Construction projects may seldom be performed exactly as it was planned during project design. In addition, the underground conditions on the site are not quite exact as it was considered by the contractor or the designer at the outset to this project. Small differences have little importance to the parties involved but when the economic consequences of these differences are significant, they are of great interest. Therefore, many construction contracts, in particular those issued by governmental entities, comprise two significant clauses: a 'changes clause` and 'different conditions of the site clause". The names of these clauses can vary, but the content is generally the same.
In general, there are stated processes, often with legal requirements and keeping records, contained in the contract to facilitate the use of these clauses.
Entitlement, Cost, Documentation Sections and participation satisfaction have reflected the success of any construction claim management.
The entitlement is usually presented in two parts. First, the claim description must clearly establish the law of the part of the party of relief. This part of the narrative should always flow from the contract. Secondly, as part of the law section, there is usually a technical description which links the facts of the evolution work or failure to perform the right theory. It is generally substantial in detail describing this subject. It is the story of the project, which uses of journalists classic 'who, what, when, where, why and how' method in both quantitative and qualitative terms.
The cost section concerns the costs incurred by the party or owner to the following changes. This section is generally organized in such a way that it goes hand in hand with the organization of the technical description. The costs are directly related to each element detailed in the technical description.
Documentation is the ultimate success of a construction claim. Even a claim to merit may be failed if it fails to show itself in this section. Generally, the right description will mention contact provisions and appropriate case law, copies of which would be established in this section. The technical description could probably be supported by copies of relevant correspondence, calendars, the reports, agendas, newspapers, etc. Documents submitted in support of the cost section could include invoices, compensation, time sheets, delivery tickets, etc.
In addition, the claim management success is based on an interdisciplinary method, involving project managers, engineers, lawyers, construction site managers. This broad range of expertise is necessary to the analysis of often complex claim situations whose origins and scope might, at first sight, resemble a maze.
Therefore, by company audit, you may discover possible weaknesses of your claim management so you may close the gaps. After solving those gaps, the strengths of your claim management can be demonstrated. Strengths that your company may use can complete projects with the maximum profit.
Audits typically, but not exclusively focus on:
- Integrating claim management into your project design and handling.
- Internal and external communication of your company in claim situations
- Complete, court-proof and transparent project documentation.
- Efficiency of existing contracts and vehicles for securing payment.
- Decision-making processes in strategic claim situations.
In construction claim management, the most potential problems affecting project entitlement, document and cost in construction claim related with:
- Incomplete and inadequate definition of scope
- Lack of mutual understanding of scope
- Contract document
- Owner does not complete any conditions which are necessary for contractor’s to work
- Accelerating the time of completion.
- Constructive acceleration
- Owner asks the contractor to accelerate the progress to meet the planned completion schedule. In other words, no time extension is given.
- Delay with excusable and non-excusable or compensable and non-compensable
- Disruption with Incomplete and incorrect contract drawings or changes in the work.
Mrs. Truc Thi Thanh Nguyen made a research which main purposes were to: (1) develop a framework on claim analysis approach; and (2) study the application of the framework in Hydropower Construction Project Claim.
Conclusions
The design process for the development of framework on claim analysis is evolutionary and informal. The claims analysis approach was adapted to offer a simple framework for describing the claimant activities and goals, framing them in a way that supports the claim reasoning. The claim format set forth in this article is a general outline of what should be comprised in a claim. The actual framework should be modified to present the claim in a persuasive manner.
In addition, in the hydropower plant construction project, the contractors followed the specifications closely and keep good documentation. As the owner strives to improved contract quality, the contractor followed the contract and specifications very closely, found out the deficiency of the contract, and keep good documentation. Therefore, the contractor has received a higher offer from his claim. Besides, the contractor was aware that the litigation opportunity cost is more than the direct litigation cost. The contractor understood that opportunity cost also includes indirect litigation costs, such as schedule interruption, idle labor, idle equipment, damaged reputation, and contractor-owner relationships.
In this case study, force majeure claims become complicated when there is a major event that not only directly impacts the work but also creates potentially changed working conditions after work resumes. Therefore, several questions regarding the contractual language with respect to allowable project extensions, responsibility for mitigating the event’s impacts, as well as the costs associated with mitigation efforts create complications when preparing and analyzing force majeure claims. The primary challenges associated with complex force majeure claims relate to continued impacts and mitigation responsibilities. Certain continued impacts may result from severe natural disasters, including idling cost of manpower, plant and machinery.
It is our sincere hope that all construction projects will be executed without claims. However, if claims are inevitable, the claim framework may attend as a template to analyze a claim situation and help to bring quick solutions to an interruptive event.
Her thesis abstract is copied and posted
Abstract
In general, construction claim happen on various reasons. It is required to understand the dynamic nature between construction claim and opportunist tender. Therefore, negotiation is a significant stage in construction claim management process. Unluckily, most construction claim negotiations are conducted inefficiently due to various reasons. The recent development of multi-agent systems supplies an innovative method of facilitating various negotiations. Besides, standard forms of contract supply for extensions of time (EOT) due to excusable delays, and EOT claims are frequent in many construction projects. The contractor and the supervising engineer commonly spend important time proving and estimating such claims. However, a variety of different techniques has been employed for such evaluations.
Only a small number of contractors fail to utilize some form of a scheduling device to determine the sequence of construction activities and events. A correctly though out schedule permits a contractor and owner to correctly coordinate the work with resources that are required to finish the project on time. Therefore, the cost of scheduling software is reducing and at the same time the level of complexity of the completed schedule is increasing. However, the correct usage of such software demands a basic understanding of construction scheduling concepts.
The idea of delay and disruption within projects is well-known and is frequently the subject of litigation claims. However, the term is not clearly explained, and it is difficult to justify such claims within a legal process. This paper shows a well-developed method that is a reasonable, translucent, auditable and sustainable means of presenting such a claim.
Tuesday 3 August 2010
Monday 2 August 2010
Quality Management in Design Phase of Construction Project
With the rapid growth of the economy since 1990s, the boom of construction industry has brought a quite new face for Viet Nam. Many large and complex projects are attracting international companies to attend. These multinational companies have introduced the new technologies and modern knowledge on project management in Viet Nam which have created a new and fresh air to the construction market – a more and more competitive market. This has new standards and needs. The customers have more choice. In order to survive in such an environment, the domestic companies have to change themselves to fit them in the market economy with the higher requirements of the customers/ owners.
High quality construction works is always the final target for any customers as well as the relevant parties – contractors, designers, etc. However, people used to imply about the construction process quality more than other factors that have the same affect on the construction works such as setting up investment project, survey and design, etc., –the first phases before execution. Therefore, if there is any problem to a construction project, construction companies is always find at fault due to poor quality. But in fact, people have forgotten a very important part in the chain of a project - the design consulting phase or designer.
In Viet Nam the role of consultant/ engineer in the design phase of the construction project has not been concerned properly, especially in the state own projects or small private projects.
Design consulting is the essential knot to the success or failure of a project. Those who consult in the design phase must be responsible to the owners and the law for the design quality. They are requested to ‘eliminate hazards which may give rise to risks’ and to ‘reduce risks from remaining hazards’. They therefore must consider the materials and process in their design for the construction. They also must concern to the factors regarding health and safety in the project.
Some well-known factors in design phase affecting to the project quality are as follows:
- Misunderstanding the clients’ requirements to develop the design
- Using incorrect/ out-of-date information
- Lack of co-ordination between the co-workers
- Loose or inappropriate specifications
To have a good construction work, it is necessary to have a good design. It has been recognized that each error will cost ten times more to fix in development than it would to fix in planning, and 100 times more if the error actually reaches the customer. (Peter E.D. Love, 2002)
Mr. Nguyen Anh Kiet made a research to identify the activities should be taken to implement the quality management system in design phase of the construction project.
