Infrastructure management in the past may not used the optimal planning for maintenance and rehabilitation. Many governments developed methods for the maintenance operation and rehabilitation planning. They concerned the three main processes. Those are, how to inspect the performance of the infrastructure, the appropriate frequency of inspection data, and the best way to find the maintenance and rehabilitation technique on the appropriate time.
Most development interest in the performance index such as condition index or roughness index, it is the method to optimize the maintenance and rehabilitation planning, and the optimal inspection time interval. The sample unit management in term of the number of sample unit and inspection interval does not have the optimal technique. This omission made many problems in every country about the inspection tradeoff between time, cost, and accuracy.
Mr. Dolyawich Nongpong made a study which main objective was to optimize the inspection interval for the pavement inspection. The secondary objectives of his study were to (1) develop the reliability functions that are derived from IRI data. This function can help deciding the inspection interval and pavement reliability, (2) show the percentage of inspection sample reduction based on the traffic volume of the pavement; (3) develop the modified model that is derived from the cost data. This function is developed based on the number of inspection sample; and (4) show the percentage difference of the inspection costs between the calculation cost and the actual cost.
Conclusions
The important conclusions for Mr. Nongpong’s research are:
1. The optimal inspection interval is related to the traffic volume and the pavement performance.
2. The current technique to collect IRI data every kilometer is not the optimal sample.
3. The most appropriate reliability function is the lognormal type.
4. The cost model is reliable to estimate the cost for inspection IRI data.
5. The reliability functions in this study are reliable and acceptable.
6. The optimal inspection intervals in this study are reliable and acceptable.
7. The cost model requires the development for more reasonable cost factor in the future work when the cost data is available.
His thesis abstract is copied and posted.
ABSTRACT
Highway agencies spend a large amount of budget in collecting the pavement condition data. Visual inspection is a time-consuming and expensive task. Most agencies sample the inspection areas and use the selected sample size to represent the condition of the entire area. Decreasing the number of sample size can reduce the total inspection cost and time, but it may jeopardize the overall data quality. Reliability can be defined as a probability of a non-failure over the specific time. The reliability of the pavement plays an important role in the life cycle cost analysis. It can be viewed as the subset of the pavement quality that satisfies the users’ requirement and can be used to determine the expected service life of the pavement as well.
This main objective of this research is to apply the reliability theory to determine the optimal pavement inspection intervals and the appropriate sample size for pavement inspection. The relationship between reliability values and the number of sample units is investigated. The analysis used in this study is based on the relationship between the number of sample units and their reliability values. Traffic volumes are grouped to investigate the sensitivity of different parameters on the reliability values. This paper presented the optimal pavement inspection intervals determined based on the developed reliability values and the appropriate inspection sample size for highway agencies to balance between data quality issue and inspection cost control.
Monday 12 April 2010
Thursday 8 April 2010
Collaborative Solving Problems Between Consultants and Contractors
During the construction stage, many problems frequently arise especially in large-scale project. Moreover, those problems are extremely needed rapid decision making from the proper authority because the nature of construction projects is dynamic and fast moving. Consultants and contractors that act as center of project communications and collaborations should be able to solve or reduce the negative effects of those problems (Wickham, 1999). For effective and efficient projects, there are several reasons that need proper manners of consultants and contractors for enhancing collaborations especially when contracting problems arise.
In construction project, collaboration is a key for project success, especially when there are contracting problems such as change order, design-related, differing site condition and progress payment. The benefit of timely solving problems is located through all stakeholders. Every party has win-win attitude in for rapidly solved problems that occur during construction stage and lead projects to be effectiveness and efficiency.
Miss Wijittra Mahavarakorn made a study which main objective was to find out treatment methods for collaborative improvement when such problems arise. To achieve the major objectives, four sub-objectives was needed to accomplish such as follows:
1. to identify collaborative attributes related with contracting problems during construction stage;
2. to examine differences in perceptions between consultants and contractors regarding collaborations when contracting problem arise;
3. to investigate collaborative practices to find out between consultants and contractors causing by improper collaborations; and
4. to propose recommendations on how to enhance collaborative problem solving.
Conclusions
According to the collaborative matrix model, this research is logically summarized and divided into two sections that are collaborative perceptions through five collaborative attributes and six contracting problems. For more clarification, findings of consultants and contractors’ perceptions are summarized into the highest and lowest collaborations from collaborative attributes and contracting problems in followings.
Collaborative Perceptions through Collaborative Attributes
In overall, results found that consultants are higher perceptions in collaboration than contractors. Moreover, rationally utilitarian of logical reason in actions and decision making (Rationale) is the highest collaboration by collaborative attributes from consultants and contractors. Moreover, adaptability of consultants and contractors to change themselves in networks and information environment (Adaptability) is the lowest perceptions in collaboration.
a. Rationale: The highest perceptions of rationally utilitarian of logical reason in actions and decision making in contracting problems from consultants and contractors is negotiated price/unit price of varied works. The contracting problem of differing site condition is the lowest perceptions from consultants and contractors.
b. Goal-orientation: The highest perceptions of always concerned a goal in every pursuit in contracting problems from consultants and contractors is error and unclear drawings and specifications. The contracting problem of timely payment is the lowest perceptions from consultants and contractors.
c. Reactivity: The highest perceptions of timely responsive actions in contracting problems from consultants and contractors is differing site condition and timely payment from the owner. The contracting problem of negotiated extra quantities of milestone payment is the lowest perceptions from consultants and contractors.
In construction project, collaboration is a key for project success, especially when there are contracting problems such as change order, design-related, differing site condition and progress payment. The benefit of timely solving problems is located through all stakeholders. Every party has win-win attitude in for rapidly solved problems that occur during construction stage and lead projects to be effectiveness and efficiency.
Miss Wijittra Mahavarakorn made a study which main objective was to find out treatment methods for collaborative improvement when such problems arise. To achieve the major objectives, four sub-objectives was needed to accomplish such as follows:
1. to identify collaborative attributes related with contracting problems during construction stage;
2. to examine differences in perceptions between consultants and contractors regarding collaborations when contracting problem arise;
3. to investigate collaborative practices to find out between consultants and contractors causing by improper collaborations; and
4. to propose recommendations on how to enhance collaborative problem solving.
Conclusions
According to the collaborative matrix model, this research is logically summarized and divided into two sections that are collaborative perceptions through five collaborative attributes and six contracting problems. For more clarification, findings of consultants and contractors’ perceptions are summarized into the highest and lowest collaborations from collaborative attributes and contracting problems in followings.
Collaborative Perceptions through Collaborative Attributes
In overall, results found that consultants are higher perceptions in collaboration than contractors. Moreover, rationally utilitarian of logical reason in actions and decision making (Rationale) is the highest collaboration by collaborative attributes from consultants and contractors. Moreover, adaptability of consultants and contractors to change themselves in networks and information environment (Adaptability) is the lowest perceptions in collaboration.
a. Rationale: The highest perceptions of rationally utilitarian of logical reason in actions and decision making in contracting problems from consultants and contractors is negotiated price/unit price of varied works. The contracting problem of differing site condition is the lowest perceptions from consultants and contractors.
b. Goal-orientation: The highest perceptions of always concerned a goal in every pursuit in contracting problems from consultants and contractors is error and unclear drawings and specifications. The contracting problem of timely payment is the lowest perceptions from consultants and contractors.
c. Reactivity: The highest perceptions of timely responsive actions in contracting problems from consultants and contractors is differing site condition and timely payment from the owner. The contracting problem of negotiated extra quantities of milestone payment is the lowest perceptions from consultants and contractors.
d. Cooperation: The highest perception of social ability to interact with others in contracting problems from consultants and contractors is negotiated extra quantities of milestone payment. The contracting problem of timely payment is the lowest perceptions from consultants and contractors.
e. Adaptability: The highest perception to change themselves in networks and information environments in contracting problems from consultants and contractors is differing site condition. The contracting problem of timely payment is the lowest perceptions from consultants and contractors.
2. Collaborative Perceptions through Contracting Problems
In overall of contracting problems, results found that consultants are higher perceptions in collaboration than contractors. Moreover, the contracting problem of negotiated price/unit price of varied works is the highest collaboration from consultants and contractors. Moreover, the contracting problem in timely payment from the owner is the lowest perceptions in collaborations of consultants and contractors.
a. Negotiated Price or Unit Price of Varied Works
b. Evaluated Time or Cost Compensations from Change Order Impacts
c. Error and Unclear Drawings and Specifications:
d. Differing Site Condition of under or over Ground
e. Negotiated in Extra Quantities of Milestone Payment between Actual and Contact Document
f. Timely Payment from the Owner
In summary, consultants and contractors’ perceptions are identified into two main perspectives that are collaborations and contracting problems. Results found that rationally utilitarian of logical reason in actions and decision making (Rationale) and ability to change themselves in networks and information environment (Adaptability) are the highest and lowest collaborations from consultants and contractors respectively. For another perspective, the problem in negotiated price/unit price of varied works is the highest collaborations from consultants and contractors. Timely payment from the owner is the lowest collaborations in contracting problems from consultants and contractors. Moreover, consultants perceive in collaboration higher than contractors. There are different perceptions among them in all contracting problems. Therefore, different perceptions are required to treat by consultants and contractors in the proper implications to enhance collaboration among multi-parties.
3. Recommendations for Improvement
For achieving the final objective of this study, the last research objective is completed by proposing treatment methods for consultants and contractors’ improvement through contracting problems as illustrated in figure 1. In the previous section, collaborative manners are provided for both consultants and contractors according with collaborative attributes and contracting problems. In this section, treatment methods are recommended proper collaborations for inter-correlation among consultants and contractors during preplanning and construction stage. Details of treatment methods in six contracting problems for improvement are illustrated in table 1. Benefits of this survey are clearer understanding for consultants and contractors in the existing phenomenon of other perceptions when contracting problems arise. Furthermore, benefits of recommendations utilize for proactive implementations systems of consultants and contractors’ collaborations.
e. Adaptability: The highest perception to change themselves in networks and information environments in contracting problems from consultants and contractors is differing site condition. The contracting problem of timely payment is the lowest perceptions from consultants and contractors.
