Nowadays, the construction industry lacks constructability, which causes many problems, such as increased cost and time required for constructing a project, reduced productivity of project personnel and equipment, and low-quality construction (Nima et al., 2002). In this connection, it is worthwhile to investigate the drawbacks of the existing practices and application of constructability concepts.
Systematic application of constructability concepts will enhance constructability of a project. Consequently, schedule, quality and cost are optimized and all the parties are benefitted from the project. Nepal is practicing constructability concepts in hydropower development however these concepts are not recognized with importance by the key practitioners. Mr. Mukesh Khadka made a case study which objectives were broadly divided into following three parts:
i. To find out constructability concepts and implementation barriers applicable for different phases of hydropower project namely conceptual planning, design and procurement, and construction/field operation.
ii. To identify the degree of importance, level of application and major implementation barriers of constructability concepts in hydropower construction in Nepal.
iii. To propose recommendations for the effective application of constructability concepts in the hydropower project construction in Nepal.
Conclusions
1. Identification of constructability concepts and implementation barriers
For Nepal, thirty-six constructability concepts suitable for hydropower projects are identified out of which seven concepts are suitable for implementation during conceptual and planning phase, twenty-one concepts for design and procurement phase, and last eight concepts are suitable during construction or field operation phase. In hydropower industry, 49 implementation barriers were obtained from expert review and play key role to deter the implementation of constructability concept.
2. Identification of degree of importance, level of application and major implementation barriers
The result of this study confirmed that six concepts are very important constructability concepts in overall respondents’ opinions. The very important constructability concepts are (1) provide detail and clear design information, (2) investigate the impacts of design on safety during construction, (3) documentation of works of good contractors based on quality and time, (4) carry out thorough investigation of the site, (5) evaluation, documentation and feedback of the issues of the constructability concept, and (6) technical specification. Remaining thirty constructability concepts is accepted as important constructability concepts for hydropower construction in Nepal.
The research has also revealed that none of the concepts are being highly applied in hydropower construction in Nepal. All constructability concepts are believed as concept with medium application except three concepts namely, (1) innovation on temporary construction materials/systems, (2) employ any visualization tools such as 3D CAD to avoid physical interference, and (3) design to avoid return visit by trade which fall into category of concepts with little application.
During the study, major constructability implementation barriers were identified and ranked as top ten implementation barriers. These barriers were further grouped into three dimensions named as (1) Ineffective communication and coordination, (2) Socio-political influences, and (3) Insufficient resources using factor analysis. Ineffective communication and coordination between parties may cause conflicts that could eventually impact the project constructability adversely leading to dissatisfaction of the project parties, reworks, variation orders and claims. Not following the execution plan of the project may hamper the critical path of the project thereby causing the time and cost overrun of the project. Socio-political influences are the major barriers of hampering implementation of constructability concepts. Disruption by local people and road strikes imposing various reasonable and sometimes unreasonable causes seriously hamper the project constructability. Insufficient resources due to limited project budget also hinder the implementation of constructability concept. Due to lack of incentives given to the employees, it is very difficult to implement the constructability improvement concepts as employees are the key player for applying them.
Recommendations
Further study is recommended for the following subjects:
• Further study considering large number of hydropower projects of various sizes, different financing models and identification of specific barriers for each constructability concept is necessary in milieu of developing guidelines for hydropower projects
• Further study can be extended to find the detail procedures for effective application of those constructability concepts in hydropower construction and to find the most suitable contracting approach which facilitates effective constructability application.
• A study on suitability of constructability issues in various kinds of contracting approach can be done.
His thesis abstract is copied and pasted.
Abstract
Nepal has favorable condition to develop numerous hydropower plants yet it is facing eighteen hour load shedding per day during dry season. Traditional approach adopted in Nepal for hydropower construction involves many problems such as design changes, reworks, poor safety practices, time delays, cost overruns, disputes, claims which hampers constructability of the project. In this context, it is worthwhile to conduct research which focuses on investigation of the degree of importance and level of application of constructability concepts and identifying the major barriers hindering effective implementation of those concepts. The findings would be appropriate for the preparation of baseline required in constructability improvement guideline for hydropower construction in Nepal.
Thirty-six constructability concepts and forty-nine implementation barriers related to hydropower construction in Nepal were selected for detail study after extensive literature review and expert verification. Through questionnaire survey, opinions on those constructability concepts and implementation barriers were collected from fifty-three managers/engineers associated with hydropower developers, consulting firms and construction companies involved in hydropower construction in Nepal. The quantitative data gathered were then analyzed using various statistical techniques to conclude and recommend further studies. The result of this study revealed that six constructability concepts were accepted as very important concepts by overall respondents and the remaining concepts were considered to be important. To the contrary, none of the concepts are being highly applied in hydropower construction in Nepal. Further, ten major constructability implementation barriers were identified and grouped as ineffective communication and coordination, socio-political influences, and insufficient resources using factor analysis.
The effective implementation of constructability concepts in hydropower projects in Nepal can be attained by developing guidelines for the application of those concepts. For preparation of the guidelines the concepts identified by the study need to be verified with hydropower projects of various sizes and different financing models and detail procedures for applying those concepts should be documented. Also, identification of specific barriers for each constructability concept is necessary in milieu of developing guidelines for hydropower projects.
Keywords: constructability, buidability, implementation barriers, hydropower, Nepal
Monday 20 June 2011
Thursday 16 June 2011
Effective Pricing Negotiation Strategy of Variation Claims in Commercial Building Construction
The valuation of variations is near daily task on large construction contracts. It is a norm in the construction industry where one of the contracting parties disagrees about the valuation of work done. Thus, the valuation of variation orders has been admitted as one of the main causes for conflict and disputes in construction management. A mechanism is required to accommodate the process of the changes in order to derive a more objective decision-making. An appropriate mechanism should be identified as a potential feasible solution for modeling the decision making process in the valuation of variation.
As abovementioned, Ms. Supatchana Pumpipat conducted a research studies for proper quantification of variation claims by emphasizing the varied works impact to cost structure which will be claimed by the contractors. Therefore, the major objectives for her study were to: (1) classify the variation works types in civil works of commercial building project and identify the problems that incurred in managing variation; (2) find out how to price the varied works that is generated from variation order that could be caused of claims and disputes; and (3) propose proper valuation process and the effective negotiation on the accepted price for both contractor and owner.
Conclusion
Based on the Case Study, the rebuilding shopping mall project garnered variation orders that were classified into five (5) categories such as:
i) New work – are the additional item in the some part of building for more suitable and aesthetic of the building. Frequently, this category is initiated by owner
ii) Modified work – are the existing of buildings becomes unsuitable for their present use, and then improvement, repair and maintenance are often required to keep them in usable condition.
Change work – are covered amend in some parts or whole scope of work that is stipulate in the contract
iii) Move work – are Moving things without creating any damage to those items including storage of those items, they assume a duty to be included in this section.
iv) Demolishing work – are move the existing part out and would not be reused. And the occupancy of debris that comes from the demolishing process will be agreed before starting work.
v) Correcting Work – items that are corrected or fix the damage of building. Most of them are architectural work.
At first, the author would like to identify the specific valuation method in each variation categories but based on interview, the valuation methods is not related to the variation categories. The valuation methods depend upon the condition and the character of the varied work.
The formulation procedure was initiated in order to manage the emerging variation orders. Basic flows of steps were provided but still flaws were found in processing time in every step. Some VO can be process without any difficulty and some may takes time to verify the submission documents, verify evidence, to gather data to confirm entitlement of the contractor to claim VO. Resolutions to variation order impact through variation order management were viewed and as to the effectiveness of current procedure. Current procedure is useful but can be developed to improve processing period and administer each changes lessening the probable effect to the whole project particularly on the cost.
Actually, the problems of this project are generated in every stage of variation procedure which will only base on the contractor’s viewpoint such as follows.
1. Notification - Information of change is given by either the PM or Contractors or whoever identifies the variation and all site instructions that may constitute a variation should readily indicate and require the Contractor to submit quotation. In the event that the Contractor submits a proposal like for example value engineering, this is the only time when the Project Management team conducts a preliminary analysis on time, cost, quality and the overall effects of the change in the construction.
2. Evaluation – the stage of gathering data to confirm support documents submitted by the Contractor. Determine the quantities, cost and time involved in the variation request. Coordinate the change with the trade in the construction for probable effect on the progress of the work and the work itself. At the same time coordinate with the contractor’s QS for comparison, checking and correcting evaluation. This will greatly discourage dispute in final cost later and save time on repeated evaluation in cases of disagreements.
3. Negotiation-in the event that the contractor still does not agree and cannot settle among QS of both parties, it is only then that the variation is elevated to negotiation. And in times that QS from both parties cannot decide on particular issues, negotiation among PM is recommended to settle the variation.
4. Final Approval– will include informing the Accounting department for the additional cost due to the variation for budgeting and cash flow management.
Nonetheless, one of the common reasons for dispute is the valuation of variation. The current traditional approach has been claimed inadequate to provide a scheme of compensation for any delay or disruption involved due to variations. Actually, rules for variations, when appropriate, the rate and price quoted is used in the valuation for variations. However, the rate or prices may not necessarily be an accurate figure for individual work items. In other words, it represents the collective amount of the project. Therefore, the rules of valuation should not be implemented in a loose way, simply because the rates to which they are applied are imperfect.
A valuation scheme in valuing variations has been provided. The possible outcomes of the scheme when the valuation is to be determined are as follows:
1. Applying original rate and price from similar works in the bill of quantities.
2. Using the original rate and price of similar works as the basis of valuation, applying necessary adjustment and/or allowances.
3. Determining new rate and price derived from fair valuation.
However, there was an issue arise on this scheme as it is potentially creates conflicts and disputes. The conflicts and disputes has been identified, namely the distinction of the varied works compared to the original works, i.e. similar character and/or under similar conditions. In the case of similar work characteristics and/or work condition, the varied works are valued using the original rate and price of similar works in the Bill of Quantities. If the work character and/or work condition is not similar but in the opinion of the assessor is still appropriate, the original rate and price of similar works in the Bill of Quantities will be used as the basis of valuation applying necessary adjustment and/or allowances. If the work character and/or work characteristic are totally different from those mentioned in the Bill of Quantities, new rate and price will be established by fair valuation. A mechanism for valuation of variations is essential if our understanding of construction management is to be advanced.
On the other hand, difficulties may arise among the related parties in perceiving the conditions to be encountered during execution. Each party may perceive the works characters and/or work conditions differently according to the nature of their own needs and for their own benefits. A framework has been developed to fairly assess all changes resulted from authorized variations and relate the changes to the final decision of valuation method to be. The form of contract also has been especially drafted to accommodate the risks of different perceptions on this matter and distribute the risks fairly to the involved parties. This result in the recommended way to deal with variation events is to look back to the forms of contract to make a careful assessment.
Finally, based on the findings, it can be concluded that each of the condition of contracts has stipulated clearly the rules for method of valuing the claims of variation works. However, the adequacy and appropriateness of the mechanism are different based on the different types of contracts. The selection of the type of contracts to be used for a particular project may influence the project implementation in terms of contractual administration related to claims for variation works. By selecting an appropriate type of contracts for a project to be implemented may reduce the tendency of disputes arising from valuation of variation claims. Disputes related to claims of variation works can be avoided by overcoming the problems of the disputes. This may only be achieved through the proper selection of type of contracts which contain the most effective methods of valuing the variation claims. Despite the fact that BQ rates/Contract rates is the most instant method and agreeable among the contracting parties, it is recommended that this method should be improved by rationalization of the rates accordingly depend on the nature of the work of similar character executed under similar conditions. In other words, the BQ rates/Contract rates despite being the most agreeable rates they should be adjusted accordingly so that the rates for varied works will be fair to both contracting parties.
Recommendation
It is also suggested that the application of Information Technology by using an expert system as a potential decision-making tool in the valuation of variation claims to be further explored as it has the potential to deliver the best solution in the valuation of variations which based on the expertise of the professional decision-makers. It has been previously explored that the valuation of variations needs a mechanism that represents the expertise and knowledge of the human experts for its decision-making. Decision-making by experts regarding the valuation methods to be applied, based on the determination of the extent of the changes affecting the work characteristics and/or work condition, plays an essential role in the valuation scheme.
However, the majority of human decision making is answerable to more than a single person, and involves higher level functions that can be constrained and frustrated by any attempt to enforce rigid or methodical practices. In other words, consensus decision-making is required from several human experts for an appropriate decision. The human experts for the valuation of variations are the quantity surveyors due to their important role and involvement in financial and technical aspects of a construction project management.
Here are some knowledgeable key points to manage a Variation Order:
- Out-Source Information - for variations that need price comparison, outsource information must be obtained such as price indices from the government, quotations from suppliers and price information from consultants.
- Data collection – is to collect the correct information to support the validity of the any variation order. It can be Site Records such as site diaries, weather charts, site instructions, inspection reports, shop drawings and materials approval, RFIs and other forms of communication like emails, transmittals, minutes of meeting and project reports.
- Investigation - For variation order due to differing site conditions, site investigation is imperative. It is essential in determining the actual site situations and for observing if the proposed change were feasible to the site. It is also done to verify quantities, type of material applied by the contractor and to confirm the methods proposed for application for use.
