name contractor in Vietnam, TTT Corporation now becomes a well-known contractor in small scale and fast track project specifically in fitting-out and interior areas.

Matrix structure is not only suitable for organization development but also in helping organization members in self-study and self-development. Project Matrix structure is a good model apply in fast track project in Vietnam which come out a lot of advantages in labor force allocation, project team allocation and major improvement of team productivity.

Recommendations

Besides the success of this model in TTT Corporation, there are many issues happened that need improvement in software application, in system buidling and in human resource usage. Below are some recommedations:

1. In general

i. Experience sharing needs enforcement to become company policy, and proceed each quarter including reward to the best

ii. Improving existing norm, regulation and organize training course to team member update knowledge on sharing is not fair

iii. Develop individual assessment form for functional manager, project manager and proceeds the assessment immediately after project hand over.

iv. Training to increase perceive communication management

v. Report overview is a part of project bonus to encourage PM, have right evaluation sent to supervisor, not popular to project team

vi. The increasing of internal project information is a problem. The way end user transfer & discussion the information on CRM need to be reviewed and be classified suitable with business strategy not a forum.

2. Human resource

i. Minimize the amount of virtual project manager and increase the number of professional project manager to take care bigger projects.

ii. Support project manager to have more training course on approach with new technology and new concept in project management.

iii. Training of project manager on technical knowledge related with project because small scale and fast track project need by the project manager to understand not only in project management but also all technical issues of project. This understanding helps project manager in making decision in short time.

iv. Training about communication management, which help project manager and each member understand the importance of communication and classify it in a right way which support to long term goals of organization.

3. System

1. CRM is a soft ware for customer relationship management, not suitable for project management although it is a very good support for project management process: it supports for centralize project information, clients information, integrating with other soft ware (ERP, Share Point…) helping board of director in controlling, monitoring and reviewing most projects but only the project milestone and not the general progress of the project. So Central Project is a recommendation for developing and application in some next years.

2. ERP is a soft ware suitable for manufacturing and not for design & built project, so the application is just for production department or apply ERP software for construction area and ERP department should be a department to manage and control ERP and support to others.

Abstract

Project Matrix Structures are applied in large scale projects & long term projects in many western countries and comes with many successes. How it can apply for small scale & fast track projects in developing countries as VN?

There has been a tendency in recent years to manage more activities in more application areas using project management. More organizations are using “management by project.” This is not to say that all operations can or should be organized into projects but the real efficient of the management by project can be the good answer.

This Project Report has taken a general view of Project Matrix Structure in theory & application in developed countries then finding out the case study that applied in VN with a relative successful to propose some recommendations to improve & change in suitable with practical condition of VN.

Office Fitting-out has started in VN around 15 years from the time VN did the “Open Policy” to open the country and to set up relations with other countries & receiving FDI and ODA. By FDI and ODA from developed countries and International Institutes – Office Fitting-out works are developed very fast in VN with high requirements in doing the fast-track project including high quality of finishing, keeping reasonable cost & schedule.

The adoption of “management by project” is also related to the adoption of an organizational culture that is close to the project management culture but this is outside of this report.

Quality Management in Construction Projects

Construction activities involve quality management systems, but in practice there are a lot of poor works that worries the owner because it usually resulting to waste of money and also cause danger to people.

To ensure the effective application of quality management for construction projects, it requires the strong commitment of business leaders and implementation of multiple solutions. Apply effective quality management that will bring many potential benefits for businesses. Le Van Thong made a case study which objectives were summarized such as follows:

1. Determination of quality management activities in the construction in the Oil and Gas Company

2. To discuss and review the effectiveness of quality management in construction of the Oil and Gas Company

Conclusions

Quality management system has been applied by PTSC companies in their projects. It brings success to the company for many years now, and became a famous company in the international market in oil and gas technical services industry in Vietnam. They are the useful tools to avoid and mitigate problems and to improve quality performances of their projects. They are the principles that management use to achieve effective cost control, quality control, schedule control etc. Many civil and industry construction Corporations, companies in developed countries have been applied the successful Quality Management and got more profits and reduced lost time, and cost for reworks. They recognize the importance of the Quality Management and have responsibilities to identify, assess, prevent and manage all breakdowns and risks to projects, damage to property and working environment.