2. Collaborative Perceptions through Contracting Problems
In overall of contracting problems, results found that consultants are higher perceptions in collaboration than contractors. Moreover, the contracting problem of negotiated price/unit price of varied works is the highest collaboration from consultants and contractors. Moreover, the contracting problem in timely payment from the owner is the lowest perceptions in collaborations of consultants and contractors.
a. Negotiated Price or Unit Price of Varied Works
b. Evaluated Time or Cost Compensations from Change Order Impacts
c. Error and Unclear Drawings and Specifications:
d. Differing Site Condition of under or over Ground
e. Negotiated in Extra Quantities of Milestone Payment between Actual and Contact Document
f. Timely Payment from the Owner
In summary, consultants and contractors’ perceptions are identified into two main perspectives that are collaborations and contracting problems. Results found that rationally utilitarian of logical reason in actions and decision making (Rationale) and ability to change themselves in networks and information environment (Adaptability) are the highest and lowest collaborations from consultants and contractors respectively. For another perspective, the problem in negotiated price/unit price of varied works is the highest collaborations from consultants and contractors. Timely payment from the owner is the lowest collaborations in contracting problems from consultants and contractors. Moreover, consultants perceive in collaboration higher than contractors. There are different perceptions among them in all contracting problems. Therefore, different perceptions are required to treat by consultants and contractors in the proper implications to enhance collaboration among multi-parties.
3. Recommendations for Improvement
For achieving the final objective of this study, the last research objective is completed by proposing treatment methods for consultants and contractors’ improvement through contracting problems as illustrated in figure 1. In the previous section, collaborative manners are provided for both consultants and contractors according with collaborative attributes and contracting problems. In this section, treatment methods are recommended proper collaborations for inter-correlation among consultants and contractors during preplanning and construction stage. Details of treatment methods in six contracting problems for improvement are illustrated in table 1. Benefits of this survey are clearer understanding for consultants and contractors in the existing phenomenon of other perceptions when contracting problems arise. Furthermore, benefits of recommendations utilize for proactive implementations systems of consultants and contractors’ collaborations.
Her thesis abstract is copied and posted below.
ABSTRACT
Due to increasing demand from customers, construction projects are getting more complicated. Therefore, professionals in construction business are forced to enhance their construction skills and competencies in order to effectively deliver projects as customers’ requirements. For that reason, consultants and contractors are a center of collaborations among multi-parties in construction projects for running project smoothly. Therefore, the appropriate collaboration is one of the most essential success factors for project effectiveness. This research is aimed to find out how to enhance collaborations when contracting problems arise.
To achieve the objective of study, collaborative attributes are framed and used to explore existing perceptive practices in contracting problems including rationale, goal orientation, reactivity, cooperation, and adaptability attribute. Contracting problems are focused on change order, design-related, differing site condition, and progress payment. The hypothesis of this research is statistically analyzed by the T-Test method to find out similar or different perceptions among consultants and contractors. Consequently, questionnaire survey was applied from project managers of contractors and consultants’ companies. Additionally, interviews were conducted for in-depth information. The result of collaborative perceptions between contractors and consultants is depicted by Relative Index (R.I.) and the collaborative level.
Results were found that consultants assessed themselves to be more collaboration, when contracting problems arise, than contractors. The hypothesis was statistically tested and demonstrated that there are different perceptions among consultants and contractors in investigated contracting problems. Moreover, findings found that rationale and adaptability are the highest and lowest collaborations respectively. Negotiated price/unit price of varied works is the highest collaborations in contracting perspectives from consultants and contractors. Additionally, the contracting problem of timely payment from the owner is lowest collaborations. Therefore, this research recommends: (1) designing and implementing collaboration management systems for given projects’ environment; and (2) providing clear contracting clauses in contract document for enhancing collaborations for typical contracting problems.
ABSTRACT
Due to increasing demand from customers, construction projects are getting more complicated. Therefore, professionals in construction business are forced to enhance their construction skills and competencies in order to effectively deliver projects as customers’ requirements. For that reason, consultants and contractors are a center of collaborations among multi-parties in construction projects for running project smoothly. Therefore, the appropriate collaboration is one of the most essential success factors for project effectiveness. This research is aimed to find out how to enhance collaborations when contracting problems arise.
To achieve the objective of study, collaborative attributes are framed and used to explore existing perceptive practices in contracting problems including rationale, goal orientation, reactivity, cooperation, and adaptability attribute. Contracting problems are focused on change order, design-related, differing site condition, and progress payment. The hypothesis of this research is statistically analyzed by the T-Test method to find out similar or different perceptions among consultants and contractors. Consequently, questionnaire survey was applied from project managers of contractors and consultants’ companies. Additionally, interviews were conducted for in-depth information. The result of collaborative perceptions between contractors and consultants is depicted by Relative Index (R.I.) and the collaborative level.
Results were found that consultants assessed themselves to be more collaboration, when contracting problems arise, than contractors. The hypothesis was statistically tested and demonstrated that there are different perceptions among consultants and contractors in investigated contracting problems. Moreover, findings found that rationale and adaptability are the highest and lowest collaborations respectively. Negotiated price/unit price of varied works is the highest collaborations in contracting perspectives from consultants and contractors. Additionally, the contracting problem of timely payment from the owner is lowest collaborations. Therefore, this research recommends: (1) designing and implementing collaboration management systems for given projects’ environment; and (2) providing clear contracting clauses in contract document for enhancing collaborations for typical contracting problems.
Monday 5 April 2010
An Application of Asset Valuation for Railroad Tracks
The concept of asset valuation, which is the part of asset management, has been widely accepted from many agencies in both private and public sectors. In Thailand, many public agencies have addressed the concept of asset management and incorporated into their infrastructure management system. The public transportation agencies such as the Department of Highways (DOH) have applied the concept of asset management into its infrastructure management such as Pavement Management System (PMS) and Bridge Management System (BMS). This concept helps DOH manage their infrastructures more effective in allocate maintenance resources and manage the agency maintenance funds.
Valuing the value of asset is one of the important procedures that play an important role in asset management. The value of asset can be incorporated in the financial statement of the company. Moreover, it plays as one of the criterion that the managers use in the decision-making.
Reporting the asset in monetary term can help the managers or politicians understand the value of assets easier than the engineering term and can help them understand the return on benefits when maintenance is applied. Mr. Chinnawit Yamkruan conducted a study in which he applied different valuation techniques to evaluate the value of railroad tracks and analyzes the sensitivity of the track value in order to enhance the knowledge of the decision-makers and to improve the efficiency of the decision-making.
The main objective of his research was to develop the framework for valuing railroad track of the State Railway of Thailand (SRT) in order to assist the maintenance program and to increase the efficiency of the decision-making process. The secondary objectives of his research were to: (1) apply different asset valuation approaches to determine the value of railroad track; and (2) recommend the advantage and disadvantage of each asset valuation techniques.
Conclusion
Railroad track value comparison
1. Cost Approach
According to the results of track values from the cost approach, that track value of the Northern line is higher than track value of the Eastern line. Most of railroad tracks in the Northern line are in a good condition. This study also found out that track value appears to be sensitive to QI value when a change of QI value results a change in the recommended maintenance treatment type of SRT since QI value has a direct relationship with a physical deterioration. Therefore, when the conditions of railroad track decline or QI values increase, it will make the physical deterioration increase and track values decrease or when QI values decrease, track values will increase.
Disadvantages of the cost approaches are: there are many methods to calculate parameters of the cost approach. It might make the asset value of the same asset to be different if the appraisers use different methods.
2. Income Capitalization Approach
Based on the results of track values from the income capitalization approach in, the track value of the Northern line is higher than track value of the Eastern line approximately two times. Because the net operating incomes (NOI) of the Northern line are much higher than the net operating incomes of the Eastern line. This approach estimates track values by interesting only the potential of income generating of both lines. Therefore, it makes a difference of track values of both lines is high.
Disadvantages of the cost approaches are; asset value from the income capitalization approach does not have the relationship to the real condition of the asset.
3. Sensitivity analyses of relevant variables
Test cases of relevant variables are analyzed to investigate their impacts on track values. This study performs the sensitivity analyses in both the relevant variables of the cost approach and the income capitalization approach. The summarized results of the sensitivity analyses of these two approaches are following below:
a. Sensitivity analysis of track values from the cost approach
In the sensitivity analyses of relevant variable of the cost approach, relevant variables are classified into two categories:
1. Monetary variables - defined as a variable that are related to money, e.g. material price, labor cost and maintenance price.
2. Non-monetary variables are defined as variables that do not related to money, which are Track Quality Index (QI), type of rail, type of sleeper and type of construction standard.
The impacts of different variables were investigated and comparison was performed between a base case and test case.
The sensitivity study of the monetary variables can be summarized as a change in material price and labor cost appear causes a change of track value in the same direction but the change of maintenance price causes the change of track value in the reverse direction. In addition, material price has the impacts on the changes of track value more than labor cost and maintenance price do.
The analysis also reveals that track values are sensitive to the changes in QI value, rail type, sleeper type and construction standard with respect to non-monetary variables. According to the sensitivity study of QI values, track value appears to be sensitive to QI value results in a change of the recommended maintenance treatment from SRT.
The results of the sensitivity study of rail type, sleeper type and construction standard show that track value will increase when rail type, sleeper type and construction standard are changed from the exits type to the better type. In addition, it should be noted that the change of the construction standard has very high impact to the changes of track values.
b. Sensitivity analysis of track values from the income capitalization approach
In the sensitivity analysis of track values from the income capitalization approach, relevant variables that are applied in this analysis are revenue, expenditure and discount rate. According to the sensitivity analyses results, it can be summarized that a change in revenue and discount rate appear to cause a change of track value in the same direction but the change of expenditure causes the change of track value in the reverse direction. Moreover, revenue has the impacts on the changes of track value more than discount rate and expenditure do.
His thesis abstract is copied and posted.
ABTRACT
Railroad track maintenance is a part of infrastructure maintenance of the State Railway of Thailand (SRT). In reporting the maintenance programs, results from improving the condition of railroad tracks are reported to the top of organization or the politicians in the form of engineering term. Reporting the maintenance programs in the engineering term is difficult for the top managers or politicians to imagine or understand the benefits or affects when the maintenance program is applied.
This study focuses on an application of the asset valuation approaches in order to develop the framework for valuing railroad tracks and demonstrate reporting the railroad track in monetary term. Railroad tracks of the Northern line and the Eastern line of SRT are used as the case studies in this study. This study applies two valuation approaches, which are cost approach and income capitalization approach, in estimating value of railroad tracks. In addition, sensitivity analyses of relevant variables are performed to investigate their impact on railroad track values.
Results of this study show that railroad track value, which are derived from the cost approach, are different from the track values that are derived from the income capitalization approach. The differences of railroad track values between these two approaches are caused from the different interest in estimating asset value. The results of the sensitivity analyses of relevant variables in both cost approach and income capitalization approach show that different variables have effects on railroad track value at different levels.
Valuing the value of asset is one of the important procedures that play an important role in asset management. The value of asset can be incorporated in the financial statement of the company. Moreover, it plays as one of the criterion that the managers use in the decision-making.
