Generally, the basic objective of a construction project is to implement the project on time within reliable budget and meet required quality. From the contractors’ point of view, cost control is an extremely important aspect because it is conducted to ensure that the project costs are monitored and kept within the project’s objectives and company’s requirements. Therefore, the contractors have to pay attention to it in order to maximize profit.
However, most of Thai construction companies are still facing with cost overrun and competitiveness nowadays. Previous study by Charoenngam and Sriprasert (2001) found that one reason is cost control systems are unsystematic and ineffective cost information management. Lack of reliable data, ineffective planning, insufficiency of updated data, or ineffective cost management is also critical problem that can lead to cost overruns (Construction Management Committee, 1999). Moreover, several project managers in several projects are incompetent in order to bring successful project within a given budget. Many companies have to face with untimely and meaningless cost status so that project managers cannot make correct decision and take corrective actions. It means that if management does not receive accurate information timely, right decision making will not be effective. As a result, productivity improvement cannot be attained.
Not only internal factors can lead cost overruns but also companies still face with several uncontrollable external factors such as oil price, market conditions, and interest rates. These factors affect project costs that may lead to cost overruns if lack of appropriate cost information management. Furthermore, continuous cost overrun in most of the projects of a company can lead to bankruptcy. Up to now, both inefficient cost information management and uncertain variables factors still are the problems affecting cost overruns in construction companies. In order to control high project cost and accomplish profit maximization, it is necessary to understand the current cost information management and manage problems occurring.
In Thailand, there are several ongoing projects that are managed by Japanese companies. Therefore, Japanese company has much influence to construction industry in Thailand. Moreover, when Japanese companies go and invest in any countries, they bring their culture, organization and management to that country. It is interesting to understand the cost management behavior in situation of cost overruns of Japanese construction companies and Thai construction firms. Therefore, the reactions under each management behavior of both Japanese and Thai firms are generated. Moreover, key factors influencing same or different reaction of both two groups will be understand.
Ms. Narumon Jongcharoensub made a study to understand the key parameters that influencing the same or different reaction of Japanese and Thai construction firms. Her study objectives were to (1) identify key factors affecting the cost management in each stage, warning, detection, analysis, and corrective action; (2) investigate the existing practice of cost overruns management in order to understand the management behavior especially the difference between Japanese and Thai construction companies; and (3) propose recommendation for improving of cost overruns management.
Ms. Jongcharoensub found out that cost management behavior under cost overruns consists of four stages wherein each stage has different key factors that make difference or similar behavior and reaction. These are:
Warning stage where the key factors are purchasing requisition procedures, sub-contractor payment procedure.
Detection stage where the key factors are cost detection style, timeliness to detect cost overruns, accuracy of cost overruns.
Analysis/ reporting stage where the key factors are ability to identify cause of overruns, ability to recheck cause of overruns, ability to forecasts cost at completion; .and
Corrective action stage where the key factors are flexible of corrective action, project manager’s behavior, feedback’s evaluation by project manager
Her research revealed that the companies’ strategies vary from one group to other, thus companies’ behaviors about cost management are also different. The Japanese companies try to put customers’ satisfaction as the top target whereas mostly medium-scale Thai companies concentrate on the cost. On the other hand, the large-scale Thai companies are in the middle. They try to trade off and balance between project cost and customer’s satisfaction. The differences in companies’ strategies make the cost management in Japanese companies and large scale Thai companies vary even though they are quite similar in cost management system. The research also found that the companies’ performance and project’s cost management in Japanese are the best while the small-scale companies are in the opposite side.
Key factors that affect cost management behavior in each stage
The similarity of Japanese and Thai (L) companies
The key factors appear in Japanese and Thai (L) is quite similar and the only difference in cost management is the company strategy which is the way manager does on-site. Since owner’s satisfaction is the most concern of Japanese companies, they always follow the owner and do not care in cost especially in urgent situation. Another difference is manager’s behavior. Japanese project manager will not blame the project team in the meeting, but he will call the staff who did mistake to discuss about cause and reason of that problem. This way is motivate the staff who did mistake in order to correct it. On the other hand, project manager from Thai (L) companies blame the staff who did the mistake in the meeting. Moreover, blaming with negative pressure is generated in Thai (L) companies. It discourages the staff who did mistake and indication to other staff to avoid mistake.
