Corporate Social Responsibility In Vietnamese Construction Industry

Corporate social responsibility (CSR) is a new concept for Vietnamese businesses in general and for construction firms in particular. It has become more familiar in recent years especially after Vietnam has enacted and implemented its “Doi moi” (renovation) policy since 1986 and has been gaining more and more significant economic goals. According to Post et al (2002), “CSR challenges businesses to be accountable for the consequence of their actions affecting the firm’s stakeholders while they pursue traditional economic goals.

The general public expects business to be socially responsible, and many companies have responded by making social goals a part of their overall business operations”. There are a lot of studies on CSR of businesses in general and other industries but there are few studies concentrating particularly on CSR in construction industry. Since Vietnam’s concept on CSR is not yet established, Mr. Tran Huong Quang made a study on “Corporate Social Responsibility in Vietnamese Construction Industry”. The main objective of his study is to understand the current status, attitudes and the awareness toward CSR in Vietnamese construction companies through their principles of conduct and evaluating the CSR performance.

His specific objectives are: (1) to understand the attitudes and the awareness of CSR in Vietnamese construction companies; (2) to explore the current status and performance of CSR in construction companies; (3) to find out the influence of other relevant factors to CSR performance in construction companies; and (4) to propose recommendations for CSR performance improvement.

His conclusions based on the result of his study are:
1. Attitude and awareness toward CSR - generally, Vietnamese construction managers have positive attitude toward CSR and good interest in CSR concept. A considerable percentage of managers understand CSR well and can recognize the benefit of CSR while some have bias perception.

2. CSR performance - most organizations have above average CSR performance score which generally come from certain “good characteristic” or objective advantages of construction industry rather than organization’s own efforts.

3. Influence of factors - CSR requires a bunch of indicators to be examined and controlled simultaneously which becomes a burden for every construction companies especially small and medium sized. The research shows that in public companies, there are some CSR indicators with good performance. “Sheer” public companies and similar still play important roles in Vietnamese economy, public equity exist strongly in those companies and the government somehow participates in decision making in those companies. This power is a good advantage for Vietnamese government to initiate many CSR promotion programs.

His thesis abstract is copied and posted.

Abstract

During recent years, Vietnam, a developing country, is one of the most rapidly developing economies of the world. Among its objectives, sustainable development is essential. Together with attaining some Millennium Development Goals such as reducing poverty, faster growth, improving quality of education, gender equality…, Vietnam has been delivering more and more effort for its sustainable development.

Today’s heightened interest in the role of businesses in society has been promoted by increased sensitivity to and awareness of environmental and ethical issues. Issues like environmental damage, improper treatment of workers, and faulty production that inconveniences or endangers customers are highlighted in the media. Corporate social responsibility (CSR) is closely linked with the principles of Sustainable Development and the wider aim of CSR is to create higher and higher standards of living while preserving the profitability of the corporation.

The Construction industry is a large and diverse component of any economy. Its positive contributions for the social through many deliverables are undeniable. But there are still inadequacies inside the industry which has been criticized by lots of researchers. The author would like to conduct a research based on a case study and a survey to assess the attitudes and the awareness toward CSR in Vietnamese construction companies through their principles of conduct and evaluating the CSR performance. By the way, the author would like to discuss about some suggestion for CSR performance improvement and devote his effort in a hope that it may give a small contribution for enhancing CSR among construction companies in his beloved country.

Conflict Dynamics in Dam Construction Projects: A Case Study of Middle Marsyangdi Hydroelectric Project, Nepal

In any construction projects, conflicts exist. The bigger the projects are, the more it face many disagreements. Dam construction project involve multidisciplinary teams and interdisciplinary activities. The limited time and physical resources has added the another complexity to the construction process. Different stakeholders have different objectives, perception and priorities. The difference in attitudes often creates conflict (Awakul and Ogunlana, 2002a) and as a result of which most of the projects are set aside at the planning stage whereas others are subject to conflicts during the execution stage causing enormous time and cost overruns.

Mr. Braj Kishor Mahato made a case study on Conflict Dynamics in Dam Construction Projects in Middle Marsyangdi Hydroelectric Project in Nepal which aimed to develop a model for comprehensive and integrated approach of conflict management to manage the conflicts effectively, efficiently and equitably early in a project’s life using system dynamic modeling technique.

His study’s overall objective is to thoroughly understand and develop a simulation model for comprehensive, integrated and proactive approach of conflict management in dam construction project. The model will be helpful for project manager to assess and take proactive measures to manage the conflicts effectively, efficiently and equitably early in a project’s life. However, his study’s three specific objectives are to (1) identify and explore pertinent conflict factors in dam construction projects; (2) develop a model to understand the dynamics of conflict in dam construction project using system dynamics modeling technique; and (3) use the model to derive viable policies for minimization of conflict at construction stage in dam construction projects.
His major conclusions made in this study are as follows:

1. Most interesting fact found from model simulation is intensive public hearing prior to final decision at earlier stage surges conflict forward and minimize overall conflict at later stage.

2. Discloser of project related data to project stakeholder is not only surging conflict forward but also reducing it at construction stage.

3. Intensive public participation at early stage of project will decrease over all interface conflict in project. Public participation and consultation at early stage of project guarantying access to all stakeholders including disclosure of all data, both positive and negative, for public knowledge will reduce the anxiety of local people about the project and establish transparency beyond suspicion which will reduce confrontation at later stage.

4. It may be concluded from the simulation that discrepancy in compensation payment, resettlement and support programs can be minimized by effectively involving project-affected people in formulation and implementation of compensation, resettlement and support program

5. Proper implementation of programs related with resettlement of project affected people (project employment, compensation payment, support programs) will reduce interface conflict at later stage of project.

6. Increasing monitoring and reporting surge interface conflict slightly forward which will give opportunity to project team to take proactive action.

His thesis abstract is copied and posted.

ABSTRACT

Interface conflict is identified as one of the major problem in dam construction projects. Differences in attitude and interest often create conflict as a result of which many projects are set aside at planning stage whereas others are subject to conflict during execution stage. Conflict in execution stage causes prolonged delay, enormous cost overrun and at worst abandon of project. Proper management of conflict can determine success or failure of a project. Thus it is crucial to identify the root-causes of interface conflict in present and past project to avoid such problems in future. Qualitative data gathered from the case studies, interviews conducted in Nepal and an intensive literature review has helped to develop a system dynamic model to explore and examine full context of interface conflict theoretically and practically in dam construction project. Reference mode approach was used in modeling based on literature and expert views on the typical evolution of key indicators of interface conflict. This study discusses factors that influence development of interface conflict in dam construction project in Nepalese context.

This study reveals that interface conflict at construction stage of project is caused by lack of effective public hearing prior to making final decision, public participation and information disclosure at early stage of project, insufficient education and training program, discrepancy in compensation payment, resettlement and support programs. Public involvement and mutual consultation considering guaranteed access to all stakeholders, public hearing prior to final decision will increase the public acceptance of the project. It will be easier to reach on agreement on conflicting issues when the stakeholders are well informed and empowered. Disclosure of accurate and timely information for public knowledge will reduce the anxiety of local people about the project and establish transparency beyond suspicion.

Discrepancy in compensation payment, resettlement and support programs can be minimized by (i) effectively involving project-affected people in formulation and implementation of compensation and resettlement program (ii) formulating comprehensive and inclusive national policy to resettlement issues in dam construction project. Education, training and support programs to the project-affected people will provide opportunity to restore their livelihood and create positive perception of community about dam project. Study also identified that monitoring and reporting will allow for identifying success stories to be replicated and avoiding the failure, which will ultimately decrease the negative perception of community about dam project. This will reduce interface conflict in future dam construction project.

Safety Rules And Procedures Development And Implementation: A Study On Construction Industries In Thailand

The construction industry is known for its poor safety performance when compared with other industries. According to Mohamed (1999), construction accident contribute to many human tragedies, de-motivate workers, disrupt site activities, delay project progress and negatively affect the overall cost, productivity or even the industry’s reputation.

Many researchers made a lot of studies to find ways in having a concrete safety measures to be applied in the construction firm to minimize these related accidents.

Mr. Andreas Adihartanto made a case study on the “Safety Rules and Procedures Development and Implementation” that Thai Construction firms are now applying. The main objective of his study is to investigate effective ways to manage safety rules and procedures when they have to deal with several types of violations. However, to attain the main objective, several sub-objectives were also proposed in his research to (1) investigate the prevalent safety rules and procedures practices in the construction industry in Thailand; (2) explore the relationship between organizational culture attribute and safety rules and procedures development and implementation; (3) examine the relationship between safety rules and procedures development, implementation and type of worker’s violations; (4) explore the relationship between leadership styles and types of safety rules and procedures violations; and (5) As an initial research to investigate the possibility of the “Peltzman Effect” occurrence in construction safety.