Reporting the asset in monetary term can help the managers or politicians understand the value of assets easier than the engineering term and can help them understand the return on benefits when maintenance is applied. Mr. Chinnawit Yamkruan conducted a study in which he applied different valuation techniques to evaluate the value of railroad tracks and analyzes the sensitivity of the track value in order to enhance the knowledge of the decision-makers and to improve the efficiency of the decision-making.
The main objective of his research was to develop the framework for valuing railroad track of the State Railway of Thailand (SRT) in order to assist the maintenance program and to increase the efficiency of the decision-making process. The secondary objectives of his research were to: (1) apply different asset valuation approaches to determine the value of railroad track; and (2) recommend the advantage and disadvantage of each asset valuation techniques.
Conclusion
Railroad track value comparison
1. Cost Approach
According to the results of track values from the cost approach, that track value of the Northern line is higher than track value of the Eastern line. Most of railroad tracks in the Northern line are in a good condition. This study also found out that track value appears to be sensitive to QI value when a change of QI value results a change in the recommended maintenance treatment type of SRT since QI value has a direct relationship with a physical deterioration. Therefore, when the conditions of railroad track decline or QI values increase, it will make the physical deterioration increase and track values decrease or when QI values decrease, track values will increase.
Disadvantages of the cost approaches are: there are many methods to calculate parameters of the cost approach. It might make the asset value of the same asset to be different if the appraisers use different methods.
2. Income Capitalization Approach
Based on the results of track values from the income capitalization approach in, the track value of the Northern line is higher than track value of the Eastern line approximately two times. Because the net operating incomes (NOI) of the Northern line are much higher than the net operating incomes of the Eastern line. This approach estimates track values by interesting only the potential of income generating of both lines. Therefore, it makes a difference of track values of both lines is high.
Disadvantages of the cost approaches are; asset value from the income capitalization approach does not have the relationship to the real condition of the asset.
3. Sensitivity analyses of relevant variables
Test cases of relevant variables are analyzed to investigate their impacts on track values. This study performs the sensitivity analyses in both the relevant variables of the cost approach and the income capitalization approach. The summarized results of the sensitivity analyses of these two approaches are following below:
a. Sensitivity analysis of track values from the cost approach
In the sensitivity analyses of relevant variable of the cost approach, relevant variables are classified into two categories:
1. Monetary variables - defined as a variable that are related to money, e.g. material price, labor cost and maintenance price.
2. Non-monetary variables are defined as variables that do not related to money, which are Track Quality Index (QI), type of rail, type of sleeper and type of construction standard.
The impacts of different variables were investigated and comparison was performed between a base case and test case.
The sensitivity study of the monetary variables can be summarized as a change in material price and labor cost appear causes a change of track value in the same direction but the change of maintenance price causes the change of track value in the reverse direction. In addition, material price has the impacts on the changes of track value more than labor cost and maintenance price do.
The analysis also reveals that track values are sensitive to the changes in QI value, rail type, sleeper type and construction standard with respect to non-monetary variables. According to the sensitivity study of QI values, track value appears to be sensitive to QI value results in a change of the recommended maintenance treatment from SRT.
The results of the sensitivity study of rail type, sleeper type and construction standard show that track value will increase when rail type, sleeper type and construction standard are changed from the exits type to the better type. In addition, it should be noted that the change of the construction standard has very high impact to the changes of track values.
b. Sensitivity analysis of track values from the income capitalization approach
In the sensitivity analysis of track values from the income capitalization approach, relevant variables that are applied in this analysis are revenue, expenditure and discount rate. According to the sensitivity analyses results, it can be summarized that a change in revenue and discount rate appear to cause a change of track value in the same direction but the change of expenditure causes the change of track value in the reverse direction. Moreover, revenue has the impacts on the changes of track value more than discount rate and expenditure do.
His thesis abstract is copied and posted.
ABTRACT
Railroad track maintenance is a part of infrastructure maintenance of the State Railway of Thailand (SRT). In reporting the maintenance programs, results from improving the condition of railroad tracks are reported to the top of organization or the politicians in the form of engineering term. Reporting the maintenance programs in the engineering term is difficult for the top managers or politicians to imagine or understand the benefits or affects when the maintenance program is applied.
This study focuses on an application of the asset valuation approaches in order to develop the framework for valuing railroad tracks and demonstrate reporting the railroad track in monetary term. Railroad tracks of the Northern line and the Eastern line of SRT are used as the case studies in this study. This study applies two valuation approaches, which are cost approach and income capitalization approach, in estimating value of railroad tracks. In addition, sensitivity analyses of relevant variables are performed to investigate their impact on railroad track values.
Results of this study show that railroad track value, which are derived from the cost approach, are different from the track values that are derived from the income capitalization approach. The differences of railroad track values between these two approaches are caused from the different interest in estimating asset value. The results of the sensitivity analyses of relevant variables in both cost approach and income capitalization approach show that different variables have effects on railroad track value at different levels.
Wednesday 31 March 2010
The Use of Planning and Control Techniques in Construction Projects in Thailand
Many developed planning and control techniques have been applied in the construction industry. With the increasing availability of various management techniques evolved from past, to select an appropriate technique to manage construction projects is becoming a crucial challenge. As the project management objectives are time, cost, and quality, this study will more focused on comparing between planning and control technique of medium-scale and large-scale projects those are operating in Thai construction industry. Analyzing will conduct in term of merely cost and time rather than quality follow to the study of Laufer and Tucker (1987). They further pointed out that between cost and time, formal planning effort of most construction companies has been primarily focused on time planning, and to a lesser extent on resource allocation and its cash-flow implications. However the emphasis in schedule and budget planning and control of a construction project is because of the realization by the contractor and the owner of the severe implications of schedule and budget overruns. In today's fast-paced construction environment, project owners are increasingly placing greater demands on contractors to complete projects in record time and under budget. This is because time and cost is critical for owners in attaining first in the market advantage over competitors. In short, no party would gain from schedule and budget overruns.
Regarding to above-mentioned problems, efficient planning and control techniques are an approach to alleviate and solve the problems. However in large-scale construction projects, there will be numerous, dynamic, and complex interaction among activities and planning/control system comparing with medium-scale one. The uncertain and rapid changing conditions are always happen, the unanticipated problems might be issued anytime. Consequently, the practiced planning and control techniques will be so complex and complicated. The important question is raised that how the construction projects manager could utilize such techniques effectively and efficiently.
Mr. Kriengkai Payapwattanawong made a research which major objective is to find approaches in improving planning and control practice in Thai construction projects. In order to achieve his objective, the following minor objectives need to be accomplished: (1) to identify criteria considered for adopting and installing planning and control techniques covering majority of planning and control techniques available in the market; (2) to apply such criteria to examine the planning and control practiced of both large-scale and medium-scale Thai construction projects and identify the strengths and weaknesses of their planning and control techniques employed; and (3) to recommend appropriate approach for both large-scale and medium-scale Thai construction projects to adopt and install an efficient planning and control techniques that could enhance project planning and control capability.
Conclusions
The needs to more effective and appropriate planning and control technique
The study shows that respondents rank the criticality level of ‘Effective and appropriate planning and control techniques’ as high whereas only medium satisfaction level of ‘their currently used techniques’ is emerging. This reflects that the investigation for improving the currently used techniques is necessary.
The critical criteria considered for adopting and installing planning and control technique
Results showed that both medium and large-scale construction projects primarily give important to requirement of contract/clients, ease for using and understanding, and available of sufficient knowledge and expertise of planner. Moreover, capability in application with computer software and ease of updated are also considered as critical criteria. However, the analysis shows that there are no significant differences between high influence criteria of medium and large-scale construction projects. Even though there are no significant differences in high influence criteria, significant differences are found between low and moderate influence criteria of medium and large-scale construction projects. Complexity of work (activities), Operation cost, Accuracy of technique, Well-known and widely used technique, and Modernization of technique (Development level) are significantly considered more by large-scale project comparing with medium-scale one. This means that large-scale projects require more advanced and high capability of planning and control techniques for cope with more management difficulties. However, these criteria are not appeared in high level of influencing for adopting and installing the techniques.
The currently practiced planning and control techniques in Thai construction projects
The survey result indicated innovative and advanced planning and control techniques are very infrequently used. However, it has trend to be more used of advanced techniques in large-scale construction projects. But not explicitly emerge. They perceive that their used techniques are easy for using and understanding. Large-scale projects primarily accept that the techniques are widely used and familiar for using. On the other hand, medium-scale projects have perceived that their used techniques can facilitate to achieve better understanding objectives and easy to determine critical path. But their used techniques are still difficult to model ‘real world’, failed to predict problems, and inadequate for complex projects. These might be cause of lacking of training and expertise in their projects.
The obstructions of implementing the better or advanced planning and control techniques in Thai construction projects and suggestions for improvement
It was found out that most of large-scale and medium-scale Thai construction projects find advanced planning and control techniques a definite advantage. A key factor in all successful applications is personnel training of familiarization and advanced techniques’ benefits acknowledgement.
The Thai construction projects need to improve some aspects in the planning and control system areas as presented in the table below, and then the efficient and effective construction management would be achieved.
His thesis abstract is copied and posted.
Abstract
Increasing global competition and rapid technological development are pushing many industries to give more attention to improving the planning and control. Construction is one of the largest industries in many countries. However, the industry has been experiencing such problems as cost overrun, delayed completion, disputes and even litigation. Planning and control techniques are identified among the top potential areas needing improvements. Adopting and installing the efficient technique is important for more effective management. However, an efficient technique is difficult to be adopted and installed. This research aims to identify the criteria considered for successful adopting and installing the techniques, as well as pointing out key problems and difficulties faced of both medium and large-scale construction projects. The currently applied techniques, their strengths, and weaknesses are also examined. Structured questionnaires were conducted with project engineers of 31 medium-scale projects and 35 large-scale projects. The t-test and mean ranking as statistics test methods were used to analyze the data and compare the different between study groups. The results show that the techniques using of both parties is not much different. Advanced techniques are infrequently adopted and installed. However, significant differences were found between some criteria of two parties. These criteria are considered for adopting and installing the technique such as knowledge and expertise user requirement. As consequence, the study helps planners of both medium and large-scale projects to recognize and evaluate the effectiveness of their current used techniques. It also provides suggestions to overcome some practical problems and obstructions if the new techniques are applied in their construction projects.
Regarding to above-mentioned problems, efficient planning and control techniques are an approach to alleviate and solve the problems. However in large-scale construction projects, there will be numerous, dynamic, and complex interaction among activities and planning/control system comparing with medium-scale one. The uncertain and rapid changing conditions are always happen, the unanticipated problems might be issued anytime. Consequently, the practiced planning and control techniques will be so complex and complicated. The important question is raised that how the construction projects manager could utilize such techniques effectively and efficiently.