The awareness of the value of quality design would ensure that sufficient time and fees are available to allow designers to provide the needed level of services in order to satisfy customers, save time, cost and finally to maximize the benefits thanks to more projects will be completed on time, within budget, and with less rework and disputes. In addition, implementing the quality management system will help to measure the performance, increase efficiency and to create a more competitive position in the market.
Conclusion
Quality management in the design phase is as important as it is in the construction phase. It will help all parties involved in the project to save their time, cost and assure the project life. Although most of the companies have their own systems to manage the quality of the products and services from conception through disposal, there are still many works need to be done because no study has been done within the company to measure how effective were these quality management systems. The problem is that, companies need a good system to track accurately the causes of the failure and find out where the cost can be minimized.
In order to apply quality management system to the design phase of the construction project, companies need to define the factors that affect to the quality of the design phase in a construction project and set quality as performance to requirements. It depends on the characteristics of projects the quality management should be focused to different aspects. For example, requirements for a brewery project will be different from those for textile factory project. This means that the designs and specifications of the two projects will be different. Therefore the problems (if any) of each project will also be not similar. An experienced project manager will foresee the difficulties and has suitable preventive actions.
Below are the common factors that have serious affects on the design tasks:
- Misunderstanding the clients’ requirements to develop the design
- Using incorrect/ out-of-date information
- Lack of co-ordination between the co-workers
- Loose or inappropriate specifications
To improve the quality in the design phase, the drawings and documentation are considered as one of the most important factors which are assessed by the accuracy, time, completeness and conformance. Besides, the co-ordination between the team members and relevant parties will help to maximize the quality of the construction works and minimize the extra cost and time, by which will reduce the risks of disputes. Improvements in drawings and documentation in the design phase will create the efficiency in the construction process. Improved quality in design phase will lead to less construction waste and optimum performance of project stages. This will lead to significant cost savings both with regards to the project cost and to the cost to the environment.
To implement the quality management to the design phase of the project, there are a lot of activities that the organization must pay attention to.
Common Problems in Design Phase
Many researches showed that the followings are the most important causes of problems in a construction project that generates from design phase.
His thesis abstract is copied and posted.
Abstract
In a perfect quality management system, changes should be confined to the design phase of the construction project. However, in the reality the changes often happen during construction phase and cause serious disruption to the project because the quality management in the design phase. Many researches showed that do the right things at the design phase can improve the overall project performance. The study focuses on the role of quality management in the design phase of a construction project and the factors influencing on the quality management systems.
Mendelsohn (1997) observed that up to 75% of the problems happened on site were generated at the design phase. Therefore, eliminating these problems at the design phase can reduce the problems on site. (Causes of discrepancies between and construction by Faisal Manzoor Arain, Sadi Assaf, Low Sui Pheng).
A systematic research on the effects of design in construction was performed by Design Task Force of the CII, by which the design were evaluated mainly on accuracy and usability. The quality of the design is very important as it influences on the quality of the whole project. The AQSC has published a guideline for quality system, in which “… it should assure that drawings and specifications provide a clear and cost effective design definition that incorporates all applicable requirements”.
High quality construction works is always the final target for any customers as well as the relevant parties – contractors, designers, etc. However, people used to imply about the construction process quality more than other factors that have the same affect on the construction works such as setting up investment project, survey and design, etc., –the first phases before execution. Therefore, if there is any problem to a construction project, construction companies is always find at fault due to poor quality. But in fact, people have forgotten a very important part in the chain of a project - the design consulting phase or designer.
In Viet Nam the role of consultant/ engineer in the design phase of the construction project has not been concerned properly, especially in the state own projects or small private projects.
Design consulting is the essential knot to the success or failure of a project. Those who consult in the design phase must be responsible to the owners and the law for the design quality. They are requested to ‘eliminate hazards which may give rise to risks’ and to ‘reduce risks from remaining hazards’. They therefore must consider the materials and process in their design for the construction. They also must concern to the factors regarding health and safety in the project.
Some well-known factors in design phase affecting to the project quality are as follows:
- Misunderstanding the clients’ requirements to develop the design
- Using incorrect/ out-of-date information
- Lack of co-ordination between the co-workers
- Loose or inappropriate specifications
To have a good construction work, it is necessary to have a good design. It has been recognized that each error will cost ten times more to fix in development than it would to fix in planning, and 100 times more if the error actually reaches the customer. (Peter E.D. Love, 2002)
Mr. Nguyen Anh Kiet made a research to identify the activities should be taken to implement the quality management system in design phase of the construction project.
The awareness of the value of quality design would ensure that sufficient time and fees are available to allow designers to provide the needed level of services in order to satisfy customers, save time, cost and finally to maximize the benefits thanks to more projects will be completed on time, within budget, and with less rework and disputes. In addition, implementing the quality management system will help to measure the performance, increase efficiency and to create a more competitive position in the market.
Conclusion
Quality management in the design phase is as important as it is in the construction phase. It will help all parties involved in the project to save their time, cost and assure the project life. Although most of the companies have their own systems to manage the quality of the products and services from conception through disposal, there are still many works need to be done because no study has been done within the company to measure how effective were these quality management systems. The problem is that, companies need a good system to track accurately the causes of the failure and find out where the cost can be minimized.
In order to apply quality management system to the design phase of the construction project, companies need to define the factors that affect to the quality of the design phase in a construction project and set quality as performance to requirements. It depends on the characteristics of projects the quality management should be focused to different aspects. For example, requirements for a brewery project will be different from those for textile factory project. This means that the designs and specifications of the two projects will be different. Therefore the problems (if any) of each project will also be not similar. An experienced project manager will foresee the difficulties and has suitable preventive actions.
Below are the common factors that have serious affects on the design tasks:
- Misunderstanding the clients’ requirements to develop the design
- Using incorrect/ out-of-date information
- Lack of co-ordination between the co-workers
- Loose or inappropriate specifications
To improve the quality in the design phase, the drawings and documentation are considered as one of the most important factors which are assessed by the accuracy, time, completeness and conformance. Besides, the co-ordination between the team members and relevant parties will help to maximize the quality of the construction works and minimize the extra cost and time, by which will reduce the risks of disputes. Improvements in drawings and documentation in the design phase will create the efficiency in the construction process. Improved quality in design phase will lead to less construction waste and optimum performance of project stages. This will lead to significant cost savings both with regards to the project cost and to the cost to the environment.
To implement the quality management to the design phase of the project, there are a lot of activities that the organization must pay attention to.
Common Problems in Design Phase
Many researches showed that the followings are the most important causes of problems in a construction project that generates from design phase.
His thesis abstract is copied and posted.
Abstract
In a perfect quality management system, changes should be confined to the design phase of the construction project. However, in the reality the changes often happen during construction phase and cause serious disruption to the project because the quality management in the design phase. Many researches showed that do the right things at the design phase can improve the overall project performance. The study focuses on the role of quality management in the design phase of a construction project and the factors influencing on the quality management systems.
Mendelsohn (1997) observed that up to 75% of the problems happened on site were generated at the design phase. Therefore, eliminating these problems at the design phase can reduce the problems on site. (Causes of discrepancies between and construction by Faisal Manzoor Arain, Sadi Assaf, Low Sui Pheng).
A systematic research on the effects of design in construction was performed by Design Task Force of the CII, by which the design were evaluated mainly on accuracy and usability. The quality of the design is very important as it influences on the quality of the whole project. The AQSC has published a guideline for quality system, in which “… it should assure that drawings and specifications provide a clear and cost effective design definition that incorporates all applicable requirements”.