Mr. Adihartanto’s conclusions:

SRP’s practices in the construction industry in Thailand

He found out that there were no significant differences between medium-sized and large-sized construction projects in the way they develop and implement SRPs. Most of the SRP’s development variables were scored as high which indicated that contractor companies in Thailand typically take into accounts all of these variables when they develop their SRPs. However, during the implementation, they do not prefer to provide SRPs in form of writing documents (safety cards, manuals, etc.) to all of the workers, including translating written SRPs to the workers’ native language. Further analysis revealed a predisposition that management exploits these variables merely as of value to protect their back from the workers’ excuses. Regarding the translation of written SRPs, most respondents preferred to utilize interpreters to communicate their safety messages into the workgroups in which commonly they are the head of the groups. Therefore, it can be concluded that workers’ type of violations were occurred in similarity, in which they were ranging from erroneous to routine violations.

Organizational culture and SRP’s development and implementation

His analysis result indicated that neither of the clan nor the hierarchical culture attributes is more superior and effective in the development and implementation of SRPs. Each of these attributes has both positives and negatives. It is suggested therefore, that it is much more important for the management to understand the strengths as well as the weaknesses of particular attributes in their relation to the SRP’s development and implementation in order to make necessary adjustment for their organizational effectiveness.

Safety rules and procedures which were known to be complicated or confusing were adjusted, and it is more likely that they willing to put operatives’ suggestions into the rules development. However, in this kind of organizations, drawbacks are resulted from the management deficiencies in supporting their site operation as apparently, the availability of the SRP’s documents to the workforces and maintenance of safety visual signs were insufficient. Therefore, the decisions are skewed more on the management’s side.

SRP’s development and implementation with the type of worker’s violations

The result came with some SRP’s development and implementation variables that could potentially reduce particular type of violations. Therefore, it should be pointed out that mismanaging some of these variables could potentially promote violations. Although the rest of the variables were not found in contributing to the reduction of any type of violations, it is still suggested that management takes these variables into their Hierarchical Attributes Negatives Positives Operation, technical support deficiency Open-systems approach Bureaucratic approachOrdered, well-arranged Procedural rigidity, over reliance Output maximization, torientedClan Attributes Towards FlexiTowards Centra consideration when developing and implementing their SRPs. Table 5.3 and 5.4 below summarizes the analysis result analysis in which they portrayed the potential of each SRP’s development and implementation variable to reduce particular type of violations.

Leadership styles and type of worker’s violations

The result signifies the need for the Safety Officers to carefully understand the impact of their leadership behaviors. It is suggested that emphasize should have been taken to minimize the negative effect of the leadership styles rather than to reduce them. Based from the observations on-site combined with the analyses results, the researcher postulated that the problem largely relies on the workers’ perception. Thus, safety trainings were suggested to address this problem, particularly to take bigger portion in correcting workers’ perception.

5. The Peltzman Effect

In terms of workers’ activeness in safety programs participation, this study did not identify the presence of Peltzman Effect. However, further studies are suggested to investigate this phenomenon from different angle.

His thesis abstract is copied and posted.

ABSTRACT

This study was carried out to identify problems associated with the development and implementation of safety rules and procedures (SRPs) to ensure worker’s compliance and to give an insight of effective solutions to overcome these problems. The discussions were broadened to identify the influence of organizational culture to the SRP’s development and implementation, the potential of leadership styles in handling particular type of violations and the possibility of the Peltzman Effect occurrence in the construction industry.

The result revealed that several SRP’s development and implementation variables have a great potential in reducing particular type of violations. Therefore, management should be aware that mismanaging these variables could potentially promote violations. In general, the finding suggested that SRP’s should be: (i) developed following project risks assessment, (ii) designed so that it will not over restricted individuals working efficiency, and (iii) designed considering operational difficulties. As well, during the implementation, SRP’s should be: (a) available to all of the workforces, (b) implemented alongside with varieties of safety trainings, and (c) enforced by providing wide ranging of PPE or any other resources necessary to do the job safely.

Furthermore, the findings also suggested the need for the management to understand the strengths as well as the weaknesses of the particular organizational culture attributes in their relation to the SRP’s development and implementation in order to make necessary adjustments for their organizational effectiveness. It is also suggested the need for the Safety Officers to carefully understanding the impact of their leadership behaviors. At last, in terms of worker’s activeness in safety programs participation, this study did not identify the presence of the Peltzman Effect.

Framework Implementation Of Reduce, Reuse, Recycle, And Residual Management For Thai Building Construction Industry

In 1972, the first conference in sustainable development was held at Stockholm, Sweden. Since then, several countries all over the world have put a great emphasis on this issue and have accepted it as the major concern in a mainstream. A number of conferences and summits have been organized in order to ensure that the world has met the requirement of sustainable contents. Many countries have signed an agreement to accept the agenda in processing the implementation of sustainable development concept across all industries, especially in construction industry. Consequently, “sustainable construction” is the term commonly used in representing sustainability in construction industry.

In term of sustainable construction, material waste is one of key issues (DIT, 2000). The waste has a directly crucial impact on environment. The obvious effect of which which can be easily observed is the rapid achievement of landfill site. A number of studies tried to find out the causes of the construction material waste and the approaches to minimize the waste. Since the waste minimization and management are the important issues toward the sustainable construction, Mr. Pakawat Pormmoon made a case study concerning the systematic formulation of framework through 4Rs (reduce, reuse, recycling, and residual management) waste management strategy for managing the construction material waste on sites. This framework is hoped to enable the construction companies to deal with the construction material waste.

Mr. Pormmoon’s research objective is to develop the 4Rs framework implementation for the construction industry. In order to achieve this main objective, the three
key objectives were also set to (1) investigate the existing activities relating to the concept of reduce, reuse, recycle, and residual management in Thai building construction industry; (2) test the validation of collected 4Rs-relevant activities; (3) develop the framework implementation following to 4Rs concept.

The result of his case study based from the interview revealed that ten general issues can be implemented through 4R’s concept. These issues include (1) environmental policy; (2) nearly Just-in-time delivery; (3) waste management plan; (4) use of long-life construction material; (5) standardization of design; (6) design and build scheme; (7) project quality plan; (8) off-site prefabrication; (9) supply chain alliances with suppliers and recycling companies; and (10)“Take-back” scheme.

However, upon detailed implementation of each “R” in 4Rs, many activities have been arisen. These activities were categorized as (a) improvement of material ordering and supplying; (b) changes of material selection; (c) improvement of site material management; (d) increase of work controlling; (e) defining of alternative options for reuse and recycle; (f) provision of sorting methods and container, area, or infrastructure for collection of by-product; and (g) setting of policies according to the relevance law and regulation; Residual Collection and Residual Disposal

Another finding of his study validated that 4Rs have many relevant activities such as:

1) General Issues
a. To set up environmental policy in order to contribute the implementation of 4Rs (reduce, reuse, recycle, and residual management) principle in practices

b. To apply ‘nearly Just-in-time’ delivery principle in order to reduce and alleviate the congestion of material movement on site
c. To encourage the use of Design and Build scheme to deliver project in order to utilize use of value engineering concept

d. To enhance the use of standardization of design in term of modular system to improve buildability and reduce the quantity of off-cuts on site

e. To increase the use of off-site prefabrication to control loss, waste, and damage, thus, the off-cut can be reduced

f. To enhance the use of long-life construction materials such as steel, standard wood, and others to construct building components; therefore those structures can longer be used

g. To develop Project Quality Plan for managing construction materials on site

h. To develop Waste Management Plan for managing waste on site

2) Reduce at management level
a. Improvement of material ordering and supplying
b. Changes of material selection
c. Improvement of site material management
d. Increase of work controlling

3) Reduce at operational level

4) Reuse and recycle at management level
a. Defining of alternative options for reuse and recycle
b. Provision of sorting and collecting methods, container, area, or infrastructure for collection of by-product

5) Reuse and recycle at operational level

6) Residual management at management level - Setting of policies according to the relevance law and regulation

7) Residual management at operational level

His study’s last finding is that application of each 4Rs-relevant on sites and its implementation can be done at both site management and operational level as implemented by Bovis Lend Lease (Thailand) Limited. It yields a better work execution than other companies at site management level.

His thesis abstract is copied and posted.

ABSTRACT

The problems regarding to sustainable construction are that the most of construction materials are considered to be low efficiently used. The less efficient use of construction materials will not be a problem if the natural resources are limitless, but in fact it is not. In addition, the construction firms need to be reminded that waste make financial cost both direct cost and indirect cost are significant. Many researches have tried to apply the 3Rs (Reduce, reuse, and recycle) waste strategy for managing waste on construction sites. Consequently, this study has tried to apply the concept of 4Rs, reduce, reuse, recycle, residual management concept in Thai building construction industry. To apply 4Rs, reduce, reuse, recycle, residual management concept in Thai construction industry is the main purpose of this thesis.