Mr. Kriengkai Payapwattanawong made a research which major objective is to find approaches in improving planning and control practice in Thai construction projects. In order to achieve his objective, the following minor objectives need to be accomplished: (1) to identify criteria considered for adopting and installing planning and control techniques covering majority of planning and control techniques available in the market; (2) to apply such criteria to examine the planning and control practiced of both large-scale and medium-scale Thai construction projects and identify the strengths and weaknesses of their planning and control techniques employed; and (3) to recommend appropriate approach for both large-scale and medium-scale Thai construction projects to adopt and install an efficient planning and control techniques that could enhance project planning and control capability.
Conclusions
The needs to more effective and appropriate planning and control technique
The study shows that respondents rank the criticality level of ‘Effective and appropriate planning and control techniques’ as high whereas only medium satisfaction level of ‘their currently used techniques’ is emerging. This reflects that the investigation for improving the currently used techniques is necessary.
The critical criteria considered for adopting and installing planning and control technique
Results showed that both medium and large-scale construction projects primarily give important to requirement of contract/clients, ease for using and understanding, and available of sufficient knowledge and expertise of planner. Moreover, capability in application with computer software and ease of updated are also considered as critical criteria. However, the analysis shows that there are no significant differences between high influence criteria of medium and large-scale construction projects. Even though there are no significant differences in high influence criteria, significant differences are found between low and moderate influence criteria of medium and large-scale construction projects. Complexity of work (activities), Operation cost, Accuracy of technique, Well-known and widely used technique, and Modernization of technique (Development level) are significantly considered more by large-scale project comparing with medium-scale one. This means that large-scale projects require more advanced and high capability of planning and control techniques for cope with more management difficulties. However, these criteria are not appeared in high level of influencing for adopting and installing the techniques.
The currently practiced planning and control techniques in Thai construction projects
The survey result indicated innovative and advanced planning and control techniques are very infrequently used. However, it has trend to be more used of advanced techniques in large-scale construction projects. But not explicitly emerge. They perceive that their used techniques are easy for using and understanding. Large-scale projects primarily accept that the techniques are widely used and familiar for using. On the other hand, medium-scale projects have perceived that their used techniques can facilitate to achieve better understanding objectives and easy to determine critical path. But their used techniques are still difficult to model ‘real world’, failed to predict problems, and inadequate for complex projects. These might be cause of lacking of training and expertise in their projects.
The obstructions of implementing the better or advanced planning and control techniques in Thai construction projects and suggestions for improvement
It was found out that most of large-scale and medium-scale Thai construction projects find advanced planning and control techniques a definite advantage. A key factor in all successful applications is personnel training of familiarization and advanced techniques’ benefits acknowledgement.
The Thai construction projects need to improve some aspects in the planning and control system areas as presented in the table below, and then the efficient and effective construction management would be achieved.
His thesis abstract is copied and posted.
Abstract
Increasing global competition and rapid technological development are pushing many industries to give more attention to improving the planning and control. Construction is one of the largest industries in many countries. However, the industry has been experiencing such problems as cost overrun, delayed completion, disputes and even litigation. Planning and control techniques are identified among the top potential areas needing improvements. Adopting and installing the efficient technique is important for more effective management. However, an efficient technique is difficult to be adopted and installed. This research aims to identify the criteria considered for successful adopting and installing the techniques, as well as pointing out key problems and difficulties faced of both medium and large-scale construction projects. The currently applied techniques, their strengths, and weaknesses are also examined. Structured questionnaires were conducted with project engineers of 31 medium-scale projects and 35 large-scale projects. The t-test and mean ranking as statistics test methods were used to analyze the data and compare the different between study groups. The results show that the techniques using of both parties is not much different. Advanced techniques are infrequently adopted and installed. However, significant differences were found between some criteria of two parties. These criteria are considered for adopting and installing the technique such as knowledge and expertise user requirement. As consequence, the study helps planners of both medium and large-scale projects to recognize and evaluate the effectiveness of their current used techniques. It also provides suggestions to overcome some practical problems and obstructions if the new techniques are applied in their construction projects.
Tuesday 30 March 2010
Management Of Mega Projects: Case Study Of The Second Bangkok International Airport
Second Bangkok International Airport is one of the large engineering projects in the history of Thailand. Construction work of this project is divided into several packages and each package comprises of several projects which are running parallel to each other. Each project is designed and constructed by a number of intercontinental firms and involves many suppliers from different countries. Literature entitles such mega construction projects as programs. Management of such programs is not only complex but also multifaceted. Studying this mega project which has been declared as ‘national priority’, as a whole and specifically from management point of view would be of vast interest.
Mr. Shamas-ur-Rehman Toor conducted a research study in 2005 to study the aspects of interface management, coordination and communication among numerous partakers of the project. The questions explored in his research were:
1. How do different parties (Clients, Consultants, Designers, and Contractors) communicate and coordinate on this large construction project; what kind of communication and coordination tools are they using in their work? And what problems are they facing in doing it?
2. What are the key leadership traits of successful project leaders on large construction projects, and how are they affected by the involvement of participants from a range of national and cultural backgrounds?
3. What are the Key Performance Indicators (KPIs), Critical Success Factors (CSFs), and most significant problems faced on large construction projects? What special issues arise due to the presence of a range of different cultural elements on such mega projects?
4. To what extent can we generalize, with validity, the findings related to this airport construction project and what further research do the findings indicate we should undertake?
Conclusions
Results have shown that perception of different project participants is similar about the subject of communication and coordination interface management on large project and the case study project. Though satisfaction on current health of communication and coordination interface management has been low, usefulness of information has been rated satisfactory. Low satisfaction has been a result of several barriers which are: language, lack of experience of staff, lack of experience of project manager, lack of experience and knowledge of subcontractor, difference in local construction practices, lack of cooperation of government agencies, lack of foremen’s experience and knowledge and bureaucratic behavior of employer.
In second part of this study, traits and skills of project leaders which make them successful were investigated. Different leadership behaviors were also examined to find which styles were more important for success. As a result, four Rs were devised: revolutionary, resolving, reverent and rewarding. These four characteristics of project leaders are crucial for success on large construction projects. Moreover, it was found that communication, team, personal and interpersonal and management skills were most important for project leaders. Technical skills were rate low on importance scale along with computer and specialty trades’ skills. It was also found that poor communication skills, wrongful use of authority and lack of experience make project leaders incompetent.
In third part, critical success factors, key performance indicators and problems on large construction projects were aimed for investigation. Among the top critical success factors, effective planning and control, sufficient resources and clear and detailed written contract, defined goals and competent project manager were given higher ranking. Among the key performance indicators, the traditional triangle of completion on time, under budget and according to specification was given high rating along with two more indicators which are safety and efficiency. It reveals that project managers are conscious about the traditional iron triangle of project management but they do consider safety and efficiency as important measures of performance on large construction projects.
His thesis abstract is copied and posted.
ABSTRACT
Construction industry due to its complex nature and dynamic environment is considered to be a difficult area to conduct research. Numerous studies have been conducted on various topics of project management. These studies have their own boundary conditions, limitations and constraints. Generalizing the results for the whole construction industry after analyzing few projects in particular area is difficult. Also, every project in construction industry is different from others in many ways even when it is copied from another similar project. That is the reason that case studies have become common in research related to construction industry. The current research is also a case study of a construction project which is situated in Thailand. Suvarnabhumi Airport is considered to be the biggest construction project in the history of Thailand. The project is exceptional in many terms. It comprises of five work packages and forty eight construction contracts. Several experts from all over the world are participating in the project in different capacities. With a budget of approximately four billion USD, the SBIA has been declared as ‘national priority’ by Thai government.
The current research explores several areas of project management in context of large construction projects, especially the Second Bangkok International Airport. The research has been divided in to three parts. In the first part, it explores the tools and techniques used by project participants to develop communication and coordination interface management on large construction projects. It also investigates the problems faced during developing communication and coordination on complex construction projects. Results have shown that perception of different project participants is similar about the subject of communication and coordination interface management on large project and the case study project. Face-to-face meetings, formal letters and memos, telephones and e-mails have been considered to be used the most on project as communication channels. Though satisfaction on current health of communication and coordination interface management has been low, usefulness of information has been rated satisfactory. Low satisfaction has been a result of several barriers which are: language, lack of experience of staff, lack of experience of project manager, lack of experience and knowledge of subcontractor, difference in local construction practices, lack of cooperation of government agencies, lack of foremen’s experience and knowledge and bureaucratic behavior of employer.
Several problems being faced in coordination on project were due to tight schedule, limited budget, getting access to work area, lack of authority with project manager, absence of most of designers from site, sharing of cost conflicts, several design changes and use of huge and unnecessary documentation. Most of the communication and coordination problems were overcome through face-to-face meetings, telephone calls, using personal informal relations, and letters and memos. Also, severity of problems related to communication and coordination interface management was rated higher by the contractors as compared to other groups. Designers were the other extent as they rated the severity of problems lower.
In second part of this study, traits and skills of project leaders which make them successful were investigated. Different leadership behaviors were also examined to find which styles were more important for success. As a result, four Rs were devised: revolutionary, resolving, reverent and rewarding. These four characteristics of project leaders are crucial for success on large construction projects. Moreover, it was found that communication, team, personal and interpersonal and management skills were most important for project leaders. Technical skills were rate low on importance scale along with computer and specialty trades’ skills. It was also found that poor communication skills, wrongful use of authority and lack of experience make project leaders incompetent. In context of organizational factors which make project leaders ineffective, lack of resources, lack of planning and control, lack of synergy b/w organizational strategy and performance and lack of top management commitment were rated the top factors which make project leaders ineffective.
In third part, critical success factors, key performance indicators and problems on large construction projects were aimed for investigation. Among the top critical success factors, effective planning and control, sufficient resources and clear and detailed written contract, defined goals and competent project manager were given higher ranking. Thirty nine CSFs were given to the respondents and factor analysis was conducted on top twenty which produced four critical COMs for success of large construction projects. These COMs are comprehension, competence, commitment and communication. Among the key performance indicators, the traditional triangle of completion on time, under budget and according to specification was given high rating along with two more indicators which are safety and efficiency. It reveals that project managers are conscious about the traditional iron triangle of project management but they do consider safety and efficiency as important measures of performance on large construction projects.
Respondents were also asked about the problems they face on large construction projects. Problems related to several human and system groups were presented to rating. Results have shown that higher rating was given to human related problems in organizations. Also, higher mean scores were given by the contractors as compared to other project participants. Moreover, problems related to client, designers, contractors and project management/consultants have been ranked high. Only few problems related to labor, site and environment, finance, communication and other factors could achieve high ranking.