The quality improvement programs establish actions for achieving the objectives and targets, in line with the policy commitment of continuous improvement. When establishing targets, the following will be taken into consideration:

1. Who do? How? Who supervise the provision of information; as executive / coordination / control is assigned in advance and all agents involved must comply.

2. The system clearly and closely flexibility have created a positive consequence of works completed on schedule, ensure quality and safety.

Effectiveness of the implementation quality management

After implementation of the quality management, there are some achieved results such as below:

1. Quality Assurance is to obtain completed construction that meets all contract requirements. Assurance is defined as a degree of certainty. Quality assurance personnel continually assure that the contractor's works comply with contract requirements.

2. Quality Control is the successful execution of a realistic plan to ensure that the required standards of quality construction will be met. In QC, the contractor defines procedures to manage and control his own, designer of record, consultant, architect-engineer, all subcontractor and all supplier activities so that the completed project complies with contract requirements.  For design-build contracts this includes providing and maintaining a Design Quality Control plan as a part of the overall contract QC plan.  This plan, as a minimum, must assure that all documents are reviewed by a technically competent, independent reviewer specifically named in the plan.  This review cannot be performed by the same designers that produced the product.  The design QC plan must be managed by a Design QC Manager who has verifiable engineering or architectural design experience or is a registered engineer or architect.  The Design QC Manager is under the supervision of the QC Manager.

Recommendations

1. The performance of Quality Management must be carried out permanently in the company to prevent all budget overrun, progress slow, reworks maybe happening from the existing projects and future projects.

2. The performance of Quality Management must be concerned from the top management to everybody in the company.

3. Examine the quality control methods being used to determine if the contractor is properly controlling design activities in design-build contracts.

4. Examine the quality control methods being used to determine if the contractor is properly controlling construction activities.

5. Make certain that the necessary changes are made in the contractor's QC system, if excessive construction deficiencies occur.

6. Assist the contractor in understanding and implementing the contract requirements.

7. Examine ongoing and completed work.

8. Produce the quality specified in the plans and specifications and for design-build contracts in the Request for Proposal, as well as the contractor's accepted proposal.

9. Develop and maintain an effective QC system.

10. Perform all control activities and tests.

11. Prepare acceptable documentation of QC activities.

Abstract

In an organization or business will have a lot of construction projects, any project also is importance. Ensure the quality of the project is very important for each organization. Aware of that, the quality management has been applied widely in their construction projects. But how apply the successful model of quality management for a construction project that is still a big question.

Organizations in Vietnam as some other countries, in face, the signers disclaim the possibility of anticipating and detailing everything in the construction documents. Second, it is unstable for the construction environment. The complexity and size of project vary. Working conditions cannot be somewhat control. The employee is variable; its composition, motivation and size change. Cooperation between contractor and subcontractors is problematic. Those will affect the quality management of construction projects and it makes the project to delay, re-work and increase cost.

So, how to manage the quality of the construction project effectively? This thesis will research about quality management in construction project through theory and real case that is applied in PTSC Production Services Company.

Seminar in Can Tho: Managing Megaprojects in Developing Countries

Seminar

MANAGING MEGAPROJECTS IN DEVELOPING COUNTRIES
Prof. Christian Brockman, University of Applied Science, Bremen, Germany
14 Nov 2013
AITVN, Can Tho city, Vietnam

On 14 Nov 2013 at AITVN Can Tho city, Vietnam, the Professional Master program in Project Management in Construction (MPM) organized the seminar  MANAGING MEGAPROJECTS IN DEVELOPING COUNTRIES, presented by Prof. Christian Brockman. Similar to Ho Chi Minh city, the seminar received the interest of many participants come from construction companies and organizations within and outside Can Tho city.

Once again, we would like to send the thankfulness to Prof. Brockman for his sharing to our participants in Mekong Delta provinces and all participants for your coming and contribution to the success of our seminar.