In order to correlate the main and the sub-objectives of this study, research methodology has been split into three main steps. The first step is to investigate existing 4Rs-relevant activities. The result is that the related activities following 4Rs concept. These activities would be utilized in the next step, gathering the significance and applicability of collected 4Rs-relevant activities. The second step, some activities have been removed. There are six experts utilized in the second step. The last step is to measure the application of each 4Rs activity on sites at both management and operational level. The data in last step were
collected from both Bovis Lend Lease (Thailand) Limited and other companies within Thai building construction industry.

The results were found that validated eight general issues can be implemented through the 4R’s concept. Moreover, there are eight groups of work which 4Rs concepts can be implemented through that are improvement of material ordering and supplying, changes of material selection, improvement of site material management, increase of work controlling, defining of alternative options for reuse and recycle, provision of sorting methods and container, area, or infrastructure for collection of by-product, and setting of policies according to the relevance law and regulation.

Total Quality Management In Property Development Projects In Vietnam

Despite of a half-year difficulty, Vietnam real estate market is now considered a long term potential market as foreign investors are keen on developing more projects. From the picture of real estate development in 2008, it showed that all trading in this sector are almost frozen, together with the increasing of interest from the banks and material prices, domestic investors are put in troubles. Meanwhile, foreign capital from the outside investors is continuously put in Vietnam’s real estate market with an impetuous speed.

Many foreign developers are still looking for opportunities to penetrate Vietnam's realty market, and many companies are now interested in HCM City's outskirts such as Thu Thiem and Cu Chi District. Developers are also keen-on complexes of apartments, offices and commercial centers, resorts, industrial parks and residential areas. These segments' supply and demand are not well matched. Consequently, if having visibility strategy such as focusing on target customer, paying attention on marketing and having ability to bring out a high quality product, then chance of success is a seeable thing.

According to Goetsch (2002) “Total Quality Management (TQM) is an approach to doing business that maximizes the competitiveness of an organization through continuous improvement of its products, services, people processes, and environment”. Kotler, 1999 noted that the foundation of TQM is satisfaction renders by products or services and products (or services) are nothing offered to a market for attention, acquisition, use or consumption that satisfy a want or need.

TQM is not a new concept in the manufacturing sector. However, it does not mean that management system which have worked well in the manufacturing sector can be directly well-applied to construction. This is due to the nature differences between the two sectors. Construction industry has its own unique feature while manufacturing calls for repeat processes with products primarily put out in large batches. On the other hand, construction work is undertaken in the main single batch or projects. Although many of the basic processes are repeated from job to job (e.g. concreting and plastering), the specifics of application are always changing (Low & Peh, 1996).

In construction industry, where customers’ requirements are increasingly complex and expectations are uncertain, the application of such tools becomes difficult. Vietnam’s Property market is now considered a complex and “hot” environment for investors. Hence, application of TQM will be a competitive advantage (Low & Peh, 1996). If TQM can be implemented into property development field in a right way, it can help to improve the quality as well as the productivity of the project. It is a need to identify suitable TQM factors that are applicable to these projects in order to take the best efficiency of implementation.

Ms. Nguyen Viet Nhan made a case study that focused on the property developing projects in Ho Chi Minh City to (1) find out TQM factors that are applicable to property developing projects; (2) find out the perception and practices of TQM in Vietnam property development; and (3) develop TQM framework that is applicable in Vietnam property development.

The results of her study clearly indicated that Leadership and commitment by top management is the most critical factor for the successful implementation of TQM in Vietnam property development organizations. Once it is known exactly where the organization is, the manager can take steps to improve the overall effectiveness of quality management system. This study also found out that the first five critical problems of TQM implementation are (1) Customer focus; (2) Relationship with supplier, contractor and subcontractor; (3) Leadership and commitment of top management; (4) Employee involvement and commitment; and (5) Education and training. These five priority factors should be given more attention in order to achieve a satisfactory level.
Her thesis abstract is copied and posted.

ABSTRACT
This study investigates the factors affecting successful implementation of TQM in property developments projects. The primary objectives of this study illustrate the development of TQM, introduce the common TQM model and evaluate the items in property development management's TQM model that are believed to be most successfully and most unsuccessfully implemented. In the later part of the study proposes a new TQM model that is applicable in Vietnam market. The result finding is expected to be powerful information for future research directions especially as an indicator for the development of a suitable TQM framework for the property development projects in Vietnam.

The survey was carried in Ho Chi Minh City and the suburban provinces of Ho Chi Minh City. 145 samples from medium-large scale projects were selected for the analysis. All respondent‟s results were analyzed using SPSS version 15.0. Theory using in this survey is grounded from literature review and expert‟s experience. There are twelve factors which affect successful TQM implementation were identified from the survey. The findings indicated that the most important element in TQM framework is Commitment and Leadership by Top Management. The others critical dimensions of TQM are Employee Involvement and Commitment, Education & Training, Communication to improve quality, Policy, System & Process, Customer focus, Relationship with supplier, contractor and subcontractor, Quality Audit & Evaluation, Improve jobsite quality, Work environment & Culture, Team working for, Continuous improvement, and Resource management. The findings also indicated that there was a difference on TQM perception between project manager and site engineer in some dimension of TQM. These are Customer focus, Quality Audit and evaluation, and Relationship with supplier, contractor and subcontractor. A gap the analysis was carried to examine the importance and actual status of these TQM factors. The results indicated that there are a big gap between actual practice and perception. The top five factors that have largest gaps were Customer focus, Relationship with supplier, contractor and subcontractor, Leadership and commitment of top management, Employee involvement and commitment, Education and training. Improving the satisfactory levels of these factors may lead to a successful TQM implementation. Finally, a framework for implementing TQM is recommended.

Improvement Of The Budgeting System For Transportation Projects By Enhancing Road Transportation Technical Knowledge

Transportation infrastructure is one of the most important categories of infrastructure. It is fundamental in movement of people and goods. According to Andrichak (2005), transportation infrastructure is the durable capital of the city that fixed in the location. It was defined as a long-term asset on investment site. For development side, transportation was defined as the one of the tools which influences two sides of country development. First side, transportation investment effects community development, comprises of social, political and natural, and another side is economic development (Mourmouris, 2005).

In Thailand, ADB (2008) emphasized that the proposed megaprojects program is required to sustain long-term growth of economy. The amount of expenditure in transportation sector is 7.8 billion dollars which is considered to be the third of government allocation in megaproject investment plan. The Bureau of the Budget plays a crucial role in all responsibilities concerned with budgeting such as budget management, budget analysis for budget allocation, monitoring and evaluating the performance of government ministries and agencies. This bureau is also responsible to prepare an annual government statement of expenditure.

For budgeting system, budget is always considered for two main sides which are revenue side and expenditure side. Budgeting is as a document which forecasts and authorizes the annual governmental revenue and expenditure of the state (Storum, 1917). On the expenditure side of the budget, government allocates budgets to project following functional classification of expenditure, such as health care, education and transportation project (World Bank, 2008). The thing is the bigger size of project means bigger amount of budget investing in project. The key important factor is expenditure prioritization. Therefore, principle to considering project is very important for budgeting officers in order to prioritize which project should be allocated budget in.
Ms. Korakade Thamphongsri made a case study to tackle the three main issues such as: (1) inadequate budgeting knowledge using for project prioritization and budget allocation; (2) unclear criteria for project prioritization and selection; and (3) lacking of understanding technical knowledge of transportation project using for project consideration.

The objectives of her study is to (1) investigate current practices and perceptions of governmental budgeting officers from Bureau of the Budget and Ministry of Transportation regarding budgeting system; (2) develop physical model of road transportation components for applying in budget consideration; and (3) propose recommendation for improving budget allocation of road transportation project by applying utilities of developed model.

She concluded that road transportation project is a basic infrastructure which is necessary for the society and needs huge amount of budget for investment. Therefore, bureaucrats who are responsible for budgeting department play crucial role in this task – project consideration and budgeting allocation. Although there is budgeting system used for managing budget, it still has problem in lacking of knowledge of budgeting officers to budget management.

The purpose of studying perception of budgeting officers regarding problem influencing budgeting system is to: 1) investigate current practices and perceptions of governmental budgeting officers from Bureau of the Budget and Ministry of Transportation regarding budgeting system, 2) develop physical model of road transportation components and 3) propose recommendation for improving budget allocation of road transportation project by applying utilities of developed model.

Current Practice of Budgeting System

From investigating current practice of budgeting system, it was found that there are different perceptions between budgeting officers from budgeting level and operational level. Below are crucial points that show different of perceptions to budgeting instrument of budgeting system.