The current research has explored several areas of project management and gives a very broad view of how success can be achieved on large construction projects. The study explores the problems which are potential for large construction projects, suggests critical success factors as input to project, devices KPIs to measure the performance on intervals, gives an overview of leadership required for execution and tools, techniques and practices to overcoming communication and coordination issues and developing an adequate communication and coordination interface management system. Wisely considering all these areas definitely leads to the success of a large construction project.
Keywords: Interface Management, Communication and Coordination, Project Success, Leadership, Critical Success Factors, Key Performance Indicators, Problems, Large Construction Projects
Mr. Shamas-ur-Rehman Toor conducted a research study in 2005 to study the aspects of interface management, coordination and communication among numerous partakers of the project. The questions explored in his research were:
1. How do different parties (Clients, Consultants, Designers, and Contractors) communicate and coordinate on this large construction project; what kind of communication and coordination tools are they using in their work? And what problems are they facing in doing it?
2. What are the key leadership traits of successful project leaders on large construction projects, and how are they affected by the involvement of participants from a range of national and cultural backgrounds?
3. What are the Key Performance Indicators (KPIs), Critical Success Factors (CSFs), and most significant problems faced on large construction projects? What special issues arise due to the presence of a range of different cultural elements on such mega projects?
4. To what extent can we generalize, with validity, the findings related to this airport construction project and what further research do the findings indicate we should undertake?
Conclusions
Results have shown that perception of different project participants is similar about the subject of communication and coordination interface management on large project and the case study project. Though satisfaction on current health of communication and coordination interface management has been low, usefulness of information has been rated satisfactory. Low satisfaction has been a result of several barriers which are: language, lack of experience of staff, lack of experience of project manager, lack of experience and knowledge of subcontractor, difference in local construction practices, lack of cooperation of government agencies, lack of foremen’s experience and knowledge and bureaucratic behavior of employer.
In second part of this study, traits and skills of project leaders which make them successful were investigated. Different leadership behaviors were also examined to find which styles were more important for success. As a result, four Rs were devised: revolutionary, resolving, reverent and rewarding. These four characteristics of project leaders are crucial for success on large construction projects. Moreover, it was found that communication, team, personal and interpersonal and management skills were most important for project leaders. Technical skills were rate low on importance scale along with computer and specialty trades’ skills. It was also found that poor communication skills, wrongful use of authority and lack of experience make project leaders incompetent.
In third part, critical success factors, key performance indicators and problems on large construction projects were aimed for investigation. Among the top critical success factors, effective planning and control, sufficient resources and clear and detailed written contract, defined goals and competent project manager were given higher ranking. Among the key performance indicators, the traditional triangle of completion on time, under budget and according to specification was given high rating along with two more indicators which are safety and efficiency. It reveals that project managers are conscious about the traditional iron triangle of project management but they do consider safety and efficiency as important measures of performance on large construction projects.
His thesis abstract is copied and posted.
ABSTRACT
Construction industry due to its complex nature and dynamic environment is considered to be a difficult area to conduct research. Numerous studies have been conducted on various topics of project management. These studies have their own boundary conditions, limitations and constraints. Generalizing the results for the whole construction industry after analyzing few projects in particular area is difficult. Also, every project in construction industry is different from others in many ways even when it is copied from another similar project. That is the reason that case studies have become common in research related to construction industry. The current research is also a case study of a construction project which is situated in Thailand. Suvarnabhumi Airport is considered to be the biggest construction project in the history of Thailand. The project is exceptional in many terms. It comprises of five work packages and forty eight construction contracts. Several experts from all over the world are participating in the project in different capacities. With a budget of approximately four billion USD, the SBIA has been declared as ‘national priority’ by Thai government.
The current research explores several areas of project management in context of large construction projects, especially the Second Bangkok International Airport. The research has been divided in to three parts. In the first part, it explores the tools and techniques used by project participants to develop communication and coordination interface management on large construction projects. It also investigates the problems faced during developing communication and coordination on complex construction projects. Results have shown that perception of different project participants is similar about the subject of communication and coordination interface management on large project and the case study project. Face-to-face meetings, formal letters and memos, telephones and e-mails have been considered to be used the most on project as communication channels. Though satisfaction on current health of communication and coordination interface management has been low, usefulness of information has been rated satisfactory. Low satisfaction has been a result of several barriers which are: language, lack of experience of staff, lack of experience of project manager, lack of experience and knowledge of subcontractor, difference in local construction practices, lack of cooperation of government agencies, lack of foremen’s experience and knowledge and bureaucratic behavior of employer.
Several problems being faced in coordination on project were due to tight schedule, limited budget, getting access to work area, lack of authority with project manager, absence of most of designers from site, sharing of cost conflicts, several design changes and use of huge and unnecessary documentation. Most of the communication and coordination problems were overcome through face-to-face meetings, telephone calls, using personal informal relations, and letters and memos. Also, severity of problems related to communication and coordination interface management was rated higher by the contractors as compared to other groups. Designers were the other extent as they rated the severity of problems lower.
In second part of this study, traits and skills of project leaders which make them successful were investigated. Different leadership behaviors were also examined to find which styles were more important for success. As a result, four Rs were devised: revolutionary, resolving, reverent and rewarding. These four characteristics of project leaders are crucial for success on large construction projects. Moreover, it was found that communication, team, personal and interpersonal and management skills were most important for project leaders. Technical skills were rate low on importance scale along with computer and specialty trades’ skills. It was also found that poor communication skills, wrongful use of authority and lack of experience make project leaders incompetent. In context of organizational factors which make project leaders ineffective, lack of resources, lack of planning and control, lack of synergy b/w organizational strategy and performance and lack of top management commitment were rated the top factors which make project leaders ineffective.
In third part, critical success factors, key performance indicators and problems on large construction projects were aimed for investigation. Among the top critical success factors, effective planning and control, sufficient resources and clear and detailed written contract, defined goals and competent project manager were given higher ranking. Thirty nine CSFs were given to the respondents and factor analysis was conducted on top twenty which produced four critical COMs for success of large construction projects. These COMs are comprehension, competence, commitment and communication. Among the key performance indicators, the traditional triangle of completion on time, under budget and according to specification was given high rating along with two more indicators which are safety and efficiency. It reveals that project managers are conscious about the traditional iron triangle of project management but they do consider safety and efficiency as important measures of performance on large construction projects.
Respondents were also asked about the problems they face on large construction projects. Problems related to several human and system groups were presented to rating. Results have shown that higher rating was given to human related problems in organizations. Also, higher mean scores were given by the contractors as compared to other project participants. Moreover, problems related to client, designers, contractors and project management/consultants have been ranked high. Only few problems related to labor, site and environment, finance, communication and other factors could achieve high ranking.
The current research has explored several areas of project management and gives a very broad view of how success can be achieved on large construction projects. The study explores the problems which are potential for large construction projects, suggests critical success factors as input to project, devices KPIs to measure the performance on intervals, gives an overview of leadership required for execution and tools, techniques and practices to overcoming communication and coordination issues and developing an adequate communication and coordination interface management system. Wisely considering all these areas definitely leads to the success of a large construction project.
Keywords: Interface Management, Communication and Coordination, Project Success, Leadership, Critical Success Factors, Key Performance Indicators, Problems, Large Construction Projects
Monday 29 March 2010
Social Impact Assessment Development for Road Projects in Thailand
Infrastructure projects are utilized for public that played an important role for development in any country. Due to the lack of construction resources or financial allocation, the feasibility study is used to decide which project is the most effective. Environmental Impact Assessment (EIA) was regulated on legal framework in many countries before constructing the project. The EIA study of the project is normally assessed the impacts which are typically in environment. Presently the social and economic impacts are increasing in attention from the public. EIA includes the socio-economic and partly the social study. This creates some confusion on what are the differences between EIA and SIA (Social Impact Assessment).
In Thailand, the feasibility of highway projects has mostly focused on the EIA which only includes the small part of social dimension. In fact, EIA deems the social changes and indirect social impacts but it is not SIA; so that the real social impacts are not covered. The Department of Highways (Thailand) hired the consultant companies to conduct merely the feasibility study and environmental impact assessment of some of the highway projects. These studies gave some social attentions; but not fully covered because they only studied on the social changes or indirect impacts from biological changes which in terms of the public health; property compensation; socio- economic; aesthetic; tourism. For example, the view of public health concerns only pollution occurred during the construction phrase but neglects the accessibility of local people to the health facilities. In the aspect of property compensation, it is reported only how much cost of compensation is or how many relocated area are that is neglected the cohesion of community, structure of institution, interaction among people. This is shown that the recent feasibility study requires further consideration on SIA.
Thailand faces the above problems when conducting SIA. Miss Siriporn Sumonwattanadej conducted a study which was focused on modifying the feasibility standards guidelines to be more completed and able to reflect the nature of local environment. The main objective of her research is to develop the specific guidelines of SIA for road transportation in Thailand. The secondary objectives of her study are as follows:
(1) To review the current SIA implementation of road projects in Thailand
(2) To examine the gap between SIA guidelines from Thailand and other countries
(3) To map between the current SIA implementation from other countries with existing guidelines from Thailand for assessing social impacts.
(4) To recommend the new SIA guideline for Thailand.
Conclusions
The Current SIA Implementation in Thailand
The collected EIA feasibility study of road projects in Thailand plays attentions on social concerns in terms of land use, quality of life, and public participation. Social impacts herein are resulted from the changes of environment. Land use impacts mainly focus direct impacts from expropriation such as residents, agriculture area, and commercial area. Quality of life emphases impact assessment from pollution and relocation of facilities and services. The public participation is conducted for surveying people’s attitude and needs, and informing the relocated people. Both negative and positive impacts are studied by EIA study, however negative impacts are mainly considered. Impact analysis of this study generally assesses direct impacts because further analysis requires budget, researches, models, tools or techniques.