Friday 30 July 2010
Customer-Driven Strategy And KPIs Using CRM Approach: A Case Study Of Construction Enterprises In Vietnam
Vietnam construction enterprises seem to be far behind compared with other industries in application of marketing strategy, customer study and enterprises business strategy adaptation. Construction industry should be the one to apply CRM the most. The value of a project is always very big; the number of projects and customer is very limited in comparison to any other industry. And because of the uniqueness and rarity, customer is different from any other. They require special, customized care and service. So, each customer is critical to construction project marketing.
Besides, CRM in construction is different from CRM in other industries due to the characteristic of construction industry.
The most important and different characteristic of construction industry from other industries is project-based production. Any projects are unique. Construction projects are always executed on site which much influenced by many factors such as weather, technologies, culture, social, politic, etc conditions, much more than any kind of production in the factory. Projects are always constrained by resources available, time for completion and quality required by Client.
The characteristic of customers is also much different. The number of customer is very limited. And the demand of the customer is much different from consumer product customers. Those characteristics make the marketing in construction different from other industries, especially CRM.
Those conditions make the construction industry marketing different from others. So it requires changes and adaptation in application of marketing strategy and technique.
Mr. Tran Dang Manh made a study to look into the CRM marketing technique and application in construction industry which includes:
- What is Customer relationship management?
- What is the characteristic of project-based construction industry?
- How to adapt and apply CRM in construction industry, especially in Vietnam?
- Based on real case of a construction enterprise in Vietnam, explore the actual conditions and level of CRM application. Identify any vacancy and adjustment applicable in CRM development to propose.
Conclusion
CRM is new to Vietnam construction enterprises. But CRM is a must for the enterprises development.
CRM helps enterprises understanding its customer and its own performance, classifying its customers, satisfying its targeted customer, and creating values to its share holders by creating values to both its targeted customer and its own.
CRM requires the commitment of the whole organization- from top leaders to every employee, and all of its related supplier chain. Only with the commitment of the whole production chain, the final product and customer service shall be achieved.
CRM requires the construction of information system capable of gathering customer information from any sources, media, and channel, analyze to give instructions to the production and management system, and store all information.
CRM requires its KPIs definition and application to give feedback to CRM system, continually improve itself and the whole organization.
Besides common strategy for general business, project-based industry has special characteristics: Uniqueness, non-standard working conditions, limited number of customers. It makes the CRM in project-based industry different from others.
In construction, the values that are critical to both customer and enterprises are time, cost, quality, and safety. To be competitive, each enterprise needs a unique strategy to ensure the value to themselves and customer. For all of that, CRM shall be able to find all necessary information, analyze, and evaluate the performance.
Vietnam construction enterprises are applying CRM in a very preliminary level. They do not have strategic approach to develop. Their management system also does not incorporate CRM. They need to change from its business ideology, its organization and business culture, its management system, and its employees’ behavior.
The primary values in construction- time, cost, quality, and safety- are still far from requirement in Vietnam. The CRM also has not been written and developed as an official strategy for the enterprises.
Vietnam construction enterprises need to assess its own performance to decide its targeted customer segments, apply appropriate customer policy, media, and channel, information system to manage CRM system. The assessment shall be based on clear and quantifiable KPIs set at the start of the development of CRM system. The KPIs to be used should be at least three categories:
- Enterprises general performance: profitability, operational criteria such as rate of inventory, liquidity ratio.
- Project performance: time, cost, quality, safety, and number of customer claims
- CRM performance: rate of customer retention, rate of referral.
CRM is a cross-functional activity. In order to develop CRM, enterprises need to change business ideology, organization and business culture, management system, and employees’ behavior. The improvement of CRM is part of an overall corporate restructuring
Only with the customized application of CRM, enterprises may understand their customer more, continually improvement of performance, and ensure its future development.
His thesis abstract is copied and posted.
Abstract
Customer relationship management (CRM) has been developed for centuries. It decides the design, function, and cost of the product, turnover, and profit of the enterprises.
CRM is a cross-functional activity. In order to develop CRM, enterprises need to change business ideology, organization and business culture, management system, and employees’ behavior. The improvement of CRM is part of an overall corporate restructuring.
But it seems not to be in Vietnam construction enterprises. Construction industry should be the one that apply CRM the most. Throughout understanding each customer is critical to construction project marketing.
By this study, I would like to study Customer-driven strategy and KPIs using CRM approach- a case study of construction enterprises in Vietnam so that I can propose a framework for the application and development of CRM in Vietnam construction enterprises.
Besides, CRM in construction is different from CRM in other industries due to the characteristic of construction industry.
The most important and different characteristic of construction industry from other industries is project-based production. Any projects are unique. Construction projects are always executed on site which much influenced by many factors such as weather, technologies, culture, social, politic, etc conditions, much more than any kind of production in the factory. Projects are always constrained by resources available, time for completion and quality required by Client.
The characteristic of customers is also much different. The number of customer is very limited. And the demand of the customer is much different from consumer product customers. Those characteristics make the marketing in construction different from other industries, especially CRM.
Those conditions make the construction industry marketing different from others. So it requires changes and adaptation in application of marketing strategy and technique.
Mr. Tran Dang Manh made a study to look into the CRM marketing technique and application in construction industry which includes:
- What is Customer relationship management?
- What is the characteristic of project-based construction industry?
- How to adapt and apply CRM in construction industry, especially in Vietnam?
- Based on real case of a construction enterprise in Vietnam, explore the actual conditions and level of CRM application. Identify any vacancy and adjustment applicable in CRM development to propose.
Conclusion
CRM is new to Vietnam construction enterprises. But CRM is a must for the enterprises development.
CRM helps enterprises understanding its customer and its own performance, classifying its customers, satisfying its targeted customer, and creating values to its share holders by creating values to both its targeted customer and its own.
CRM requires the commitment of the whole organization- from top leaders to every employee, and all of its related supplier chain. Only with the commitment of the whole production chain, the final product and customer service shall be achieved.
CRM requires the construction of information system capable of gathering customer information from any sources, media, and channel, analyze to give instructions to the production and management system, and store all information.
CRM requires its KPIs definition and application to give feedback to CRM system, continually improve itself and the whole organization.
Besides common strategy for general business, project-based industry has special characteristics: Uniqueness, non-standard working conditions, limited number of customers. It makes the CRM in project-based industry different from others.
In construction, the values that are critical to both customer and enterprises are time, cost, quality, and safety. To be competitive, each enterprise needs a unique strategy to ensure the value to themselves and customer. For all of that, CRM shall be able to find all necessary information, analyze, and evaluate the performance.
Vietnam construction enterprises are applying CRM in a very preliminary level. They do not have strategic approach to develop. Their management system also does not incorporate CRM. They need to change from its business ideology, its organization and business culture, its management system, and its employees’ behavior.
The primary values in construction- time, cost, quality, and safety- are still far from requirement in Vietnam. The CRM also has not been written and developed as an official strategy for the enterprises.
Vietnam construction enterprises need to assess its own performance to decide its targeted customer segments, apply appropriate customer policy, media, and channel, information system to manage CRM system. The assessment shall be based on clear and quantifiable KPIs set at the start of the development of CRM system. The KPIs to be used should be at least three categories:
- Enterprises general performance: profitability, operational criteria such as rate of inventory, liquidity ratio.
- Project performance: time, cost, quality, safety, and number of customer claims
- CRM performance: rate of customer retention, rate of referral.
CRM is a cross-functional activity. In order to develop CRM, enterprises need to change business ideology, organization and business culture, management system, and employees’ behavior. The improvement of CRM is part of an overall corporate restructuring
Only with the customized application of CRM, enterprises may understand their customer more, continually improvement of performance, and ensure its future development.
His thesis abstract is copied and posted.
Abstract
Customer relationship management (CRM) has been developed for centuries. It decides the design, function, and cost of the product, turnover, and profit of the enterprises.
