Risk Factors in Vietnam Power Plant Projects

In the past, risk management has been an important tool to control safety-related risks. However, we see the shift away from the traditional compliance and insurance-motivated risk management to one that is closely linked to business performance and long-term society commitment.

In order to minimize the interfaces and risks between the separated contractor and the project company during executing an oil and gas project, the oil and gas companies normally prefer to award and sign an EPC contract with the EPC contractor. However, this project delivery method will take a lot of time to make clarification, explanation and get the mutually agreement on the contract clauses between the contractor and the project company. The following problems are normally involved with the EPC contract clauses:

1. Take time to make the clarification and finalization before contract signing;

2. Wrong understanding and interpreting of stipulated clauses in the contract;

3. Conflict between contractor and the project company during project execution

An EPC contract is generally applied for developing the oil and gas 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, therefore, Nguyen Duc Thanh made a case study which aimed to focus on the following issues related to EPC contract:

1. To study the contract of EPC project and contractual risks

2. To study contractual problems occurring in a project.

3. To propose a recommendation for improvement

Conclusion

The research study summary and concern the risks we often meet when executing EPC oil and gas project in Vietnam. It also mentions and suggests effective solutions that can be performed to avoid or overcome the obstacles in contractor management.

The literature review sections introduce and cover the form, phases and activities for general EPC project. It is also listed advantages or disadvantages and challenges when we apply EPC model to manage project, especially managing Vietnam EPC project. The advantages under investor’s point of view of EPC contract model in respect of following:

1. Reduction in project management works for an investment owner;

2. Reduction in risks of difference between design and construction;

3. Costs for an EPC package are easier to estimate and control because it is lump sum contract.

This chapter has also raised reason which case EPC should be applied in Vietnam:

1, Project with multiple options of construction methods;

2. Projects in which whose design and equipment production cannot be separated

3. And in case a project has urgent progression.

In two case studies mentioned in previous chapter, through collecting related document and attending as one of duty to solve these problems, risk in Vietnam appeared in oil and gas projects normally come from what parties haven’t defined or stipulated in contracts. Moreover, maybe some contractor want to expand profit as well as possible, they change some conditions they can, except some case is compulsory for pushing project schedule.

According to studies and data statistic, client needs to play as interface when many contractors participate in project. It requests a professional team to monitor, assess and can hold point whole activity of contractors. Schedule is always updated and mobilization plan of employee and equipments must comply with master schedule.

Through the review of literature on EPC model and risk in EPC contract, it’s proposed that solutions of effective EPC risk management needed such as “the problems often appear in execution stage of project and we meet difficulty in avoiding them. However, we can ignore or minimize problem through understanding and clarify term, scope of work in contract. In additional, these problems that can be predict or determine happen in the next phases but can’t solve at this time, we need to stipulate them in contract about solutions to control, monitor or solve”.

In conclusion, for each of EPC project, risks accompany by them are not the same. The risks depend on whole EPC project such as: scope of work, material specifications, equipment style and requirements of client. Therefore, risks management application for the kinds of EPC projects will be different little or more. So, application should be considered via EPC project style.

Suggestion of further researchers

In order to fully understand the EPC risk management in Oil and Gas project, which can be applied in some kinds of project, especially international oil and gas project, further researchers can be suggested on the following fields:

1. Develop risk research in another phase of projects: design, construction, commissioning

2. Based on result of research, proposing solution to risk management.

Abstract

Oil and gas projects are established intensely to satisfy the energy demand on the world. In an EPC contracts help provide ‘turnkey ‘systems for companies. This is where a single point of contract is given which includes the design work, engineering procurement, installation works, commissioning, start up, supply chain materials, testing activities. Due to this single point of responsibility, almost all the risk is transferred from the owner to the contractor. In this contract, there are guaranteed completion dates, performance, clear division of obligations and liabilities. EPC projects which are also known as turnkey project service face many challenges to stay in the competitive within the industry business environment despite of the efforts made towards compressing activities by phase overlapping, in order to reduce time scale and to obtain better EPC projects. These project challenges lead to cost overrun and schedule delay. Understanding the function of EPC Project Risk Management is important to protect interest of both parties and to engage tools and techniques to allocate risks between the owners and contractors.