- Know your references - reference materials would be the basis for evaluation first, entitlement of the contractor to a variation order, validity of the change, and determination of quantities either additive or deductive. Reference may include Construction Contract, Drawings, Specifications and other forms of site communications.
Her thesis abstract is copied and pasted.
Abstract
Construction industry is often described as a volatile industry which can be true in implementing a project. Construction itself is more often unpredictable due to the different situations a project may face. Variations may occur in the preparation, during construction and even upon completion of the project. The veracity of inconsistent nature of construction, variation management procedures must be considered to minimize the effects particularly to project cost, time schedule and overall quality of the project.
There are an increasing number of construction contracts resulted in claims and disputes. All of the parties involved in the Thai construction industry are fully aware that disputes not only lead to cost overruns, but can end up as expensive and lengthy courtroom battles. However, very few studies related to construction contract claims and disputes in Thailand have been presented. This study is an attempt to gain further insight to construction contract claims and disputes in the Thai construction industry.
The big challenge for Thai Construction industry is to advance the management styles to cope up with challenges faced in a project. Procedures in managing contract and change orders are viewed to know the effectiveness and liability ensuing steps observed. Disruptions in cash flow and programme when mitigated and handled correctly may create confidence in handling changes that transpire in any project.
However, knowledge and skill in managing this challenging changes and observing effective procedures may eventually create a norm in Project Management system in the industry where tradition of strong relationship among Owner and Contract still prevails.
From the aforementioned information, it can be seen that the engineers have high levels of responsibility and must be knowledgeable and experienced in their work. They also have to work carefully to complete their work. Therefore, it is suitable for both engineers and involved personnel to study work data and past court cases that are related to their work, so that they can be careful about their work.
As abovementioned, Ms. Supatchana Pumpipat conducted a research studies for proper quantification of variation claims by emphasizing the varied works impact to cost structure which will be claimed by the contractors. Therefore, the major objectives for her study were to: (1) classify the variation works types in civil works of commercial building project and identify the problems that incurred in managing variation; (2) find out how to price the varied works that is generated from variation order that could be caused of claims and disputes; and (3) propose proper valuation process and the effective negotiation on the accepted price for both contractor and owner.
Conclusion
Based on the Case Study, the rebuilding shopping mall project garnered variation orders that were classified into five (5) categories such as:
i) New work – are the additional item in the some part of building for more suitable and aesthetic of the building. Frequently, this category is initiated by owner
ii) Modified work – are the existing of buildings becomes unsuitable for their present use, and then improvement, repair and maintenance are often required to keep them in usable condition.
Change work – are covered amend in some parts or whole scope of work that is stipulate in the contract
iii) Move work – are Moving things without creating any damage to those items including storage of those items, they assume a duty to be included in this section.
iv) Demolishing work – are move the existing part out and would not be reused. And the occupancy of debris that comes from the demolishing process will be agreed before starting work.
v) Correcting Work – items that are corrected or fix the damage of building. Most of them are architectural work.
At first, the author would like to identify the specific valuation method in each variation categories but based on interview, the valuation methods is not related to the variation categories. The valuation methods depend upon the condition and the character of the varied work.
The formulation procedure was initiated in order to manage the emerging variation orders. Basic flows of steps were provided but still flaws were found in processing time in every step. Some VO can be process without any difficulty and some may takes time to verify the submission documents, verify evidence, to gather data to confirm entitlement of the contractor to claim VO. Resolutions to variation order impact through variation order management were viewed and as to the effectiveness of current procedure. Current procedure is useful but can be developed to improve processing period and administer each changes lessening the probable effect to the whole project particularly on the cost.
Actually, the problems of this project are generated in every stage of variation procedure which will only base on the contractor’s viewpoint such as follows.
1. Notification - Information of change is given by either the PM or Contractors or whoever identifies the variation and all site instructions that may constitute a variation should readily indicate and require the Contractor to submit quotation. In the event that the Contractor submits a proposal like for example value engineering, this is the only time when the Project Management team conducts a preliminary analysis on time, cost, quality and the overall effects of the change in the construction.
2. Evaluation – the stage of gathering data to confirm support documents submitted by the Contractor. Determine the quantities, cost and time involved in the variation request. Coordinate the change with the trade in the construction for probable effect on the progress of the work and the work itself. At the same time coordinate with the contractor’s QS for comparison, checking and correcting evaluation. This will greatly discourage dispute in final cost later and save time on repeated evaluation in cases of disagreements.
3. Negotiation-in the event that the contractor still does not agree and cannot settle among QS of both parties, it is only then that the variation is elevated to negotiation. And in times that QS from both parties cannot decide on particular issues, negotiation among PM is recommended to settle the variation.
4. Final Approval– will include informing the Accounting department for the additional cost due to the variation for budgeting and cash flow management.
Nonetheless, one of the common reasons for dispute is the valuation of variation. The current traditional approach has been claimed inadequate to provide a scheme of compensation for any delay or disruption involved due to variations. Actually, rules for variations, when appropriate, the rate and price quoted is used in the valuation for variations. However, the rate or prices may not necessarily be an accurate figure for individual work items. In other words, it represents the collective amount of the project. Therefore, the rules of valuation should not be implemented in a loose way, simply because the rates to which they are applied are imperfect.
A valuation scheme in valuing variations has been provided. The possible outcomes of the scheme when the valuation is to be determined are as follows:
1. Applying original rate and price from similar works in the bill of quantities.
2. Using the original rate and price of similar works as the basis of valuation, applying necessary adjustment and/or allowances.
3. Determining new rate and price derived from fair valuation.
However, there was an issue arise on this scheme as it is potentially creates conflicts and disputes. The conflicts and disputes has been identified, namely the distinction of the varied works compared to the original works, i.e. similar character and/or under similar conditions. In the case of similar work characteristics and/or work condition, the varied works are valued using the original rate and price of similar works in the Bill of Quantities. If the work character and/or work condition is not similar but in the opinion of the assessor is still appropriate, the original rate and price of similar works in the Bill of Quantities will be used as the basis of valuation applying necessary adjustment and/or allowances. If the work character and/or work characteristic are totally different from those mentioned in the Bill of Quantities, new rate and price will be established by fair valuation. A mechanism for valuation of variations is essential if our understanding of construction management is to be advanced.
On the other hand, difficulties may arise among the related parties in perceiving the conditions to be encountered during execution. Each party may perceive the works characters and/or work conditions differently according to the nature of their own needs and for their own benefits. A framework has been developed to fairly assess all changes resulted from authorized variations and relate the changes to the final decision of valuation method to be. The form of contract also has been especially drafted to accommodate the risks of different perceptions on this matter and distribute the risks fairly to the involved parties. This result in the recommended way to deal with variation events is to look back to the forms of contract to make a careful assessment.
Finally, based on the findings, it can be concluded that each of the condition of contracts has stipulated clearly the rules for method of valuing the claims of variation works. However, the adequacy and appropriateness of the mechanism are different based on the different types of contracts. The selection of the type of contracts to be used for a particular project may influence the project implementation in terms of contractual administration related to claims for variation works. By selecting an appropriate type of contracts for a project to be implemented may reduce the tendency of disputes arising from valuation of variation claims. Disputes related to claims of variation works can be avoided by overcoming the problems of the disputes. This may only be achieved through the proper selection of type of contracts which contain the most effective methods of valuing the variation claims. Despite the fact that BQ rates/Contract rates is the most instant method and agreeable among the contracting parties, it is recommended that this method should be improved by rationalization of the rates accordingly depend on the nature of the work of similar character executed under similar conditions. In other words, the BQ rates/Contract rates despite being the most agreeable rates they should be adjusted accordingly so that the rates for varied works will be fair to both contracting parties.
Recommendation
It is also suggested that the application of Information Technology by using an expert system as a potential decision-making tool in the valuation of variation claims to be further explored as it has the potential to deliver the best solution in the valuation of variations which based on the expertise of the professional decision-makers. It has been previously explored that the valuation of variations needs a mechanism that represents the expertise and knowledge of the human experts for its decision-making. Decision-making by experts regarding the valuation methods to be applied, based on the determination of the extent of the changes affecting the work characteristics and/or work condition, plays an essential role in the valuation scheme.
However, the majority of human decision making is answerable to more than a single person, and involves higher level functions that can be constrained and frustrated by any attempt to enforce rigid or methodical practices. In other words, consensus decision-making is required from several human experts for an appropriate decision. The human experts for the valuation of variations are the quantity surveyors due to their important role and involvement in financial and technical aspects of a construction project management.
Here are some knowledgeable key points to manage a Variation Order:
- Out-Source Information - for variations that need price comparison, outsource information must be obtained such as price indices from the government, quotations from suppliers and price information from consultants.
- Data collection – is to collect the correct information to support the validity of the any variation order. It can be Site Records such as site diaries, weather charts, site instructions, inspection reports, shop drawings and materials approval, RFIs and other forms of communication like emails, transmittals, minutes of meeting and project reports.
- Investigation - For variation order due to differing site conditions, site investigation is imperative. It is essential in determining the actual site situations and for observing if the proposed change were feasible to the site. It is also done to verify quantities, type of material applied by the contractor and to confirm the methods proposed for application for use.
- Know your references - reference materials would be the basis for evaluation first, entitlement of the contractor to a variation order, validity of the change, and determination of quantities either additive or deductive. Reference may include Construction Contract, Drawings, Specifications and other forms of site communications.
Her thesis abstract is copied and pasted.
Abstract
Construction industry is often described as a volatile industry which can be true in implementing a project. Construction itself is more often unpredictable due to the different situations a project may face. Variations may occur in the preparation, during construction and even upon completion of the project. The veracity of inconsistent nature of construction, variation management procedures must be considered to minimize the effects particularly to project cost, time schedule and overall quality of the project.
There are an increasing number of construction contracts resulted in claims and disputes. All of the parties involved in the Thai construction industry are fully aware that disputes not only lead to cost overruns, but can end up as expensive and lengthy courtroom battles. However, very few studies related to construction contract claims and disputes in Thailand have been presented. This study is an attempt to gain further insight to construction contract claims and disputes in the Thai construction industry.
The big challenge for Thai Construction industry is to advance the management styles to cope up with challenges faced in a project. Procedures in managing contract and change orders are viewed to know the effectiveness and liability ensuing steps observed. Disruptions in cash flow and programme when mitigated and handled correctly may create confidence in handling changes that transpire in any project.
However, knowledge and skill in managing this challenging changes and observing effective procedures may eventually create a norm in Project Management system in the industry where tradition of strong relationship among Owner and Contract still prevails.
From the aforementioned information, it can be seen that the engineers have high levels of responsibility and must be knowledgeable and experienced in their work. They also have to work carefully to complete their work. Therefore, it is suitable for both engineers and involved personnel to study work data and past court cases that are related to their work, so that they can be careful about their work.
Wednesday 15 June 2011
Risk and Project Contract Management for Preventing and Solving Disputes in FIDIC Contract
A project is highly successful when risks are strictly controlled and the contract is effectively managed.
Mr. Dang Thai Son made a case study on the Can Tho Bridge Construction Project. In his study, the following core issues were aimed to achieve:
* To study issues on project risk management: implicit risks, the tenor and process of project risk management.
* To study issues on project contract management: signing and implementing the project contract, amending, canceling or terminating the contract.
* To find approaches to mitigate risks as well as to prevent and resolve disputes, litigations in project contract.
Conclusion
Risks are unavoidable in construction projects, yet it is still possible to prevent them before and during a project. With such a length (15.85 km), Cantho Bridge was a typical example for risk management. The project has received full financial support from the Japanese government which is Twenty Four Billion Eight Hundred Forty Seven Million Japanese Yen (¥24,847,000,000). However, there was still delay in land requisition. Although only two local households did not agree on their compensation, they affected the progress of the project. In addition, shipping equipment and complex custom procedures also hindered the progress.
On the better side, the Contractor has implemented good management starting with the designed hierarchy of management with well-targeted goals as well as backup plans. This helped the project progress even in case of force majeure. Second, the contractor had good management on quality and quantity on various aspects of working requirements such as materials, equipment, construction methods and skilled labors that were focused and well-prepared. Thirdly, the Contractor showed that environment was taken with extreme care so that almost no effects on the local landscape, and ecosystem were done by pollution from the construction. Finally, the Contractor always followed the most important motto: "Safety first." The disastrous accident in foundation settlement showed the nature of risk on one hand; but on the other hand, it showed that the Contractor prepared and implemented practical and helpful steps in preventing diseases and treating injuries to workmen. As a result, construction workers felt better and secure to continue their work and the project could be completed in due time.
After Can Tho Bridge was completed, it has provided the researcher with practical experience in terms of capital, specific infrastructure conditions, hi-tech quality of the contractor and compensation negotiation. This study showed that reality is always unexpected but with well-planned risk management, we can still handle and heal the uninvited damage to project effectively and in time so as to fulfill the project as pre-planned.
In conclusion, throughout the analysis, the Can Tho Bridge Construction Project achieved more successful factors than its constrained ones. This project obtained good delivery system from setting to closing out phase owing to good environments such as stable society economy and politics, favorably legal environment especially the great support from the project stakeholders: Financier (JIBIC), Owner, Consultant, Contractors, Suppliers and others (Local Authorities and so on).
