Seminar: Strategic Infrastructure Development of South East Asia

PROJECT FINAL EXAMINATION

MPM HO CHI MINH CITY - INTAKE 2012

16th - 23th November 2013

MPM program successfully organized Project Final examination for MPM students at AITVN in Ho Chi Minh city, Ha Noi and Can Tho city from 16-23 Nov 2013. Committee members were Dr. Hadikusumo, Dr. Chotchai, Dr. Santi and Dr. Santoso.

Students who have passed this exam and fulfilled all graduation requirements will attend the Graduation ceremony at AIT Thailand on 17 December 2013.

 

Final report presentation in Ho Chi Minh city

Final report presentation in Ha Noi

Final report presentation in Ha Noi

Owner’s Project Life Cycle Approach

In recent years, VRC has invested big amount capital for expanding rubber plantations and upgrading rubber processing facilities both domestic and outside the country. VRC has been carrying many rubber plantation projects in Cambodia, Laos and has been negotiating with Myanmar government. For VRC, the concept and practice of owner’s project life cycle have been used in rubber plantation projects. Nevertheless, VRC has not built a type of project life cycle appropriating with its specific characteristics; therefore, some projects meet with serious difficulties during performance. Although Cambodia projects are now just in middle of project life cycle but many problems happened like the costs balloon out of control, the scope expands beyond reason, the project slips behind schedule, and the deliverables do not possess expected value in Cambodia projects.

According to internal audit and the report of situation of the project management in construction of VRC in the period of 2007-2010, it shows many problems happening with VRC’s oversea rubber projects, especially cost and schedule. The problems, according to reports that VRC’s projects encounter as follows:

-          Cost overrunning or over budget;

-          Projects are prone to delay;

-          Project quality uncontrolled;

-          Project scope creep.

Also according to this report, VRC recognize the bad results in Cambodia are created by many reasons; however, poor management of the project life cycle is one of the reasons brings about serious consequences including the followings:

-          No establishing a framework of project life cycle;

-          Project proposals and business cases and project selecting process in the first phase were carried out incautiously have impacted to all remain phases of the project life cycle;

-          Some projects do not have a strong project management team;

-   Inadequate delegation from VRC’s head quarter and the project organization is not properly;

-          Lack of managerial skills and competencies as well as the internal capacities of the owner

VRC consider that the result of poor management of the project life cycle is one of the causes impact to the projects negatively. They are the critical problems which VRC and other related parties to Cambodia projects need to consider cautiously.

Do Huu Phuoc made a case study to study Vietnam Rubber Company’s project life cycle approach, analyze situation and develop a framework of project life cycle of a rubber plantation project and guideline to possibly ensure the projects deliver on time, on budget and to the level of quality expected.

Conclusion for VRC’s project life cycle approach

There is no single best approach in organizing project management throughout a project's life cycle. All organizational approaches have advantages and disadvantages, depending on the knowledge of the owner in project management as well as the type, size and location of the project. It is important for VRC to be aware of the approach which is most appropriate and beneficial for a particular project. In making choices, VRC should be concerned with the life cycle costs of planted rubber trees, constructed facilities rather than simply the initial costs.

Saving small amounts of money during construction may not be worthwhile if the result is much larger operating costs or not meeting the functional requirements for the new facility satisfactorily or the objective is not align with the scope. Thus, generally a project or particularly a rubber plantation project wants to finish successfully it must be very concerned all the phase of the project life cycle.

Recommendations

With so many ongoing projects like situation at present, VRC may encounter difficult for all projects to get adequate support, or even the attention of top managements. The particularly common problems when trying to manage multiple projects concurrently may be:

a.    There is no time for summary experience lessons so the mistakes from a project can repeat to all projects.

b.   Delays in one project may drag other projects delay because of common resource needs or technological dependencies;

c.  The inefficient use of corporate resources results in hills and valleys of resource utilization;

d.   There are unwholesome competitions between project teams to get support, or the attention of top managements;

VRC should consider a temporary stopping with the current projects to review all the problems happening. The lessons learn from projects should be analyzed, critiqued and documented for later use by the future projects and any other projects will be performed by VRC in Cambodia or other countries in the future. 

This study has concentrated on owner’s approach in managing project life cycle to an agriculture project. However, there are many aspects relating to the project management. Further studies should be carried out to find out the approach of owner for agriculture project management.

Abstract

 Project life cycle is an approach that links the phases, which can lead to significant results required for completing a project. As the owner has the most authority in enforcing the implementation of constructability, the owners' awareness of the benefit of the project life cycle is the most important. Project owners must be aware that the decisions that are made in the stages of projects are difficult and costly to change once construction begins.

Owners should recognize that there is no single best approach in organizing project management throughout a project's life cycle. All organizational approaches have advantages and disadvantages, depending on the knowledge of the owner in project management as well as the type, size and location of the project. It is important for the owner to be aware of the approach which is most appropriate and beneficial for a particular project. In making choices, owners should be concerned with the life cycle costs of constructed facilities rather than simply the initial construction costs. Saving small amounts of money during construction may not be worthwhile if the result is much larger operating costs or not meeting the functional requirements for the new facility satisfactorily.

However, the traditional approach to project life cycle limits their option for involving in the phases of the project. The general lifecycle model that an organization use will probably be similar to one that has been used dozens or hundreds of times at other organizations. There is no reason to reinvent everything for your own project. It just takes longer and contains more inherent risk. The better approach is to utilize a standard set of lifecycle processes, techniques and templates which to be used in the same industry.  

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.