Most projects are bound to be affected risks such as construction risks, operational risks, financial and economic risks, legal risks etc. All these risks are interrelated and have a chain effect in overall start-up and commissioning. Common delays and cost overruns can have severe effects and causes as a primary effect on construction risks. Therefore it is important in a project when structuring EPC contract. EPC contract comes many new risks that are often severe due to the complex nature and high cost frequently associated with this type of project involved

By finding out and analyzing the problems happening in Nhon Trach power Project  and Ca Mau Project, through collecting data and assessing status of project in each phase, the research study aim to identify and analyze problems that often occurring as well as resolutions and try to suggest solutions which are effective to solve the problems.

Solutions to manage Risk in EPC project was developed as a result of the research case study which is helpful for Vietnam oil and gas projects wishing to overcome obstacles by avoiding or minimizing these risk. 

Delay in Planning, Design and Construction

In Vietnam the construction industry especially residential and complex building is now suffering many problems from design to operation. Some normal problems are:

1. Coordinate between Architect and Structural have many difference because they maybe    are another country but the project to be built at other country.

2. Difference communication from Architect and structure by the owner, maybe the condition of contract to be limited.

3. In during construction have many problems from project as lack permit of government of other board.

4. The method of construction from contractor is uncorrected with local building therefore accident will be happen. Example: When the designer provide method for excavation work but they study little big about geology, the result happen underground water to damage the diaphragm wall so the neighbor house to be subsidence.

5. The project be delay which reason the owner return payment to contractor is not on time following contract condition.

6. Disputation between project construction management group with main contractor or main-contractor with sub-contractor about claim, variation order, quality, delay of schedule, and coordinate with other contractor.

7. Taking over have a lot of difficult from contractor to project management group because the standard not clear or unable enter general standard.

8. When PCMG hand over the project to client but client have difficult about finance, on the other hand the client does not receive because some reason from the owner as service following the contract.

9. Problems during operation as warranty manager. Example when the owner pay all the claim but it included percent of warranty and then the project have problem they request contractor to come rework but contractor do not want to come in order to rework.

10. Resolve complain from client about service quality, the method manage project.

It is very important to understand the normal problems and to find the ways to solve all of them in order to be able to develop an effective planning management process, and also to take experience manager in project construction management.

Nguyen Hung Cuong made a case study aimed to:

1.  study delay in planning, design, construction.

2.  find out to solve at prevent problems in each stage.

3.  propose project life cycle strategy in how to develop residential complex.

Conclusions

The project life cycle will be successful in each phase if the project management must have a clear plan and resolve the problems earlier during construction phase in coordination with all the contractors. The project will be completed on time and it satisfies quality, safety and more pleasing to clients.

In order to solve the problems, proposed solutions based on theoretical and recommended practices including guidance from the PMI’s PMBOK guide, one of the world’s most prestigious guides to the project management, were presented. Besides, some useful tools were considered and suggested to use as the aids for the project managers to improve control management in the project.

However, this case has limited information, due to some companies’ confidentiality. Thus, the data gathered were from their staff, from the internet and during the actual construction.

The project delay usually involves the contractor, the owner, and the client. So, the PCMG have to resolve the cause of delay and control the taking over process to accomplish the project on time which brings profit to company.

       

Recommendations

In order to avoid project delay problems from concept design to project operation, The Manor phase II project made the following recommendations:

1. PCMG have to prepare permission together with concept design before constructing the project, and control the plan in such a good way. The plan monitoring is very important for project management. In this project case, the owner committed a mistake when they started the project without Government permission yet resulting to 1.5 years delay. The reason why the reason why the contractor and client lost a lot of profit.

2. With regard to the Owner, to estimate the project expenditure, the owner should have board that will double check it phase by phase. In this case, the owner did not estimate the cost of project.

3. The Project Construction Management Group should organize training in order for them to know how to use the process to accomplish project and contract condition.

4. Document controls for project is very important, all the site instruction should make the process for resolved and return it to contractor soon, with the process that all the scope of work will be completed on time.

5. In case of ISO certified company, Project Manager should give feedback to the company’s Quality Manager to add in personality test forms together with Job Application Assessment Procedures forms. That will save Project Manager’s time whenever there is new job applicant coming to job site for interviewing.