CRM is a cross-functional activity. In order to develop CRM, enterprises need to change business ideology, organization and business culture, management system, and employees’ behavior. The improvement of CRM is part of an overall corporate restructuring.
But it seems not to be in Vietnam construction enterprises. Construction industry should be the one that apply CRM the most. Throughout understanding each customer is critical to construction project marketing.
By this study, I would like to study Customer-driven strategy and KPIs using CRM approach- a case study of construction enterprises in Vietnam so that I can propose a framework for the application and development of CRM in Vietnam construction enterprises.
Thursday 29 July 2010
Contract Clauses In The EPC Contract: A Case Study Of The Dinh Vu Polyester Project, Hai Phong, Vietnam
The Vietnamese Textile and Garment (T&G) industry consists of around 2.000 enterprises (25 State owned enterprises, 1.500 private enterprises and 450 reign direct investment enterprises) with over 2 million employees involved. Vietnam is ranking the 10th largest textile and apparel export countries in the world. Currently in Vietnam there are only two foreign companies producing PES fiber and filament yarn ‚ namely Formosa and Hualon company. Vietnam Textile industry has to import most PES fiber and filament yarn from abroad.
In order to minimize the interfaces and risks between the separated contractors and the Owner during executing a polyester project, Owners normally prefer to award and sign an EPC contract with an EPC contractor. However, this project delivery method will take a lot of time to make bidding, clarification, explanation and get the mutually agreement on the contract clauses between the contractor and the Owner. The following problems are normally involved with the EPC contract clauses:
1. Take time to make the bidding, clarification and finalization before contract signing;
2. Wrong understanding and interpreting of stipulated clauses in the contract;
3. Conflict between contractor and the Owner during project execution.
An EPC contract is generally applied for developing a polyester project, in case of problems or disputes during the project execution, these problems and disputes shall be resolved in accordance with stipulated clauses in the signed contract. Mr. Vu Dinh Duy made a research which focused on the following issues related to EPC contract:
1. to study EPC contract process and management from literature review;
2. to study the contract clauses in EPC polyester project;
3. to study the implementations of the contract clauses and their performance with reference to project advantages and problems.
Conclusion
EPC Contract, (known as the “Lump-sum Turnkey Contract”, “package deal”, or Engineering, Procurement, Construction and Commissioning Contract) places the duty to design, procure, construct and commissioning solely on the Contractor. The term “Lump-sum Turnkey” tends to mean the most extreme form of placing design, procurement, construction and commission responsibility on the contractor, such that after completion the Owner need only turn the key to commence operation of the Plant or Constructed facilities.
The use of EPC Contract results in a considerable reduction of intervention by the Owner in design, procurement, construction and commissioning process throughout the Project. The role of the Owner will consist primarily of contract administration, such as supervision, review and/or approval of critical works of detailed designs, procurement of long-lead items etc.
Lump-sum pricing method is often used for EPC Contract and enables the use of fixed payment by stages of completion. Lump-sum pricing and fixed installment payments provide the Owner with greater certainty in overall cost as well as in the timing of payment.
Advantages and Disadvantages of EPC Contract:
Advantages:
The EPC Contract makes contractor entirely responsible for the whole project regarding detailed design, procurement, construction and commissioning. The Owner receives a completed project in accordance with his performance specification.
The Owner does not need to worry about co-coordinating contractors effectively and avoids claims resulting from lack of interface definition.
In addition, single-point responsibility can also reduce the opportunity for claims by the contract. The Contractor must deliver the works that are fully operational to the specifications of the Owner; any defect or default is necessarily his responsibility except where the contract provides otherwise. Everything relating to the works can, thus, be concentrated in a single point of responsibility – the contractor.
With lump-sum pricing method, this system reduces front-loading by the contractor and encourages rapid completion. Also, it facilitates financing, as lender will have greater certainty of financial exposure and the timing of draw-downs.
The control given to the contractor should facilitate implementation of new and better approaches to design, developed through his experience and expertise. The contractor will have an intensive to implement such time saving changes under the turnkey structure.
Since the designer, purchaser, constructor work as a team, they are more likely to identify critical flaws in the design at an earlier stage, ensuring avoidance or mitigation of the flaw when such action is more effective. This team approach will help avoid many design, procurement, construction, commissioning risks which a separate designer, purchaser, constructor would not be able to identify, The joining of the design, procurement, construction and commissioning task under on contractor may also reduce the number of disputes which arise between the contractor and Owner.
Disadvantages:
Loss of control. The overall supervision role of the Owner is absent from the EPC Contract. The EPC model generally contemplates less day-to-day intervention. Under the EPC contract, it may be more difficult for the Owner to exercise his variation power properly. He may be distanced from the design, procurement, construction activities, reducing his understanding of the process used and his ability to verify for a variation and whether a variation proposed will affect the performance of the finished works.
The contractor will want to execute the works within the parameters of the Owner’s requirements for the least cost possible. The contractor in a EPC contract may be tempted to under-design the project in order to cut his costs and save on time.
Cost of risks. Under the EPC contract the Owner benefits from an increased amount of the risk of the project being placed on the contractor. However, depending upon market forces, a contractor will attempt to increase the contract price in accordance with the increase in risk. Where there is little competition, the Owner may have to assume the cost of the increased risk placed on the contractor. Thus the Owner may end up paying a higher overall price for the project due to the degree of risk that is placed on the contractor and the need for the contractor to price such risk.
So that, EPC contracts nowadays become popular in construction projects, especially in oil and gas sector. However, together with the advantages, EPC contract also exposes its disadvantages and is quite complicated in terms of legal issues, therefore the Owner and the EPC Contractor shall have enough experiences and knowledge to understand lump sum contract characteristics from the perspectives of both the contractor and the Owner in order to avoid their faults and mitigate the risks during contract execution.
The EPC contract also come many new risks that are often severe, due to the complex nature and high cost frequently associated with this type of project. Understanding the risks and some of the other unique characteristics of EPC contracting is critical to a successful project where both the owner and the contractor obtain the high rewards for the risk.
His thesis abstract is copied and posted.
Absract
The Vietnamese Textile and Garment (T&G) industry consists of around 2.000 enterprises (25 State owned enterprises, 1.500 private enterprises and 450 reign direct investment enterprises) with over 2 million employees involved. Vietnam is ranking the 10th largest textile and apparel export countries in the world. The industry generates an economy contribution of 8% to country’s GDP. The T&G industry is employing 12% of national industrial workforce, holding the second position in export turnover and making the contribution of 14% to country‘s export turnover. Average growth rate from 2002 - 2007 is about 18% per year.
Therefore, valuable arguments for the implementation of a Polyester fiber project:
Saving of foreign currency due to substitution of imported Polyester staple fiber and filament;
Creation of new employment for qualified labor;
Further strengthening of the textile industry in Vietnam as a second largest export earner after crude oil;
Establishment of the whole polyester esterification, polycondensation, spinning and fiber drawing process through introduction and transfer of state-of-the-art technology;
First step in the Vietnamese synthetic fiber industry to extend the business into the upstream petrochemical industry, e.g. production of PTA;
Stable and long term local supply of staple fiber to the domestic downstream textile industry including the improvement of quality due to close cooperation between domestic companies.
Normally, for building a polyester plant the Owner will sign an EPC (Engineering, Procurement and Construction included pre – Commissioning and Commissioning and training) contract with an EPC contractor. In the petrochemical and polyester industry, there is not any EPC Contractor in Vietnam who can execute a full EPC project, therefore the EPC contractor is selected and awarded by the international bidding. The major factors for executing an EPC project are the contract clauses which are normally stipulated too generally with unclearly understanding and interpreting when having disputes between the contractor and the owner. Therefore, studying the method to develop the effective clauses in the EPC contract is necessary to simplify and make involved parties to understand and interpret clearly during the contract negotiation prior to the EPC contract signing and commencement. The understandable and applicable contract clauses properly will help an EPC project to be executed smoothly and effectively.