The difference of Japanese, Thai (L) and Thai (M) companies
From the findings, most of cost overrun management in Thai (M) companies are quite different. Medium Thai companies still have not got the factors that appear to be positive factor in cost management as follows:
Cost detection is centralized and Timeliness to detect cost overruns
On-site analysis is identified only cost overruns from quantity. Project manager or project engineer cannot save cost or minimize cost overruns at a given progress. This result affects the Timeliness to detect cost overruns which is one factor influences to minimize or prevent cost overruns. Cost overruns from excessive unit price will be known at nearly the end of project. Therefore, cost overruns are not handled at the beginning. Most of Thai (M) companies do not allow site personnel to know and manage cost on –site. This process will not motivate site personnel in cost control. Project manager and project engineer know only cost overrun in term of excessive quantity. This is the indirect way to know cost status but the real actual cost is not recognized from site personnel. However, cost detection is not decentralized in Thai (M) companies because corruption may be occurred. Moreover, money in Thai (M) companies is not much so they cannot give authority to personnel on-site. At this point, corruption is occurred in most of Japanese and Thai (L) companies when cost detection is decentralized. However, the amount of corruption compares with amount of profit is too little. Moreover, Japanese and Thai (L) companies cannot detect cost overruns by centralized because there are a lot of projects.
Timeliness to input data
Accuracy of cost overruns affects analytical cost overruns in term of identifying cause of overrun and the way to take corrective action. All companies, even Japanese, Thai (L), or Thai (M) companies obstruct with accuracy of cost overruns from human behavior. Since the attention and responsibilities of their staffs is limited. Most of staffs always wait to input collected data until report submitting. Therefore, many collected data is not accurate enough for project manager/ site manager to analyze.
Moreover, manipulating to cover up staff’s mistakes is always occurring from all of Japanese, Thai (L), or Thai (M) companies. Although, Japanese and Thai (L) companies still have quite sufficient form of collecting data and clear procedure for working, collected data always inaccurate and insufficient. Furthermore, inaccurate of cost overruns will also affect forecasting cost at completion. If amount of cost overruns are inaccurate so much, clear direction to correct the problems cannot be identified.
Her thesis abstract is copied and posted.
ABSTRACT
In order to maximize profit, cost control is an extremely important aspect because it is conducted to ensure that the project costs are monitored and kept within the project’s objectives and company’s requirements. However, cost overruns are still becoming common problems in the construction industry nowadays. Cost overruns create financial risk to both general contractors and owners. Moreover, Japanese companies have much influence to construction industry in Thailand and many projects on hand are managed by Japanese companies. Therefore, it is important to have a study on cost management behavior.
The purpose of this study was conducted to: 1) identify key factors affecting the cost management in each stage, warning, detection, analysis/ reporting, and corrective action., 2) investigate existing cost management practice in order to understand the behavior, reaction, and key parameters affecting different reaction between Japanese and Thai companies, and 3) To propose recommendation for improving of cost overruns management.
The data was collected from interview surveys in large scale projects of 3 groups consisting of Japanese companies, large scale Thai companies, and medium scale Thai companies. There were 3 companies conducted in each groups. The target group of this research is project managers, project engineers, site engineers. The findings were already discussed in detail and recommendations for improvement of cost overrun management were propose in this study.
Tuesday 10 November 2009
Monday 9 November 2009
The Practices of Thai Contractors in Cross Border Procurement
During the end of the 20th century, many accomplishments of multilateral trade diplomacy were established. The effect of globalization has brought a new trend in trading and has much changed the world economy. Presently, the share of services in the world-wide economy has expanded greatly. Since the establishment of the GATT (General Agreement on Tariffs and Trade) in 1947, it has generally been considered a success in reducing tariffs and increasing trade volumes around the world. The finalization of the Uruguay round of the General Agreement on Tariffs and Trade (GATT) 1994 and the establishment of the World Trade Organization (WTO) has further enhance the movement to trade liberalization. Since then many trade agreements consisting of bilateral and multilateral have been formed until today. As an emerging country, Thailand is not far behind. Until the year 2006, Thailand has formed many FTA’s with other countries.
FTA offers not only opportunity but also threat especially to those local construction companies. For those companies who understand the importance of integrating FTA and the supply chain, they strive in aligning their strategies towards that direction. They will then partake the benefits and gain competitive advantage. As FTA is unavoidable, companies that fail to evolve will loose their competitive edge. This has made it difficult for construction companies to align their strategies for the future.
Another problem faced by Thai contractors these days is the fear of going global. Most contractors fear the risk and do not understand the procedures involved in global procurement which put them to a disadvantage situation.
Mr. Arasavindiran Mariappan made a research which aimed to find out how construction companies can improve their strategies and competitiveness with relations to globalization especially FTA. The focal point of his research was large scale contractors. His objectives were to (1) develop a supply chain framework showing different participants in construction service; (2) survey the perception of large scale contractors in terms of their procurement practices and flow of materials, equipment and labor globally; (3) identify the mechanisms affecting the global procurement practices and analyze the relationship affecting the parties of the supply chain; and (4) propose guidelines for construction companies to align their strategies towards competing in international trade and gain benefit from the FTA phenomenon.