Apart from the strengths achieved as analyzed, there are many weaknesses that the project stakeholders should pay much attention to and should take them as valuable recommendations for future projects:
- Before carrying out the construction of any project, the Project Owner together with Local Authorities shall ensure land requisition to be well-executed and give right of access and site possession to the Contractor at appropriate time without any delay and obstruction from local residents.
- When making the estimation for a project, besides calculating an official capital source for the main items of the project, the project planner should carefully calculate an extra money fund for nearby existing land compensation including the crops. Therefore, the Project Owner will be able to get sufficient land area and provide further access to the Contractor for construction. Because the construction activities of the Contractor definitely affect to the neighboring structures of the inhabitants.
- The Project Owner should thoroughly consider selecting competent, qualified contractors who are healthy in finance and capable of high technology. Not to give the award to the bidder of the lowest price, and poor equipment and poor technology transfer.
It was time for Vietnamese Government and its subordinating Ministries consider carefully when deciding to select the bidder especially for foreign ones. Before inviting them for bidding, a well pre-qualified selection of experienced, prestigious and competent bidder list should be made and elimination of unqualified bidders from the list should be done. If doing so, the Government saves a lot of time and money for unreasonable loss and damage from rectification of defects and re-works.
His thesis abstract is copied and posted.
Abstract
Risk management is an indispensable job because it will help the project reduce and minimize the extraordinary impacts occur which affect to the general objective of the project.
In this study, we should learn about the concept of risk with its two specific characteristics: probability of occurrence and degree of impact. In addition, the classification of risk is also a meaningful deed; each kind of risk is different, therefore, risk management issue is also totally different. To manage risk, a process of six steps can be applied. First, making risk management plan for general orientation of work and scope of performance to manage the risks. Then, carrying out risk determination, it means to list out the risks might occur in the project. Since then analyzing probability of occurrence and the degree of impact of the risks, Control and adjustment of risks are to implement the plan for dealing with actual risks.
Contract management is extremely important in the project management. Referring to the contract, the project manager will treat and adjust the relationship as well as contradiction between interests and liability of the parties concerned in the project. Therefore, being a project manager, he or she needs to master the sequence of steps of signing and implementing the project contract, the arising issues and conditions of alteration, omission or termination of project contract as well as the approaches to resolve and settle disputes in the contract. Once dispute arises, it is wise that the parties should seek for negotiation, discussion or conciliation. This approach is simple, effective and little cost while claim and arbitration approach is more complicated, costly and waste of time.
“Discourage litigation. Persuade your neighbors to compromise whenever you can. Point out to them how the nominal winner is often a real loser – in fee, expenses and waste of time.”- Abraham Lincoln
Mr. Dang Thai Son made a case study on the Can Tho Bridge Construction Project. In his study, the following core issues were aimed to achieve:
* To study issues on project risk management: implicit risks, the tenor and process of project risk management.
* To study issues on project contract management: signing and implementing the project contract, amending, canceling or terminating the contract.
* To find approaches to mitigate risks as well as to prevent and resolve disputes, litigations in project contract.
Conclusion
Risks are unavoidable in construction projects, yet it is still possible to prevent them before and during a project. With such a length (15.85 km), Cantho Bridge was a typical example for risk management. The project has received full financial support from the Japanese government which is Twenty Four Billion Eight Hundred Forty Seven Million Japanese Yen (¥24,847,000,000). However, there was still delay in land requisition. Although only two local households did not agree on their compensation, they affected the progress of the project. In addition, shipping equipment and complex custom procedures also hindered the progress.
On the better side, the Contractor has implemented good management starting with the designed hierarchy of management with well-targeted goals as well as backup plans. This helped the project progress even in case of force majeure. Second, the contractor had good management on quality and quantity on various aspects of working requirements such as materials, equipment, construction methods and skilled labors that were focused and well-prepared. Thirdly, the Contractor showed that environment was taken with extreme care so that almost no effects on the local landscape, and ecosystem were done by pollution from the construction. Finally, the Contractor always followed the most important motto: "Safety first." The disastrous accident in foundation settlement showed the nature of risk on one hand; but on the other hand, it showed that the Contractor prepared and implemented practical and helpful steps in preventing diseases and treating injuries to workmen. As a result, construction workers felt better and secure to continue their work and the project could be completed in due time.
After Can Tho Bridge was completed, it has provided the researcher with practical experience in terms of capital, specific infrastructure conditions, hi-tech quality of the contractor and compensation negotiation. This study showed that reality is always unexpected but with well-planned risk management, we can still handle and heal the uninvited damage to project effectively and in time so as to fulfill the project as pre-planned.
In conclusion, throughout the analysis, the Can Tho Bridge Construction Project achieved more successful factors than its constrained ones. This project obtained good delivery system from setting to closing out phase owing to good environments such as stable society economy and politics, favorably legal environment especially the great support from the project stakeholders: Financier (JIBIC), Owner, Consultant, Contractors, Suppliers and others (Local Authorities and so on).
Apart from the strengths achieved as analyzed, there are many weaknesses that the project stakeholders should pay much attention to and should take them as valuable recommendations for future projects:
- Before carrying out the construction of any project, the Project Owner together with Local Authorities shall ensure land requisition to be well-executed and give right of access and site possession to the Contractor at appropriate time without any delay and obstruction from local residents.
- When making the estimation for a project, besides calculating an official capital source for the main items of the project, the project planner should carefully calculate an extra money fund for nearby existing land compensation including the crops. Therefore, the Project Owner will be able to get sufficient land area and provide further access to the Contractor for construction. Because the construction activities of the Contractor definitely affect to the neighboring structures of the inhabitants.
- The Project Owner should thoroughly consider selecting competent, qualified contractors who are healthy in finance and capable of high technology. Not to give the award to the bidder of the lowest price, and poor equipment and poor technology transfer.
It was time for Vietnamese Government and its subordinating Ministries consider carefully when deciding to select the bidder especially for foreign ones. Before inviting them for bidding, a well pre-qualified selection of experienced, prestigious and competent bidder list should be made and elimination of unqualified bidders from the list should be done. If doing so, the Government saves a lot of time and money for unreasonable loss and damage from rectification of defects and re-works.
His thesis abstract is copied and posted.
Abstract
Risk management is an indispensable job because it will help the project reduce and minimize the extraordinary impacts occur which affect to the general objective of the project.
In this study, we should learn about the concept of risk with its two specific characteristics: probability of occurrence and degree of impact. In addition, the classification of risk is also a meaningful deed; each kind of risk is different, therefore, risk management issue is also totally different. To manage risk, a process of six steps can be applied. First, making risk management plan for general orientation of work and scope of performance to manage the risks. Then, carrying out risk determination, it means to list out the risks might occur in the project. Since then analyzing probability of occurrence and the degree of impact of the risks, Control and adjustment of risks are to implement the plan for dealing with actual risks.
Contract management is extremely important in the project management. Referring to the contract, the project manager will treat and adjust the relationship as well as contradiction between interests and liability of the parties concerned in the project. Therefore, being a project manager, he or she needs to master the sequence of steps of signing and implementing the project contract, the arising issues and conditions of alteration, omission or termination of project contract as well as the approaches to resolve and settle disputes in the contract. Once dispute arises, it is wise that the parties should seek for negotiation, discussion or conciliation. This approach is simple, effective and little cost while claim and arbitration approach is more complicated, costly and waste of time.
“Discourage litigation. Persuade your neighbors to compromise whenever you can. Point out to them how the nominal winner is often a real loser – in fee, expenses and waste of time.”- Abraham Lincoln
Tuesday 14 June 2011
Business Cooperation Contract Management in Gas Pipeline Project – A Case Study of Block B – O Mon Gas Pipeline Project
The signing of the business cooperation contract (hereinafter called BCC) to develop the Block B Gas Pipeline Project among PV Gas, Chevron, MOECO, and PTTEP will help to ensure the country's energy security and to promote industrial development in the Mekong Delta. The project will also save a significant amount of foreign currency for Vietnam on fuel imports, create more employment for the community, protect the environment by using a clean fuel, ensure a stable source of power, and open opportunities to connect with the gas pipeline systems of other countries in the region. However, how to well monitor and manage the pipeline project under the BCC is the challenge for operator.
Under BCC, each party will appoint a representative to the board of coordinators (hereinafter called BoC) to provide overall supervision and direction over and control all matters pertaining to the system operation. Therefore, the operator cannot decide on its own for the system operation which may lead to run late project, over-budget or fail to meet key needs of parties and so on. There are definitely some shortcomings in project under BCC need to be over, that are:
i. Take time for mutual agreement among parties;
ii. Misunderstanding and misinterpreting of stipulated clauses in contracts
iii. Conflict between contractor and the project company during project execution
iv. Conflict between cultures
A BCC is generally applied for managing the oil and gas project, in case of problems or disputes happen during the project execution, then these problems and disputes shall be resolved in accordance with stipulated clauses in the signed contract, therefore Mr. Phung Quang Hiep made a case study which main object was to focus the Phung Quang Hiep
issues related to BCC:
1. To study BCC contract objectives
2. To study BCC contract conditions
3. To study BCC contract implementation and problems occurring
4. To propose effective solutions for project management under BCC
Conclusion
BCC Objectives:
The purpose of this report is to describe the BCC objectives in which the project is implementing the design, procurement, construction, ownership, operation, maintenance of the upstream Block B & 48/95 and Block 52/97 facilities to ensure economic, efficient System development on an integrated, aligned basis, as set forth in this Contract.
BCC Conditions:
These objectives are concretized under BCC conditions of conditions precedent and participating interest. Block B – O Mon pipeline project has some difference phases. Therefore, the writing displays them in three main groups of technique, finance and legality. Technical phases include construction, operation and maintenance of system; transportation proposal and capacity; usage of the system, transportation of gas and tariffs; as well as decommission. In addition, financial issues of BCC are focused on taxation; government and corporation support; work program and budget; and contracting procedures. Also, BCC requires legal items in operation that are, insurance and litigation; default, assignment of participating interest; withdrawal; and dispute resolution.
BCC Implementation And Problems:
The above analysis is to result to business cooperation contract management for block B – O Mon pipeline project through making up factors affecting to take time for mutual agreement among parties, underground drivers of misunderstanding and misinterpreting of stipulated clauses in contracts and conflict between contractor and the project company during project execution as well as conflict between cultures. To response to these problem statements, this report concentrates on studying problems occurring and proposing effective solutions for project management under BCC as well.
This project may be continued if precedent conditions are satisfied or waived. That foreign- factors take part in business of gas pipeline and that disadvantages are caused by BCC have created some outstanding problems to system operation. The report asserts that issues of finance, accounting, culture, legality, risks, approval and human resource are needed to analyzed, improved and boosted. Otherwise, project will be delayed in the manner of time and quality and not achieved project objectives.
Effective Solutions for Project Management under BCC:
For finance and accounting issues, the operator has to harmonize regulations between BCC and Vietnamese Corporation Accounting which is first priority while the parties are required to obtain deep understanding of investee country, that is, Vietnamese laws. Moreover, due to four different management cultures the operator should set up harmonious business culture, seminars, team build to interpersonal communication and friendly atmosphere and especially maintain internal control of approval procedure and authorization for expenditure procedure. A unified and well defined organizational chart for human resource management is so important for continuous system operation. All above is to minimize business risks led by project specialization.
In addition, the report shows out main experience lesson groups to solve these problem statements. First, the operator should take full advantages of local authorities and governmental support in all tax and foreign currency issues. Second, the operator needs to have closer direction and management of higher authorities to keep the project be in the right way. Third, taking an initiative of finance, positioning negotiators of BCC in the board of operator and maintain frequently periodic meeting are considered as meaningful recommendations to unbind stuck bars during implementing project and achieve project objectives in timely and quality basis.
His thesis abstract is copied and posted.
Abstract
Natural gas is a fossil fuel extracted from the ground that can be used as a source of energy for household, industrial and commercial use, as well as to generate electricity. So, natural gas is an important factor for the development of countries that have strong economies and people who enjoy good living conditions. To be able to have a viable and efficient supply requires the construction of a pipeline from faraway regions that have large reserves of natural gas to onshore terminals. In Vietnam, the projects of pipeline construction and operation are almost under direct foreign investment of which business cooperation contract is the most favor.
The management of this contract is a challenge to Vietnamese operator due to foreign factors. This report let a case of BCC for block B – O Mon pipeline project as a study of project management in construction. It tries to work out common and regular problems this kind of BCC is encountering. These difficulties are divided into four groups that are, take time for mutual agreement among parties, misunderstanding and misinterpreting of stipulated clauses in contracts and conflict among contractors and the operator during project execution as well as conflict among cultures.
Moreover, BCC conditions and project phase operation are analyzed in details. Above all, the author suggests some solutions focusing on outstanding problem statements to improve the project operation and implement it in the manner of time and quality.