The sensitive clauses in the EPC contract are also needed to focus in order to minimize the conflicts and risks between the EPC contractor and the Owner. This study will also discuss on point of view and how to managing the EPC contract of Dinh Vu Polyester project and focus on the following issues related to EPC contract:
i. To study EPC contract process and management from literature review;
ii. To study the contract clauses in EPC polyester project;
iii. To study the actual Dinh Vu polyester project Contract implementation.
In order to minimize the interfaces and risks between the separated contractors and the Owner during executing a polyester project, Owners normally prefer to award and sign an EPC contract with an EPC contractor. However, this project delivery method will take a lot of time to make bidding, clarification, explanation and get the mutually agreement on the contract clauses between the contractor and the Owner. The following problems are normally involved with the EPC contract clauses:
1. Take time to make the bidding, clarification and finalization before contract signing;
2. Wrong understanding and interpreting of stipulated clauses in the contract;
3. Conflict between contractor and the Owner during project execution.
An EPC contract is generally applied for developing a polyester project, in case of problems or disputes during the project execution, these problems and disputes shall be resolved in accordance with stipulated clauses in the signed contract. Mr. Vu Dinh Duy made a research which focused on the following issues related to EPC contract:
1. to study EPC contract process and management from literature review;
2. to study the contract clauses in EPC polyester project;
3. to study the implementations of the contract clauses and their performance with reference to project advantages and problems.
Conclusion
EPC Contract, (known as the “Lump-sum Turnkey Contract”, “package deal”, or Engineering, Procurement, Construction and Commissioning Contract) places the duty to design, procure, construct and commissioning solely on the Contractor. The term “Lump-sum Turnkey” tends to mean the most extreme form of placing design, procurement, construction and commission responsibility on the contractor, such that after completion the Owner need only turn the key to commence operation of the Plant or Constructed facilities.
The use of EPC Contract results in a considerable reduction of intervention by the Owner in design, procurement, construction and commissioning process throughout the Project. The role of the Owner will consist primarily of contract administration, such as supervision, review and/or approval of critical works of detailed designs, procurement of long-lead items etc.
Lump-sum pricing method is often used for EPC Contract and enables the use of fixed payment by stages of completion. Lump-sum pricing and fixed installment payments provide the Owner with greater certainty in overall cost as well as in the timing of payment.
Advantages and Disadvantages of EPC Contract:
Advantages:
The EPC Contract makes contractor entirely responsible for the whole project regarding detailed design, procurement, construction and commissioning. The Owner receives a completed project in accordance with his performance specification.
The Owner does not need to worry about co-coordinating contractors effectively and avoids claims resulting from lack of interface definition.
In addition, single-point responsibility can also reduce the opportunity for claims by the contract. The Contractor must deliver the works that are fully operational to the specifications of the Owner; any defect or default is necessarily his responsibility except where the contract provides otherwise. Everything relating to the works can, thus, be concentrated in a single point of responsibility – the contractor.
With lump-sum pricing method, this system reduces front-loading by the contractor and encourages rapid completion. Also, it facilitates financing, as lender will have greater certainty of financial exposure and the timing of draw-downs.
The control given to the contractor should facilitate implementation of new and better approaches to design, developed through his experience and expertise. The contractor will have an intensive to implement such time saving changes under the turnkey structure.
Since the designer, purchaser, constructor work as a team, they are more likely to identify critical flaws in the design at an earlier stage, ensuring avoidance or mitigation of the flaw when such action is more effective. This team approach will help avoid many design, procurement, construction, commissioning risks which a separate designer, purchaser, constructor would not be able to identify, The joining of the design, procurement, construction and commissioning task under on contractor may also reduce the number of disputes which arise between the contractor and Owner.
Disadvantages:
Loss of control. The overall supervision role of the Owner is absent from the EPC Contract. The EPC model generally contemplates less day-to-day intervention. Under the EPC contract, it may be more difficult for the Owner to exercise his variation power properly. He may be distanced from the design, procurement, construction activities, reducing his understanding of the process used and his ability to verify for a variation and whether a variation proposed will affect the performance of the finished works.
The contractor will want to execute the works within the parameters of the Owner’s requirements for the least cost possible. The contractor in a EPC contract may be tempted to under-design the project in order to cut his costs and save on time.
Cost of risks. Under the EPC contract the Owner benefits from an increased amount of the risk of the project being placed on the contractor. However, depending upon market forces, a contractor will attempt to increase the contract price in accordance with the increase in risk. Where there is little competition, the Owner may have to assume the cost of the increased risk placed on the contractor. Thus the Owner may end up paying a higher overall price for the project due to the degree of risk that is placed on the contractor and the need for the contractor to price such risk.
So that, EPC contracts nowadays become popular in construction projects, especially in oil and gas sector. However, together with the advantages, EPC contract also exposes its disadvantages and is quite complicated in terms of legal issues, therefore the Owner and the EPC Contractor shall have enough experiences and knowledge to understand lump sum contract characteristics from the perspectives of both the contractor and the Owner in order to avoid their faults and mitigate the risks during contract execution.
The EPC contract also come many new risks that are often severe, due to the complex nature and high cost frequently associated with this type of project. Understanding the risks and some of the other unique characteristics of EPC contracting is critical to a successful project where both the owner and the contractor obtain the high rewards for the risk.
His thesis abstract is copied and posted.
Absract
The Vietnamese Textile and Garment (T&G) industry consists of around 2.000 enterprises (25 State owned enterprises, 1.500 private enterprises and 450 reign direct investment enterprises) with over 2 million employees involved. Vietnam is ranking the 10th largest textile and apparel export countries in the world. The industry generates an economy contribution of 8% to country’s GDP. The T&G industry is employing 12% of national industrial workforce, holding the second position in export turnover and making the contribution of 14% to country‘s export turnover. Average growth rate from 2002 - 2007 is about 18% per year.
Therefore, valuable arguments for the implementation of a Polyester fiber project:
Saving of foreign currency due to substitution of imported Polyester staple fiber and filament;
Creation of new employment for qualified labor;
Further strengthening of the textile industry in Vietnam as a second largest export earner after crude oil;
Establishment of the whole polyester esterification, polycondensation, spinning and fiber drawing process through introduction and transfer of state-of-the-art technology;
First step in the Vietnamese synthetic fiber industry to extend the business into the upstream petrochemical industry, e.g. production of PTA;
Stable and long term local supply of staple fiber to the domestic downstream textile industry including the improvement of quality due to close cooperation between domestic companies.
Normally, for building a polyester plant the Owner will sign an EPC (Engineering, Procurement and Construction included pre – Commissioning and Commissioning and training) contract with an EPC contractor. In the petrochemical and polyester industry, there is not any EPC Contractor in Vietnam who can execute a full EPC project, therefore the EPC contractor is selected and awarded by the international bidding. The major factors for executing an EPC project are the contract clauses which are normally stipulated too generally with unclearly understanding and interpreting when having disputes between the contractor and the owner. Therefore, studying the method to develop the effective clauses in the EPC contract is necessary to simplify and make involved parties to understand and interpret clearly during the contract negotiation prior to the EPC contract signing and commencement. The understandable and applicable contract clauses properly will help an EPC project to be executed smoothly and effectively.
The sensitive clauses in the EPC contract are also needed to focus in order to minimize the conflicts and risks between the EPC contractor and the Owner. This study will also discuss on point of view and how to managing the EPC contract of Dinh Vu Polyester project and focus on the following issues related to EPC contract:
i. To study EPC contract process and management from literature review;
ii. To study the contract clauses in EPC polyester project;
iii. To study the actual Dinh Vu polyester project Contract implementation.