1. Project management: Perception of budgeting officers at budgeting level with problem influencing implementation of budgeting system highly tend to be the problem in part of project management. The reason is problems are mostly related to unreadiness of project operation which mostly comes from planning phase of project. Another problem is related to lacking of important information of project such as project feasibility study which is the main data that budgeting officers use to consider and make decision for budget allocation.

2. Output costing: Perception of operational officers with problem influencing implementation of budgeting system highly tend to be the problem in part of output costing. Almost problems are related with financial recording system from central office which its function is not flexible to be integrated with existing system of operational department. It would make recording cost of activity at operational level difficult which affects to budget record at budgeting level as well. Another problem is activities distribution without considering of central officers before distributing which can lead to unnecessary budget allocation.

3. Output structure: From result, both levels of budgeting officers have good practice in output structure. The thing is that both budgeting officers at budgeting level and operational level familiar in using this budgeting instrument for breaking down output of project from time to time. Therefore, both levels of budgeting officers do not have problem with implementing output structure.

4. Alignment between strategies, objective, strategic plan, and output with the budget: Operational officers mostly have practice problem with this instrument more than budgeting officers. Problem with key performance indicator (KPI) is a main problem for Operational officer. Performance indicator has bigger scale of measurement than actual work. The thing is bigger scale of performance indicators would lead more budgets to project. Therefore, indicator should be indicated with appropriate consideration.

5. Medium Term Expenditure Framework (MTEF): Budgeting officers at budgeting level mostly have practice problem with this instrument more than operational officers. The important practice problem for budgeting officers is a lack of success evaluation of megaproject for MTEF budget ceiling. This problem would affect budgeting allocation. Because megaproject needs large amount of budget, success evaluation of previous megaproject would be useful for considering in order allocating budget to coming megaproject.

6. Performance Assessment Rating Tool (PART): Budgeting officers at budgeting level have practice problem in implementing PART at operational level which operational officers do not emphasize PART evaluation on working performance. A lack of emphasizing PART evaluation would affect to decision making on budget allocating for the next project of department. For operational officers, they have practice problem in inflexible PART system for using operational level because evaluation system is belonging to assessment division in practical.

Problem Ranking

From part of analysis, there are problem ranking of both budgeting officers from Bureau of the Budget and from Ministry of Transportation. For officers at Bureau of the Budget - budgeting level, the first three problems, which are the most importance to influencing budgeting system, are problems in part of project management. These are problems in the first three ranks.

1st rank : Most projects are prioritized by the individual policies of high level management rather than by the readiness of project operation. (Project Management)
2nd rank : There is a lack of important information related to the project, the act of which can hinder effective project prioritization. (Project Management)
2nd rank : A project cannot achieve its target that has been planned because of project delay due to the fact that the project is not ready to be launched and there are on-side obstacles. (Project Management)

For perception of budgeting officers from Ministry of Transportation, first three rank include two problems are in output costing and one problem are in part of big picture of budgeting system.

1st rank : The financial record of the government, GFMIS, used by government divisions at budget management and operational level is not flexible to be integrated in output costing system. (Output Costing)
2nd rank : Officers at the operational level only focus on achieving task-objectives, but lack consideration for the monitoring and evaluation. (Big picture of budgeting system)
3rd rank : Central officers distribute activities and budget to provincial officers even though such activities can be done for the whole country at the central level. (Output Costing)

Model Development

In order to achieve objective two, physical model of road transportation components has been develop. The purposes of model development are:

1. To make budgeting officers more clear perception about physical components of road transportation.

2. Help budgeting officers to be more understanding technical terms of road transportation project and it will be useful for budgeting officers in project consideration process.

3. To make use of relationship between factors for better considering proposed physical output of road transportation project.

4. To be used as an instrument for budgeting officers in order to consider project budget requests from operational officers by using physical output to clarify output costing of project.

5. To improve budget allocation of budgeting officers on road transportation project by reducing unnecessary outputs of road transportation project which causes unnecessary budget.

Recommendation for improving budget allocation of road transportation

There are utilities of physical model on budget allocation. Factors in each group have different utilities issues. This part would propose recommendation for better decision making on budget allocation for budgeting officers. Proposed recommendation mainly focuses on improving budget allocation for road transportation project.

1. Long term planning: Budgeting officers can make use of design factors in order to plan and study road transportation project in long term which would benefit for preparing budget. In addition, project would be ready to be launched with completely information and resources.

2. Emphasis on setting and using performance indicators: Budgeting officers should consider result of measuring performance of project operation by using performance indicators. It would be guideline for considering next project proposal for budget allocation.

3. Eliminating unnecessary budget: Budgeting officers should divide important level of output components of road transportation and consider output that relate with objective of the project. Budgeting officers would eliminate unnecessary output, which can lead more amount of budget, which included in project proposal without relating with targets. Therefore, budgeting officers can eliminate unnecessary budget and budgeting officers also can select the most important project.

4. Understanding technical knowledge of road transportation: Technical terms in physical model of road transportation would make budgeting officers better understanding road transportation project at operational level. It would help budgeting officer consider project easily.

Her thesis abstract is copied and posted

ABSTRACT

Road transportation project is an infrastructure which serves society in movement of people and commodity. Most road transportation projects are megaproject that need huge budget for investment. Therefore, it is a responsibility of Bureau of the Budget in order to consider and allocate budget into project. Budgeting officers use budgeting system to be as an instrument for considering project and allocation budget. From problem statement, for budgeting officers, there are unclear criteria for project selection and inadequate knowledge to prioritize project and allocate budget. Therefore, this research is aimed to investigate current practice and perception of budgeting officers, who work at different level which are budgeting level and operational level, regarding budgeting system and develop model to improve budget allocation process.

To achieve objective of study, the first objective is achieved by using questionnaire survey to investigate current practice and perception of budgeting officers between Bureau of the Budget and Ministry of Transportation. Current practice and perception would be investigated about problems regarding budgeting system throughout budgeting components included six budgeting instruments. Descriptive analysis by mean and ranking is used to analyze important level of problem in each instrument. Result is that there are similar and different perception between budgeting officers from budgeting level and operational level.

Results were found that perception of operational officers with problem influencing implementation of budgeting system highly tend to be the problem in part of output costing. The reason is almost problems are related with financial recording which is not flexible for working at operational level, and also activities distribution which is lack of considering of central officers before distributing. It would affect to unnecessary budget allocation. For budgeting officers at budgeting level, their perception with problem highly tend to be problem in project management. The reason is problems are mostly related to unreadiness of project operation and lacking of important information of project such as project feasibility study which is the main data that budgeting officers use to consider and make decision for budget allocation. Therefore, physical model of road transportation components has been developed. The purpose is to be as an instrument for budgeting officers more understanding in technical term, and used to improve budget allocation of road transportation. Finally, recommendation for improving budget allocation has been proposed.

Quality Management System For Consultant Supervision For Managing Performance Of Building Contractors In Vietnam

The purpose of the quality control system is to make high quality products and focus on customers’ satisfaction. Business competition in today’s markets has increased that tend the customers to being quality oriented. Many companies try to find the way to satisfy customers’ needs in order to survive. For this reason, quality management accreditations such as ISO 9000, total quality management (TQM), and the likes can be frequently heard and more widely discussed.

Worldwide, ISO 9000 and TQM are considered as the most effective ways of quality managing. ISO 9000 has guidelines and requirements for documenting a quality system. TQM is far wider in application than ISO 9000.

TQM is organization’s set of management practices equipped to guarantee the organization consistently meets or exceeds customer requirements. TQM focused on process measurement and controls as means of continuous improvement. It has four key elements (1) customer’s expectations and definition of quality; (2) Focusing on the improvement process and not the end result; (3) The participation of all employees and their empowerment to make decisions affecting quality; and (4) Continuous, ongoing improvement.

On 8 June 2004, the Vietnamese government issued decree No 209/2004/ on quality management in building projects. This decree requires all construction organizations to follow to avoid related accidents that happened in three construction projects in 2007 until middle 2008. After investigating those problems, construction committee concluded that the owners were lacked of construction quality control. Besides, the consultant also did not have a quality control system to keep track of the contractor’s work.

Therefore, quality control system of the consultant is strongly necessary for both owner and contractor to assure quality and prevent any unexpected hazards.

Mr. Bui Van Bao made a case study on “Quality Management System for Consultant Supervision for Managing Performance of Building Contractors in Vietnam”. The objective of his study is to develop quality management system for consultant supervision in managing the performance of building contractors in Vietnam. His study also aimed to investigate the construction methods which are related with quality control based on the Vietnam standard and regulation, and analyzed the communication process of managing quality and exchanging information between the owner, supervising consultant, designing consultant and contractor to solve many problems at the site.

He concluded that to ensure the quality of construction works, the consultant and contractor are responsible to determine the quality of construction project. All management procedures must also be followed on a suggested three stage basis: input à processà output. Of these three, the most important stage is “process”.