Usefulness of Developed SIA Guideline
Usefulness of SIA guideline is retrieved by comparing between the existing SIA implementation and the proposed SIA guideline. The existing scopes of social assessments are identified boarder. Developed guideline is proposed to fit for road projects in Thailand. It yields usefulness below:
a) Clear Impact Identification - Main methodology of guideline development is use data sorting and data mapping; the impacts are sorted into the developed matrix.
b) Assessment in Community Level - The existing community profile uses questionnaires in sampling groups to draw community characteristics. This method is economic for developing countries.
c) Assessment in Actual Land Use of Community - The SIA guideline assesses not only property expropriation but also people’s living on their land use. Living of people related to their land use is condition of resident, agriculture activities, and operation of religious rituals. Mobility and accessibility of residents in community are assessed. The land use is not only physical aspect but also psychological aspect; so that religious rituals are accounted in this guideline.
d) Social Value Identification - Social values of community are subjective and unique assessment; thus residents are a key to evaluate these values.
e) Assistance Programs of Relocation - Relocation impact assessment cannot stop only fair compensation for relocated people because it is not guarantee that their replacements are enough decent living. If relocated people are low income or distinctive; they may face exploitation on their quality of life.
f) Boarder Safety Impacts - Safety of motorists is considered in engineering design; however safety impacts of residents are not accounted. SIA guideline yields boarder safety for community that considers unsafe conditions on patterns of pedestrians, bicyclists, motorcyclists and hired motorcyclists, and users of local buses. Life of community is safe; this benefit is overestimated.
g) Boarder Economic Impacts - EIA study uses results of random sampling to draw the socioeconomic condition of study area and to predict what economic changes are. The opponents of this assessment argue that economic of community is not only income or employment but also viability of economic sectors or components.
h) Disadvantage Identification - Civil rights system between developed and developing countries are definitely different so that implementation of civil rights in developing countries consumes additional resources as limited. Actually, this is true only in one respect; but it is not a reason to neglect civil rights in feasibility study.
Limitations of Developed SIA Guideline
One of purposes in this study is SIA guideline development from the existing social concerns in EIA; thus SIA of Thailand is not fully implemented yet. This guideline can raise awareness of human and community impacts from road project; and it clearly figure out scope of impact assessments and impact indicators. It is claimed that it is not applicable for
a) Systematic Assessment - Nature of social impacts is subjective depending on characteristics of residents; so that social impacts may not be measured in numerical value. Evaluating system of SIA guideline attempts to use same systematic assessment on each impact. But it is limited because social impacts are sense evaluations of community and various kinds of impacts.
b) Multistage Assessment - Data mapping is a main process to develop SIA guideline; therefore results of impact assessments depend on characters of data sources. Collected literature studies have not clearly defined impact assessment in various stages of project; so that multistage of assessment is limited on this guideline. Nevertheless, impacts on construction and operation stages are identified in some impacts; but planning stage cannot capture what impacts are, and monitoring stage has lack of proposed assessment.
c) Data Mapping - One of expected results from data mapping is that the developed SIA guideline can identify techniques of specific impacts. It is found that the techniques are designed for assessing impacts in particular study area; so that they have limitation to apply for Thailand. Each assessment requires some special data, models, or programs to analyze effects such as land consumption standard, property price model, or computer visual simulation. These tools are not available or developed in Thailand; thus some techniques are invalid. However the proposed assessments in this guideline are developed in similar assessment concept; it means that social issues, indicators, and impact analysis can be applied.
d) Further Study - The impact assessments proposed in SIA guideline is able to reveal and mention what social impacts should be. Precise assessments require their further studies in order to analyze each impact as has been pointed out that social impacts are particular and distinctive. It is recommended that these further studies should be conducted by partial assessment of each impact category or perspective for enclosure area; so that board view of SIA will use many techniques to examine social impacts in particular or proper.
SIA Guideline Instruction
According to usefulness and limitation, instruction of SIA guideline assesses social impacts from road projects in Thailand. The guideline can assess social impacts of new road and existing road projects; its assessment mentions to assess effects from highways, motorways, and expressways. For new project, it can apply in feasibility study on alternative selection; likewise its assessment can monitor impacts from the existing roads. Instruction of SIA guideline implementation is described following.
a) SIA guideline requires project information to assess project’s effects; this adequate information is available after alignment selection in feasibility study. Therefore its assessment can evaluate social impacts during project design and alternative selection in feasibility study.
b) The checklist of SIA guideline can review what necessary data are, what impacts should be. It figures out the sensitive areas or communities in order to further assess social impacts on these areas. SIA guideline starts to assess impacts.
c) SIA guideline has two main parts: community profile and impact assessments. It assists to profile the mentioned areas or communities to collect and prepare community data for assessing impacts. The assessments use the developed profile as a baseline to consider what anticipated changes are; these changes can bring about any impacts according to guideline. These changes are associated with social conditions, economic characteristics, land use characteristics, and physical features, and relocation programs according to guideline.
d) Impact assessments propose guideline to evaluate human, economic, land use, aesthetic and livability, and relocation impacts. The identified changes can analyze their impacts by using proposed forms and questions based this guideline. It is kept in mind that social impacts are dynamic and divergent; the dynamic environment results in difficulties of data validation and impact projection. The divergent impacts are caused side effects and cumulative impacts in other impacts. Thus impact analysis should not limit only this guideline.
e) Assessment is summarized to readable documentation for disclosing to stakeholders in order to plan mitigation plans responding to these impacts.
Recommendations
Recommendations are proposed for success of SIA guideline implementation and further study in future. Successful SIA implementation requires effective public participation to identify subjective impacts; and cooperative environment among relevant agencies to achieve sustainable development. Monitoring of assessed impacts enhance cross-check of assessed impacts and improvement of assessments. Phrased-stages between feasibility study and road project require the compatible guideline in practice.
People or residents are vital to define what impacts are; proper public participation can enhance precision of assessment. It is recommended thus further study is how public participation is designed for consistency with this guideline.
Due to SIA regarding many stakeholders who have different orientations, cooperative environment can assist effectiveness of assessment. Stakeholders’ meetings to identify and evaluated social impacts that should be arranged.
Summary of SIA documentation cannot ensure that assessed impacts are exact and precise. Level or magnitude of impact assessment is examined whether these impacts are correct or not. This guideline can be modified or corrected by the new findings; it will more complete. The further study should specify assessment guideline for particular road types.
Phased-stages between feasibility study and road project require different SIA guideline to assess social impacts as early. This guideline is able to assess impacts after alignment selection; that means social impacts are exist from selected alignment. These impacts are assessed for mitigation; preventive assessment is limited. Thus further study should consider preventive assessment guideline; and the active guideline should match with these phased-stages.
Her thesis abstract is copied and posted.
ABSTRACT
The goal of this study is to develop social impact assessment (SIA) for road projects in Thailand. Road projects, excluding rural roads, are mandated to conduct environmental impact assessment (EIA) under Environmental Act, 1992. Environment term is expanded to integrate human living with physical natural resources; thus current EIA evaluate project’s effects in terms of land use and quality of life. Public participation is a part of EIA according to Law for articulating project’s information to affected residents. Guideline development method uses data management and data mapping by reviewing secondary data between the EIA feasibility studies of the road projects from relevant jurisdictions and the developed SIA guidelines from other countries. The new SIA guideline is developed by extending social impacts in EIA to assess indirect and cumulative impacts. It is validated by experts from these jurisdictions. It is consisted of the checklist of SIA guideline and body of SIA guideline; to estimate anticipated impacts and evaluate detail of social impacts respectively. It can assess both positive and negative impacts of new and existing road projects. It can evaluate impacts for alternative selection and since design stage of road project to operation. Monitoring and iterative assessment processes are recommended for further study.
In Thailand, the feasibility of highway projects has mostly focused on the EIA which only includes the small part of social dimension. In fact, EIA deems the social changes and indirect social impacts but it is not SIA; so that the real social impacts are not covered. The Department of Highways (Thailand) hired the consultant companies to conduct merely the feasibility study and environmental impact assessment of some of the highway projects. These studies gave some social attentions; but not fully covered because they only studied on the social changes or indirect impacts from biological changes which in terms of the public health; property compensation; socio- economic; aesthetic; tourism. For example, the view of public health concerns only pollution occurred during the construction phrase but neglects the accessibility of local people to the health facilities. In the aspect of property compensation, it is reported only how much cost of compensation is or how many relocated area are that is neglected the cohesion of community, structure of institution, interaction among people. This is shown that the recent feasibility study requires further consideration on SIA.
Thailand faces the above problems when conducting SIA. Miss Siriporn Sumonwattanadej conducted a study which was focused on modifying the feasibility standards guidelines to be more completed and able to reflect the nature of local environment. The main objective of her research is to develop the specific guidelines of SIA for road transportation in Thailand. The secondary objectives of her study are as follows:
(1) To review the current SIA implementation of road projects in Thailand
(2) To examine the gap between SIA guidelines from Thailand and other countries
(3) To map between the current SIA implementation from other countries with existing guidelines from Thailand for assessing social impacts.
(4) To recommend the new SIA guideline for Thailand.
Conclusions
The Current SIA Implementation in Thailand
The collected EIA feasibility study of road projects in Thailand plays attentions on social concerns in terms of land use, quality of life, and public participation. Social impacts herein are resulted from the changes of environment. Land use impacts mainly focus direct impacts from expropriation such as residents, agriculture area, and commercial area. Quality of life emphases impact assessment from pollution and relocation of facilities and services. The public participation is conducted for surveying people’s attitude and needs, and informing the relocated people. Both negative and positive impacts are studied by EIA study, however negative impacts are mainly considered. Impact analysis of this study generally assesses direct impacts because further analysis requires budget, researches, models, tools or techniques.
Usefulness of Developed SIA Guideline
Usefulness of SIA guideline is retrieved by comparing between the existing SIA implementation and the proposed SIA guideline. The existing scopes of social assessments are identified boarder. Developed guideline is proposed to fit for road projects in Thailand. It yields usefulness below:
a) Clear Impact Identification - Main methodology of guideline development is use data sorting and data mapping; the impacts are sorted into the developed matrix.
b) Assessment in Community Level - The existing community profile uses questionnaires in sampling groups to draw community characteristics. This method is economic for developing countries.
c) Assessment in Actual Land Use of Community - The SIA guideline assesses not only property expropriation but also people’s living on their land use. Living of people related to their land use is condition of resident, agriculture activities, and operation of religious rituals. Mobility and accessibility of residents in community are assessed. The land use is not only physical aspect but also psychological aspect; so that religious rituals are accounted in this guideline.
d) Social Value Identification - Social values of community are subjective and unique assessment; thus residents are a key to evaluate these values.
e) Assistance Programs of Relocation - Relocation impact assessment cannot stop only fair compensation for relocated people because it is not guarantee that their replacements are enough decent living. If relocated people are low income or distinctive; they may face exploitation on their quality of life.
f) Boarder Safety Impacts - Safety of motorists is considered in engineering design; however safety impacts of residents are not accounted. SIA guideline yields boarder safety for community that considers unsafe conditions on patterns of pedestrians, bicyclists, motorcyclists and hired motorcyclists, and users of local buses. Life of community is safe; this benefit is overestimated.
g) Boarder Economic Impacts - EIA study uses results of random sampling to draw the socioeconomic condition of study area and to predict what economic changes are. The opponents of this assessment argue that economic of community is not only income or employment but also viability of economic sectors or components.
h) Disadvantage Identification - Civil rights system between developed and developing countries are definitely different so that implementation of civil rights in developing countries consumes additional resources as limited. Actually, this is true only in one respect; but it is not a reason to neglect civil rights in feasibility study.