Under BCC, each party will appoint a representative to the board of coordinators (hereinafter called BoC) to provide overall supervision and direction over and control all matters pertaining to the system operation. Therefore, the operator cannot decide on its own for the system operation which may lead to run late project, over-budget or fail to meet key needs of parties and so on. There are definitely some shortcomings in project under BCC need to be over, that are:
i. Take time for mutual agreement among parties;
ii. Misunderstanding and misinterpreting of stipulated clauses in contracts
iii. Conflict between contractor and the project company during project execution
iv. Conflict between cultures
A BCC is generally applied for managing the oil and gas project, in case of problems or disputes happen during the project execution, then these problems and disputes shall be resolved in accordance with stipulated clauses in the signed contract, therefore Mr. Phung Quang Hiep made a case study which main object was to focus the Phung Quang Hiep
issues related to BCC:
1. To study BCC contract objectives
2. To study BCC contract conditions
3. To study BCC contract implementation and problems occurring
4. To propose effective solutions for project management under BCC
Conclusion
BCC Objectives:
The purpose of this report is to describe the BCC objectives in which the project is implementing the design, procurement, construction, ownership, operation, maintenance of the upstream Block B & 48/95 and Block 52/97 facilities to ensure economic, efficient System development on an integrated, aligned basis, as set forth in this Contract.
BCC Conditions:
These objectives are concretized under BCC conditions of conditions precedent and participating interest. Block B – O Mon pipeline project has some difference phases. Therefore, the writing displays them in three main groups of technique, finance and legality. Technical phases include construction, operation and maintenance of system; transportation proposal and capacity; usage of the system, transportation of gas and tariffs; as well as decommission. In addition, financial issues of BCC are focused on taxation; government and corporation support; work program and budget; and contracting procedures. Also, BCC requires legal items in operation that are, insurance and litigation; default, assignment of participating interest; withdrawal; and dispute resolution.
BCC Implementation And Problems:
The above analysis is to result to business cooperation contract management for block B – O Mon pipeline project through making up factors affecting to take time for mutual agreement among parties, underground drivers of misunderstanding and misinterpreting of stipulated clauses in contracts and conflict between contractor and the project company during project execution as well as conflict between cultures. To response to these problem statements, this report concentrates on studying problems occurring and proposing effective solutions for project management under BCC as well.
This project may be continued if precedent conditions are satisfied or waived. That foreign- factors take part in business of gas pipeline and that disadvantages are caused by BCC have created some outstanding problems to system operation. The report asserts that issues of finance, accounting, culture, legality, risks, approval and human resource are needed to analyzed, improved and boosted. Otherwise, project will be delayed in the manner of time and quality and not achieved project objectives.
Effective Solutions for Project Management under BCC:
For finance and accounting issues, the operator has to harmonize regulations between BCC and Vietnamese Corporation Accounting which is first priority while the parties are required to obtain deep understanding of investee country, that is, Vietnamese laws. Moreover, due to four different management cultures the operator should set up harmonious business culture, seminars, team build to interpersonal communication and friendly atmosphere and especially maintain internal control of approval procedure and authorization for expenditure procedure. A unified and well defined organizational chart for human resource management is so important for continuous system operation. All above is to minimize business risks led by project specialization.
In addition, the report shows out main experience lesson groups to solve these problem statements. First, the operator should take full advantages of local authorities and governmental support in all tax and foreign currency issues. Second, the operator needs to have closer direction and management of higher authorities to keep the project be in the right way. Third, taking an initiative of finance, positioning negotiators of BCC in the board of operator and maintain frequently periodic meeting are considered as meaningful recommendations to unbind stuck bars during implementing project and achieve project objectives in timely and quality basis.
His thesis abstract is copied and posted.
Abstract
Natural gas is a fossil fuel extracted from the ground that can be used as a source of energy for household, industrial and commercial use, as well as to generate electricity. So, natural gas is an important factor for the development of countries that have strong economies and people who enjoy good living conditions. To be able to have a viable and efficient supply requires the construction of a pipeline from faraway regions that have large reserves of natural gas to onshore terminals. In Vietnam, the projects of pipeline construction and operation are almost under direct foreign investment of which business cooperation contract is the most favor.
The management of this contract is a challenge to Vietnamese operator due to foreign factors. This report let a case of BCC for block B – O Mon pipeline project as a study of project management in construction. It tries to work out common and regular problems this kind of BCC is encountering. These difficulties are divided into four groups that are, take time for mutual agreement among parties, misunderstanding and misinterpreting of stipulated clauses in contracts and conflict among contractors and the operator during project execution as well as conflict among cultures.
Moreover, BCC conditions and project phase operation are analyzed in details. Above all, the author suggests some solutions focusing on outstanding problem statements to improve the project operation and implement it in the manner of time and quality.
Wednesday 8 June 2011
Project Schedule Internal Risk Management in EPC Gas Pipeline Project: A Case Study
Oil and gas sector is considered as a backbone of any country’s economy. In Viet Nam, the promotion of gas industry development since the early 1990s has significantly contributed to the economic development of the country.
The demand of domestic gas consumption is being increased in a very short time. Therefore, Petro Vietnam has cooperated with national and international petroleum companies to speed up the plan of developing and building of the new gas fields in the southeast sea and southwest sea of Vietnam. As a result, lot of new pipelines will be installed to transport gas from field to shore of Vietnam, and this process involves many risks. Due to the unique characteristic of this project, the risk management during project execution became very important activity because the risks may have effect on cost, schedule and quality of the project. Risk management is a key to successful project implementation.
For most effective and efficient risk management, it is recommend to plan, analyze and manage risk in all phases of project life cycle specifically from design to construction phase.
Mr. Pham Binh Lam made a case study which objectives were to: (1) describe key activities in EPC gas pipeline project ; (2) identify risk factor in implement the EPC gas pipeline project which may affect the project schedule; and (3) propose risk solution that can be used to manage in the EPC gas pipeline project
Conclusion
Based on the data collected mainly from Bloc B&52-Omon gas pipeline project of Petro VietNam Gas Corporation, the author has clarified that EPC gas pipeline project contains high risk during project execution. The very important stages are from engineering stage to construction stage because these stages influence the quality of gas pipeline project. There are a lot of risk factor impacts on the project schedule in these periods such as experience, knowledge and skill of owner, contractor, subcontractors, design change, and environment impact. Pipeline construction in the offshore environment as well as onshore environment which across many rivers and canals are difficult and dangerous activity which lead to accidents and incidents frequencies happen especially if this project have a long distance from offshore to onshore pipeline route. It will not only cause project delays but also directly and indirectly cause very high project cost.
Major risk factors which may affect EPC gas pipeline project schedule has been identified by and facilitated during the brainstorming session of key experience stakeholders in this project such as top management, project manager, site manager, HSE manager, office personnel and the author.
The author has proposed appropriate strategies to reduce major risks schedule in EPC gas pipeline project by conducting a Framework on EPC Schedule Risk Management through a real gas pipline project case study -Block B – Omon gas pipeline project.The results are shown in the table below.
Recommendation
In order to obtain efficient schedule risk management in EPC gas pipeline project this study proposes a number of recommendations:
- Experience project management team should be appointed to the selection EPC contractor
- The EPC contractor has to contribute audit procedure for detailed designer to select qualified designer effectively. In addition, review and approval by Project Management team (PMT) of both selection of detailed designer and approval of designed document
- The EPC contractor and subcontractor should contribute an effective and efficient safety management system
- An effective communication and coordination system between lower stake holder (e.g. EPC contractor, subcontractor, vendor, etc) should be set up
- The owners should have high commitment of all people involved especially top management commitment in all stage of project and hand over authority to make decision.
- The Risk Management Plan should be reviewed during the EPC phase as specified in the Project Management Plan to ensure that appropriate actions have been taken and followed up. Reviews should also occur at the commencement of a new project phase or if there are significant changes to the project scope or operating environment.
His thesis abstract is copied and posted.
Abstract
In order to adapt the demand of domestic gas consumption is being increased in very short time PetroVietnam has cooperated together with national and international petroleum companies to speed up the plan of developing and building new gas fields in the southeast sea and southwest sea of Vietnam. Therefore a lot of new pipelines will be installed to transport gas from field to shore of Vietnam. In oil and gas project specify gas pipeline project contains high risk during project execution because of interacting activities of many event in condition of limited time, human resource and budget and the participation of many different parties in the project with the role, responsibilities as well as different objectives make the project more complex. Additional, only four gas pipelines project that built in Vietnam. Due to the unique characteristic of these project, the risk management during project execution is became very importance activity because the risks effect on cost, schedule and quality of the project. Risk management is a key to successful project implementation The author has identified mayor significant risks which impact project schedule and has proposed appropriate strategies to reduce major risks schedule in EPC gas pipeline project by conducting a Framework on EPC Schedule Risk Management through a real gas pipeline project case study -Block B – Omon gas pipeline project.
The demand of domestic gas consumption is being increased in a very short time. Therefore, Petro Vietnam has cooperated with national and international petroleum companies to speed up the plan of developing and building of the new gas fields in the southeast sea and southwest sea of Vietnam. As a result, lot of new pipelines will be installed to transport gas from field to shore of Vietnam, and this process involves many risks. Due to the unique characteristic of this project, the risk management during project execution became very important activity because the risks may have effect on cost, schedule and quality of the project. Risk management is a key to successful project implementation.
For most effective and efficient risk management, it is recommend to plan, analyze and manage risk in all phases of project life cycle specifically from design to construction phase.
Mr. Pham Binh Lam made a case study which objectives were to: (1) describe key activities in EPC gas pipeline project ; (2) identify risk factor in implement the EPC gas pipeline project which may affect the project schedule; and (3) propose risk solution that can be used to manage in the EPC gas pipeline project
Conclusion
Based on the data collected mainly from Bloc B&52-Omon gas pipeline project of Petro VietNam Gas Corporation, the author has clarified that EPC gas pipeline project contains high risk during project execution. The very important stages are from engineering stage to construction stage because these stages influence the quality of gas pipeline project. There are a lot of risk factor impacts on the project schedule in these periods such as experience, knowledge and skill of owner, contractor, subcontractors, design change, and environment impact. Pipeline construction in the offshore environment as well as onshore environment which across many rivers and canals are difficult and dangerous activity which lead to accidents and incidents frequencies happen especially if this project have a long distance from offshore to onshore pipeline route. It will not only cause project delays but also directly and indirectly cause very high project cost.
Major risk factors which may affect EPC gas pipeline project schedule has been identified by and facilitated during the brainstorming session of key experience stakeholders in this project such as top management, project manager, site manager, HSE manager, office personnel and the author.
The author has proposed appropriate strategies to reduce major risks schedule in EPC gas pipeline project by conducting a Framework on EPC Schedule Risk Management through a real gas pipline project case study -Block B – Omon gas pipeline project.The results are shown in the table below.
Recommendation
In order to obtain efficient schedule risk management in EPC gas pipeline project this study proposes a number of recommendations:
- Experience project management team should be appointed to the selection EPC contractor
- The EPC contractor has to contribute audit procedure for detailed designer to select qualified designer effectively. In addition, review and approval by Project Management team (PMT) of both selection of detailed designer and approval of designed document
- The EPC contractor and subcontractor should contribute an effective and efficient safety management system
- An effective communication and coordination system between lower stake holder (e.g. EPC contractor, subcontractor, vendor, etc) should be set up
- The owners should have high commitment of all people involved especially top management commitment in all stage of project and hand over authority to make decision.
- The Risk Management Plan should be reviewed during the EPC phase as specified in the Project Management Plan to ensure that appropriate actions have been taken and followed up. Reviews should also occur at the commencement of a new project phase or if there are significant changes to the project scope or operating environment.
His thesis abstract is copied and posted.
Abstract
In order to adapt the demand of domestic gas consumption is being increased in very short time PetroVietnam has cooperated together with national and international petroleum companies to speed up the plan of developing and building new gas fields in the southeast sea and southwest sea of Vietnam. Therefore a lot of new pipelines will be installed to transport gas from field to shore of Vietnam. In oil and gas project specify gas pipeline project contains high risk during project execution because of interacting activities of many event in condition of limited time, human resource and budget and the participation of many different parties in the project with the role, responsibilities as well as different objectives make the project more complex. Additional, only four gas pipelines project that built in Vietnam. Due to the unique characteristic of these project, the risk management during project execution is became very importance activity because the risks effect on cost, schedule and quality of the project. Risk management is a key to successful project implementation The author has identified mayor significant risks which impact project schedule and has proposed appropriate strategies to reduce major risks schedule in EPC gas pipeline project by conducting a Framework on EPC Schedule Risk Management through a real gas pipeline project case study -Block B – Omon gas pipeline project.
Tuesday 7 June 2011
Quality Management System for Construction Material Testing: A case study of Jupiter Inspection J/S Company
In recent years, there are many modern infrastructure which have been constructed with high-technology in Vietnam. However, the technical management is not caught up with the development of actual construction. Many serious accidents are still taken place causing numbers of deaths. Therefore, the management of construction work has been more and more taken into account. One of the solution for enhancement of construction work quality is to strengthen the inspection of construction quality by expanding the network of laboratory and auditing centers in all regions and industries in the country.
The activities of these laboratories have positively contributed to the construction quality and timely being into operation for the planning, design, construction and acceptance of such works as bridge and road, infrastructure, industrial and civil works. The development of civil industry, in general, and the activities of laboratories, in particular, are the reasons for the establishment of Quality Management System (QMS).
Ms. Nguyen Thi Vui made a case study, which objectives were to: (1) study QMS of company; and (2) evaluate the effectiveness of the QMS
Conclusions
Based on the result of the study, the quality management system in Jupiter Company was based on the ISO 9001:2008 requirement system. These are:
a) an organization structure, responsibility and authority in QMS which are regulated under the applied Law,
b) procedures of QMS (Operating procedure, Supporting procedure, and system management procedures),
c) resources for performing all activities in QMS,
d) document system, and
e) leadership representative of quality management system.