Web Application for Contractor Claim Analysis

the content of this past has been moved to http://www.masterprojectmanagement.org/web-application-for-contractor-claim-analysis/

for a better service, we are migrating to http://www.masterprojectmanagement.org/

Managing the Pre-commissioning and Commissioning Phase in EPC Contract

Developing oil refining and petrochemical industry is an index for success of each country’s industrialization because it is a spearhead industry with an essential role that widely influences many aspects of the national economy. Vietnam is one of the leading countries in Southeast Asia, after China, Indonesia and Malaysia, having large crude oil reserves.

The project to build Dung Quat Oil Refinery is a national key project in oil and gas field that is of great significance for social and economic development in Vietnam’s Central region in general, and Quang Ngai Province in particular. Investment in the construction of Dung Quat Oil Refinery will help facilitate domestic crude oil processing, step by step to ensure energy security and reduce reliance on petroleum imports, and contribute to boosting national industrialization and modernization.

In order to minimize the interfaces and reduce any conflicts between the separated Contractors and the Owner during executing a grass root refinery project, Owners normally prefer to award and sign an EPC contract with an EPC contractor.  An EPC contract is generally applied for developing a Refinery project, in case of problems or disputes happen during the project execution, then these problems and disputes shall be resolved in accordance with stipulated clauses in the signed contract, Dinh Van Ngu made a case study which objectives were to:

1. study organization,  roles and responsibilities of EPC contractors;

2. study executed and controlled the pre-commissioning and commissioning phase in accordance with the signed Contract; 

Conclusion

To ensure a successful implementation of this phase of the Project, Owner must have full support from its Stakeholder and the Government. The Owner must have a strong leadership and commitment from senior management throughout the execution of the project. The availability and competency of the Project Management core team also contribute an important factor during the initial/ preparation phase when the rest of the team will be mobilized. As many cost-schedule trade-off are may be required, Owner must prepare a strong financial status and willing to accept or compromise some commercial terms.

The results from this study have identified that the Managing of Pre-commissioning and Commissioning phase play important roles of Project. In this report, the Author’s real experiences lead to identifying the most important key success in managing EPC pre-commissioning and commissioning phase such as follows:

1. Safety system and site safety team: it is essential for the success of commissioning phase that the Safety system must be in place. During the commissioning phase, there are still many activities that belong to the construction phase. This makes lots of interfaces,  confusion and complexity while carrying out different type of activity in a area for example pipe welding activity being carried out on pipe rack/ structure while below the pipe rack, people performs loop checks for instrumentation or leak test for sectional of piping, etc. Due to such activies, there are more potential risk of incident like falling objects, electrical short-circuit, working at height. Therefore the site safety inspection team is vital for keeping safe situation at site.....To ensure the work is in good order and workers strictly follow safety requirements, management of each parties including subcontractors must strongly commit to implement safety procedures at work, having enough and adequate Protective Personal Equipment for every worker; Site safety team should go around the unit routinely to check and identify any potential safety problem and stop such action from happening. If necessary, a penalty shall be imposed for every party who gets their staff violate such safety procedures.

2. Organizational structure that fits to the Commissioning phase: To have a suitable organization with full authority at site and proper coordination procedures is a key for success of commissioning stage. During the construction phase, EPC and Owner team may have different organization structure to manage mainly subcontractors’ activities but when the commissioning phase started, the organization must be modified accordingly due to nature of the commissioning works. It should note that both EPC and Owner must nominate the Commissioning Manager position who will take sole responsibility and single contact point for any decision making related to the commissioning.

3. Qualified and experience commissioning staff in all disciplines: having experienced staff who has several commissioning assignments will be the key for success. They will share their experience with the rest of the team and also advice on how to avoid similar commissioning problems that they faced with in other projects. The experienced staff will lead the team to conduct the required activities because they know exactly what to do and how to do it following the general commissioning procedures and guidelines. It will take a significant time and effort for any new staff to figure out the procedures and handle plant activities for his first time therefore having experienced staff in the team will help to reduce risk of schedule slippage, avoid common problems and failures and help the team do it right first time.