The quality management system functions as practiced in building construction. A model for managing quality has been defined and shown to apply to any construction domain and organizational structure for developing and administering a quality assurance program. The model involves multi level quality management participation, encompassing contractors, engineers, and managers. It describes the quality management tasks and the roles assumed in a scheme relating construction quality control, quality assurance, and the interface between them. This study advances the understanding of how quality management is performed and engages participants at several management levels.

His recommendations for management improvement are:

1. The Supervising Consultant should supply the contractor with their quality management system before construction commencement so that the contractor knows and understands QMS for better coordination.

2. Top manager of Supervising Consultant should update new standards in quality management system in order to improve its management system and preventing quality risk in building the project. The Consulting Engineer must have a quality policy that applies the quality standards and approval requirements all in accordance with the law of construction.

3. Top management of the contractor should take a lead role in commitment towards quality. They must understand the quality policy and follow it as a work quality standard.

4. The owner should have a good financial condition to enable the contractor to complete the project in accordance with the contract schedule.

His recommendation for further study is to find out the influence of Owner, Consultant and Contractor in the project quality itself for consultant management improvement.

His thesis abstract is copied and posted.

Abstract

The study gives a thorough description of the quality management system as practised by the supervising consultant in the construction industry. This function is shown as an interconnected system that recognizes the main quality system management activities. The documents and records used in these activities are also reviewed. A model for high level quality system management is defined, including supervising consultants and contractors.

The model depicts the quality management system responsibilities and the roles in a scheme relating to construction quality control, quality assurance, and the interface between them. The scheme can be applied to any construction domain and quality management structure of organization. The study advances the understanding of how quality management is performed and engages participants at several management levels.

The use of quality management system in the construction industry has greatly increased in recent years. Because the purpose of QMS development is to manage the performance of building contractors in Vietnam, it is very important to assure quality in building projects and satisfy the client as much as possible in the construction industry. The objective of the quality management system is to improve the quality of construction projects and to enhance the effect and productivity during the building project in order to achieve client satisfaction.

The research methodology is highlighted as the main philosophy. Besides, different sources of data will be gathered in this research, including project documents, reports from local government and project agencies, newspapers, construction law and standards in Viet Nam etc. an exploratory approach will be adopted by reviewing the available literature to develop a quality management system framework for consultant supervision building projects in Vietnam.
Report the findings of a research study, which was undertaken to examine the underlying factors affecting the quality of a building project. It also aims to identify factors that show a strong correlation to good quality performance. The ultimate goal is to provide clients, project managers, supervising consultants and contractors with information that can help them become more efficient with their limited resources and, as a result, achieve better quality outcomes.

Managing Subcontractor Schedule Performance In An EPC Contract

The construction industry has been used as a gauge of economic health because of its strong linkage to cyclical fluctuation in the economy. The construction services sector is thus a relatively large employer. It draws on a large part of fixed capital formation in an economy, and it provides the essential support for economic development.

Over the last two decades, up to 70% of construction business opportunities in international markets as measured by the size of contracts were found in developing countries primarily in infrastructure projects. Some developing countries have been exporting construction services successfully and have attained a certain competitive advantage, although they have had extremely limited success in penetrating the markets of development countries.

With economic development, contracts in the construction industry have greatly increased in recent years. The experience of large companies has shown that technology co-operation agreements with developed country partners have helped to reduce organizational and transaction costs, facilitated international sourcing of technology and improved marketing and managerial practices. As a result, main contractor prefer to subcontract the services. Subcontracting has proved to be an entry point to the international market for small and medium-sized construction companies from developing countries and also transition economies. This appears to be because developing country companies seem to have inadequate capacities for executing overall management of large construction projects and are usually subcontracted for other specialized services. In most construction projects, especially building projects, it is common for 80 to 90% of the work to be performed by subcontractors (Hinze and Tracey, 1994).

The contractors that are selected to enter into general EPC contracts must fully satisfy the conditions on experience and capability. In the process of preparing, entering into and performing the contracts, the contractors are encouraged to put forward initiatives, measures or apply their experiences in order to fulfill the contractual jobs, meet the objectives and requirements of the projects or bidding packages and raise their efficiency (Circular 08/2003/QD-BXD - Ministry of Construction of Vietnam).

Most of the work should be done by subcontractors as the main contractors rely on a large number of subcontractors. As much as 90% of the construction work id carried out by the variety of subcontractors while the main contractors tend focus on the management and coordination. Therefore, main contractor need to develop subcontract management strategy that leading to control subcontractors’ performance effectively and efficiently.

Managing subcontractors does not simply involve asking them to allocate resources into the jobsite whenever an activity is scheduled and then push them to speed up the work without the consciousness of schedule and cost risks. A good general contractor or project manager must award to which subcontractors should be paid more attention than others in preventing delay when considering the problems on duration and additional costs.

Mr. Nguyen Tan Hoang made a study to (1) identify problems related with subcontractors’ performance in terms of project schedule and delivery; and (2) study the monitoring the performance of subcontractors in terms of project schedule and delivery.

He found out that relating to the concept of concurrent delay is one of the most troubled and complicated area. It is strongly contested topic in the building and construction industry. Both parties in the construction contract regularly use concurrent delay as an excuse to avoid responsibility for extension of time claims and the assessment of liquidated damages. It was also found out in this study that even contractor hired a third party for selecting subcontractors. The contractor also implemented the bidding that follows basic principles including consideration of the interaction of different factors such as:
Contractual provisions.
Legal principles.
Technical assessment of the construction program.
Definition of criticality.
Floating ownership and methods for proof of delay claims.

The delays absolutely happened 100% in public main subcontractors and only a small % delay of private subcontractors because of unforeseen conditions as very bad weather. Despite of these, contractor almost solved the subcontractors’ delays by using the contractual provisions of back-charge to hire another subcontractor to do the impacted areas. The overall time to be recovered and is similar to required schedule of project.

Conclusions for Subcontractor Control Strategy

It can be concluded based on this study that subcontractor control strategy has been well aligned and well organized in all aspects to international contractor. However, there are some major points that need to be improved in order to strengthen the management efficiency and it effectiveness. These are the following:

1. Consider to the size of scope of work for each package.

2. Consider to the public and private subcontractors in the subcontractor master list and the overall subcontract plan, also their current works at the same time of awarded project as well. They are the main causes of overloading.

3. Study site conditions more carefully in order to consider the proper price of each package that could be awarded to subcontractor.

4. Sharing with subcontractors in risks that could be happened by unforeseen conditions not only generally covered in contractual provisions.

5. Obligate subcontractors must use legal tools for tracking schedule and define delays.

Conclusion for subcontractor Performance Management

It can also be concluded that main contractor maintained a very systematically concise subcontract performance management. However, there are some major points that need to be improved in order to strengthen continually the performance efficiency and it effectiveness. These are the following:

1. Contractor must consider to the prepared schedule may include milestone and interim completion dates that satisfy contractor needs and they should be required in subcontract provisions clearly.

2. Contractor must consider to unforeseen conditions clearly as the bad weather and undiscovered soil conditions.

3. Contractor must consider the progress payments that to be used 100% by subcontractors for project.

4. Contractor must consider the facilities conditions for subcontractors in subcontract before implementing the work at site.

5. Contractor must consider incentive in line of subcontractors’ performances.

Mr. Nguyen Tan Hoang learned from this case study regarding on how the main contractor managed their subcontractors in line of subcontractor control strategy and how they managed the performance in terms of schedule delays together with its strength and weaknesses. In order to improve this, he made some recommendations as follows:

1) Whether the scheduling obligation is to be imposed on a subcontractor, main contractor, the scheduling specification should be as carefully considered and written as any other technical specification.

2) Setting up the rewards for subcontractor performance when achieving each milestone as required in the subcontract in order to increasing the productivity and endeavors from subcontractors.

3) Construct an unforeseen conditions control procedure for applying at site when the parties faced, especially for bad weather and soil conditions not only locked by subcontract provisions.

4) Parties must get resources evaluation for project before implementing the work in the cases of far site location with economic - social centers. They must be considered in the contract negotiation meetings.

5) Maintain the other standby strong subcontractors/ suppliers for cases of back-charge decisions happened. These standby subcontractors could be some ones that are doing other packages of project in order to reuse available resources and facilities.

6) Maintain at least a lawyer for cases of contractual conflictions in a large project in order to solve local rules and regulations, especially when removing any subcontractor out of battery limits.

His thesis abstract is copied and posted.