In general, although, there are some difficulties in the implementation of QMS, but still it has some remarkable effect such as follows:
1. Making the company manage the quality and operation of production line and trading activities systematically and in a planned method, in order to minimize and exclude all cost arising after inspection, as well as cost of maintenance and repeating of work.
2. Making company increase the efficiency and reduce cost of supply of means and facilities for people doing the job according to correct procedures from the beginning. As well as having close control, then the quantity of repeated work and cost for corrective actions carried out for defective products are limited, due to lack of control and reduction of consuming for time, material, human resource and money.
3. Increase the competition with other company due to the proper QMS. The company is now well qualified for bidding and might take part in many large and important projects such as Project for Expressway of HCM City – Long Thanh – Dau Giay; Ben Luc – Long Thanh Expressway; Trung Luong Can Tho Expressway. At the same time, it creates jobs for foreign countries such as TOA (Japan), BCOM (France), Hyder (UK), SMEC (Australia) Hanshin (Korea) Wilbur Smith (USA), and Nipon Koei (Japan).
The company’s prestige has improved in terms of quality security from the professional level of staff, document system, accuracy of equipments, making the test results with high accuracy. Besides, the progress of the project is always satisfactory with planned handing over schedule and then meeting the customer’s requirements as well.
In short, QMS is a correct solution, a unique way for the development and stability of the company. When QMS is supplied, internal force (organization) and external force (customer) will have mutual link in terms of benefits and responsibility, a solution for the benefits of many parties.
Her thesis abstract is copied and posted.
Abstract
The report expresses the key issues in Quality Management System (QMS) that known as the critical factor for organizations wants to develop and survive in the construction work.
This study, which refers to the theories and the standards system, has expressed the concept of quality in construction, the QMS in organization, requirements for QMS in construction materials testing and its benefits.
The study based on theoretical considerations as well as practical experience gained in the materials testing process. To ensure the correct identification of substances, to ensure that the processes undertaken.
Report the findings of a research study, which was undertaken to examine the underlying factors affecting the quality of a construction project. It also aims to identify factors that show a strong correlation to good quality performance. The aim of this report is to improve the quality of materials testing services and to define common quality assurance criteria.
The activities of these laboratories have positively contributed to the construction quality and timely being into operation for the planning, design, construction and acceptance of such works as bridge and road, infrastructure, industrial and civil works. The development of civil industry, in general, and the activities of laboratories, in particular, are the reasons for the establishment of Quality Management System (QMS).
Ms. Nguyen Thi Vui made a case study, which objectives were to: (1) study QMS of company; and (2) evaluate the effectiveness of the QMS
Conclusions
Based on the result of the study, the quality management system in Jupiter Company was based on the ISO 9001:2008 requirement system. These are:
a) an organization structure, responsibility and authority in QMS which are regulated under the applied Law,
b) procedures of QMS (Operating procedure, Supporting procedure, and system management procedures),
c) resources for performing all activities in QMS,
d) document system, and
e) leadership representative of quality management system.
In general, although, there are some difficulties in the implementation of QMS, but still it has some remarkable effect such as follows:
1. Making the company manage the quality and operation of production line and trading activities systematically and in a planned method, in order to minimize and exclude all cost arising after inspection, as well as cost of maintenance and repeating of work.
2. Making company increase the efficiency and reduce cost of supply of means and facilities for people doing the job according to correct procedures from the beginning. As well as having close control, then the quantity of repeated work and cost for corrective actions carried out for defective products are limited, due to lack of control and reduction of consuming for time, material, human resource and money.
3. Increase the competition with other company due to the proper QMS. The company is now well qualified for bidding and might take part in many large and important projects such as Project for Expressway of HCM City – Long Thanh – Dau Giay; Ben Luc – Long Thanh Expressway; Trung Luong Can Tho Expressway. At the same time, it creates jobs for foreign countries such as TOA (Japan), BCOM (France), Hyder (UK), SMEC (Australia) Hanshin (Korea) Wilbur Smith (USA), and Nipon Koei (Japan).
The company’s prestige has improved in terms of quality security from the professional level of staff, document system, accuracy of equipments, making the test results with high accuracy. Besides, the progress of the project is always satisfactory with planned handing over schedule and then meeting the customer’s requirements as well.
In short, QMS is a correct solution, a unique way for the development and stability of the company. When QMS is supplied, internal force (organization) and external force (customer) will have mutual link in terms of benefits and responsibility, a solution for the benefits of many parties.
Her thesis abstract is copied and posted.
Abstract
The report expresses the key issues in Quality Management System (QMS) that known as the critical factor for organizations wants to develop and survive in the construction work.
This study, which refers to the theories and the standards system, has expressed the concept of quality in construction, the QMS in organization, requirements for QMS in construction materials testing and its benefits.
The study based on theoretical considerations as well as practical experience gained in the materials testing process. To ensure the correct identification of substances, to ensure that the processes undertaken.
Report the findings of a research study, which was undertaken to examine the underlying factors affecting the quality of a construction project. It also aims to identify factors that show a strong correlation to good quality performance. The aim of this report is to improve the quality of materials testing services and to define common quality assurance criteria.
Monday 6 June 2011
Insurance and Surety Bonds: A Case Study of Petrochemical, Oil and Gas Projects in Myanmar and Thailand
Human beings, business firm, organization, government and society want security but everybody and property cannot be fixed and established because risk is generally underlying those. Risks can be easily understood among the projects, but they are difficult to describe. Construction projects require many resources such as financial capital, human resources and material resources. It is very important to mitigate the construction risks, and complete the project with target time and necessary quality. Analyses of the various risks and understanding of these risks are very important to mitigate these risks. The insurance company is of primary significant of the risk management. It shows that insurance is a form of risk management primarily used to avoid against the risk of a contingent loss (Tsanakas and Desli, 2005 cited in El-adaway and Kandil, 2009). Insurance is determined as the equitable risk transferring. The insured need to pay equitable insurance rates called premium to insurance company (Harrington and Niehaus, 2004 cited in El-adaway and Kandil, 2009).
The insurance premium payment is a major cost of project. If insurance is used, the premium must be paid in advance. If any losses happen in project, the project can get indemnification. However, the using of insurance can get loss of premiums. Therefore, the contract manager and risk manager need to consider about insurable risks. All kinds of insurable risks are not insured. Bunni (2003) mentioned that classification of risks on the basic insurability is shown in figure below.
There are many risks in the construction project. Each project activity may be its own risks such as occurrence of physical damages, accidents, materials delivery delays, unforeseeable problems, unforeseeable site conditions, natural hazards, political affects, etc. These risks will affect to the client, contractor, design professional, employees, third party and public. For instance, the contractor cannot be able to finish the project with contract price because of the economic situation and changes, the site condition changes, the difficulties of resources and others. Therefore, contractor’s default is one of the most important risks in construction projects (Arditi et al. 2000 cited in Al-Sobiei et al. 2005).
Contractor’s risks cannot be eliminated by the client, but it can be partly or totally transferred to the bonds (Al-Sobiei et al. 2005). When the project meets the unforeseeable contractor’s failure, it is very difficult to finish on time because the projects may have financial difficulties, delays and others. However, the surety bonds can provide to the client as a guarantee to complete the project and defaulting financial payment from the contractor (Russell, 1990; Mills, 2001).
Ms. Kyawt Phyu Phyu made a case study which objectives were to : (1) study insurable risks which can be managed using insurance and surety bonds; (2) study the insurance and surety bonds in oil & gas and petrochemical projects; and (3) develop a framework on risk and insurance
Conclusions
Objective 1
It was found out that there are many kinds of risks in oil and gas and petrochemical projects. Their risk management (risk transfer) approaches are the insurance, surety bonds and other approaches. However, most of the appropriate risk transfer approaches are the insurance and surety bonds and the detailed conclusion for objective-2 are described in table below.
Objective 2
it was found out that most of the projects don’t have the same insurances and surety bonds because of their project nature, project types, different project parties, different risks management system. The insurance premiums are also different relating with risks, project types, company background and others. If the risks are high, insurance premiums are also high. There are eleven (11) kinds of insurance and four (4) kinds of bonds on petrochemical and oil & gas project in this research according to case study.
(i) Recommendation Insurances for offshore pipeline project
The recommendation insurances for offshore oil and gas projects according to case study are:
1. Construction All Risk Insurance
2. General Third Party Liability Insurance
3. Marine Hull and Machinery Insurance
4. Protection and Indemnity Insurance
5. Worker’s Compensation Insurance
6. Transportation Insurance
(ii) Recommendations Insurances for Transportation and Installation Offshore
Facilities Projects
The recommendation insurances for transportation and installation offshore facilities projects according to case study are:
1. Construction All Risk Insurance/ Erection All Risk Insurance
2. General Third Party Liability Insurance3. Worker’s Compensation Insurance
4. Marine Hull and Machinery Insurance
5. Protection and Indemnity Insurance
6. Transportation (Marine Cargo) Insurance
7. Builder All Risk Insurance
(iii) Recommendation Insurances for Urea Fertilizer Factory Projects
The recommendation insurances for Urea Fertilizer Projects according to case study are:
1. Construction All Risk Insurance/ Erection All Risk Insurance
2. Transportation Insurance
3. Fire and Exploration Insurance
4. Worker’s Compensation Insurance
5. General Third Party Liability Insurance
(iv) Recommendation Insurances for Refinery Projects
The recommendation insurances for refinery projects according to case study are:
1. Construction All Risk Insurance/ Erection All Risk Insurance
2. General Third Party Liability Insurance
3. Worker’s Compensation Insurance
4. Construction Plant and Equipment Insurances
5. Business Interruption Insurance
(v) Recommendation Surety Bonds for Petrochemical and Oil and Gas Projects
In petrochemical and oil and gas projects, bid bond is needed in the bidding stage. In the construction and operation phases, performance bond (bank guarantee) and advance payment bond are important according to case study.
Objective 3
Main types of insurable risks in petrochemical and oil and gas projects are loss of life and personnel injury, material damage, material in transit and contractor’s risks. The insurable risks for oil and gas projects are collusion, oil pollution related with marine property. The researcher shows the detailed level of respective insurable risks in below figure. The project’s participants transfer these kinds of insurable risks to insurance and surety bonds, and the detailed descriptions are mentioned in figure below.
Her thesis abstract is copied and posted.
Abstract
There are many uncertainties, risks and probability and possibility of loss of chance in every firm, business, projects and human beings. The oil and gas project and petrochemical projects have many uncertainties and risks because these projects are related with geological risks, probability of existing oil, oceanography, and others. Insurance and surety bond are very important in projects because they can protect the risks, contractor’s default, and the project can get the financial and performance security. This study is emphasizing on insurable risks with appropriate types insurance and surety bonds.
This study emphasizes on the case study approach on petrochemical and oil and gas projects. The study was conducted to two oil and gas projects from Myanmar, two urea fertilizer projects from Myanmar and two refinery projects from Thailand to study types of insurable risks, insurance and surety bonds.
The insurance premium payment is a major cost of project. If insurance is used, the premium must be paid in advance. If any losses happen in project, the project can get indemnification. However, the using of insurance can get loss of premiums. Therefore, the contract manager and risk manager need to consider about insurable risks. All kinds of insurable risks are not insured. Bunni (2003) mentioned that classification of risks on the basic insurability is shown in figure below.
There are many risks in the construction project. Each project activity may be its own risks such as occurrence of physical damages, accidents, materials delivery delays, unforeseeable problems, unforeseeable site conditions, natural hazards, political affects, etc. These risks will affect to the client, contractor, design professional, employees, third party and public. For instance, the contractor cannot be able to finish the project with contract price because of the economic situation and changes, the site condition changes, the difficulties of resources and others. Therefore, contractor’s default is one of the most important risks in construction projects (Arditi et al. 2000 cited in Al-Sobiei et al. 2005).
Contractor’s risks cannot be eliminated by the client, but it can be partly or totally transferred to the bonds (Al-Sobiei et al. 2005). When the project meets the unforeseeable contractor’s failure, it is very difficult to finish on time because the projects may have financial difficulties, delays and others. However, the surety bonds can provide to the client as a guarantee to complete the project and defaulting financial payment from the contractor (Russell, 1990; Mills, 2001).
Ms. Kyawt Phyu Phyu made a case study which objectives were to : (1) study insurable risks which can be managed using insurance and surety bonds; (2) study the insurance and surety bonds in oil & gas and petrochemical projects; and (3) develop a framework on risk and insurance
Conclusions
Objective 1
It was found out that there are many kinds of risks in oil and gas and petrochemical projects. Their risk management (risk transfer) approaches are the insurance, surety bonds and other approaches. However, most of the appropriate risk transfer approaches are the insurance and surety bonds and the detailed conclusion for objective-2 are described in table below.
Objective 2
it was found out that most of the projects don’t have the same insurances and surety bonds because of their project nature, project types, different project parties, different risks management system. The insurance premiums are also different relating with risks, project types, company background and others. If the risks are high, insurance premiums are also high. There are eleven (11) kinds of insurance and four (4) kinds of bonds on petrochemical and oil & gas project in this research according to case study.