6. With contractors, PCMG have to request them to submit the schedule of delivery material to PCMG in order to double check it. Also schedule of project, PCMG can check and give the site instruction to contractor if they detect problems.

7. The contractors always make report of human resource to PCMG in order to inform that the manpower is enough for scope of work. They make sure that with this manpower project can be completed on time.

8. Relation division always have the plan to solve problems with the method soon to contractors, also project will be base on the site condition to work in order to complete the project on time.

9. The weekly meeting is very important for PCMG and also to the contractor. All problems have to be resolved in that meeting, and relation division have limited time to return the request for information to contractors.

10. Some reasons relating to project delay and about safety work on site, all contractor must provide policy of safety to PCMG, the safety policy monitoring everyday will reduce accidents. The project having zero accident mean safety policy is successful.

11. Finally, the taking over and claim of payment during construction are bigger problem between contractors and the Owner. Some project delays are sometimes due to this reason.

Abstract

The planning process in project life cycle is one case study in the Project Management Institute’s A guide to the Project Management Body of Knowledge. In the case study of Project management is established planning process in project lifecycle is very importance therefore this is really a tough challenge and time-consuming task to any project manager.

The drawing up the plan from concept design to operation project that it suggested management must have large line of vision also experience .The planning process will be evaluated clear that must link everything from the owner, design, contractor. This final project report focuses on construction project as lifecycle project needs who’s have responsibility to design planning process to be clear within knowledge. Though a case study of residential and complex project in Ho Chi Minh City, many problems that we can saw which cause project interruption will be investigate and analyzed. A lot of solutions be proposed which base on the knowledge will be discussed to help project management in order to improve skill in the project.

Owner’s Organization Project Management Maturity

The general problems that the construction owners are facing nowadays are:

1. The lack of the modern project management knowledge: what they have about construction project management almost is just the fragmentary knowledge collected from the requirements, instructions in government legal documents, from the short training cost, from working experience. Hence, the use of that knowledge is usually not effective.

2. The use of a project management system which just built on the concept just to meet the Government requirements: for many owners, especially the state owned organizations, their main consideration is just how to meet Government requirements. They have not paid enough attention of how to use the investment money in most effective and efficient ways.

3. The lack of a system of procedures and instructions for continuously measuring, evaluating the performance of project, project staff; collecting, storing lesson learned and making convenient access for project staff; and planning and implementing the improvements.

 

Le Quang Khanh made a case study aimed to:

1. assess the organization project management maturity of an stated owned enterprise on the role of project owner, analyze what it has and what it has not in comparison with the modern project management theory.

2. propose recommendations for project management improvement.

Conclusion

This study has demonstrated an intensive exploration into the current status of an owner construction project management system. Each management process has been described, assessed, analyzed basing on the definitions, requirements of modern project management processes established by PMI in PMBOK Guide (2008) and OPM3(2003).

The assessment has found that: although the assessed company applied nearly all processes of project management, the maturity level of these processes in the company are still rather low. Company is at the first steps of project management maturity ladders. Reference to OPM3 (PMI, 2003), the Company project management maturity level is at about the standardization stage. There are many process need to be standardized; many procedures, guidelines need to be established in order to help the company improve its project management maturity, develop the company competence.   

Following are some main problems of the company in project management system:

1. Many processes are not standardized: performed basing only on the experience, practice; there are no standard documented procedures, instructions/guidelines to conduct. Many useful tools and techniques are not applied during project management processes because of the lack of the modern project management knowledge in project staff.

2. The planning processes are not well implemented. There is no specific project management plan, project scope, or project quality plan for each project. The project control and execution activities of project team members are almost unplanned, basing on experience. 

3. There are no standards, procedures, no formal performance system to measure, evaluate the degree of success and failure of each process, phase or project, the performance of project team members. Therefore there is no steady foundation to plan for project management performance improvements.

4. There is a formal process for assessing, auditing the existing procedures, instructions and suggesting, implementing improvements (included in ISO9001 quality system). However, because of the limit of the staff knowledge and skill about the modern project management, there are not many effective improvements as expected.