4. Approval authority for site team for any additional work: During the commissioning of the plant with such complex like Dung Quat refinery, there are lots of activities that can not refer to that of the contract’s requirements or many new issues may raise, site modifications and new engineering problem findings are very common and such matter must be discussed and resolved quickly to move the project forwards. For that reason Commissioning manager and its team must be authorized to take the decision cross the table without any delay. If for any problem, item that has some deviations from the contract the Commissioning team have to report to several authority level for final approval, it will be very costly due to waiting time before proceeding further. Sometimes the cost of delay due to pending approval (normaly from the Owner site) has mush more significant than the cost of the required changes in design or commissioning method itself.

5.  Availability of Utilities: service water, electricity, instrument air, plant air, nitrogen, steam and some chemical for chemical cleaning, passivation of piping must be available at anytime in sufficient quantity to meet the commissioning requirement. It was experienced that during the commissioning phase of Dung Quat refinery project, there were several electrical cut-off from the EVN net work that make the commissioning activity interrupted and delayed the overall schedule. Service water must be also continuously supplied to the refinery site at designate pressure and flow rate. This water will be used for line flushing, cleaning, hydrotest of tankage and piping section. The most consumption of such water is for hydrotest of takage, where the Project has more than 50 tanks and each of those tank needs to filled up with water for certain period then water will be pumped to other tank repeat the same kind of test. For this reason, the water supply was sometimes reached 30.000- 50.000 m3 per week for the period of two to three months.

6. Work Permit System: Having proper Work Permit System in place will ensure that work activities are in good order and sequence. It will make sure a good channel of communication of several parties working in the same area or sharing the same equipment. Work permit will ensure the review of readiness stage before conducting any work at that section, interfaces will be managed to avoid conflict of interest and rework, due to this level of control, safety will be improved.

7.  Coordination between EPC team and OWNER's team: Owner team will normally support EPC team for any commissioning activities. Any misunderstanding between the two parties may have impact to the schedule, that’s why a clear coordination procedure must be agreed and implemented.

8. Roles of daily coordination meetings: there are many activities happen daily and new activities raise that require discussion and agreement before conducting the work.

9. Equipment availability: commissioning equipment like crane, vaccum trucks, portable pumps, instrument portable devices, tools, analyzers, etc. must be available at any time for commissioning needs.

10. Maintenance workshop& its equipment readiness: this will ensure that many broken part of the equipment, material, etc. can be repaired at the site workshop to save time of commissioning.

11. Commissioning Spare parts; Tools & Materials availability: any spare part missing like flanges, gaskets, bolt and nuts, mechanical seal, thermo couples, etc. that may takes months to get it delivered at site therefore commissioning spares must be kept in sufficient quantity at site.

Procedures and systems, if not already in place, will be implemented to control and minimize the spare parts and materials inventory to improve profitability. However the refineries long term production output and efficiency will be considered when determining basic needs and critical spares that must be available for unforeseen breakdowns.

The availability of spares remaining from the commissioning activities and those ordered as two year operating spares as part of the EPC contract work will form the basis for the initial stock.

Before deciding which spares are required, criticality allocation and quantity/stocking level determination will be made as indicated below:

- Review and quality check the Spare Part Interchangeability List.

- Evaluate long lead items

- Repair/Replace philosophy

- Identification and lists of proprietary items.

- Aggregation of similar and standardized items across equipment (to ensure optimization of supply).

- Check warranty implications of using existing stocked components as spares against new equipment.

- Opportunities for alternative contract arrangements (Vendor stocking of spares, spares sharing, maintenance service contracts etc.).

12. Ready stage from Construction phase- Mechanical Completion: for any section of Plant or unit, it must be mechanically complete before any commissioning activities but note that between sections, there may be some overlapped activities of construction and commissioning can do in parallel.

13. Detailed level III, IV schedule for each Section and each disciplines: this will help the team know exactly what to do next for each area, each disciplines and can plan ahead and prepare for incoming activities.

14. Vendor technical representatives availability: there are many major equipment that EPC staff does not have a specialized knowledge to commission the equipment first time that’s why it is mandatory to have vendor representative at site to support and advice on commissioning and start-up of such equipment like compressors, turbines, fired heaters, boilers, major motors, major pumps, etc.

15. Quick resolution of Punch list and outstanding technical issues: from a public source of data, it is known that there are over 100.000 punch list items found by EPC and Owner team  during the plant check and inspection against specifications and requirements. It requires lots of time, effort, manpower and cost for fixing, correcting, replacing, etc. such items. This is considered as most time impact for the plant completion.