(i) Recommendation Insurances for offshore pipeline project
The recommendation insurances for offshore oil and gas projects according to case study are:
1. Construction All Risk Insurance
2. General Third Party Liability Insurance
3. Marine Hull and Machinery Insurance
4. Protection and Indemnity Insurance
5. Worker’s Compensation Insurance
6. Transportation Insurance
(ii) Recommendations Insurances for Transportation and Installation Offshore
Facilities Projects
The recommendation insurances for transportation and installation offshore facilities projects according to case study are:
1. Construction All Risk Insurance/ Erection All Risk Insurance
2. General Third Party Liability Insurance3. Worker’s Compensation Insurance
4. Marine Hull and Machinery Insurance
5. Protection and Indemnity Insurance
6. Transportation (Marine Cargo) Insurance
7. Builder All Risk Insurance
(iii) Recommendation Insurances for Urea Fertilizer Factory Projects
The recommendation insurances for Urea Fertilizer Projects according to case study are:
1. Construction All Risk Insurance/ Erection All Risk Insurance
2. Transportation Insurance
3. Fire and Exploration Insurance
4. Worker’s Compensation Insurance
5. General Third Party Liability Insurance
(iv) Recommendation Insurances for Refinery Projects
The recommendation insurances for refinery projects according to case study are:
1. Construction All Risk Insurance/ Erection All Risk Insurance
2. General Third Party Liability Insurance
3. Worker’s Compensation Insurance
4. Construction Plant and Equipment Insurances
5. Business Interruption Insurance
(v) Recommendation Surety Bonds for Petrochemical and Oil and Gas Projects
In petrochemical and oil and gas projects, bid bond is needed in the bidding stage. In the construction and operation phases, performance bond (bank guarantee) and advance payment bond are important according to case study.
Objective 3
Main types of insurable risks in petrochemical and oil and gas projects are loss of life and personnel injury, material damage, material in transit and contractor’s risks. The insurable risks for oil and gas projects are collusion, oil pollution related with marine property. The researcher shows the detailed level of respective insurable risks in below figure. The project’s participants transfer these kinds of insurable risks to insurance and surety bonds, and the detailed descriptions are mentioned in figure below.
Her thesis abstract is copied and posted.
Abstract
There are many uncertainties, risks and probability and possibility of loss of chance in every firm, business, projects and human beings. The oil and gas project and petrochemical projects have many uncertainties and risks because these projects are related with geological risks, probability of existing oil, oceanography, and others. Insurance and surety bond are very important in projects because they can protect the risks, contractor’s default, and the project can get the financial and performance security. This study is emphasizing on insurable risks with appropriate types insurance and surety bonds.
This study emphasizes on the case study approach on petrochemical and oil and gas projects. The study was conducted to two oil and gas projects from Myanmar, two urea fertilizer projects from Myanmar and two refinery projects from Thailand to study types of insurable risks, insurance and surety bonds.
Friday 3 June 2011
Orientation Risk Management Model for Pre-Bidding Process in Low-Income Housing Projects With Public Private Partnership in Vietnam
Although PPP is not a new approach to access infrastructure capital mobilizing in the world, this model has just applied in Vietnam since 2000s (DPI, 2010). The incompletion framework of PPP is one of the barriers that private sector could not be accessed to low income housing projects. As a result, there are only 6 projects which have been launched until 2009 Ngan Ha (2010, Jan 21), and all of them had an investor collection process without tendering process. This reality is not only “crowding out” private participation but also increasing the overall risk to the GOV in its PPP program (WB, 2008).
In order to improve this situation, in early 2010, GOV issued new 108 Decree to replace 78 Decree which was applied before. Thus, PPP procurement process is now clearer than before. Project partner must be selected through transparent tender bidding & negotiation phase. Hence, with the new regulation, risk evaluation plays a critical role in pre-bidding period.
Nevertheless, according to World Bank report (2008), in Vietnam current situation, ‘projects are not very well developed before they are bid out’. This is a key point needed to be thoroughly comprehended by stakeholders if they do not want to be ineffective of PPP program.
Mr. Vu Tuyet Mai made a research to find out the answer for the following questions:
1. What are the risks included in pre-bidding process for every aspect of PPP stakeholders who have difference objectives, functions, risk perception, how to manage those risks properly based on stakeholder’s competence and experience?
2. What is the existing risk management model which is used by stakeholders in the PPP low income housing projects running without bidding process in Vietnam?
3. What are the basic differences and how to capture the new risk management model from existing one?
The objectives of his research were to: (1) investigate risk factors can occur in pre-bidding stage for stakeholders of PPP low-income housing projects when apply the new regulation in Vietnam; (2) find out the existing critical risk factors in pre-bidding stage of low-income housing project in Vietnam; and (3) develop the risk management model in pre-bidding stage to help PPP stakeholders to achieve individual and project objectives under the new regulation.
Conclusion
Even though PPP model is familiar to infrastructure projects in general and low income housing project in particular around the world, it was just piloted in Vietnam recently, and now is in the improvement process. In parallel with gradual correction of policy system is the comprehension of related partners in project structure about risk management orientation. Hence, the goal of this thesis is pursuing this orientation to partly contribute to the completion process.
The result of the first objective is that the risk factors can face stakeholders in LIHPs would be investigated follow bidding process which should be applied in PPP practices. Thus, public sector plays the most important role in pre-bidding process and takes responsibility of social outcome. As a result, they take 19 risk factors in whole pre-bidding process, much higher if it will compare with 7 risk factors of private sector and debt funder.
The result of objective number 2 is that although all LIHPs in Vietnam now have not applied bidding regulation, those were analyzed exposed the real process of investor selection and their risk management related. In other words, those showed the evidences of real risk factors occurring now. Also, the ways stakeholders managed them and their result have been investigated.
For the last objective, the orientation model not only reduces many risk factor sprang from current selection process, but also recommend the solution to solve the risk related with policy and regulation in Vietnam now.
His thesis abstract is copied and posted.
Abstract
Risk management issue becomes more and more important in low income housing projects in Vietnam, especially in the transitional period of improvement of policy in recent years. Pursuing the suitable risk management model in pre-bidding process which needs to be applied from now as ruled in new regulations is the main propose of this thesis. In order to catch up requirements in pre-bidding, every stakeholder has to face with some determined risks to meet their needs. Moreover, current investment condition in low-income housing projects has contained many existing risk. Therefore, combination between risk simulation in pre-bidding and risk occurring could show the orientation of risk management model for the near future.
The thesis used methodology of case study analysis. After finding out risk factors in pre-bidding and verifying by experts, two most typical projects that run by PPP scheme have been chosen to analyze. The result of study shows that low-income housing project in Vietnam were challenged by many risk factors. They were caused by either current process of investor appointment or existing vague regulation and policy. For this reason, the thesis oriented the risk management model in order to reduce the main risks factor and transfer some risks to the sector enable to manage well. Obviously, this model needs to be perfected gradually through project by project and period by period. At least, the first model of risk management can help stakeholder to optimize their interest in low-income housing project with applying bidding process instead of investor selection before.
In order to improve this situation, in early 2010, GOV issued new 108 Decree to replace 78 Decree which was applied before. Thus, PPP procurement process is now clearer than before. Project partner must be selected through transparent tender bidding & negotiation phase. Hence, with the new regulation, risk evaluation plays a critical role in pre-bidding period.
Nevertheless, according to World Bank report (2008), in Vietnam current situation, ‘projects are not very well developed before they are bid out’. This is a key point needed to be thoroughly comprehended by stakeholders if they do not want to be ineffective of PPP program.
Mr. Vu Tuyet Mai made a research to find out the answer for the following questions:
1. What are the risks included in pre-bidding process for every aspect of PPP stakeholders who have difference objectives, functions, risk perception, how to manage those risks properly based on stakeholder’s competence and experience?
2. What is the existing risk management model which is used by stakeholders in the PPP low income housing projects running without bidding process in Vietnam?
3. What are the basic differences and how to capture the new risk management model from existing one?
The objectives of his research were to: (1) investigate risk factors can occur in pre-bidding stage for stakeholders of PPP low-income housing projects when apply the new regulation in Vietnam; (2) find out the existing critical risk factors in pre-bidding stage of low-income housing project in Vietnam; and (3) develop the risk management model in pre-bidding stage to help PPP stakeholders to achieve individual and project objectives under the new regulation.
Conclusion
Even though PPP model is familiar to infrastructure projects in general and low income housing project in particular around the world, it was just piloted in Vietnam recently, and now is in the improvement process. In parallel with gradual correction of policy system is the comprehension of related partners in project structure about risk management orientation. Hence, the goal of this thesis is pursuing this orientation to partly contribute to the completion process.
The result of the first objective is that the risk factors can face stakeholders in LIHPs would be investigated follow bidding process which should be applied in PPP practices. Thus, public sector plays the most important role in pre-bidding process and takes responsibility of social outcome. As a result, they take 19 risk factors in whole pre-bidding process, much higher if it will compare with 7 risk factors of private sector and debt funder.
The result of objective number 2 is that although all LIHPs in Vietnam now have not applied bidding regulation, those were analyzed exposed the real process of investor selection and their risk management related. In other words, those showed the evidences of real risk factors occurring now. Also, the ways stakeholders managed them and their result have been investigated.
For the last objective, the orientation model not only reduces many risk factor sprang from current selection process, but also recommend the solution to solve the risk related with policy and regulation in Vietnam now.
His thesis abstract is copied and posted.
Abstract
Risk management issue becomes more and more important in low income housing projects in Vietnam, especially in the transitional period of improvement of policy in recent years. Pursuing the suitable risk management model in pre-bidding process which needs to be applied from now as ruled in new regulations is the main propose of this thesis. In order to catch up requirements in pre-bidding, every stakeholder has to face with some determined risks to meet their needs. Moreover, current investment condition in low-income housing projects has contained many existing risk. Therefore, combination between risk simulation in pre-bidding and risk occurring could show the orientation of risk management model for the near future.
The thesis used methodology of case study analysis. After finding out risk factors in pre-bidding and verifying by experts, two most typical projects that run by PPP scheme have been chosen to analyze. The result of study shows that low-income housing project in Vietnam were challenged by many risk factors. They were caused by either current process of investor appointment or existing vague regulation and policy. For this reason, the thesis oriented the risk management model in order to reduce the main risks factor and transfer some risks to the sector enable to manage well. Obviously, this model needs to be perfected gradually through project by project and period by period. At least, the first model of risk management can help stakeholder to optimize their interest in low-income housing project with applying bidding process instead of investor selection before.
Tuesday 31 May 2011
Claims in Building Construction of Pakistan: Statistical and Pathogenic Analysis
The Causes of Project failures in terms of cost over runs, schedule over runs and depleted quality have been identified particularly for different countries conducting case studies and questionnaire survey based upon the opinions of Employers, Consultants and Contractors operating in that Country. Generic identification of causes of claims in one country may not be very helpful for the other country and would not address the particular problems prevailing in the relevant Construction market of that country. According to Acharya et al. (2006), the sources and reasons of conflicts are different according to the nature of the projects and conditions of a particular country. The differences in the types and levels of conflicts from country to country are due to the unique local environment of the country in which the project is going to be executed. Therefore a study is required to investigate the frequently occurring causes of claims and their types in Building construction market of Pakistan. The sector of Building construction is chosen because Building construction is the sector in which both Public and Private sector clients invest and develop the projects; Economic downturn in the Industry and double digit inflation have already created problems for Employers and contractors to procure and to deliver the projects respectively. Therefore, the projects under planning stage should be planned and designed in such a comprehensive manner so that they could survive the harsh and tough market conditions of Pakistan.
Causes and types of claims provide an insight into the list of factors responsible for the development of claims but lack in identifying the underlying causes of claims. Love et al. (2010) also state that many of the causes of claims and disputes identified in many studies are not dissimilar in nature and moreover do not identify the underlying causes of disputes which are essential if the reduction in claim and dispute potential is required. Therefore, it is required to find the pathogenic influences on the causes of claims and disputes so that proactive measures could be aligned in organization rather than aligning reactive measures.
Mr. Hassan Ashraf made a research in order to reduce the dispute potential in project beforehand and to view causal factors behind disputes through holistic approach. The objectives of his study were to : (1) identify the critical causes and types of claims against frequency of occurrence, degree of severity and level of importance in the Building Projects of Pakistan; (2) identify the Pathogenic Influence on the causes of claims in Building Projects of Pakistan; and (3) To propose recommendations for the minimization of claims and disputes.
Conclusions
1. Causes of Claims
Competitive market conditions, delayed payments by the Employer, ineffective planning and scheduling by contractor, poor financial management of the contractor, price hike of materials, improper technical study by the contractor during the bidding stage of the project, are the causes which have been identified as critical causes of claims against level of importance based on overall response. The causes are mainly related to economic conditions of Pakistan which lead to less number of construction projects resulting into tight competition for project award, these tight competition forces contractors to bid low and then proceeds for claims practice at the later stages of the project. Contractor’s incompetence and market inflation also lead to claim causation due to poor quality of work and escalated costs of work respectively. It was also seen from both case study of project “A” and the response of survey that inadequate early planning of the project also lead to claim causation due to limited understanding of Employer about the project and what is really required out of the project.
Scope changes and design changes and variations are most of the times caused by inadequate early planning of the project by the Employer. It has also been seen that regulatory and execution delays in terms of delays in obtaining permits also lead to claims and even disputes like in project “C” the conflict between Employer and Contractor was developed due to unavailability of permit `and consequently the contract was suspended and ultimately terminated by Employer which led to Claims by Contractor and counter claims by Employer.