Based on the analysis of cases, several trade mechanisms were identified that allowed free flow of materials, equipment and labor. Although the general FTA parameters were initially identified from literatures, a detailed screening was done to get an in depth information of all the existing mechanisms. After a thorough analysis of each case, the impact of each mechanism on the cases was identified. Analysis shows some mechanism giving benefit and some not. He found out that each mechanism can contribute to the benefit of the contractor or otherwise give disadvantage to them. This is because in order for the mechanism to function depends on the country of project being undertaken and also other parties in the supply chain such as the supplier, the bank and the freight company. In order to conclude this study, a proposed guideline was constructed to help Thai contractors with global procuring in their mind. This guideline is meant to assist them in assessing all the possible impact from each participating party so that a strategic for procuring international project can be created.
The Road towards Globalization
The road toward globalization is never a smooth path. Most contractors learned the hard way in order to grasp the true benefit or FTA and the use of each mechanism. One of the interview respondent stated that 5 years ago, the Letter of Credit (L/C) was not know by contractors. Today it has become an important mechanism for transaction and a driving mechanism for easier flow of materials and better finance. Many contractors before fear of exploring the global market because of the many risk involved. Those who dare are mainly large scale contractors. Times are changing, contractors nowadays are slowly moving towards globalization due to tight competition and untapped advantages in the global market.
Another driving force for contractors is the recent trade agreements between Thailand and other countries. For the years to come, many more trade agreements will exist and Thai contractors will be force to join the global market or lose competitiveness.
His thesis abstract is copied and posted.
ABSTRACT
The shift of procurement methods in the construction industry is inevitable as Thailand moves towards globalization. Many contractors are slowly shifting their mindset towards the global market. Nevertheless, some contractors are still keeping their legs crossed because of fear and the risk involved in global procurement. This study aims to identify and analyze the mechanism that affects the free flow of materials, labor and equipment into other countries. The result of this study proposed useful guidelines for contractor in procuring oversea projects in terms of material, labor and equipment. In the analysis, the researcher found out that effect of each mechanism on the parties can be different according to case. This is because in order for the mechanism to function depends on the country of project being undertaken and also other parties in the supply chain such as the supplier, the bank and the freight company. The study is concluded by proposing some guidelines for contractors to check and measure when procuring international project. This model is done based on free trade mechanisms of the analyzed cases. To make a sound decision, the contractor should also consider other important factors such as cost, time, distance, political conditions and others.
FTA offers not only opportunity but also threat especially to those local construction companies. For those companies who understand the importance of integrating FTA and the supply chain, they strive in aligning their strategies towards that direction. They will then partake the benefits and gain competitive advantage. As FTA is unavoidable, companies that fail to evolve will loose their competitive edge. This has made it difficult for construction companies to align their strategies for the future.
Another problem faced by Thai contractors these days is the fear of going global. Most contractors fear the risk and do not understand the procedures involved in global procurement which put them to a disadvantage situation.
Mr. Arasavindiran Mariappan made a research which aimed to find out how construction companies can improve their strategies and competitiveness with relations to globalization especially FTA. The focal point of his research was large scale contractors. His objectives were to (1) develop a supply chain framework showing different participants in construction service; (2) survey the perception of large scale contractors in terms of their procurement practices and flow of materials, equipment and labor globally; (3) identify the mechanisms affecting the global procurement practices and analyze the relationship affecting the parties of the supply chain; and (4) propose guidelines for construction companies to align their strategies towards competing in international trade and gain benefit from the FTA phenomenon.
Based on the analysis of cases, several trade mechanisms were identified that allowed free flow of materials, equipment and labor. Although the general FTA parameters were initially identified from literatures, a detailed screening was done to get an in depth information of all the existing mechanisms. After a thorough analysis of each case, the impact of each mechanism on the cases was identified. Analysis shows some mechanism giving benefit and some not. He found out that each mechanism can contribute to the benefit of the contractor or otherwise give disadvantage to them. This is because in order for the mechanism to function depends on the country of project being undertaken and also other parties in the supply chain such as the supplier, the bank and the freight company. In order to conclude this study, a proposed guideline was constructed to help Thai contractors with global procuring in their mind. This guideline is meant to assist them in assessing all the possible impact from each participating party so that a strategic for procuring international project can be created.