ABSTRACT

The construction industry has greatly developed and increased in recent years. In most EPC projects, it is common for over 80% of the work to be performed by subcontractors. This has resulted in main contractors concentrating their efforts on managing subcontractor performance rather than employing direct labor to undertake construction work. Therefore, main contractor need to develop a strategy that allow him to control subcontractor effectively and efficiently in terms of schedule delay. In order to understand how the current strategies are being operated together with the strengths and the weaknesses of the strategy, an EPC international contractor who is doing a very large project in Vietnam was investigated through documentation, archival, and interview. Major improvements are needed for the subcontractor control strategy for local subcontractors in order to improve the subcontractor management performance. In contrast, subcontractor control strategy and relationship management from international contractor had been aligned and organized. However, there are some major points, which need to be improved in order to strengthen and continually improve the strategy performance.

AN OWNER’S PROJECT COST CONTROL STRATEGY FOR BUILDING PROJECTS

The construction industry plays a vital role in any country’s economic growth, both developed and developing ones. Construction cost control did not consider being a major concern as developers rushed to capitalize on the booming market, as what was happened in Vietnam in the years 2006, 2007 and the beginning of 2008.

However, in the late 2008, the world economy as well as in the Southeast Asia sank into recession. Thus, project cost control became a critical issue for the developers as well as the construction companies in managing construction projects. A significant number of projects in the world had suffered cost overruns as the prices of materials are spiraling with no signs of abating in the near future.

Cost control is the activity which compares cost performance against the cost plan, adjusting one or the other dynamically by reference to the changing circumstances in the project's financial environment. It is a process that should be continued throughout the construction period to ensure that the cost of the building is kept within the agreed cost limits. The cost control can be divided into three major areas: the control of cost during the design stages, the control of cost during the tendering stages and the control of cost by the client once the construction of project has started.

In many large projects, professional construction consultants or senior quantity surveyors play a critical role in estimating construction costs, scheduling construction activities and implementing various techniques to complete the projects. During the current economic recession, the cost of construction tends to exceed the budget. This is one of the major problems that need to be addressed by clients, construction management consultants and contractors. To minimize cost overruns, client, project management and contractors need to improve their skills and abilities in dealing with project cost control. Recessions and poor economic times have put pressure on the average company for better cost control.

Mr. Nguyen Dang Thong Nhat made a case study on “An Owner’s Project Cost Control Strategy for Building Projects” to identify the key components of cost control. How the owner in construction industry can become more efficient and respond better to the current economic recession with non-stop prices increase of material and labor cost.

His other objectives are to (1) identify the problems in cost control in an observed case study in Vietnam’s building project and (2) develop a framework for owner’s project cost control strategy that covers the entire project life span, from the conceptual stage to the construction stage.

Based on his study, there are three components that caused project costs overruns. These were (a) incomplete specifications and drawings; (b) requirements of the owner and; (c) changes from contractors. Although the project management team tried to coordinate all requirements and solve the above problems, there were several factors that made overruns inevitable and certain factors were beyond their ability and responsibility.
According to his research, no matter how good the cost and control system is, problems might occur. Below are common causes of cost problems:
• Poor estimating techniques and/or standards, resulting in unrealistic budgets
• Out-of-sequence starting and completion of activities and events
• Inadequate work breakdown structure
• No management policy on reporting and control practices
• Poor work definition at the lower levels of the organization
• Management reducing budgets or bids to be competitive
• Inadequate formal planning that results in unnoticed, or often uncontrolled, increases in scope of effort
• Poor comparison of actual and planned costs
• Comparison of actual and planned costs at the wrong level of management
• Unforeseen technical problems
• Schedule delays that require overtime or idle time costing
• Material escalation factors that is unrealistic

His conclusions for Owner’ Project Cost Control

Design Stage - the project owner did not define the (a) project scope which is a crucial first step towards making the project a success; and (b) failed to set realistic expectation at the design stage.

He did not know how to manage expectations before going to the designer, consultant and contractors. And it became a struggle when he needed to meet changes along the way. Since he wanted to reduce the fees for architects and engineers, their input became limited and insufficient specifications subsequently caused many problems during construction. Also, he did not give the project management team, designer and consultants the authority. When the contractors suggested changing the amount of materials to be purchased and to import some materials that are out of stock, it resulted to project cost control problem and delayed schedule.

Tendering Stage - the project owner did not conduct face-to-face interviews with the bidders. As a result, the project bidders did not discuss directly with the project owner the changes that were made. A lack of understanding on the owner’s expectations also hindered the process. He did not have any chance to negotiate price and costs with contractors as well.

Construction Stage – the project owner did not give some authority and responsibility to the project management team, designer and consultants. Therefore, they needed to get his approval before sending and approving any change orders.

The project owner did not establish project objectives and project expectations clearly and carefully from the beginning of project. He wanted to reduce the fees for architects, designers and engineer resulting to limited input, insufficient specification, and incomplete detailed drawings and project specifications. In addition, he did not understand clearly the benefits of investment license and he did not hire a third party to evaluate the design drawing to check the quality of site works as required by Vietnamese construction law.

Mr. Nguyen Dang Thong Nhat’s recommendations for owner’s cost control management improvement are:

Project Management - The project owner must work with the project management team to detail five major project issues with a comprehensive list in the project definition phase such as: (1) programming/functional needs of a facility; (2) site questions and concerns; (3) building systems requirements; (4) construction schedule; and (5) project budget.

The owner and the project management team have to make sure that each issue needs to be reconciled with the others and updated frequently. If any issue is ill-defined, there is a chance that the project will go out of control.

Project Change Control - When changes must be made that will change the plan, the project manager must control and track them. The guidelines for controlling changes are as follows:

1. Changes can be requested by anyone associated with the project, but submitting the Project Change Request Form to the project manager and the project change committee will start the change process.

2. Project change requests must be evaluated to determine the effect of a request.

3. The project manager and the team must estimate the effort, dependencies, and resources required to institute the project change.

4. The project manager must communicate the impact of proposed changes in terms of cost, scheduling, and performance to the customer.

5. If a change is approved, the signatures of the client and the project manager authorize the project team to make the requested change.

6. The project plan must be revised after the change has been approved for implementation.

7. The project manager must inform the project team of all approved, unapproved, and deferred changes.

8. The Project Change Request Form must be logged, regardless of its approval or denial.

Cost Control

1. Cost control should be approached as an application of Pareto's Law, which essentially states that 80 percent of the outcome of a project is determined by only 20 percent of the included elements. Thus in establishing a cost control system, the idea is to isolate and control in detail those elements with the greatest potential impact on final cost, with only summary level control on the remaining elements. The greatest variable in the final cost of a construction project is usually the labor cost. Most of the other cost elements in the project are materials, labor, equipment, and overhead.

2. Cost control is a process that should be carried out for all types of construction stages and activities. Comparison with a cost standard method is complicated and expensive but it is more accurate than other methods. Subdivision by detail is a method that is not expensive but risky operation, involves little or no control of cost. The integration with other functions method has to take into account other functions and not as a separate entity and control is kept on the functions combined.

3. Cost Control problems come about for many reasons including incorrect estimating techniques, predetermined or fixed budgets with no flexibility, schedule overruns, inadequate WBS development, and so on. Good project management planning techniques during the planning processes may prevent cost problems later in the project. At a minimum, proper planning will reduce the impact of these problems if they do occur.

4. Cost Control, like many of the other Controlling processes, is concerned with monitoring project performance for variances. As the project owner, we try to keep a close eye on the factors that cause variance to keep their impacts to a minimum. An important thing to remember is that Cost Control makes certain all appropriate parties agree to any changes to the cost baseline. This process is ongoing and continues to manage cost changes throughout the project.

5. It is important to have formally cost control system for contractors. It helps project owner to understand and control project costs easier and faster.

6. Using Computers: It’s hard to imagine a project, especially larger projects, moving forward without the use of computers. Project managers can rely on project management software and spreadsheet programs to assist them in calculating actual costs, earned value, and planned value.

Which Cost-Control Strategies Work Best?

The choice of project delivery method depends on variables like funding, time constraints, and project objectives. This view from the experts substantiates that, regardless of delivery method, effective cost controls depend on a commitment to thorough planning, good communication, and rigorous monitoring of a project from start to finish. Building professionals and owners should find it easy to borrow and incorporate many of these cost-control strategies into their practice (Written by Mary Maher, University of Wisconsin – Madison Department of Engineering Professional Development).

His thesis abstract is copied and posted.

ABSTRACT

Nowadays, the construction industry plays a vital role in the healthy growth of the economy of many countries, both the developed and developing ones. Construction cost control did not use to be a major concern as developers rushed to capitalize on the booming market, as was what happened in Vietnam in Year 2006, 2007 and the beginning of 2008. However, in late 2008, the economy of the world and Southeast Asia sank into recession. Project cost control became a critical issue for the developers as well as the construction companies in managing construction projects. A significant number of projects in the world had significant cost overruns as the price of material was spiraling with no signs of abating in the near future.