It is seen that poor financial management of the contractor also leads to claims and this fact is endorsed by Contractors themselves by ranking this cause very high on scale of frequency and severity, this result leads to an interesting yet critical finding that delays in payments by the Employer would certainly push the contractor to adopt extreme measures in order to get its payment and to keep its company alive; most of the times this cause leads to conflicts and ultimately become the cause of suspension of works by Contractor. So, this is to be understood by Employers that Contractors should be assisted in terms of timely financial compensation as their financial management is already poor and delays could lead to conflicts and disputes. Studying the project details, evaluating costs and assessing the risks properly also leads to reduction of conflicts and claims in implementation phase of the project, Cause “Improper technical study during bidding stage of the project” was ranked high on the scale of frequency and degree of severity which shows that this is a cause of considerable importance.
2. Types of Claims
Extra Work Claims and Change Claims were found to be mostly occurring according to overall response. However, according to Employer’s response extra work claims and change claims were found to be critical types against level of importance and Delay claims, change claims, delayed payment claims, and extra work claims were found to be critical types against level of importance based on consultant’s response. Similarly, according to contractor delay claims, extra work claims, changes claims, delayed payment claims and design error & omission claims are critical types of claims against level of importance. These results signify that extra work claims and change claims are quite important types of claims in the Building construction of Pakistan and if the claims need to be minimized then it could be thought that reduction in these two types of claims would certainly help in mitigating the negative impact of claims on the project performance.
3. Pathogenic Influence on the Causation of Claims
Pathogenic influence was determined by identifying the causation of claims from case studies and then finding out the reasons for these causations. Mostly it was found out that task, Practice and Circumstance were the three pathogens which were mostly responsible for claim causations; Convention and Organization pathogens were also found out to be present but mostly practice, task and Circumstance pathogens gave rise to claim causations. Also, it is worth to be noted that Circumstance pathogen is the critical pathogen as it leads to the development of the other pathogens.
Recommendations for the minimization of claims are as follows:
• Adequate planning of the project needs to be done by the Employer in terms of major and minor deliverables of the project, financing issues, availability of technical resources with the Employer to get the project executed effectively.
• Engaging experienced Design consultants for the Design development in such a way that errors and omissions don’t take place in the Design Documents and the Design produced is workable and practical. Also, preparation of Tender Documents should be prepared with no ambiguities and errors. Pre-Bid meetings must be arranged to clarify the reservations/misunderstanding of contractors if any.
• Procuring project is the most crucial aspect in terms of preventing or minimizing claims. Claims generate from the poor analysis and allocation of risks among stakeholders of the project. Considering the project complexity and financial constraints, projects should be procured with such innovative contractual schemes where risks are rightly distributed among all stakeholders. Unjust allocation of risks will ultimately result in conflicts, claims and disputes which need to be avoided for smooth completion of the project.
• Standard form of contracts should be used on projects to increase the understanding of the contractual provisions and contractual provision for “price Adjustment” should be drafted in such a way that inflation and price hike of materials and equipment could be adjusted without creating any conflicts and disputes.
• Cooperative and problem solving approach should be employed on a project which is called as partnering so that negative attitudes which could lead to conflicts and misunderstanding are minimized.
• Engaging third party to review the contractual documents prepared for bidding purposes. This would help in decreasing the errors and ambiguities in documents which would later help in smooth execution of project.
• Escrow-of- bid documents clause need to be mentioned in the contract agreement so as to avoid the opportunistic behavior of the contractors during the course of execution.
His thesis abstract is copied and posted.
Abstract
Construction industry is getting competitive and complex due to increasing demands of the Employers and global economic downturn. This complex environment leads to claims and dispute causation which is totally counterproductive for the project Success. Therefore, this study was conducted to identify the types, causes of claims against the frequency of occurrence, degree of severity and level of importance so that preventive and corrective measures could be taken accordingly. Causes and types of claims provide the information on the elements which are responsible for claim and dispute causation in general terms with no pin pointing detail. For that matter, Pathogenic influence on the causation of claims was determined in order to know the practices, tasks, circumstances and other pathogens which lead to claim and dispute causation.
Data analysis was done on the responses of 59 respondents belonging to all three target populations i.e. Employer, Consultant and Contractor. Causes and types of claims were ranked against frequency, severity and level of importance. Most important causes which have been revealed from this study are delayed payments by the Employer, competitive market forcing contractors to bid low leading to tight profit margins, ineffective planning and scheduling by Contractor, poor financial management of the Contractor, price hike of materials and increased rentals of plant & equipment, and improper technical study by the Contractor during bidding stage of the project. For types of claims, extra work claims and change claims found out to be the most critical. Case studies were conducted to figure out the pathogenic influence on claims causation; Practice, task and circumstance pathogens were found to be the main pathogens responsible for claim and dispute causation. Recommendations were developed specifically for Employers, Consultants and Contractors with the theme of preventing and avoiding claim causation.
Key Words: Claims, Pathogens, Building Construction, Causes of Claims, Types of Claims, Pathogens and Types of Claims.
Causes and types of claims provide an insight into the list of factors responsible for the development of claims but lack in identifying the underlying causes of claims. Love et al. (2010) also state that many of the causes of claims and disputes identified in many studies are not dissimilar in nature and moreover do not identify the underlying causes of disputes which are essential if the reduction in claim and dispute potential is required. Therefore, it is required to find the pathogenic influences on the causes of claims and disputes so that proactive measures could be aligned in organization rather than aligning reactive measures.
Mr. Hassan Ashraf made a research in order to reduce the dispute potential in project beforehand and to view causal factors behind disputes through holistic approach. The objectives of his study were to : (1) identify the critical causes and types of claims against frequency of occurrence, degree of severity and level of importance in the Building Projects of Pakistan; (2) identify the Pathogenic Influence on the causes of claims in Building Projects of Pakistan; and (3) To propose recommendations for the minimization of claims and disputes.
Conclusions
1. Causes of Claims
Competitive market conditions, delayed payments by the Employer, ineffective planning and scheduling by contractor, poor financial management of the contractor, price hike of materials, improper technical study by the contractor during the bidding stage of the project, are the causes which have been identified as critical causes of claims against level of importance based on overall response. The causes are mainly related to economic conditions of Pakistan which lead to less number of construction projects resulting into tight competition for project award, these tight competition forces contractors to bid low and then proceeds for claims practice at the later stages of the project. Contractor’s incompetence and market inflation also lead to claim causation due to poor quality of work and escalated costs of work respectively. It was also seen from both case study of project “A” and the response of survey that inadequate early planning of the project also lead to claim causation due to limited understanding of Employer about the project and what is really required out of the project.
Scope changes and design changes and variations are most of the times caused by inadequate early planning of the project by the Employer. It has also been seen that regulatory and execution delays in terms of delays in obtaining permits also lead to claims and even disputes like in project “C” the conflict between Employer and Contractor was developed due to unavailability of permit `and consequently the contract was suspended and ultimately terminated by Employer which led to Claims by Contractor and counter claims by Employer.
It is seen that poor financial management of the contractor also leads to claims and this fact is endorsed by Contractors themselves by ranking this cause very high on scale of frequency and severity, this result leads to an interesting yet critical finding that delays in payments by the Employer would certainly push the contractor to adopt extreme measures in order to get its payment and to keep its company alive; most of the times this cause leads to conflicts and ultimately become the cause of suspension of works by Contractor. So, this is to be understood by Employers that Contractors should be assisted in terms of timely financial compensation as their financial management is already poor and delays could lead to conflicts and disputes. Studying the project details, evaluating costs and assessing the risks properly also leads to reduction of conflicts and claims in implementation phase of the project, Cause “Improper technical study during bidding stage of the project” was ranked high on the scale of frequency and degree of severity which shows that this is a cause of considerable importance.
2. Types of Claims
Extra Work Claims and Change Claims were found to be mostly occurring according to overall response. However, according to Employer’s response extra work claims and change claims were found to be critical types against level of importance and Delay claims, change claims, delayed payment claims, and extra work claims were found to be critical types against level of importance based on consultant’s response. Similarly, according to contractor delay claims, extra work claims, changes claims, delayed payment claims and design error & omission claims are critical types of claims against level of importance. These results signify that extra work claims and change claims are quite important types of claims in the Building construction of Pakistan and if the claims need to be minimized then it could be thought that reduction in these two types of claims would certainly help in mitigating the negative impact of claims on the project performance.
3. Pathogenic Influence on the Causation of Claims
Pathogenic influence was determined by identifying the causation of claims from case studies and then finding out the reasons for these causations. Mostly it was found out that task, Practice and Circumstance were the three pathogens which were mostly responsible for claim causations; Convention and Organization pathogens were also found out to be present but mostly practice, task and Circumstance pathogens gave rise to claim causations. Also, it is worth to be noted that Circumstance pathogen is the critical pathogen as it leads to the development of the other pathogens.
Recommendations for the minimization of claims are as follows:
• Adequate planning of the project needs to be done by the Employer in terms of major and minor deliverables of the project, financing issues, availability of technical resources with the Employer to get the project executed effectively.
• Engaging experienced Design consultants for the Design development in such a way that errors and omissions don’t take place in the Design Documents and the Design produced is workable and practical. Also, preparation of Tender Documents should be prepared with no ambiguities and errors. Pre-Bid meetings must be arranged to clarify the reservations/misunderstanding of contractors if any.
• Procuring project is the most crucial aspect in terms of preventing or minimizing claims. Claims generate from the poor analysis and allocation of risks among stakeholders of the project. Considering the project complexity and financial constraints, projects should be procured with such innovative contractual schemes where risks are rightly distributed among all stakeholders. Unjust allocation of risks will ultimately result in conflicts, claims and disputes which need to be avoided for smooth completion of the project.
• Standard form of contracts should be used on projects to increase the understanding of the contractual provisions and contractual provision for “price Adjustment” should be drafted in such a way that inflation and price hike of materials and equipment could be adjusted without creating any conflicts and disputes.
• Cooperative and problem solving approach should be employed on a project which is called as partnering so that negative attitudes which could lead to conflicts and misunderstanding are minimized.
• Engaging third party to review the contractual documents prepared for bidding purposes. This would help in decreasing the errors and ambiguities in documents which would later help in smooth execution of project.
• Escrow-of- bid documents clause need to be mentioned in the contract agreement so as to avoid the opportunistic behavior of the contractors during the course of execution.
His thesis abstract is copied and posted.
Abstract
Construction industry is getting competitive and complex due to increasing demands of the Employers and global economic downturn. This complex environment leads to claims and dispute causation which is totally counterproductive for the project Success. Therefore, this study was conducted to identify the types, causes of claims against the frequency of occurrence, degree of severity and level of importance so that preventive and corrective measures could be taken accordingly. Causes and types of claims provide the information on the elements which are responsible for claim and dispute causation in general terms with no pin pointing detail. For that matter, Pathogenic influence on the causation of claims was determined in order to know the practices, tasks, circumstances and other pathogens which lead to claim and dispute causation.
Data analysis was done on the responses of 59 respondents belonging to all three target populations i.e. Employer, Consultant and Contractor. Causes and types of claims were ranked against frequency, severity and level of importance. Most important causes which have been revealed from this study are delayed payments by the Employer, competitive market forcing contractors to bid low leading to tight profit margins, ineffective planning and scheduling by Contractor, poor financial management of the Contractor, price hike of materials and increased rentals of plant & equipment, and improper technical study by the Contractor during bidding stage of the project. For types of claims, extra work claims and change claims found out to be the most critical. Case studies were conducted to figure out the pathogenic influence on claims causation; Practice, task and circumstance pathogens were found to be the main pathogens responsible for claim and dispute causation. Recommendations were developed specifically for Employers, Consultants and Contractors with the theme of preventing and avoiding claim causation.
Key Words: Claims, Pathogens, Building Construction, Causes of Claims, Types of Claims, Pathogens and Types of Claims.
Monday 30 May 2011
Strategic Management Implementation of Vietnamese Construction Organizations
Nowadays, more and more foreign companies invest into developing countries which have a lot of potentialities and Vietnam is one of them. Besides that, Vietnam’s participation in the World Trade Organization (WTO) in November 2006 also brings numerous opportunities for domestic and foreign investors.
Therefore, Vietnam construction industry in generally speaking or Vietnam’s property market is facing with many opportunities and is considered long term potential market for both domestic and foreign investors. If Vietnam has strategic planning, goal development, good vision, and mission or knows what the steps should be executed for the future market, chance of success is a seeable thing. On the other hand, strategic planning and implementation management is an important key which will lead to success.
But in Vietnam, strategic management receives less attention. Some companies or organizations think that the future can be depended by many factors which related to God. Besides that, Vietnam’s investment climate is change slowly which affected to investment abilities of investors. According to Haley (2000), that is the barriers prompted many investors to leave.
Mr. Nguyen Tuan Tu made a case study which major objective was to find ways to improve the Vietnamese construction companies in related to planning and implementing in strategic management (focus on implemented in strategic management). To support his major objective, three sub-objectives were needed to accomplished:
• To study about strategic planning development and implementation of companies from the top to operational structure in public and private contractors.
• To analyze the critical problems in strategic management implementation in public and private contractors.
