Planning for Improving Efficiency of Housing Project’s Development Process

According to the Governmental Investment Project Assessment Report for the year 2009 by Ho Chi Minh City People’s Committee, there are 1,177 projects completed until end of the year 2009 (which are currently equal to 20% of 5,886 operational projects in Ho Chi Minh City). However, 65% of the projects were delayed and 20 projects only achieved up to 30% of the target progress. This is due to the following reasons:

(i) Weak financial capacity of the project owners.

(ii) Lack of experienced project managers and project management human resources.

(iii) Long period for authority submission and lack of transparency of Vietnam law and regulations.

(iv) Land clearance and resettlement.

Bui Quang Huy made a case study which main objective is to investigate the basic requirements by Vietnam law and regulations, the common practice of housing development projects in Vietnam complying with Vietnam law and regulations; and to find out a more efficient process for developing a housing project in Vietnam.

Conclusions

The housing development industry has its own characteristics. Every single activity in the project development process has to comply with local law and regulations. Hence, the good understanding about local law and regulations is very useful for developers in their business. The success of the case project in this study also depends very much on the understanding about local law and regulations beside the project management knowledge.   

The old practice of housing project development process complying with Vietnam law and regulation is not efficient, it takes 60 – 78 months to finish the project from the feasibility study and planning phase to handing over and obtaining the ownerships for the house buyers. The longer the project development period is, the more costly the investment in housing projects is. Besides, Vietnam population and housing demand are developing very fast; the supply could not satisfy the demand. Hence, the housing price could not be reduced and a major part of people with low and medium income do not afford to buy houses. It causes a lot of social issues in Vietnam.

With the improved housing development process proposed, it takes 45 – 57 months to finish the project. If we only consider the Project Launching Preparation phase, the saving is 15 – 21months, it takes 12 -15 months in the improved process instead of 27 - 36 months of the old process. This is a valuable improvement. The investment in housing project becomes more efficient when the developers can recycle their investment faster and cut down financial cost in housing projects. It helps to increase the supply of housing products and reduce house price.

Besides the understanding about Vietnam market, the knowledge from lean production and last planner theory also offers a basis for evaluating the whole development process of housing projects and identify waste times in the process. The project manager/ planner should examine and schedule the project with all constituent and continuous activities as a whole. By implement that, it will make the timing of whole project period more efficient, rather than only taking care of shortening the period of its individual activities. The application of lean theory is absolutely suitable for the current situation of Vietnam housing market. It helps to shorten the project development period and make the process more efficient by ignoring waste time. There are no additional costs to apply these theories.

Recommendations

In general, when the understanding about local law and regulations is very important in housing project development, the developers should continuously update and study local law and regulations, especially, the new issuances.

A good relationship with government also helps developers in their submission works. This relationship could be created by contributing to society and maintaining the good image in the local market, the developers should properly deliver what they committed to the government and buyers.

The developers are recommended to maintain their efforts in evaluating the working and project development process to find any problems for improvement, not only waste of time, but also any other wastes such as cost, manpower, etc.

Lastly, the good schedule should never achieve the good actual result if it is not well controlled. The control system also needs to be established to monitor the execution of the project to ensure it is carried out in accordance with the plan.

ABSTRACT

Vietnam is a developing country which means that the country need a lot of knowledge for development, especially in the field of construction project management.

Some “old men” think that all the construction projects are similar, about the process, technology and method, especially housing development projects. They are actually not similar, there are many projects carried out in such a way of wasting time and cost; and achieving bad quality.

In this study, a more efficient process for housing development project is introduced. Hopefully, it could help the project managers / planners schedule and execute their projects strictly complying with the local law and regulations, in shorter cycle without any additional costs for advanced technology and materials.

This study also affirms that there is always un-efficiency in project development process of every construction projects. The project managers should always spend enough efforts to identify wastes and improve them. This is helping the projects, the company and the country, in a wider angle of view.

Engineering, Procurement, Construction (EPC) Contract Management

Engineering, Procurement, Construction, Pre-commissioning, Commissioning for the well, wellhead platforms, offshore facilities are considered to be very risky because of their complications and large money required, therefore we need good contract management to check whether the obligations, rights, specification, performance, commitment and so on are met properly and to optimize contract performance, eliminate risk involved in EPC contract throughout the lifecycle.

Not having a good contract management process in place has consequences both to the Client and the Contractor as well as to Consultant Company, Vendor, and Sub-contractor (if applicable). If the Contract Management is not managed, controlled, monitored, and implemented properly, the parties are likely to fail to meet its goals that they had for the project associated with the contract. Such failures may include delayed schedule, cost overruns, quality, safety and more.

EPC contracts have been used in both medium and complicated large scale oil and gas projects in Vietnam since 1990s. Phan Tuong Liem made a research by studying EPC Contract Management of his own project (Rang Dong Full Field Development Project Block 15.2 Offshore Vietnam). The objectives of his study were to:

1. study implementation of JVPC EPC contract management.

2. state problems that occurred in the execution of EPC project.

3. give out some recommendations to EPC contracts.

4. learn lessons from JVPC project.

Conclusion

In order to have a successful project, contract management played an important role. During the administration of a project, any major or minor activities involved a sequence of activities that were covered by different Clauses and Sub-clauses in the Contract.  However, in reality not all Clauses/Sub-clauses covered all activities without unchanged, unrevised. Because of modification and design change which were not fully mentioned in the Contract, as well as cost of extra work and so on.

The contract usually had at least three copies to be distributed: original copy for The Client, Contractor and filed Field Contract Manager to follow.

To mange well the contract, the Owner had enough qualified manpower to take care for each particular part and or area  of the project such as Supervisor, Superintendent, QA/QC Engineer, Cost Control Engineer, Scheduling Engineer, Administrator, Coordinator and so on who are involved in the project. The Project Manager himself could not take care the whole contract management.

Contractor knew how to allocate manpower, material, and equipment to meet the project target. Any personnel involve in the project especially key personnel had their profiles to show that they were qualified, competent and approved by the Client.

Abstract

Contract Management is the process that enables both parties to a contract to meet their rights, duties, obligations and responsibilities (i.e. allocate the risks) in order to deliver the objectives, services, required from the contract.

It also involves building a good working relationship between the customer and provider in general, and between Owner and Main Contractor or Main Contractor and Subcontractor so on. It continues throughout the life of a contract and involves managing proactively to anticipate future needs as well as reacting to situations that arise.

The main purpose of contract management is to obtain the services, performance, commitments as agreed in the contract between the Client and the Contractor. This means optimizing the efficiency, effectiveness and economy of the service, the performance, or relationship described in the contract, balancing costs against risks and actively managing the Clients/Owners and the Contractors relationship. Contract management may also aim for continuous improvement in performance over the life of the contract. 

Investment Risk Factors in Foreign Oil and Gas Investment Projects.

the content of this page has been moved to 

http://www.masterprojectmanagement.org/investment-risk-factors-in-foreign-oil-and-gas-investment-projects/

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.