Cost overruns had been a problem during this period and the use of good project cost control procedures has become a concern of project investors and construction companies in the current world since the recession of the late 2008. Project managers and developers are now aware that the failure of a cost control system or use of a poor system can lead to project failure. Project cost control methods need to be improved to ensure that owners and contractors manage construction costs and meet project goals on time and within budget.

Effective management of construction projects has been a major research subject due to the importance of the construction industry and the amount of investment it attracts. A significant issue facing construction managers is that of inefficient cost control procedures, particularly in developing regions of the world, such as Vietnam. The cost control system is the most important function that facilitates construction organizations in accomplishing profit maximization.

In this study, project cost controls will be examined. These procedures will be researched and it will be illustrated how the project cost control procedures can be applied to the construction industry in Vietnam to increase the awareness of contractors, consultants and client of the functions of cost control in the execution of construction projects.

SAFETY AUDIT IN OIL AND GAS EXPLORATION PROJECTS

In the past three decades, the energy demand has increased rapidly in Vietnam due to its stronger economic development. The energy resources are considered as the blood of the Vietnam economy. PetroVietnam has developed rapidly since it was established in 1975. Its activities, through its various companies and wholly owned subsidiaries are now covering all the operations from oil and gas exploration and production to storage, processing, transportation, distribution and services. Oil and Gas exploration in Viet Nam have been developed so fast but until now, no refinery yet. Vietnam’s expanding offshore exploration and production has created a steadily growing market for offshore oil and gas equipment and services.

However, Oil and gas industry in offshore consist of many stages such as search, exploration and construction to explore crude oil. It is one of the most dangerous industries, especially the exploration of the crude oil. It always encounters many different dangers and serious accidents. Oil and gas causes fire and explosion easily. When workers do not comply with safety rules nor has low skill safety and outdated equipment, accidents may happen. When these accidents happened, it has effects on the project cost, schedule, qualities and profit. Thus safety audit must be used as an integral part on Oil and Gas project to mitigate accidents. It plays one of the most important roles for the safety of the exploration project.

The safety audits when properly observe and practice can save lives and minimize the accidents in a work place. The companies are advised to implement the following:
· Persuade workers by explain the results of their safety efforts.
· Improve safety understanding.
· Make sure that in the past recommended corrective action was addressed, initiated or completed. .
· Assess the helpfulness of, or need for, safety instruction.
· Expose weak points in the safety plan.
· Keep up principles by ensuring that staffs pursue established guidelines, methods and procedures.
· Identify where methods or procedures are not enough

Mr. Nguyen Quang Hung made a case study on “Safety Audit in Oil and Gas exploration Projects” in Vietnam which primary objective is to identify an effective safety audit framework to minimize the accidents happening in the oil and gas industries.

He found out that many Oil and Gas companies in Viet Nam such as CuuLong JOC, Vietsopetro, JVPC and PTSC have been successfully implementing the safety audit rules. Since no accidents occur in these companies, they gain more profit due to the reduction in the cost and time of the project.

He also found out that Cuu Long JOC strength is that, it is conducting its own safety audit. The Leaders in Cuu Long JOC have the right policies and the objectives of HSE management are very clear. Besides, this Joint Venture Company gives priority on the working condition and safety of Oil and Gas exploration.

However Cuu Long JOC has also weaknesses. Although the company implemented the safety audit following the procedure, still the implementation has many constraints. Almost Safety Audit procedures come from developed countries and when it is applied in developing countries like Viet Nam, it is very difficult because the workers have low safety awareness, careless and do not comply with safety manual. In some case, they do not follow audit report, no commitment to implement the result audit, no independent auditor and unavailability of Audit tool.

Mr. Hung’s thesis abstract is copied and posted.

ABSTRACT

This thesis deals with a Safety Audit in construction industry. However, to understands regarding Safety Audit is difficult and still limited. It’s a very importance key role for the safety management system, especially exploration crude oil, construction of platform to explore crude oil. Safety Audit in the construction industry has always been a major issue. Wherever reliable records are available, exploration and construction platform is found to be one of the most dangerous on safety and health criteria, particularly in developing countries. Though much improvement in construction safety has been achieved, the industry still continues to lag behind most other industries with regard to safety.

Safety was not only a worry of many companies, but also an unavoidable problem of many projects in oil and gas industry exploration which presently was the largest, strongest industry in Vietnamese manufacture and business. Hence, Safety Management System was step by step improved by many new management practices which one of them was the Safety Auditing in Oil and Gas Exploration.

EVALUATION OF PROBLEMS IN INTERNATIONAL CONSTRUCTION CONTRACT CONDITIONS: CASE STUDY OF THE THIRD PROVINCIAL TOWNS WATER SUPPLY AND SANITARY PROJECT

The construction contract is a bridge between owners and contractors for successful completion of a project. It clearly delineates the rights, responsibilities and obligations of each party in terms of project goals and scope. By means of contract form, terms and conditions are set out to serve this purpose and to make part of the contract documents by which the project will be built.

What is essential to achieve a fitness-for-purpose product on project completion and to ensure compliance by the various contractual stakeholders lies in the terms and conditions of contract. A great deal of difficulty has however been reported throughout the construction industry reflecting the problem area relating to contract clauses. and consequences are of various levels, all affecting costs, human effort, works quality and time.

With the increasing complexity of construction projects and huge funding expended, contract documents are becoming much more complicated to incorporate the objectives, requirements and expectations of owners and contractors. As a result, problems arise and claims are so common that they are becoming a way of life. the following major causes have for decades received special attention.

Mr. Bui Quang Luong made a case study that focused in the most significant contract clauses in the construction industry and their impact on project performance under various contract types. His objectives are to: (1) study the problems pertaining to construction contract clauses that have significant impact on project performance; and (2) provide strategic and specific recommendations on the drafting of construction contracts.

Based from his study, the problems that usually arise in the construction contract are related to international construction contract clauses. Contract preparation is considered vital to achieve improved project performance. Thorough contractual arrangements therefore play a crucial part in the process. It is important that the most problematic clauses be identified so that significant project impact can be successfully controlled. As a result of year-long research using the individual clause, clause family and contract type analysis approaches, nine most problematic clauses were consistently identified as being of primary concern and significantly impacting project success.

His study has successfully demonstrated an intensive exploration on the importance of contract clauses in the international construction business. A focus has been analyzed and found to be the most troublesome clauses that have significant impact in project performance. The findings resulted from thorough analyses based on individual clause, clause family and contract type analysis approaches. it is therefore important to take into special consideration the nine most problematic clauses that statistically and realistically affect contract execution and project delivery in terms of (i) frequency of occurrence; (ii) rates of major disputes; (iii) degree of seriousness; and (iv) frequent clarification.

His thesis abstract is copied and posted.

Abstract

Clauses are an essential part that constitutes a construction contract document. However, throughout its history the industry has witnessed a substantial number of disputes/conflicts of interest unfortunately characterized by the contract itself. Things are nowadays being made more complicated by a trend of long agreements where poorly drafted clauses are held responsible for even further project delays and worse, litigation. The main purpose of the study is to conduct an intensive exploration into the most problematic contract areas and to seek clauses that stand out as the most troublesome, and find appropriate strategic and specific recommendations to improve them. It is of prime importance that the contract strategy be formulated that gives a comprehensive picture of what has to be done to secure successful project delivery and to minimize losses and damages as a result of disputes and litigation. In addition, the careful drafting of contract clauses must be given utmost priority. During the course of execution, the owner’s behaviour towards the contractor should be on a fair and risk-sharing basis through careful risk allocation, cooperation and negotiation. Any negligence or lack of due care in these regards will eventually have to be paid for through large contingencies, disputes and litigation.
Some suggestions have been pointed out throughout his study; it is worth noting that contract preparation among other factors determines project delivery success. The drafting of contracts must receive special care and consideration should successful contract execution be achieved. A summary of the most common problems and proposed practice can be found in the following table.

CLAIM AND CONFLICT MANAGEMENT IN INTERNATIONAL OIL AND GAS PROJECTS

Today, many oil and gas projects were set up to satisfy petroleum and natural gas increasing demand caused by dramatically development of global economy. These projects are often large in terms of budget and people. They tend to be complex, with multiple zones, language barriers, and differing legal requirements, as well as cultural differences. Partner selection is very important and is a critical variable because it affects too much on project success and influences the overall mix of available skills and resources, operating policies and procedures of project.

In international oil and gas project, a multi projects group has a much broader range of knowledge, skills, abilities and experiences. The project management team has to deal with many issues such as logistical, governmental, communication due to different languages and values. These issues if not properly deal with, might cause for possible conflicts. The best project manager must know how to manage conflicts using different styles, depending on the circumstances in order to effectively supervise a diverse team.

The worldwide trends of joint ventures are increasing but with very unsatisfying results. To be able succeeding in an international project, major conflicts need to be managed. However, conflict in the workplace just seems to be a fact of life. But conflict isn’t always exactly a bad thing. According to the modern view of organization conflict “conflict within certain limit is essential to productivity”. In many cases, effective conflict resolution can make the difference between positive and negative outcomes.