Wednesday 28 July 2010
Quality Management System For Manufacturers And Contractors Of Pre-Cast Pile Foundation In Vietnam
Recently, Vietnam has kept highly economic growth in both public and private sectors. Therefore so many construction projects including buildings, factories and infrastructures have been invested to meet the country’s economic demands. Realizing the benefits of quality management, both investors and contractors attempt to improve the quality of the local construction industry.
Quality has been found as the most key components of project success. Deficiencies and errors in construction will require reworks or will result in failures after a product has been delivered to a customer. Such failures may result in claims, customer dissatisfaction, or dire consequences to the user.
So far, there are so many projects with piled foundation in Vietnam construction industry, especially building projects. Some serious problems in building foundation have been found with too much settlement of foundation. One of the most serious mistakes in both designing and construction of piled foundation was the collapsed 12-storey building in Shanghai City, China in March 2009. After those problems, not only owner, designer and consultants but also contractors are more and more concerned about quality management system.
The negative impact of indirect rework on profits can have serious consequences on projects’ and an organizations’ costs. For example, once design errors or omissions are identified in contract documentation, rework will occur. This process may continue to magnify until ultimately, the design firm finds itself in serious financial difficulties due to the prolonged impact of an unheeded increase in rework costs, coupled with a declining professional image and low morale.
Therefore, quality management system for the piling foundation works is really necessary for all of owner, designer, contractor and manufacturer to assure quality and prevent any unexpected hazards.
Mr. Pham Quoc Hung made a research which major objectives were to; (1) study quality management system in manufacturer of pre-cast pile and contractor of piling works for construction of project’s foundation; and (2) recommend the framework of quality management system and project quality plan based on a lesson learnt from these real cases study.
Conclusion
In order to assure the quality of construction works, it is first the contractors who determine the quality of construction project. The quality management program aims to find the most efficient way of managing the quality of work as to satisfy customers’ requirements. This study applied a framework of QMS using ISO9000 for manufacturer of pre-cast PC pile and PQP using ISO9000 for piling construction works in Vietnam.
The case studies have been conducted to investigate the construction methods and processes associated with quality assurance. The framework of QMS as presented in the report has been developed based on existing standards and regulations.
In these case studies, all major processes and detailed instructions for fabrication of pre-cast PC pile and construction of piling works have been presented. These are guidelines for contractors who implemented the QMS and PQP to achieve quality targets in construction.
The case studies found out significant tangible and intangible benefits for manufacturer of pre-cast PC pile and for contractor of piling construction project when applying QMS and PQP using ISO9000.
The most common problems related to managing quality often occurred during construction implementation and developments are found as follows:
Table 1: Problem and solution on implementing QMS and PQP
Recommendations for improvement
After understanding how the manufacturer of PC pile and contractor of piling construction project implement the QMS and PQP using ISO9000 Approach, recommendations for improvement can be as follows:
1) It is very important to have available resources with continual training and improving for better applying the QMS and the PQP. It helps the manufacturer and contractor of pre-cast piling foundation to always run smoothly for ensuring the quality targets.
2) So many benefits in implementation and development of QMS and PQP using ISO9000, some problems occurring can be reduced and eliminated with more detailed supervision and instructions.
3) ISO9000 is a framework for processing paper. However, other factors can be very important to contribute good quality products such as:
- Company culture from the beginning;
- Company strategy led by commitment of strong management;
- Company vision and policy in concentrating on satisfaction of customers and employees;
- The trend to exist in highly competitive condition forces the company to ensure its quality products;
- All company people have the same targets on quality.
His thesis abstract is copied and posted.
Abstract
ISO9000 has become more and more popular to apply for every modern business organization on all over the world. ISO9000 is considered as the most effective ways to apply for quality managing system of any company.
The study discussed the quality management system for manufacturer and contractor related to implementing construction services of pre-cast pile foundation:
- QMS using ISO9000 of the pre-cast pile manufacturing factory;
- Project quality plan with QMS using ISO9000 of piling contractor.
The main objective of this study is to recommend and develop a framework of quality management system using ISO9000 for pile manufacturer and project quality plan for piling contractor that can be effectively used to manage the performance of highway contractors in Vietnam.
An exploratory approach shall be adopted by reviewing the available literature to develop a quality management system (QMS) for pile manufacturer and project quality plan (PQP) for piling contractor and find out how is the applicability and effectiveness of this QMS and PQP in a real case study projects. The case study projects are aimed to answer following questions:
- Are the QMS and PQP applicable?
- Are the QMS and PQP effective and how is the effectiveness?
- What and how are the tangible and intangible benefits of the QMS and the PQP?
- What are the benefits and problems and impacts in implementation and development of the QMS and the PQP?
In case study, all important processes of pre-cast pile manufacturing and piling works have been clearly identified and developed with full details of guidelines for applying to achieve quality targets and satisfaction of customers.
Report of the findings and suggestions can show much more effectiveness of using ISO9000 for QMS and PQP in pre-cast pile manufacturer and piling contractor with their limited resources to achieve much better quality outcomes.
Quality has been found as the most key components of project success. Deficiencies and errors in construction will require reworks or will result in failures after a product has been delivered to a customer. Such failures may result in claims, customer dissatisfaction, or dire consequences to the user.
So far, there are so many projects with piled foundation in Vietnam construction industry, especially building projects. Some serious problems in building foundation have been found with too much settlement of foundation. One of the most serious mistakes in both designing and construction of piled foundation was the collapsed 12-storey building in Shanghai City, China in March 2009. After those problems, not only owner, designer and consultants but also contractors are more and more concerned about quality management system.
The negative impact of indirect rework on profits can have serious consequences on projects’ and an organizations’ costs. For example, once design errors or omissions are identified in contract documentation, rework will occur. This process may continue to magnify until ultimately, the design firm finds itself in serious financial difficulties due to the prolonged impact of an unheeded increase in rework costs, coupled with a declining professional image and low morale.
Therefore, quality management system for the piling foundation works is really necessary for all of owner, designer, contractor and manufacturer to assure quality and prevent any unexpected hazards.
Mr. Pham Quoc Hung made a research which major objectives were to; (1) study quality management system in manufacturer of pre-cast pile and contractor of piling works for construction of project’s foundation; and (2) recommend the framework of quality management system and project quality plan based on a lesson learnt from these real cases study.
Conclusion
In order to assure the quality of construction works, it is first the contractors who determine the quality of construction project. The quality management program aims to find the most efficient way of managing the quality of work as to satisfy customers’ requirements. This study applied a framework of QMS using ISO9000 for manufacturer of pre-cast PC pile and PQP using ISO9000 for piling construction works in Vietnam.
The case studies have been conducted to investigate the construction methods and processes associated with quality assurance. The framework of QMS as presented in the report has been developed based on existing standards and regulations.
In these case studies, all major processes and detailed instructions for fabrication of pre-cast PC pile and construction of piling works have been presented. These are guidelines for contractors who implemented the QMS and PQP to achieve quality targets in construction.
The case studies found out significant tangible and intangible benefits for manufacturer of pre-cast PC pile and for contractor of piling construction project when applying QMS and PQP using ISO9000.
The most common problems related to managing quality often occurred during construction implementation and developments are found as follows:
Table 1: Problem and solution on implementing QMS and PQP
Recommendations for improvement
After understanding how the manufacturer of PC pile and contractor of piling construction project implement the QMS and PQP using ISO9000 Approach, recommendations for improvement can be as follows:
1) It is very important to have available resources with continual training and improving for better applying the QMS and the PQP. It helps the manufacturer and contractor of pre-cast piling foundation to always run smoothly for ensuring the quality targets.