The Road towards Globalization
The road toward globalization is never a smooth path. Most contractors learned the hard way in order to grasp the true benefit or FTA and the use of each mechanism. One of the interview respondent stated that 5 years ago, the Letter of Credit (L/C) was not know by contractors. Today it has become an important mechanism for transaction and a driving mechanism for easier flow of materials and better finance. Many contractors before fear of exploring the global market because of the many risk involved. Those who dare are mainly large scale contractors. Times are changing, contractors nowadays are slowly moving towards globalization due to tight competition and untapped advantages in the global market.
Another driving force for contractors is the recent trade agreements between Thailand and other countries. For the years to come, many more trade agreements will exist and Thai contractors will be force to join the global market or lose competitiveness.
His thesis abstract is copied and posted.
ABSTRACT
The shift of procurement methods in the construction industry is inevitable as Thailand moves towards globalization. Many contractors are slowly shifting their mindset towards the global market. Nevertheless, some contractors are still keeping their legs crossed because of fear and the risk involved in global procurement. This study aims to identify and analyze the mechanism that affects the free flow of materials, labor and equipment into other countries. The result of this study proposed useful guidelines for contractor in procuring oversea projects in terms of material, labor and equipment. In the analysis, the researcher found out that effect of each mechanism on the parties can be different according to case. This is because in order for the mechanism to function depends on the country of project being undertaken and also other parties in the supply chain such as the supplier, the bank and the freight company. The study is concluded by proposing some guidelines for contractors to check and measure when procuring international project. This model is done based on free trade mechanisms of the analyzed cases. To make a sound decision, the contractor should also consider other important factors such as cost, time, distance, political conditions and others.
Thursday 5 November 2009
Dr Shamaz joined UNSW
Dr Shamaz-Ur-Rehman Toor has joined UNSW as faculty member in the School of Built Environment.
http://www.fbe.unsw.edu.au/staff/shamas.toor/
Congratulations for your excellent achievement!
Regards
Hadikusumo
http://www.fbe.unsw.edu.au/staff/shamas.toor/
Congratulations for your excellent achievement!
Regards
Hadikusumo
Riza Yosia received PhD scholarship from UNSW
Good morning
I have a good news to share with you that Mr Riza Yosia is now pursuing his PhD in UNSW. He receives full scholarship from UNSW.
Regards
Hadikusumo
I have a good news to share with you that Mr Riza Yosia is now pursuing his PhD in UNSW. He receives full scholarship from UNSW.
Regards
Hadikusumo
Risks In The Construction Of Hydropower Tunnels In Vietnam
The landscape and topography of Vietnam is characterized by high mountains and deep valleys. There are thousand of rivers across the country, out of which, about ten rivers has potential for hydropower development. As a result of economic deregulation over the pass two decades, Vietnam economy is growing rapidly, causing a great demand of electricity. At the end of 2004, Electricity of Vietnam (EVN) was forced to sign a deal to import electricity from China because of impending shortages and it is also expected to sign up for imports from Laos from 2008.
Given that the construction of hydropower tunnels in Vietnam is experiencing many problems, Mr. Dau Xuan Thuy made a research with three main objectives such as follows: (1) to identify the unique or critical risks associated with hydropower tunnel construction projects in Vietnam; (2) to investigate perceptions of the parties about risk allocation in hydropower tunnel construction and whether the risks have really been allocated efficiently or not; and (3) to propose recommendations for the government agencies, the contractors, the consultants in developing human resources in order to build proper risk allocation strategies, leading to manage risks in future hydropower tunnel constructions more effectively.
His study revealed that in construction projects, cost over run and schedule delay can be prevented, work quality can be increased and disputes can be reduced if risks are identified and allocated properly. Tunneling is a special type of constructions but also have to face general risks like other type of constructions but also have to face some critical, unique risks that specific to underground works.
The results showed that some risks are ranked somewhat differently between the two projects and this is because the two projects used different methods of tunnel excavation. About half of Dai Ninh tunnel were excavated by TBM, which are more mechanised than excavated by D&B method. The TBM itself is a unique and very complicated machine which is very sensitive to the risk of breakdown which explains why the risk ‘Productivity of equipment’ in Dai Ninh project ranked sixth and is significantly higher than in the Buon Kuop project which ranked ninth. Tunneling by TBM will produce fewer overbreaks than tunneling by D&B method. This explained why the risk ‘Overbreak’ in Dai Ninh ranked lower than in Buon Kuop project. On the contrary, the risk ‘Underground water’ in Dai Ninh project ranked higher in Buon Kuop project because the TBM, which are very heavy and run by electricity, is very sensitive to the ingress of water in rock mass cavities into tunnel.