16. Availability of Commissioning procedures: without procedures, commissioning work may be delayed, prohibited and more chance for mistake.

17. Access of Project database and Vendor document: these document must be available for reference, guidelines and also used for making procedures.

18.Roles of good document control.

19. Rotation of shift work round- the- clock concept: Commissioning work is very time consuming and happen in continues manner so the activities must be taken 24 hour a day and shift work is required.

20.  Availability of sub-contractors: they will provide manpower, tool, and equipment for commissioning therefore it is important to mobilize subcontractors to work at site.

21. Impact of weather conditions: any rain, thunder storm, flood of water at site will impact to the schedule. The commissioning if cannot avoid from raining/ bad weather season, EPC and Owner must be aware and prepare for that to minimize damages due to flooding or storm. As well as ensuring suitable condition and schedule to work during the bad weather season.

Ongoing for further discussions, I want to have identified the following areas of critical importance to the safe and efficient operation of the Dung Quat refinery:

·         Power system reliability

·         Serious problems in Demineralized Water Plant and Condensate Treatment Plant

·         Commissioning and lack of availability of many on-stream analyzers

·         Inadequate functioning of Dung Quat Refinery Laboratory, and the Laboratory Information System

·         Problems of performance and reliability of certain machines and valves – e.g. Crude and Resid Pumps

·         Problems of performance and reliability of equipment, instruments and communication systems on Single Buoy Mooring (SBM)

·         Required change-out of incorrectly specified steam traps

·         Organization of Harbor Operations to meet the required berth occupancy

·         Construction Non-Conformance Reports (NCR)/defects

·         Insufficient availability of 2 year operational spares, and incomplete parts/materials database for the operation of Dung Quat refinery warehouse;

·         Training and other,…

The initial assessment will consider items such as those above to ensure timely correction of operational and maintenance issues that affect the ongoing refinery operation.

Finally, with the limit time, the author was not discussed all the problems in Pre-commissioning and Commissioning phase in the thesis. Author wants all readers and colleagues have practical suggestions and comments for the thesis are more effective.

Abstract

In the process of industrialization and modernization in Vietnam, the construction of Dung Quat Oil Refinery is considered an extremely important step to lay a foundation for the spearhead industry of the country. Capitalized at over 2.5 billion USD, the Dung Quat Oil Refinery Project will effectively meet the demands on jobs, shifting the economic structure, increasing the State budget and developing other services of the locality during the construction and operation periods. The construction of Dung Quat Oil Refinery also encourages domestic and foreign investors to invest in Dung Quat Economic Zone in the fields of chemical industry, engineering, manufacturing and installation industry, ship building and repairing, steel refining and laminating, transport, electronics, processing and other industries. With its scale and significance Dung Quat Oil Refinery is considered the heart of Dung Quat Economic Zone.

The formation and implementation of the project on Dung Quat Oil Refinery, the first of this kind in Vietnam, have lasted many years and experienced through different periods and with various forms of investment. The decision to build Dung Quat Oil Refinery with Vietnam’s own investment in 2003 showed the great determination of the Vietnamese Party and State in the strategy to ensure national energy security and promote national industrialization and modernization. Deeply aware of the project’s significance and with responsibility of an investor, Vietnam National Oil and Gas Group has been concentrating all sources on the management and supervision of the project to ensure construction of the refinery to be completed on schedule, safely and with high quality.

This study will also discuss on point of view and how to managing the pre-commissioning and commissioning phase for the EPC contract of DungQuat refinery project that can be happened during the project execution phase.

Customer-Driven Strategy and KPIs Using CRM Approach

Vietnam construction enterprises seem to be far behind than other industries in application of marketing strategy, customer study and enterprises business strategy adaptation. Due to the limited number and the importance of customer, the CRM should be highly developed in construction. But a clear strategy is rarely defined and developed.

In fact, every bank, insurers, software manufacturer or electronics retailer develop the CRM in their business. But none of construction companies in Vietnam have developed up to now. They have no CRM strategy, no data warehouse, and no CRM assessment.