5. There are no procedures or instructions about collecting information of the contractors/suppliers, the project issues, lessons learned…to keep in a convenient place (like project management office) for analyzing and using in future project management. Therefore, there is also no formal historical information and lessons learned knowledge databases system. All the project records, after the project completion, are kept in the store.

Recommendations for the assessed company and other state owned companies, in general, on the role of owner

 

There should be more training on modern construction project management for the company staff. The training content include (but are not limited to) the knowledge/skills of project management for individual, for organization; the experience in organizing and managing a project management organization, the existing effective systems of construction management procedures and instruction of international project management groups. The staff need to be trained are: the top management for having far more vision, more correct evaluation about the importance and effectiveness of building a standard project management system; the  middle management and the project  team member to be more effective in managing projects and composing the necessary procedures and instructions:

1. Company should pay more attention on the planning processes; make all the management plans before carry out management activities.

2. Company should improve the formal system of procedures and instructions to standardize all the project management processes in the company. The guidelines about the applied range of each process are also needed.  This help to keep the consistency of quality and increase the effectiveness of management processes;

3. Company should improve and increase the effectiveness of ISO9001 assessing and auditing processes by using the competent auditors who are professional in construction project management, training the project staff to be good and innovative self-auditors;

4. Company should establish and apply the formal standards, tools, guidelines for measuring, evaluating the success, failure of project goals in order to collect experience and lessons learned for future investments;

5. Company should build a small project management office/center where the project management staff can easily access to the historical information and lessons learned of all past projects; refer to the modern project management tools and techniques. And besides, Company should build the procedure, instruction for collecting, storing those data. These works will be very useful for the future project management of the project staff, especially the new comers.

 

Recommendations for further study

Further study needs to be carried out to have more comprehensive assessment of state owned project management organizations and give more detailed recommendations for competency development of this type of project management organization.

Abstract

Vietnam is the developing country which is booming economic and the new medium classification increasing rapidly. The movement of people from rural region to urban region is growing up every year. The population growing is 2% a year that is compressing of Housing Supply for social need. The entire above figure is good reason for real estate business in Vietnam. However in order to success in property business the Feasibility study stage is most important factor should be consideration.

The subject of this study is analysis the method & effectiveness of feasibility study in Apartment Project. Base on theory and actual project the problem statement occurring in FS will be identified such as: Incorrect assumption , misunderstand the Demand of Market, cost & revenue estimate is not match reality, time schedule planning is not practice, forecasting of cash flow is wrong, mistake in term of FS calculation technical, lack of information in term of information of land. According the literature review the object study is summarized as Framework of FS in Apartment Project. To study the application of the framework in project case. To find the problem in FS for Apartment Project. To proposal the solution base on theory.

With the real project Carina Plaza the analyze of the comparison between theory and the actual activity is show up the different and causing of it. The method of cost estimate is concentrate to study according the theory and project case. The revenue estimate is also access careful to ensure the catch flow management always is positive and project is archive.

The final report specifies the most important factor to impact the FS and a successful of project in medium apartment. The FS should be conducted by the people who are integrate knowledge such as: construction knowledge, financing, marketing, communication.  

Method and Effectiveness of Feasibility Study in Apartment Project

In the real estate investment business, decision making is very important which influence the success or failure of the project. One of the its significant stages is Feasibility Study stage.

Based on the characteristics of construction industry, which has high uncertainty, many risks occur during Project Feasibility Study. Therefore, this problem will influence to the decision making of the project and its profit. The main construction factors should have been anticipated and calculate into the feasibility analysis so that risk will not happen and

may become advantage for the investor.

Le Mien Thuy made a case study which objectives were summarized as follows:

1. Framework of FS in Apartment Project.

2. To study the application of the framework in project case

3. To find the problem in FS for Apartment Project

4. To proposal the solution base on theory.

This issue is more significant to some of these construction investors facing serious problems with budget control, as an effective budget control is critical for investing in large projects. Construction project management, which includes project Cost Estimation, is an area of weakness for those investors who want to expand or invest more in the international construction market.

Conclusions

The successful project is determined by Feasibility Study. This is one of the most important stages of project life cycle. There are some problem occurring in Feasibility Study and what we should do to prevent in future project are the following:

1. Incorrect assumption: The people conduct with good experience in construction industry.

2. Misunderstand the Demand of Market: To study carefully the market situation base on survey data of professional company.