2) So many benefits in implementation and development of QMS and PQP using ISO9000, some problems occurring can be reduced and eliminated with more detailed supervision and instructions.
3) ISO9000 is a framework for processing paper. However, other factors can be very important to contribute good quality products such as:
- Company culture from the beginning;
- Company strategy led by commitment of strong management;
- Company vision and policy in concentrating on satisfaction of customers and employees;
- The trend to exist in highly competitive condition forces the company to ensure its quality products;
- All company people have the same targets on quality.
His thesis abstract is copied and posted.
Abstract
ISO9000 has become more and more popular to apply for every modern business organization on all over the world. ISO9000 is considered as the most effective ways to apply for quality managing system of any company.
The study discussed the quality management system for manufacturer and contractor related to implementing construction services of pre-cast pile foundation:
- QMS using ISO9000 of the pre-cast pile manufacturing factory;
- Project quality plan with QMS using ISO9000 of piling contractor.
The main objective of this study is to recommend and develop a framework of quality management system using ISO9000 for pile manufacturer and project quality plan for piling contractor that can be effectively used to manage the performance of highway contractors in Vietnam.
An exploratory approach shall be adopted by reviewing the available literature to develop a quality management system (QMS) for pile manufacturer and project quality plan (PQP) for piling contractor and find out how is the applicability and effectiveness of this QMS and PQP in a real case study projects. The case study projects are aimed to answer following questions:
- Are the QMS and PQP applicable?
- Are the QMS and PQP effective and how is the effectiveness?
- What and how are the tangible and intangible benefits of the QMS and the PQP?
- What are the benefits and problems and impacts in implementation and development of the QMS and the PQP?
In case study, all important processes of pre-cast pile manufacturing and piling works have been clearly identified and developed with full details of guidelines for applying to achieve quality targets and satisfaction of customers.
Report of the findings and suggestions can show much more effectiveness of using ISO9000 for QMS and PQP in pre-cast pile manufacturer and piling contractor with their limited resources to achieve much better quality outcomes.
Wednesday 21 July 2010
Delay Causes In The Construction Of The Refinery Projects In Vietnam: A Case Study On The Dung Quat Refinery Project
During the execution of construction project, project completion on time was commonly considered the key of project’s success. Project time can be evaluated as the vital factor in project management point of view because it affects directly on the profit of project if project time delay happens. The perception of project time management in construction industry has been applied in Viet Nam for recent years. Vietnam carried out the open-door policy to attract the investment from FDI (Foreign direct investment) projects. For this reason, it is essential to collaborate with oversea business and knowledge for Vietnam’s construction industry. However, many problems have been revealed due to the deficiency of the proficiencies in project management, such as:
- Project delays take place usually in the development projects due to deficient transmission among other parties, weather condition, social policy or other factors. It is surmised that about from 70% to 80% of projects of the PetroVietnam have the problems with time project delays.
- Even projects were finished on time; there are still many claims during the execution project.
Besides, the implementation of the project time management in construction industry in Viet Nam and PetroVietnam does not still achieve the effectiveness. Annually, the Vietnam Government still import large amount fuel for consumer and the result of the refinery project delays causes the huge loss of total investment and balance foreign currency of the Government.
Ms. Nguyen Thi Thu Huong made a study which main objectives were to: (1) identify delay causations in the refinery construction projects which were completed up to now or under construction; and (2) develop a framework to control and prevent delays in the remaining or under construction projects of the Refinery construction project.
Conclusion
Time delays in construction industry are a global phenomenon. The consequences of this research indicate that project delays have commonly occurred in most of construction project and the refinery construction project is no exception. Therefore, the results of this study provided a framework for project managers can better understand to reduce the incidences of delays during the refinery construction project, particularly in planning, implementation, monitoring and controls.
Delay causes in the Dungquat refinery project:
It is found that there are many delay causes seriously affecting on time extension and cost of the Dung quat refinery project. The impact of delays and appropriate response strategies and solutions to control delays are summarized in this study.
The impact of delays on time can be realized by the comparison between project schedule and the real situation. The Dungquat refinery project was started in 1999 but up to now the Refinery still not operation with full capacity. Throughout the research, the refinery construction project can be considered a case study to illustrate the success in control and prevent delays causation. Figure below shows the attempt to control and prevent delays during the construction of the refinery construction project.
Framework to control and prevent delays for future refinery projects
In order to significantly prevent and control delays in the future refining construction projects, the guidelines having the most potential were considered. The result from the real situations showed that delays could be prevented and controlled by carrying out several important strategies during the implementation of the project. Vietnam Government and Petrovietnam have been summarizing all of the difficulties and mistakes during implementation time to construct the Dungquat refinery, therefore we can avoid delaying time when construct the incoming refinery projects.
The problems need to solve when investing in the refinery project:
1. Making good planning & control for the project.
2. Management of escalation in material prices.
3. Contractor’s finance controlling.
4. Management of site clearance work.
5. Management contractors’ ability.
6. Establish communication system between the partners.
7. Building standard system for every process.
8. Surveying, collecting and deal with all of the information about weather and geological conditions of the site and other problem relating the site to make good decisions for constructions of the project.
Her thesis abstract is copied and posted.
ABSTRACT
In general, project completed with destined time, cost, and quality is the basic target of construction project management. The Dung Quat Refinery (DQR) construction project is a great and vital grassroots refining construction project in Viet Nam. DQR project is located in Dung Quat Economic Zone, Binh Son Distric, Quang Ngai province. Total cost estimation is around 2.5 billions USD, 100% invested by Vietnamese Government through Petrovietnam. The construction phase was started in 2005 and planned to complete on 2009. Regretfully, the refinery could not be finished within intended time, budget and resources. Until now, whole refinery has not passed all performance tests yet.
Normally, time delay always happened in big construction projects in Vietnam. With the purpose to solve this problem, it was found that several approaches have been affected project time completion. There are many factors found as the major source leading to manage project time completion affectively.
This report summarized the delay causes factors involved in the Dung Quat Refinery project during construction stage. This research will be conducted by using qualitative research; the data will be collected to analyze the facing problems. It was discovered from this study that there were many factors causing project time delays in the project. From the case study, effective solutions for controlling the delays will be investigated and be proposed for precious experiences to control and prevent delays in other construction projects in the future.
- Project delays take place usually in the development projects due to deficient transmission among other parties, weather condition, social policy or other factors. It is surmised that about from 70% to 80% of projects of the PetroVietnam have the problems with time project delays.
- Even projects were finished on time; there are still many claims during the execution project.
Besides, the implementation of the project time management in construction industry in Viet Nam and PetroVietnam does not still achieve the effectiveness. Annually, the Vietnam Government still import large amount fuel for consumer and the result of the refinery project delays causes the huge loss of total investment and balance foreign currency of the Government.
Ms. Nguyen Thi Thu Huong made a study which main objectives were to: (1) identify delay causations in the refinery construction projects which were completed up to now or under construction; and (2) develop a framework to control and prevent delays in the remaining or under construction projects of the Refinery construction project.
Conclusion
Time delays in construction industry are a global phenomenon. The consequences of this research indicate that project delays have commonly occurred in most of construction project and the refinery construction project is no exception. Therefore, the results of this study provided a framework for project managers can better understand to reduce the incidences of delays during the refinery construction project, particularly in planning, implementation, monitoring and controls.
Delay causes in the Dungquat refinery project:
It is found that there are many delay causes seriously affecting on time extension and cost of the Dung quat refinery project. The impact of delays and appropriate response strategies and solutions to control delays are summarized in this study.