Construction industry should be the one that apply CRM the most. The value of a project is always very big; the number of projects and customer is very limited in comparison to any other industry. And because of the uniqueness and rarity, any customer is different from any other. They require special, customized care and service. So, throughout understanding each customer is critical to construction project marketing.

Besides, CRM in construction is different from CRM in other industries due to the characteristic of construction industry.

The most important and different characteristic of construction industry from other industries is project-based production. Any projects are unique. Construction projects are always executed on site which much influenced by many factors such as weather, technologies, culture, social, politic, conditions, much more than any kind of production in the factory. Projects are always constrained by resources available, time for completion and quality required by Client.

The characteristic of customers is also much different. The number of customer is very limited. And the demand of the customer is much different from consumer product customers. Those characteristics make the marketing in construction different from other industries, especially CRM.

Those conditions make the construction industry marketing different from others. So it requires changes and adaptation in application of marketing strategy and technique.

Tran Dang Manh made a case study to look into the CRM marketing technique and application in construction industry, include:

1. What is Customer relationship management?

2. What is the characteristic of project-based construction industry?

3. How to adapt and apply CRM in construction industry, especially in Vietnam?

4. Based on real case of a construction enterprise in Vietnam, explore the actual conditions and level of CRM application. Identify any vacancy and adjustment applicable in CRM development to propose. 

Conclusion

CRM is new to Vietnam construction enterprises, but CRM is a must for the enterprises development.

CRM helps enterprises understanding its customer and its own performance, classifying its customers, satisfying its targeted customer, and creating values to its share holders by creating values to both its targeted customer and its own.

CRM requires the commitment of the whole organization- from top leaders to every employee, and all of its related supplier chain. Only with the commitment of the whole production chain, the final product and customer service shall be achieved.

CRM requires the construction of information system capable of gathering customer information from any sources, media, and channel, analyze to give instructions to the production and management system, and store all information.

CRM requires its KPIs definition and application to give feedback to CRM system, continually improve itself and the whole organization.

Besides common strategy for general business, project-based industry has special characteristics: Uniqueness, non-standard working conditions, limited number of customers. It makes the CRM in project-based industry different from others.

In construction, the values that are critical to both customer and enterprises are time, cost, quality, and safety. To be competitive, each enterprise needs a unique strategy to ensure the value to themselves and customer. For all of that, CRM shall be able to find all necessary information, analyze, and evaluate the performance.

Vietnam construction enterprises are applying CRM in a very preliminary level. They do not have strategic approach to develop. Their management system also does not incorporate CRM. They need to change from its business ideology, its organization and business culture, its management system, and its employees’ behavior.

The primary values in construction- time, cost, quality, and safety- are still far from requirement in Vietnam. The CRM also has not been written and developed as an official strategy for the enterprises.

Vietnam construction enterprises need to assess its own performance to decide its targeted customer segments, apply appropriate customer policy, media, and channel, information system to manage CRM system. The assessment shall be based on clear and quantifiable KPIs set at the start of the development of CRM system. The KPIs to be used should be at least three categories:

1. Enterprises general performance: profitability, operational criteria such as rate of inventory, liquidity ratio.

2. Project performance: time, cost, quality, safety, and number of customer claims

3. CRM performance: rate of customer retention, rate of referral.

CRM is a cross-functional activity. In order to develop CRM, enterprises need to change business ideology, organization and business culture, management system, and employees’ behavior. The improvement of CRM is part of an overall corporate restructuring

Only with the customized application of CRM, enterprises may understand their customer more, continually improvement of performance, and ensure its future development.

                                                                                               

Abstract

Customer relationship management (CRM) has been developed for centuries. It decides the design, function, and cost of the product, turnover, and profit of the enterprises.

CRM is a cross-functional activity. In order to develop CRM, enterprises need to change business ideology, organization and business culture, management system, and employees’ behavior. The improvement of CRM is part of an overall corporate restructuring.

But it seems not to be in Vietnam construction enterprises. Construction industry should be the one that apply CRM the most. Throughout understanding each customer is critical to construction project marketing.

By this study, I would like to study Customer-driven strategy and KPIs using CRM approach- a case study of construction enterprises in Vietnam so that I can propose a framework for the application and development of CRM in Vietnam construction enterprises.