Mr. Thuy’s study also identified and listed 15 risks that unique to tunnel projects (see table below). Some of these risks are also listed in the top-ten most important risks.
Mr. Thuy’s second objective was also obtained which are the results of the surveys about risk allocation opinion of respondents at the two projects. The risk allocation opinion is based on the percentages of total counts of participant responses such as risk should be allocated to the owner, to the contractor, to the consultant, shared between the owner and the contractor, or shared between the owner and the consultant.
Risk allocation is an important stage of risk management. The purpose of risk management is to reduce the cost of the owner and maximize the benefit of the contractor. As we know that contractors charge a higher price on projects when the risk is high than when it is low. Therefore, owners can reduce the cost on their projects by reducing the risks the contractors are required to bear. This potential is greatest for those forms of risk which the owner is in a better position to control than the contractor.
Hypothesis testing also revealed that risks allocation attitude of the owner and the contractor in tunnel project in Vietnam is not different. This indicates that owners and contractors in Vietnam have the same opinion about who should be responsible for a certain risk. This is an important advantage that could reduce deputes in project procurement process and making important contribution to the success of projects.
The investigation into risk allocation practices at the two projects also have been done and the results show that although there are conflicts about policy perception for risk allocation between participants in the projects, majority of participants are satisfied with the current risk allocation arrangement in their projects. Risks are allocated more properly at Dai Ninh project than at Buon Kuop project, and respondents from Dai Ninh project are more optimistic about successfulness of risk control than the respondents at Buon Kuop Project. These differences between the two projects may be explained by the fact that Dai Ninh is an international project using FIDIC condition of contracts and most risks are allocated by contract clauses. Meanwhile, Buon Kuop is a local project and has not followed any standard contract form; consequently, many risks are not allocated properly.
Mr. Thuy’s recommendations
In recent years, the construction industry in Vietnam is having a good reputation of rapid development. However, many large scale projects invested by the government are still facing cost overrun and schedule delay. The main reason for these problems is that risks are not identified and allocated properly before project start. Owners and contractors don’t have official risk management systems for their projects. Through this study, the author would like to recommend some measures as follows:
Firstly, education and training policies should be established by the government to bring out the best of current human resources in the field of project management in which risk management is a major.
Secondly, corporations also had better have periodic risk training programs for its employees. Therefore, they can recognize the benefits of risk management and also know how to handle risks in their projects. It must help encourage responsibility, knowledge sharing, continuous improvement in coping with risks in tunnel construction projects.
Finally, a standard contract form should be developed and applied in all hydropower tunnel projects in Vietnam in which all major or known risks are allocated by contract clauses. So that risks can be managed by responsible party in order to reduce cost for the owner and maximize benefit to the contractor, preventing of conflicts, claims or litigations between the owner and the contractor.
ABSTRACT
This research focuses on the identification of major risk factors faced by parties involved in hydropower tunnel construction in Vietnam and investigates into the risk allocation opinion among the involved parties. The data collections were carried out by structured interviews at two hydropower tunnel construction projects in Vietnam. Beside, the research also investigated into the risk allocation practices at the two projects to find out whether the risks in these projects are allocated properly or not.
The results of risk identification obtained at the two tunnel projects indicated that, in general, the two tunnel project facing the same risks; however, some of the risks are somewhat different in rank between these tunnel projects because they used different methods of construction. Tunneling by TBM, which is more mechanized than tunneling by drill and blast method (D&B method), faces more risk about equipment productivity and ingress of ground water but less risk about overbreak. Opinions on risk allocation were also obtained at the two projects. Hypothesis tests pointed out that there is no conflict of opinion about risk allocation between the owner and the contractor in tunnel construction in Vietnam. Furthermore, risk allocation practices at the two projects have been investigated. Although there are some conflicts about policy perception for risk allocation between participants in the projects, majority of participants are satisfied with the current risk allocation arrangement in their projects.
Tunnel in hydropower project is very important for the development of electricity in Vietnam. However, tunnel construction is very risky. Firstly, the geologic condition of underground rock is unforeseeable; the risk of tunnel collapse due to unstable of rock mass or excessive of underground water may cause accidents resulting in losing of human, damage to equipment, and time extension and extra money are needed to overcome it. Secondly, the equipment for tunneling are unique, sophisticated and very expensive, the cost for replacing the main equipment is very high and some time it is not available in the market so that contractors need time to order it from the manufacturers. Moreover, as specified by Charoenngam and Yeh (1999) the projects are capital intensive and have long duration so that financial risk is very high.
Vietnam’s hydropower project it is now suffering from cost overrun, failing to meet time targets and specifications due to lack of systematic risk management. Some major risks may not be identified and appropriate allocated so that risks may not be controlled properly. As a result, many projects were not successful completed as planed in view of economic efficiency, technical requirements and production.