Limitations of Developed SIA Guideline
One of purposes in this study is SIA guideline development from the existing social concerns in EIA; thus SIA of Thailand is not fully implemented yet. This guideline can raise awareness of human and community impacts from road project; and it clearly figure out scope of impact assessments and impact indicators. It is claimed that it is not applicable for
a) Systematic Assessment - Nature of social impacts is subjective depending on characteristics of residents; so that social impacts may not be measured in numerical value. Evaluating system of SIA guideline attempts to use same systematic assessment on each impact. But it is limited because social impacts are sense evaluations of community and various kinds of impacts.
b) Multistage Assessment - Data mapping is a main process to develop SIA guideline; therefore results of impact assessments depend on characters of data sources. Collected literature studies have not clearly defined impact assessment in various stages of project; so that multistage of assessment is limited on this guideline. Nevertheless, impacts on construction and operation stages are identified in some impacts; but planning stage cannot capture what impacts are, and monitoring stage has lack of proposed assessment.
c) Data Mapping - One of expected results from data mapping is that the developed SIA guideline can identify techniques of specific impacts. It is found that the techniques are designed for assessing impacts in particular study area; so that they have limitation to apply for Thailand. Each assessment requires some special data, models, or programs to analyze effects such as land consumption standard, property price model, or computer visual simulation. These tools are not available or developed in Thailand; thus some techniques are invalid. However the proposed assessments in this guideline are developed in similar assessment concept; it means that social issues, indicators, and impact analysis can be applied.
d) Further Study - The impact assessments proposed in SIA guideline is able to reveal and mention what social impacts should be. Precise assessments require their further studies in order to analyze each impact as has been pointed out that social impacts are particular and distinctive. It is recommended that these further studies should be conducted by partial assessment of each impact category or perspective for enclosure area; so that board view of SIA will use many techniques to examine social impacts in particular or proper.
SIA Guideline Instruction
According to usefulness and limitation, instruction of SIA guideline assesses social impacts from road projects in Thailand. The guideline can assess social impacts of new road and existing road projects; its assessment mentions to assess effects from highways, motorways, and expressways. For new project, it can apply in feasibility study on alternative selection; likewise its assessment can monitor impacts from the existing roads. Instruction of SIA guideline implementation is described following.
a) SIA guideline requires project information to assess project’s effects; this adequate information is available after alignment selection in feasibility study. Therefore its assessment can evaluate social impacts during project design and alternative selection in feasibility study.
b) The checklist of SIA guideline can review what necessary data are, what impacts should be. It figures out the sensitive areas or communities in order to further assess social impacts on these areas. SIA guideline starts to assess impacts.
c) SIA guideline has two main parts: community profile and impact assessments. It assists to profile the mentioned areas or communities to collect and prepare community data for assessing impacts. The assessments use the developed profile as a baseline to consider what anticipated changes are; these changes can bring about any impacts according to guideline. These changes are associated with social conditions, economic characteristics, land use characteristics, and physical features, and relocation programs according to guideline.
d) Impact assessments propose guideline to evaluate human, economic, land use, aesthetic and livability, and relocation impacts. The identified changes can analyze their impacts by using proposed forms and questions based this guideline. It is kept in mind that social impacts are dynamic and divergent; the dynamic environment results in difficulties of data validation and impact projection. The divergent impacts are caused side effects and cumulative impacts in other impacts. Thus impact analysis should not limit only this guideline.
e) Assessment is summarized to readable documentation for disclosing to stakeholders in order to plan mitigation plans responding to these impacts.
Recommendations
Recommendations are proposed for success of SIA guideline implementation and further study in future. Successful SIA implementation requires effective public participation to identify subjective impacts; and cooperative environment among relevant agencies to achieve sustainable development. Monitoring of assessed impacts enhance cross-check of assessed impacts and improvement of assessments. Phrased-stages between feasibility study and road project require the compatible guideline in practice.
People or residents are vital to define what impacts are; proper public participation can enhance precision of assessment. It is recommended thus further study is how public participation is designed for consistency with this guideline.
Due to SIA regarding many stakeholders who have different orientations, cooperative environment can assist effectiveness of assessment. Stakeholders’ meetings to identify and evaluated social impacts that should be arranged.
Summary of SIA documentation cannot ensure that assessed impacts are exact and precise. Level or magnitude of impact assessment is examined whether these impacts are correct or not. This guideline can be modified or corrected by the new findings; it will more complete. The further study should specify assessment guideline for particular road types.
Phased-stages between feasibility study and road project require different SIA guideline to assess social impacts as early. This guideline is able to assess impacts after alignment selection; that means social impacts are exist from selected alignment. These impacts are assessed for mitigation; preventive assessment is limited. Thus further study should consider preventive assessment guideline; and the active guideline should match with these phased-stages.
Her thesis abstract is copied and posted.
ABSTRACT
The goal of this study is to develop social impact assessment (SIA) for road projects in Thailand. Road projects, excluding rural roads, are mandated to conduct environmental impact assessment (EIA) under Environmental Act, 1992. Environment term is expanded to integrate human living with physical natural resources; thus current EIA evaluate project’s effects in terms of land use and quality of life. Public participation is a part of EIA according to Law for articulating project’s information to affected residents. Guideline development method uses data management and data mapping by reviewing secondary data between the EIA feasibility studies of the road projects from relevant jurisdictions and the developed SIA guidelines from other countries. The new SIA guideline is developed by extending social impacts in EIA to assess indirect and cumulative impacts. It is validated by experts from these jurisdictions. It is consisted of the checklist of SIA guideline and body of SIA guideline; to estimate anticipated impacts and evaluate detail of social impacts respectively. It can assess both positive and negative impacts of new and existing road projects. It can evaluate impacts for alternative selection and since design stage of road project to operation. Monitoring and iterative assessment processes are recommended for further study.
Wednesday 24 March 2010
Cash Flow Planning Application for Construction Projects
Construction industry is experiencing a proportionally greater number of distressed firms than in other industries. Primary causes are inadequate cash resources and the failure to convince creditors and lenders of the temporary nature of such shortage. Apparently, cash flow management is becoming an essential tool for managing, controlling and monitoring construction projects so as to ensure uninterrupted cash flows through the course of project implementation.
Although project cash flow has been studied in several countries in the past, most researches primarily emphasized on developing the cash flow ideal curve and mathematical formula by using past project data to forecast or predict cash flow trends during the tendering stage of construction project. Singh and Lakanathan (1992 cited in Navon, 1996) stated that cash is the most important of the construction company’s resource, because more construction companies fail due to lack of liquidity for supporting their day-to-day activities than because of inadequate management of other resources. Cash flow management is a complex and important problem faced by companies of different sizes usually requiring distinct approaches and proper tools according to the nature and complexity of the operations. Inadequate cash resource and failure to convince creditor and lender are the main reasons why the construction industry usually experiences a proportionally grate number than other industries (Barboza and Pimentel, 2001).
Therefore, the cash flow planning becomes an essential in management of construction project as to ensure uninterrupted cash flow through the course of project implementation. Previous researches of project cash flow were mostly conducted to derive a universally accepted cash flow forecasting model which can be applied to every type of construction projects.
In addition, most of the contractors require the project cash flow plan for preparing the periodic budgets and for monitoring and controlling their project. Therefore, the suitable tools for developing the project cash flow plan should provide timely, accurate and uncomplicated use. In order to efficiently plan and accurately forecast the project cash flow which can be tracked against the project schedule, a proper cash flow planning tool should be integrated with the project cash flow plan and the project schedule.
Mr. Nakorn Nakwarin made a study which main objective was to develop a cash flow planning application prototype for integrating project schedule information and cash flow plan of construction projects. The developed application can be used to assist contractors in reducing the inconvenience in project cash flow planning, monitoring the project financial status and planning proper corrective actions.
In order to achieve the main objective, two sub-objectives were also needed to accomplish as follows:
1. To identify the factors affecting the project cash flow during the construction stage
2. To develop cash flow planning system, which can be used to plan the cash flow and forecast the financial status of a construction project
Conclusion
1. Identification of Factors affecting Project Cash Flow during Construction Stage
The following are a list of key factors affecting project cash flow during construction stage:
Influence Factors in Term of Revenues
Revenue factors consist of progress payment and advanced payment. Each project has different types of work progress payments. For some projects which clients make payments according to the actual work progress, revenue to contractors would be recognized when such payments are made. However, for other projects, contractor would recognize revenue based on the payment period or payment stage. Another factor affecting the project revenue is the advanced payment. Advanced payment is the amount of deposit required from contractors prior to project commencement. Different types of project progress payment and advanced payment are based on the contract details of each project.
Influence Factors in Term of Costs
This research has classified the cost factors into seven key components, including the labor cost, equipment cost, material cost, subcontractor cost, mobilization cost, overhead cost and estimation. In calculating project costs, it undoubtedly involves estimation. Such cost estimation was made by using the estimated quantity of each project resource, the resource cost data, the subcontractor cost, the mobilization cost and the project overhead cost. Estimated costs could materially misstate the actual project costs if contractors employ improper estimation approach or use outdated resource cost data, subcontractor cost data, mobilization cost and overhead cost data.
Influence Factors in Term of Time
According to the research, time variable is another important factor affecting project cash flow planning. There are altogether four sub-factors of the time variable, including the project schedule, the project calendar, the payment term and time lags. During construction phase, project schedule constantly changes. Causes of change are changes in construction techniques, construction delay, or the pushing pressure from contractors to expedite construction process. Calendar assigns working day, non-working day and holiday of each project. Whenever Project Schedule and Calendar change, they will also cause changes in the project cash flow plan. Finally, both payment term and time lags affect the cash flow project planning with respect to the payment date of both revenue and cost.
Influence Factors in Term of Contract
There are four factors related to project contracts, including the retention, the performance and payment bonds, the unbalanced bids and the tendering BOQ. The retention amount would be charged when contractor receives progress payments and would be repaid to contractors upon project completion. The performance and payment bonds are guaranteed deposits required from contractors prior to commencing the project. The unbalanced bids arise when contractors raise the price on certain bid items and reduce the price of the other in order to accumulate more proceeds at the initial stages of the construction project. The details of tendering BOQ are stated as a part of project contracts for payment to contractors.