3. Cost & revenue estimate is not match reality: To study the some similar project that successful before and collect good information from contractor.

4. Time schedule planning is not practice: To get the advisor of contractor and expert

5. Forecasting of cash flow is wrong: To break down detail a task base on general schedule and the selling program..

6. Mistake in term of FS calculation technical: Competency people should be in charge with the professional software. 

7. Lack of information in term of information of land: Good connection to authority.

8. Based on above study we can understand deeply a significant element which impacts the consequence of project.

The literature review also gives us the typical Feasibility study Framework for apartment project. It is comprised of 6 phases: Identify Conceptual, input data, estimate method application, method of evaluation, identify requirement, and identify benefit. In the initial step of FS framework, the preparation work is most important .This section conducts entire of data for FS processing to ensure the result is truth .In the processing step of FS framework, the method of estimate, evaluation demonstrate the feasible project. There are many tools to measure the benefit of project and specify the good decision –making in apartment investment.

The emphasize point in theory of FS is cost estimation method and cost estimation element. These method are Functional unit method, superficial method, element cost plan, approximate quantities techniques, and all of them can be implemented in real apartment project efficiently. The cost estimation elements describe the detail of some important figure such as: cost of land, cost of legal and professional fee in acquiring the land, construction cost, cost associated with facilities management, and cost of finance. Because Cost is the input data for FS processing, thus knowledge to understand it is critically studied in this report.

The case study of CARINA PLAZA is discussed based on the FS framework. The comparison between actual and theory demonstrate the investor to implement feasibility study framework relevant theory. With the actual project had just finished we can get experience relate to FS problem.

 

Recommendations

According the case study analysis, some problem occurring in feasibility study for apartment project was identified. In other hand, the cause is also revealed base on the comparison between actual and theory.

In order to improve the Feasibility Study of Apartment Project , the existing problem should be avoided such as increasing cost of land , high inflation , revenue changing , and fluctuation of material.

The method of cost estimation should be implemented properly and appropriately to ensure its accuracy as much as possible. Particularly the knowledge of construction industry is most important factor to implement result of project. Cash flow control is under-taken by people who have enough experience in construction work.

To get the information is concentrated highly to eliminate the risk in future stage. The revenue of project to be executed following the real market. Beside, the input data and the output data, the calculation technique should be carried out carefully and checking by many people involving to make-sure decision making is good.

The leader should support the team to carry out the FS by the information from other party such as: Marketing research, contactor, consultant, designing company and some expertise. Especially in Vietnam the Policy of Government is not stable that is why the good relationship with government is the most important point in feasibility study.

Conclusion, in order to achieve the feasibility study in apartment project the people conducting should be a integrated knowledge competence in term of construction industry, financing, marketing , politic, and selling.

         

Abstract

Vietnam is the developing country which is booming economic and the new medium classification increasing rapidly. The movement of people from rural region to urban region is grow up every year. The population growing is 2% a year that is compressing of Housing Supply for social need. The entire above figure is good reason for real estate business in Vietnam. However in order to success in property business the Feasibility study stage is most important factor should be consideration.

The subject of this study is analysis the method & effectiveness of feasibility study in Apartment Project. Base on theory and actual project the problem statement occurring in FS will be identified such as: Incorrect assumption , misunderstand the Demand of Market, cost & revenue estimate is not match reality, time schedule planning is not practice, forecasting of cash flow is wrong, mistake in term of FS calculation technical, lack of information in term of information of land. According the literature review the object study is summarized as Framework of FS in Apartment Project. To study the application of the framework in project case. To find the problem in FS for Apartment Project .To proposal the solution base on theory.

With the real project Carina Plaza the analyze of the comparison between theory and the actual activity is show up the different and causing of it. The method of cost estimate is concentrate to study according the theory and project case. The revenue estimate is also access careful to ensure the catch flow management always is positive and project is archive.

The final report specifies the most important factor to impact the FS and a successful of project in medium apartment. The FS should be conducted by the people who are integrate knowledge such as: construction knowledge, financing, marketing, communication.  

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.