Vietnam’s hydropower project it is now suffering from cost overrun, failing to meet time targets and specifications due to lack of systematic risk management. Some major risks may not be identified and appropriate allocated so that risks may not be controlled properly. As a result, many projects were not successful completed as planed in view of economic efficiency, technical requirements and production.
Given that the construction of hydropower tunnels in Vietnam is experiencing many problems, Mr. Dau Xuan Thuy made a research with three main objectives such as follows: (1) to identify the unique or critical risks associated with hydropower tunnel construction projects in Vietnam; (2) to investigate perceptions of the parties about risk allocation in hydropower tunnel construction and whether the risks have really been allocated efficiently or not; and (3) to propose recommendations for the government agencies, the contractors, the consultants in developing human resources in order to build proper risk allocation strategies, leading to manage risks in future hydropower tunnel constructions more effectively.
His study revealed that in construction projects, cost over run and schedule delay can be prevented, work quality can be increased and disputes can be reduced if risks are identified and allocated properly. Tunneling is a special type of constructions but also have to face general risks like other type of constructions but also have to face some critical, unique risks that specific to underground works.
Mr. Thuy’s Risks first objective has been obtained. Risks in tunnel construction have been identified and ranked for significant at two case studies. In the order to determine the major risks, total weighting score, which is product of frequency of occurrence and degree of impact, has been calculated. The top-ten risks and its ranks were identified (see table below) at Buon Kuop project and Dai Ninh project.
The results showed that some risks are ranked somewhat differently between the two projects and this is because the two projects used different methods of tunnel excavation. About half of Dai Ninh tunnel were excavated by TBM, which are more mechanised than excavated by D&B method. The TBM itself is a unique and very complicated machine which is very sensitive to the risk of breakdown which explains why the risk ‘Productivity of equipment’ in Dai Ninh project ranked sixth and is significantly higher than in the Buon Kuop project which ranked ninth. Tunneling by TBM will produce fewer overbreaks than tunneling by D&B method. This explained why the risk ‘Overbreak’ in Dai Ninh ranked lower than in Buon Kuop project. On the contrary, the risk ‘Underground water’ in Dai Ninh project ranked higher in Buon Kuop project because the TBM, which are very heavy and run by electricity, is very sensitive to the ingress of water in rock mass cavities into tunnel.Mr. Thuy’s study also identified and listed 15 risks that unique to tunnel projects (see table below). Some of these risks are also listed in the top-ten most important risks.
Mr. Thuy’s second objective was also obtained which are the results of the surveys about risk allocation opinion of respondents at the two projects. The risk allocation opinion is based on the percentages of total counts of participant responses such as risk should be allocated to the owner, to the contractor, to the consultant, shared between the owner and the contractor, or shared between the owner and the consultant.Risk allocation is an important stage of risk management. The purpose of risk management is to reduce the cost of the owner and maximize the benefit of the contractor. As we know that contractors charge a higher price on projects when the risk is high than when it is low. Therefore, owners can reduce the cost on their projects by reducing the risks the contractors are required to bear. This potential is greatest for those forms of risk which the owner is in a better position to control than the contractor.
Hypothesis testing also revealed that risks allocation attitude of the owner and the contractor in tunnel project in Vietnam is not different. This indicates that owners and contractors in Vietnam have the same opinion about who should be responsible for a certain risk. This is an important advantage that could reduce deputes in project procurement process and making important contribution to the success of projects.
The investigation into risk allocation practices at the two projects also have been done and the results show that although there are conflicts about policy perception for risk allocation between participants in the projects, majority of participants are satisfied with the current risk allocation arrangement in their projects. Risks are allocated more properly at Dai Ninh project than at Buon Kuop project, and respondents from Dai Ninh project are more optimistic about successfulness of risk control than the respondents at Buon Kuop Project. These differences between the two projects may be explained by the fact that Dai Ninh is an international project using FIDIC condition of contracts and most risks are allocated by contract clauses. Meanwhile, Buon Kuop is a local project and has not followed any standard contract form; consequently, many risks are not allocated properly.
Mr. Thuy’s recommendations
In recent years, the construction industry in Vietnam is having a good reputation of rapid development. However, many large scale projects invested by the government are still facing cost overrun and schedule delay. The main reason for these problems is that risks are not identified and allocated properly before project start. Owners and contractors don’t have official risk management systems for their projects. Through this study, the author would like to recommend some measures as follows:
Firstly, education and training policies should be established by the government to bring out the best of current human resources in the field of project management in which risk management is a major.