Other factors
Other factors impacting the project cash flow planning are material-related variables and inflation rate. Material storage policy or material warehouse policy, lead time of material ordering material payment and credit term, down payments and material discount rate are examples of material-related variables affecting project cash flow planning. Inflation rate is another factor which is relevant to project cash flow planning for construction projects spanning over one year. Inflation rate is applied to calculating and planning cash flows in order to take into account the increase or decrease in the value of money over years.
2. Development of Project Cash Flow Planning Application
Project cash flow planning is a significant tool that assists construction firms in managing their project financial status. Due to the complexity and various factors involved in the project cash flow planning process, the project cash flow planning application is developed to assist contractors in performing this task. In order to develop the project cash flow planning application, several steps are involved, starting from system requirement identification, system design and development to system testing.
System Requirement Identification
System requirement identification can be divided into two sections: system requirement acquisition and system requirement analysis. In order to determine system requirements, interviews were carried out with five construction companies. The outputs of this stage include existing problems and basic requirements of project cash flow planning system. Another section is the system requirement analysis of such acquired information. The outputs of system requirement analysis are project cash flow planning framework, data flow diagram and data dictionary. These will be used as input for the system design and development phase.
System Design and Development
The system design and development phase comprises of three major tasks, namely the system architecture design, the system database design and development, and the application interface design and development. The system is designed according to the retrieved information from previous phase. The system architecture of project cash flow planning system is the output of the system architecture design stage, consisting of MS Project, MS Excel, MS Access and Project Cash Flow Planning Application. The second task is the system database design and development which consists of entity design, entity-relationship diagram design (E-R diagram) and database development, where the project cash flow planning database is the output of this stage. The last task in the system design and development phase is the application interface design and development.
System Testing
The key objective of system testing is to ensure that the developed prototype can accomplish the stated objectives. In this phase, the project cash flow planning system is tested in terms of system verification and system validation. System verification is carried out to test the overall functions and the accuracy of the system whether there is any system error. Then, system validation is carried out by demonstrating the system to contractors and noting their comments to assess whether the system meets their requirements.
His thesis abstract is copied and posted.
ABSTRACT
An essential element in a construction firm’s overall strategy is its financial plan, which should be designed to ensure an adequate provision of finance for the firm’s needs. Without sufficient funds, a company cannot safely expand as quickly as it might wish. This is due to the reason that the fund shortage problem is the most common cause of business failure, particularly the profitable and growing firms. The planning of project cash flow is a management tool used by the construction firms to improve the firms’ financial position and remove the risk of bankruptcy. Similar to other management tools, cash flow planning is a repeated process. During the initial stage, a forecast plan or target is complied. Next, when the project is progressing, the performance is measured and compared with the plan. It is often the case that there are discrepancies between the plan and actual performance; therefore, the plan has to be consequently changed in order to meet the original target or at least minimizing the discrepancy between the actual performance and the original target. Cash flow planning is a time-consuming and very complicated process because it involves lots of documentation and several procedures for calculating and checking the cash flow.
Acknowledging the inconvenience and complication of cash flow planning process, this research aims to develop a new and innovative computer tool used for project cash flow planning. The system being developed is the integration of Microsoft Project and project cash flow planning application in order to generate project cash flow plan. The benefits from this application include a reduction of time used for planning the cash flow planning, a lower error during cash flow project planning, and an increase in the construction management efficiency.
Although project cash flow has been studied in several countries in the past, most researches primarily emphasized on developing the cash flow ideal curve and mathematical formula by using past project data to forecast or predict cash flow trends during the tendering stage of construction project. Singh and Lakanathan (1992 cited in Navon, 1996) stated that cash is the most important of the construction company’s resource, because more construction companies fail due to lack of liquidity for supporting their day-to-day activities than because of inadequate management of other resources. Cash flow management is a complex and important problem faced by companies of different sizes usually requiring distinct approaches and proper tools according to the nature and complexity of the operations. Inadequate cash resource and failure to convince creditor and lender are the main reasons why the construction industry usually experiences a proportionally grate number than other industries (Barboza and Pimentel, 2001).
Therefore, the cash flow planning becomes an essential in management of construction project as to ensure uninterrupted cash flow through the course of project implementation. Previous researches of project cash flow were mostly conducted to derive a universally accepted cash flow forecasting model which can be applied to every type of construction projects.
In addition, most of the contractors require the project cash flow plan for preparing the periodic budgets and for monitoring and controlling their project. Therefore, the suitable tools for developing the project cash flow plan should provide timely, accurate and uncomplicated use. In order to efficiently plan and accurately forecast the project cash flow which can be tracked against the project schedule, a proper cash flow planning tool should be integrated with the project cash flow plan and the project schedule.
Mr. Nakorn Nakwarin made a study which main objective was to develop a cash flow planning application prototype for integrating project schedule information and cash flow plan of construction projects. The developed application can be used to assist contractors in reducing the inconvenience in project cash flow planning, monitoring the project financial status and planning proper corrective actions.
In order to achieve the main objective, two sub-objectives were also needed to accomplish as follows:
1. To identify the factors affecting the project cash flow during the construction stage
2. To develop cash flow planning system, which can be used to plan the cash flow and forecast the financial status of a construction project
Conclusion
1. Identification of Factors affecting Project Cash Flow during Construction Stage
The following are a list of key factors affecting project cash flow during construction stage:
Influence Factors in Term of Revenues
Revenue factors consist of progress payment and advanced payment. Each project has different types of work progress payments. For some projects which clients make payments according to the actual work progress, revenue to contractors would be recognized when such payments are made. However, for other projects, contractor would recognize revenue based on the payment period or payment stage. Another factor affecting the project revenue is the advanced payment. Advanced payment is the amount of deposit required from contractors prior to project commencement. Different types of project progress payment and advanced payment are based on the contract details of each project.
Influence Factors in Term of Costs
This research has classified the cost factors into seven key components, including the labor cost, equipment cost, material cost, subcontractor cost, mobilization cost, overhead cost and estimation. In calculating project costs, it undoubtedly involves estimation. Such cost estimation was made by using the estimated quantity of each project resource, the resource cost data, the subcontractor cost, the mobilization cost and the project overhead cost. Estimated costs could materially misstate the actual project costs if contractors employ improper estimation approach or use outdated resource cost data, subcontractor cost data, mobilization cost and overhead cost data.
Influence Factors in Term of Time
According to the research, time variable is another important factor affecting project cash flow planning. There are altogether four sub-factors of the time variable, including the project schedule, the project calendar, the payment term and time lags. During construction phase, project schedule constantly changes. Causes of change are changes in construction techniques, construction delay, or the pushing pressure from contractors to expedite construction process. Calendar assigns working day, non-working day and holiday of each project. Whenever Project Schedule and Calendar change, they will also cause changes in the project cash flow plan. Finally, both payment term and time lags affect the cash flow project planning with respect to the payment date of both revenue and cost.
Influence Factors in Term of Contract
There are four factors related to project contracts, including the retention, the performance and payment bonds, the unbalanced bids and the tendering BOQ. The retention amount would be charged when contractor receives progress payments and would be repaid to contractors upon project completion. The performance and payment bonds are guaranteed deposits required from contractors prior to commencing the project. The unbalanced bids arise when contractors raise the price on certain bid items and reduce the price of the other in order to accumulate more proceeds at the initial stages of the construction project. The details of tendering BOQ are stated as a part of project contracts for payment to contractors.
Other factors
Other factors impacting the project cash flow planning are material-related variables and inflation rate. Material storage policy or material warehouse policy, lead time of material ordering material payment and credit term, down payments and material discount rate are examples of material-related variables affecting project cash flow planning. Inflation rate is another factor which is relevant to project cash flow planning for construction projects spanning over one year. Inflation rate is applied to calculating and planning cash flows in order to take into account the increase or decrease in the value of money over years.
2. Development of Project Cash Flow Planning Application
Project cash flow planning is a significant tool that assists construction firms in managing their project financial status. Due to the complexity and various factors involved in the project cash flow planning process, the project cash flow planning application is developed to assist contractors in performing this task. In order to develop the project cash flow planning application, several steps are involved, starting from system requirement identification, system design and development to system testing.
System Requirement Identification
System requirement identification can be divided into two sections: system requirement acquisition and system requirement analysis. In order to determine system requirements, interviews were carried out with five construction companies. The outputs of this stage include existing problems and basic requirements of project cash flow planning system. Another section is the system requirement analysis of such acquired information. The outputs of system requirement analysis are project cash flow planning framework, data flow diagram and data dictionary. These will be used as input for the system design and development phase.
System Design and Development
The system design and development phase comprises of three major tasks, namely the system architecture design, the system database design and development, and the application interface design and development. The system is designed according to the retrieved information from previous phase. The system architecture of project cash flow planning system is the output of the system architecture design stage, consisting of MS Project, MS Excel, MS Access and Project Cash Flow Planning Application. The second task is the system database design and development which consists of entity design, entity-relationship diagram design (E-R diagram) and database development, where the project cash flow planning database is the output of this stage. The last task in the system design and development phase is the application interface design and development.
System Testing
The key objective of system testing is to ensure that the developed prototype can accomplish the stated objectives. In this phase, the project cash flow planning system is tested in terms of system verification and system validation. System verification is carried out to test the overall functions and the accuracy of the system whether there is any system error. Then, system validation is carried out by demonstrating the system to contractors and noting their comments to assess whether the system meets their requirements.
His thesis abstract is copied and posted.
ABSTRACT
An essential element in a construction firm’s overall strategy is its financial plan, which should be designed to ensure an adequate provision of finance for the firm’s needs. Without sufficient funds, a company cannot safely expand as quickly as it might wish. This is due to the reason that the fund shortage problem is the most common cause of business failure, particularly the profitable and growing firms. The planning of project cash flow is a management tool used by the construction firms to improve the firms’ financial position and remove the risk of bankruptcy. Similar to other management tools, cash flow planning is a repeated process. During the initial stage, a forecast plan or target is complied. Next, when the project is progressing, the performance is measured and compared with the plan. It is often the case that there are discrepancies between the plan and actual performance; therefore, the plan has to be consequently changed in order to meet the original target or at least minimizing the discrepancy between the actual performance and the original target. Cash flow planning is a time-consuming and very complicated process because it involves lots of documentation and several procedures for calculating and checking the cash flow.
Acknowledging the inconvenience and complication of cash flow planning process, this research aims to develop a new and innovative computer tool used for project cash flow planning. The system being developed is the integration of Microsoft Project and project cash flow planning application in order to generate project cash flow plan. The benefits from this application include a reduction of time used for planning the cash flow planning, a lower error during cash flow project planning, and an increase in the construction management efficiency.
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