The impact of delays on time can be realized by the comparison between project schedule and the real situation. The Dungquat refinery project was started in 1999 but up to now the Refinery still not operation with full capacity. Throughout the research, the refinery construction project can be considered a case study to illustrate the success in control and prevent delays causation. Figure below shows the attempt to control and prevent delays during the construction of the refinery construction project.
Framework to control and prevent delays for future refinery projects
In order to significantly prevent and control delays in the future refining construction projects, the guidelines having the most potential were considered. The result from the real situations showed that delays could be prevented and controlled by carrying out several important strategies during the implementation of the project. Vietnam Government and Petrovietnam have been summarizing all of the difficulties and mistakes during implementation time to construct the Dungquat refinery, therefore we can avoid delaying time when construct the incoming refinery projects.
The problems need to solve when investing in the refinery project:
1. Making good planning & control for the project.
2. Management of escalation in material prices.
3. Contractor’s finance controlling.
4. Management of site clearance work.
5. Management contractors’ ability.
6. Establish communication system between the partners.
7. Building standard system for every process.
8. Surveying, collecting and deal with all of the information about weather and geological conditions of the site and other problem relating the site to make good decisions for constructions of the project.
Her thesis abstract is copied and posted.
ABSTRACT
In general, project completed with destined time, cost, and quality is the basic target of construction project management. The Dung Quat Refinery (DQR) construction project is a great and vital grassroots refining construction project in Viet Nam. DQR project is located in Dung Quat Economic Zone, Binh Son Distric, Quang Ngai province. Total cost estimation is around 2.5 billions USD, 100% invested by Vietnamese Government through Petrovietnam. The construction phase was started in 2005 and planned to complete on 2009. Regretfully, the refinery could not be finished within intended time, budget and resources. Until now, whole refinery has not passed all performance tests yet.
Normally, time delay always happened in big construction projects in Vietnam. With the purpose to solve this problem, it was found that several approaches have been affected project time completion. There are many factors found as the major source leading to manage project time completion affectively.
This report summarized the delay causes factors involved in the Dung Quat Refinery project during construction stage. This research will be conducted by using qualitative research; the data will be collected to analyze the facing problems. It was discovered from this study that there were many factors causing project time delays in the project. From the case study, effective solutions for controlling the delays will be investigated and be proposed for precious experiences to control and prevent delays in other construction projects in the future.
Tuesday 20 July 2010
Marine Facility Design And Its Impact On Project Cost In Refinery Projects: A Case Study Of Nghi Son Refinery And The Petrochemical Complex Project
Most construction projects begin with recognition of a need for a new facility. Long before designers start preparing drawings and certainly well before field construction can commence, considerable thought must go into broad-scale planning. Elements of this phase include conceptual analyses, technical and economic feasibility studies, and environmental impact report.
For example, location is fundamental to planning for a new industrial plant. Where can the plant be located to provide desirable, nearby employment for an adequate supply of skilled and productivities workers? What are the present and projected costs and customs associated with the labor force? Depending on the natural raw materials input and its products, will the plant have access to the most appropriate and economical forms of transportation, via air, water, highway, rail or pipeline? Does the local provide access to raw material and to market? Are there adequate sources of energy, including gas, oil, and electricity; and are there convenient communication facilities? What political or institutional factors may ease or impede development and operation of facility? What will be the sociological and economic impact of this plant on the community? What will be environmental impact? What do all these factors taken as a whole, mean for the technical and economic feasibility of the project? Perform the feasibly study to ensure the effectively of the project.
The problem in getting a project started involves:
• Design concerned by possibility that owners spend a lot of time and money
• Uncertainty as to what the Scope of the project should be
• Worries about how much would be the cost
Construction projects, especially refinery project have a lot of items to study and to design including marine facilities, which affect the cost. Mr. Le Tu Anh made a research to study how design and selection of an optimal location for marine facility of refinery project affects the project cost.
Conclusions
The Nghi Son refinery and petrochemical complex Project has been studied for long time. In this research, the author proposed the following:
First, the research must be performed and then economic analyses need to be established. The data may use for analyzing the base on the Primary design of marine facilities.
Second, the projects begin with recognition of a need for a new facility. Long before designers start preparing drawings and certainly well before field construction can commence, considerable thought must go into broad-scale planning. Elements of this phase include conceptual analyses, technical and economic feasibility studies. All the factors taken as a whole mean for the technical and economic feasibility of the project. The costs of the marine facilities are estimated. The research shown the optimal design and show its impact to the project cost. The owner determines time, money and scope of the items.
Finally, an analysis on the result of the plan shows that the project is well planned and this project brings high advantage to owner.
His thesis abstract is copied and posted.
Abstract
The refining industry is one of the key industries playing a very important role in the development of the national economy. In addition to ensuring the national energy security, i.e. the supply of strategic energies such as LPG, gasoline, kerosene, jet fuel, diesel, etc, the establishment and development of this industry with the building of refineries will pave the way for the other related industries such as petrochemical industry, basic chemicals production, petroleum products transportation, storage, trading and distribution.
Additionally, the existing of the refineries will definitely bring about positive benefits in the socio-economic fields as well as the national security and defense, making contributions to speeding up the process of industrialization and modernization as proposed by the Government of Vietnam.
Therefore, this thesis deals with how design and selection of a optimal location for marine facility of refinery project to reduce project cost.
For example, location is fundamental to planning for a new industrial plant. Where can the plant be located to provide desirable, nearby employment for an adequate supply of skilled and productivities workers? What are the present and projected costs and customs associated with the labor force? Depending on the natural raw materials input and its products, will the plant have access to the most appropriate and economical forms of transportation, via air, water, highway, rail or pipeline? Does the local provide access to raw material and to market? Are there adequate sources of energy, including gas, oil, and electricity; and are there convenient communication facilities? What political or institutional factors may ease or impede development and operation of facility? What will be the sociological and economic impact of this plant on the community? What will be environmental impact? What do all these factors taken as a whole, mean for the technical and economic feasibility of the project? Perform the feasibly study to ensure the effectively of the project.
The problem in getting a project started involves:
• Design concerned by possibility that owners spend a lot of time and money
• Uncertainty as to what the Scope of the project should be
• Worries about how much would be the cost
Construction projects, especially refinery project have a lot of items to study and to design including marine facilities, which affect the cost. Mr. Le Tu Anh made a research to study how design and selection of an optimal location for marine facility of refinery project affects the project cost.
Conclusions
The Nghi Son refinery and petrochemical complex Project has been studied for long time. In this research, the author proposed the following:
First, the research must be performed and then economic analyses need to be established. The data may use for analyzing the base on the Primary design of marine facilities.
Second, the projects begin with recognition of a need for a new facility. Long before designers start preparing drawings and certainly well before field construction can commence, considerable thought must go into broad-scale planning. Elements of this phase include conceptual analyses, technical and economic feasibility studies. All the factors taken as a whole mean for the technical and economic feasibility of the project. The costs of the marine facilities are estimated. The research shown the optimal design and show its impact to the project cost. The owner determines time, money and scope of the items.
Finally, an analysis on the result of the plan shows that the project is well planned and this project brings high advantage to owner.
His thesis abstract is copied and posted.
Abstract
The refining industry is one of the key industries playing a very important role in the development of the national economy. In addition to ensuring the national energy security, i.e. the supply of strategic energies such as LPG, gasoline, kerosene, jet fuel, diesel, etc, the establishment and development of this industry with the building of refineries will pave the way for the other related industries such as petrochemical industry, basic chemicals production, petroleum products transportation, storage, trading and distribution.
Additionally, the existing of the refineries will definitely bring about positive benefits in the socio-economic fields as well as the national security and defense, making contributions to speeding up the process of industrialization and modernization as proposed by the Government of Vietnam.
Therefore, this thesis deals with how design and selection of a optimal location for marine facility of refinery project to reduce project cost.
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