Secondly, corporations also had better have periodic risk training programs for its employees. Therefore, they can recognize the benefits of risk management and also know how to handle risks in their projects. It must help encourage responsibility, knowledge sharing, continuous improvement in coping with risks in tunnel construction projects.
Finally, a standard contract form should be developed and applied in all hydropower tunnel projects in Vietnam in which all major or known risks are allocated by contract clauses. So that risks can be managed by responsible party in order to reduce cost for the owner and maximize benefit to the contractor, preventing of conflicts, claims or litigations between the owner and the contractor.
His thesis abstract is copied and posted.
ABSTRACT
This research focuses on the identification of major risk factors faced by parties involved in hydropower tunnel construction in Vietnam and investigates into the risk allocation opinion among the involved parties. The data collections were carried out by structured interviews at two hydropower tunnel construction projects in Vietnam. Beside, the research also investigated into the risk allocation practices at the two projects to find out whether the risks in these projects are allocated properly or not.
The results of risk identification obtained at the two tunnel projects indicated that, in general, the two tunnel project facing the same risks; however, some of the risks are somewhat different in rank between these tunnel projects because they used different methods of construction. Tunneling by TBM, which is more mechanized than tunneling by drill and blast method (D&B method), faces more risk about equipment productivity and ingress of ground water but less risk about overbreak. Opinions on risk allocation were also obtained at the two projects. Hypothesis tests pointed out that there is no conflict of opinion about risk allocation between the owner and the contractor in tunnel construction in Vietnam. Furthermore, risk allocation practices at the two projects have been investigated. Although there are some conflicts about policy perception for risk allocation between participants in the projects, majority of participants are satisfied with the current risk allocation arrangement in their projects.
Tuesday 3 November 2009
Professor Ali Jaafari Gives Lecture at AIT
Dr. Ali Jaafari, Professor and President of the Asia Pacific International College was invited to be the Speaker at the seminar held in AIT on 27 October 2009. The theme of this seminar is “The making of Professional Managers and Leaders: How to succeed on the Face of a Fast Challenging World”. This was attended by Dr. B. H. W. Hadikusumo, Associate Professor and Coordinator, CEIM-SET, some AIT staff and around 35 Ph. D. and M. S. Students of CEIM Field of Study.
About the Lecture
ABSTRACT
Professional people face different career paths to those of the past, when relative certainty and continuity were the norm. The socio-economic and political environments have changed to complex or even chaotic state and continue to challenge even the most hardened managers. Projects and programs have risen in complexity too, due to complex environments, changing goals and conflicting interests. Knowledge increases at a rapid rate and affects all fields of activity. In this environment a normative model of thinking and practice, based on best practice models, can no longer be the foundation of professionality in most fields of endeavour. In this presentation the author will attempt to respond to the following key questions and to raise the level of debate on professional development and practice as well as the role of educational institutions:
About the Lecture
ABSTRACT
Professional people face different career paths to those of the past, when relative certainty and continuity were the norm. The socio-economic and political environments have changed to complex or even chaotic state and continue to challenge even the most hardened managers. Projects and programs have risen in complexity too, due to complex environments, changing goals and conflicting interests. Knowledge increases at a rapid rate and affects all fields of activity. In this environment a normative model of thinking and practice, based on best practice models, can no longer be the foundation of professionality in most fields of endeavour. In this presentation the author will attempt to respond to the following key questions and to raise the level of debate on professional development and practice as well as the role of educational institutions:
What characterises the contemporary environment within which business, projects and endeavours take shape?
What are the business and social drivers and how do these affect organisations in both public and private sectors?
What are the implications for professional people?
Why is it necessary to promote and apply a new model of professionalism along the concept of transformative leadership?
Who are creative-reflective professionals, and what characterises them?
How relevant are these concepts to professionals, classed as techno-management professionals?
The thesis advanced by the author is that most graduates taught under a normative model cannot cope with a fast changing world nor perform professionally well despite all that training that goes to their preparation. They need additional and systemic preparation to develop different competencies and cognitive abilities that will aid them survive or even thrive in an environment of change and uncertainty. This thesis gave rise to the establishment of Asia Pacific International College (APIC) as a unique institution that aims to help both fresh university graduates as well as mature age professionals to acquire new resilience and abilities to rise above the complex challenges facing them. A major pillar of such development is leadership and transformative capabilities.
Photos during the Seminar
Why is it necessary to promote and apply a new model of professionalism along the concept of transformative leadership?
Who are creative-reflective professionals, and what characterises them?
How relevant are these concepts to professionals, classed as techno-management professionals?