Mr. Dang Huu Trinh made a case study on”Claim and Conflict Management in International Oil and Gas Projects”. In this study, he wanted to (1) identify types of conflicts and the source of conflicts occur in an international oil and gas projects; and (2) identify conflict management styles which are effective to solve the problems.

He also wanted to bring out in his study, how to solve fails of international oil and gas projects caused by conflicts during construction and operation. He conducted two case studies on which in this research work mentioned two different conflicts which frequently meet in project, specifically in Vietnam.

Based on the information he gathered, Mr. Trinh found out that the conflicts existed in international oil and gas projects normally relate to culture. Source of conflicts are different personalities and point of views, miscommunication, context and disbursement issue. The research findings revealed that the best approach for project manager to handle conflict in international oil and gas project is an “integrating style”. When working in multi-cultural projects, the project manager must be prepared for conflicts that might arise and must learn how to react with it differently. The project manager working in a multi-cultural project must have the following:

1. Culture awareness and competency: the manager should become aware of the cultural norms. He should understand the specific cultures with which he is working and last but not least he should develop a relevant skill set.

2. Conflict management: the manager should have an array of conflict management skill. He should be aware of how a conflict can arise, how it is dealt with and how to prevent it.

3. Project management: the manager should understand the strengths of his team and should be able to optimize these.

His thesis abstract is copied and posted.

ABSTRACT

Oil and gas projects are established intensely to satisfy the energy demand on the world. To operating effectively, alliance are increasingly being used as strategic organizational form in international in which each of attendant parties possessed strength in field related to project. In cooperating process, conflict and problems among parties are unavoidable; awareness and carefully managing conflict during construction stage play a key role in the subsequent success of projects. The theme of conflict management styles has been the focus of extensive research in social psychology, organizational behavior and the field of cross-cultural management.

By finding out and analyzing the conflict happening in Dung Quoc and Ca Mau project, through collecting data and interviewing staffs and relevant persons, the research study aim to identify and analyze the conflicts and problems as well as resolutions and try to suggest a conflict management styles which are effective to solve the problems.

A conflict management style was developed as a result of the research case study which is helpful for international oil and gas projects wishing to overcome obstacles by identifying the conflicts and solving them.

CLIENT’S PROJECT MANAGEMENT STRATEGY FOR FAST TRACK EPC OIL & GAS PROJECT

In today's business world, corporations must be able to react to the changing market needs rapidly, effectively, and responsively. They must be able to reduce their time to market and adapt the changing environments. Decisions must be made quickly and must be done right at the first time. Corporations can no longer wait their time repeating tasks, thereby prolonging the time it takes to bring new products to market. Therefore, completing a project faster than the normal duration is always a challenge to the management of any project, as it often requires changes in prototype.

The Vietnamese Petroleum Industry is also passing through a very dynamic business environment due to the liberalization of many Government policies and the introduction of multinationals, the participation of International major players and the pressure of globalization and attracting Foreign Direct Investment. Development of Petroleum facilities for handling petroleum products is one of them. Moreover, these projects are required to be completed in faster duration compared to normal schedules to be vital and remain competitive, to get faster return on investment, and to give higher return with longer project life. However, using conventional tools and techniques of project management, it is impossible to handle the problem of reducing the project duration from a normal period.

On the other hand “Increasing competition and the growing technical sophistication of construction processes as well as the size of some projects has led to a growing importance of partnership agreements and strategic alliances in bidding for and implementing construction projects” (Construction Industry Institute - Hong Kong, 2002).

Same approach can be applied to the Client’s project as eventually the success of the subcontractors would be the Client’s success especially for the EPC Oil and Gas Project. Project Sanctions and major contracts usually have a lengthy process requiring various approvals from the Government Agencies.

Mr. Nguyen Quoc Hanh made a case study on “Client’s Project Management Strategy for Fast Track EPC Oil & Gas Project”. His study proposed the Client’s approach for the use of concurrent engineering/ fast track approach and alliance sprit in managing projects for radically reducing project duration. The phases of the project are accomplished simultaneously instead of in a series. The required approvals from the Government and relevant authorities are acquired much quicker with the involvement of local partners from the start.

The complexities that arise in managing projects are tackled through management of Government’s approval process, restructuring project organization, management of subcontractors and independent contract packages, improving management commitment, strengthening project-planning activities, ensuring project quality, managing project risk objectively and integrating project activities through information management systems.

These would not only ensure completion of projects in fast track, but also help to improve project effectiveness in terms of quality, cost effectiveness, long-term relationship building, etc. and in turn overall productivity of the project organization would improve.

His study’s objectives are to explore Client’s strategic approach to manage a Fast Tract EPC Oil & Gas Production Facility Development Project including: (1) management of Government’s approval process; (2) management of subcontractors via a strategic Alliance sprit; (3) management of interfaces and overlapping between contract packages over widely separated geographical areas; (4) contract type and commercial compensation scheme selection and breakdowns of contract packages; (5) project organization, authorization and management commitment; (6) communication and collaboration; and (7) procurement and centralization of logistics supports

Conclusions:

Project Owner required preparation

The conclusions he made based from his study is that to ensure a successful implementation of a fast track Project, the project owner must (1) have full support from its Stakeholder and the Government to the implementation of fast track concept; (2) have a strong leadership and commitment from senior management through out the execution of the Project. The availability and competency of the Project Management core team also contribute an important factor during the initial/ preparation phase when the rest of the team will be mobilized. As many cost-schedule trade-off are may be required and; (3) must prepare a strong financial status and willing to accept or compromise some commercial terms.

As the procurement is under Project Owner’s responsibility, which may not be a common practice, the Project Owner must either public its procurement plan or open an workshop/ briefing to all potential Suppliers to ensure the best interest of the Suppliers. The Suppliers might be able to provide a better offers if they are more confident on the Client’s creditability once the overall picture of the project is presented or published.

Review the requirements of the Petroleum Contract that they may have with the Government Agency to ensure the future compliance or any required exceptions/ changes, which must be accepted by Stakeholders/ Government Agency for the implementation of the Project.

Anticipated Obstacles/ Barriers

The Oil & Gas Client/ Project Owner must consider carefully the terms/ conditions/ requirements of the Petroleum Contract that they may have with the Government Agency as some Petroleum Contract require unanimous consents from all involved parties. Different understanding on fast track requirements within and from Client Project Management Team and Top management, Stakeholders, Primary Contractor, Sub-contractor, which lead to inappropriate response (i.e. provide/ supply inadequate resources or over react in spending money to protect the project schedule un-necessarily).

Extra costs are expected in terms of cost-schedule trade off to meet aggressive schedule and overlapping between project phases/ work packages, which would cause rework and cost overrun. It will be difficult to justify those extra expenses at the end of the Project due to different understanding of the fast track requirements and reasonability of the cost-schedule trade off. Therefore, close communication between Project Owner and Stakeholder/ Government Agency is required.

The selection of Alliance/Partnering concept may lead to the contractual differences came at the end of the contract and it would take longer time for closing out of the Project.

Lastly, it will not be easy to benchmark the effectiveness/ successfulness of a fast tract project as the complexity is varied from project to project.

Recommendations

He recommended that that the constancy and level of effort should be maintained not only from the start of the Project when the gaining on the schedule could have been significant but following up the tailed end of each work phase is not less important. The lack of effort and concentration by Client in following up and pursuing the completion of the engineering tailed end works will lead to the delay of the construction works. Impact of late engineering was a problem both contractually and practically. Delaying the start of the project would probably have more impact on overall schedule than engineering/ fabrication overlap.

His thesis abstract is copied and posted.

Abstract

Completing and delivery a project faster than normal required duration is always a big challenge to any Project Management Team and often demands dynamic approach and paradigm shifts. Many projects are required to be completed in faster duration compared to normal schedules to remain economic vital, to get faster return on investment, and to give longer project life. The conventional techniques of project management are impossible to handle the problem of reducing the project duration drastically. This project report provides an introduction to, and a practical exploration and evaluation of Client’s fastracking approach to manage an Oil and Gas Project.

This final project report presents and explores the Client’s dynamic approaches from the conceptual planning, managing contractors via contractual arrangements and strategic Alliance spirit, managing the Government’s approval process and the use of concurrent engineering concept for radically reducing project duration. The phases of the project are accomplished simultaneously instead of in a series across various areas. Along with its benefits, fast-tracking project delivery also has greater potential to impact the project development process than the traditional method. This final project report also presents the key enablers as well as required preparation and obstacles have been encountered during the actual execution of the project.

These approaches if successfully implemented would not only ensure the completion of projects by the required completion date, but also improve project effectiveness in terms cost effectiveness and in turn overall productivity of the project organization would improve.