The thesis advanced by the author is that most graduates taught under a normative model cannot cope with a fast changing world nor perform professionally well despite all that training that goes to their preparation. They need additional and systemic preparation to develop different competencies and cognitive abilities that will aid them survive or even thrive in an environment of change and uncertainty. This thesis gave rise to the establishment of Asia Pacific International College (APIC) as a unique institution that aims to help both fresh university graduates as well as mature age professionals to acquire new resilience and abilities to rise above the complex challenges facing them. A major pillar of such development is leadership and transformative capabilities.
Photos during the Seminar
Speaker’s Biography:
Professor Jaafari is a distinguished educator and consultant, recognised internationally, particularly in management of large complex projects and programs. He has delivered courses and training workshops for more than 3500 professionals and executives globally, including many multi-national corporations, EPC firms, major public and private sector organisations, and government agencies. Professor Jaafari has published widely in major international journals and conferences, books and monographs. He currently heads Asia Pacific International College. He held the Chair of Project Management at the University of Sydney until August 2004. Professor Jaafari has an extensive professional track record in this field and is known as an authority internationally.
Professor Jaafari is a distinguished educator and consultant, recognised internationally, particularly in management of large complex projects and programs. He has delivered courses and training workshops for more than 3500 professionals and executives globally, including many multi-national corporations, EPC firms, major public and private sector organisations, and government agencies. Professor Jaafari has published widely in major international journals and conferences, books and monographs. He currently heads Asia Pacific International College. He held the Chair of Project Management at the University of Sydney until August 2004. Professor Jaafari has an extensive professional track record in this field and is known as an authority internationally.
Monday 2 November 2009
Prof. Peter Barrett gives lecture on “The important place of construction in the economy (using results from the revaluing construction work)”
The School of Engineering and Technology (AIT Thailand) conducted a seminar with the theme “The important place of construction in the economy (using results from the revaluing construction work)” last 19 October 2009. Professor Peter Barrett was invited to be the guest speaker for this event. Prof. Barrett is currently Professor in Construction and Property Management of the University of Salford.
Dr. Chotchai Charoenngam, Associate Professor, CEIM-SET and around 40 Ph. D. and Master Students attended this event.
Dr. Chotchai Charoenngam, Associate Professor, CEIM-SET and around 40 Ph. D. and Master Students attended this event.
Prof. Peter Barrett and Dr. Chotchai Charoenngam after the lecture.
Group photo : Prof. Barrett and Dr. Chotchai (center) together with CEIM staff, Ph. D. and M. S. students
About the Speaker
Peter is President of the UN-established International Council for Research and Innovation in Building and Construction (CIB) involving 2000 experts in 60 countries. He is a past Director of Salford’s top rated, 6* Research Institute for the Built and Human Environment and is currently Chairman of the £5M EPSRC funded, Salford Centre for Research and Innovation. From 2001 - 2008 Professor Barrett was Pro-Vice Chancellor for Research with overall responsibility for all research across Salford University, which in this period grew from involving 38% to 60% of academic staff. See Research and Graduate College,Peter is a Fellow of the Royal Institution of Chartered Surveyors and in 1989 was the first Chartered Building Surveyor to gain a PhD. He has since supervised and supported a wide range of Post Graduate students. To date he has produced over one hundred and seventy single volume publications, refereed papers and reports, and has made over one hundred and ten presentations in around sixteen countries. Professor Barrett has undertaken a wide range of research, typified by a management focus around real world problems using a range of hard and soft research methods. He is currently focusing on the theme of Revaluing Construction with a particular interest in the links between Senses, Brain and Spaces.
About the Speaker
Peter is President of the UN-established International Council for Research and Innovation in Building and Construction (CIB) involving 2000 experts in 60 countries. He is a past Director of Salford’s top rated, 6* Research Institute for the Built and Human Environment and is currently Chairman of the £5M EPSRC funded, Salford Centre for Research and Innovation. From 2001 - 2008 Professor Barrett was Pro-Vice Chancellor for Research with overall responsibility for all research across Salford University, which in this period grew from involving 38% to 60% of academic staff. See Research and Graduate College,Peter is a Fellow of the Royal Institution of Chartered Surveyors and in 1989 was the first Chartered Building Surveyor to gain a PhD. He has since supervised and supported a wide range of Post Graduate students. To date he has produced over one hundred and seventy single volume publications, refereed papers and reports, and has made over one hundred and ten presentations in around sixteen countries. Professor Barrett has undertaken a wide range of research, typified by a management focus around real world problems using a range of hard and soft research methods. He is currently focusing on the theme of Revaluing Construction with a particular interest in the links between Senses, Brain and Spaces.
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