• To conclusion and propose recommendations to improve the implementation in strategic management applicable for Vietnamese construction organizations.
Conclusion
To study about strategic planning development and implementation of companies from the top to operational structure in public and private contractors
Strategic planning development and implementation of public and private contractors were defined following vision statement application, organizational structure, leadership style, organizational culture and project management style. The results indicated that there were many significant differences between two groups in strategic management implementation and T-test was used to analyze the mean of those significant differences.
Specifically, public contractors have mechanistic system, task oriented leadership style with focusing on rules and procedures while private contractors have organic system, relations-oriented leadership style focusing on relationship between leader and members, communication among each members. Besides that, public contractors pay attention on hierarchy culture because of stability and performance with efficient operation but private contractors are different. Competitiveness and productivity were paid attention so marketing culture is suitable to private contractors.
To analyze the critical problems in strategic management implementation in public and private contractors
From the results of objective 1 and respondents’ experience in data collection, five critical problems which affect to strategic management implementation in public and private contractors were discussed. There were four critical problems having significant difference between two groups such as: strategic manager is not enough managerial skill to monitor implementation strategies, organization has rigid structure following rules and procedures so a result control mechanism may be ineffective, networking structure in organization is limited in each department and financial risk affects to strategy implementation. The mean of public contractors is always greater than private contractors; it means public contractors agreed with those problems appearing in their organization. To solve those problems, suggestions or recommendations can be delivered as follows; top management and supervisor team should involve to implementation in the organization. Besides that, top management or supervisor team also pay attention on networking which create good relationship between each member and to reduce the financial risk, top management must be careful in analyzing and allocating of budget.
Generally speaking, the main reason which created problems in each contractor is separately characteristics of organizational structure and leadership style. Or we can say that, organizational structure and leadership style will affect to culture in the organization. However, culture also plays an important role in establishing and solving problems in the organization. So to overcome those problems, management should participate not only in planning but also in implementation.
To propose recommendations to improve the implementation in strategic management applicable for Vietnamese construction organizations
The proposed framework of strategic management implementation has been suggested in figure below. First, strategic management implementation should be started with Leadership and commitment by top management combined with organizational structure. Work environment in the organization will be defined by three groups (work tasks, goals, procedures; work group behaviors and manager behaviors). Second, the process can be continuously done by effect of Leadership, commitment and organizational structure to organizational culture. From that point, organizational culture will affect to internal environment. In other hand, people attitude and behavior are main factors which affect to outcomes of organization. Finally, audit and evaluation are the keys to check whether strategic management has been implemented effectively in order to improve the organization and fulfilled existing gaps.
His thesis abstract is copied and posted.
Abstract
To gain and maintain a contractor’s competitive advantage is not easy as it depended on a large number of factors. In other words, identification of problems in strategic management implementation allows one to reduce the vast numbers of obstacles to bring back success for the organization. Based on literature review and expert’s experience, this study describes how Vietnamese public and private contractors implemented strategic management in their organization.
The study was surveyed in two big cities in southern of Vietnam - Ho Chi Minh and Can Tho city. Strategic management implementation can be delivered into framework, namely, leadership style, organizational structure, organizational culture and project management style. The result in this study indicated that there was significant difference between two groups contractor about strategic management implementation. From that point, it provides a vehicle for guiding a contractor in managing its organization in order to improve competitive advantage which helps them to survival in new market. Additionally, this study also provides insights into the management of competitiveness for contractors in operation of Vietnamese construction organization.
Keywords: Construction, Leadership style, Organizational structure, Organizational culture, Project management style, Strategic management, Implementation
Therefore, Vietnam construction industry in generally speaking or Vietnam’s property market is facing with many opportunities and is considered long term potential market for both domestic and foreign investors. If Vietnam has strategic planning, goal development, good vision, and mission or knows what the steps should be executed for the future market, chance of success is a seeable thing. On the other hand, strategic planning and implementation management is an important key which will lead to success.
But in Vietnam, strategic management receives less attention. Some companies or organizations think that the future can be depended by many factors which related to God. Besides that, Vietnam’s investment climate is change slowly which affected to investment abilities of investors. According to Haley (2000), that is the barriers prompted many investors to leave.
Mr. Nguyen Tuan Tu made a case study which major objective was to find ways to improve the Vietnamese construction companies in related to planning and implementing in strategic management (focus on implemented in strategic management). To support his major objective, three sub-objectives were needed to accomplished:
• To study about strategic planning development and implementation of companies from the top to operational structure in public and private contractors.
• To analyze the critical problems in strategic management implementation in public and private contractors.
• To conclusion and propose recommendations to improve the implementation in strategic management applicable for Vietnamese construction organizations.
Conclusion
To study about strategic planning development and implementation of companies from the top to operational structure in public and private contractors
Strategic planning development and implementation of public and private contractors were defined following vision statement application, organizational structure, leadership style, organizational culture and project management style. The results indicated that there were many significant differences between two groups in strategic management implementation and T-test was used to analyze the mean of those significant differences.
Specifically, public contractors have mechanistic system, task oriented leadership style with focusing on rules and procedures while private contractors have organic system, relations-oriented leadership style focusing on relationship between leader and members, communication among each members. Besides that, public contractors pay attention on hierarchy culture because of stability and performance with efficient operation but private contractors are different. Competitiveness and productivity were paid attention so marketing culture is suitable to private contractors.
To analyze the critical problems in strategic management implementation in public and private contractors
From the results of objective 1 and respondents’ experience in data collection, five critical problems which affect to strategic management implementation in public and private contractors were discussed. There were four critical problems having significant difference between two groups such as: strategic manager is not enough managerial skill to monitor implementation strategies, organization has rigid structure following rules and procedures so a result control mechanism may be ineffective, networking structure in organization is limited in each department and financial risk affects to strategy implementation. The mean of public contractors is always greater than private contractors; it means public contractors agreed with those problems appearing in their organization. To solve those problems, suggestions or recommendations can be delivered as follows; top management and supervisor team should involve to implementation in the organization. Besides that, top management or supervisor team also pay attention on networking which create good relationship between each member and to reduce the financial risk, top management must be careful in analyzing and allocating of budget.
Generally speaking, the main reason which created problems in each contractor is separately characteristics of organizational structure and leadership style. Or we can say that, organizational structure and leadership style will affect to culture in the organization. However, culture also plays an important role in establishing and solving problems in the organization. So to overcome those problems, management should participate not only in planning but also in implementation.
To propose recommendations to improve the implementation in strategic management applicable for Vietnamese construction organizations
The proposed framework of strategic management implementation has been suggested in figure below. First, strategic management implementation should be started with Leadership and commitment by top management combined with organizational structure. Work environment in the organization will be defined by three groups (work tasks, goals, procedures; work group behaviors and manager behaviors). Second, the process can be continuously done by effect of Leadership, commitment and organizational structure to organizational culture. From that point, organizational culture will affect to internal environment. In other hand, people attitude and behavior are main factors which affect to outcomes of organization. Finally, audit and evaluation are the keys to check whether strategic management has been implemented effectively in order to improve the organization and fulfilled existing gaps.
His thesis abstract is copied and posted.
Abstract
To gain and maintain a contractor’s competitive advantage is not easy as it depended on a large number of factors. In other words, identification of problems in strategic management implementation allows one to reduce the vast numbers of obstacles to bring back success for the organization. Based on literature review and expert’s experience, this study describes how Vietnamese public and private contractors implemented strategic management in their organization.
The study was surveyed in two big cities in southern of Vietnam - Ho Chi Minh and Can Tho city. Strategic management implementation can be delivered into framework, namely, leadership style, organizational structure, organizational culture and project management style. The result in this study indicated that there was significant difference between two groups contractor about strategic management implementation. From that point, it provides a vehicle for guiding a contractor in managing its organization in order to improve competitive advantage which helps them to survival in new market. Additionally, this study also provides insights into the management of competitiveness for contractors in operation of Vietnamese construction organization.
Keywords: Construction, Leadership style, Organizational structure, Organizational culture, Project management style, Strategic management, Implementation
Friday 27 May 2011
Quality Management System for Different Construction Project Strategies
Construction industry is a big business which needs a lot of capital investment. Each project has sophisticated mechanism which composed of any elements to manage. Therefore, head offices should have effective strategy to boost the organization to grow up. Moreover, quality of the company should follow strategy to enhance the managerial power of the organization.
Quality management is not only helping the organizations to grow to the market’s higher level but also increase creditability of the company to encourage a lot of customers. Without quality management, the organizations will have difficulty to improve, because if the organization manages to build the project without any quality standards, then they can get many claims or reworks. Therefore, quality improvement is one of the success factor that lead to the project successful.
Juran has identified the hidden costs of poor quality as represented in Figure below. Many organizations are only concerned to a few cost of poor quality such as reprocessing and rejects, but in reality there are many costs of poor quality such as delays, and damaged goods.
Therefore, quality management is important to implement in the organization to ensure the quality of products or services. Moreover, it also can be reduce cost and time that can lead the organization to be loss by increasing their quality level.
Hidden costs of poor quality Juran (1993, P.23)
Mr. Kittawat Sukosi made a research to study the project strategy and quality management. In order to accomplish this major objective, three majors were needed to achieved:
1. To study quality activities in the differences of project strategy of construction sites in Thailand.
2. To study how construction sites measure quality performance in the differences of project strategy.
Conclusion
Quality management is important for conducting premium performance of construction services.
Nowadays, quality management has been used for many construction companies in Thailand. In order to study about the relationship between project organization and quality management, two objectives was established. The first objective is “To study quality activities in the differences of project strategy of construction sites in Thailand”. This objective was established for study the mechanism of quality management activity in differences of strategy. The second objective is
“To study how construction sites measure quality performance in the differences of project strategy”. The purpose of this objective is to study about measurement of quality performance in differences of strategy.
Quality Activity
The project which established differentiation strategy is required to conduct ISO 9000 series, especially ISO 9001:2008 (newest version), while cost-leadership strategy is not require ISO standard. Quality manual report is just only established for differentiation project. Cost leadership strategy is focused on zero defects, while differentiation strategy has varied aspects such as safety and environment. QMR and quality manager is in-charge only differentiation project.
There are some activities which implemented for all cases such as quality inspection and testing, internal quality audit, equipment calibration, and corrective and preventive action. Environmental inspection and testing is implemented for some differentiation strategy. All cases are conducting safety management, but only differentiation project were implemented based on OHSHA 18000. Quality improvement program are performed for both strategies. However, the improvement relies on the quality activity that implemented and keeps record for analysis.
Quality Performance
In order to measure quality management, quality performance is an indicator of quality measurement. Cost-leadership strategy measures cost reduction and amount of rework in order to reach zero defect objectives. Customer satisfaction is implanted for both strategies, however, the factors of customer satisfaction checklist is differences. Internal audit is implemented in every case. The audit report can be used as a quality performance; again, the issue of internal audit of each project is different. Non-conformance report is performed only in differentiation project in order to improve work procedure by using this report. All cases have performed safety report, however, only differentiation project will raised safety to be a major issue in quality management. Moreover, environmental report is implemented in the differentiation project (only
on case study).
Recommendation for Further Study
This study is completed to discover the familiarities and differences of quality activity and quality performance. As a result, there is one case which they implement all of quality management system (QMS), safety management system, and environmental management system.
Interestingly, this approach can be implemented as an integrated management system. Therefore, the further study can be about the advantage and disadvantage of integrated management system.
His thesis abstract is copied and posted.
Abstract
The research aims to study relationship between project strategy and quality management. The scope of study was limited in Thailand. Qualitative method was used as a research methodology in order to accomplish the research objectives. Five cases in Thailand were selected in this study.
All of data in this study was given by the interviewees. Cross case analysis was implemented in order to find out the familiars and differences of quality activity and quality performance in each case study.
The result of the study was divided into two parts. The first part is quality activity in differences strategy. Cost-leadership strategy is performed quality management, but ISO 9001 was not established as a quality management system. However, quality assurance (QA) and quality control (QC) are implemented such as quality inspection procedure, internal quality audit, quality inspection and testing, and quality documentation system. Construction project which used differentiation strategy is established ISO 9001, especially 2008 version. Safety management is performed in order to reduce accident which can lead to enhance quality performance. The quality activities are based on ISO 9001:2008 such as combine audit, safety inspection, quality inspection and testing, environmental inspection and testing, control of non-conformance work, and quality documentation system.
Quality performance is the second result. Cost-leadership strategy is using cost of rework and number of defected nonconformities work in order to measure quality performance. Audit result is also the tool to evaluate quality performance throughout the entire project. Audit report, nonconformance work report, safety report, and environmental report are as the indicator of measurement of quality performance which the project which used differentiation strategy is using. Moreover, customer satisfaction is one of the quality performance indicators which both of strategies is evaluating. However, the measurement approach of customer satisfaction of each strategy is different.
Quality management is not only helping the organizations to grow to the market’s higher level but also increase creditability of the company to encourage a lot of customers. Without quality management, the organizations will have difficulty to improve, because if the organization manages to build the project without any quality standards, then they can get many claims or reworks. Therefore, quality improvement is one of the success factor that lead to the project successful.
Juran has identified the hidden costs of poor quality as represented in Figure below. Many organizations are only concerned to a few cost of poor quality such as reprocessing and rejects, but in reality there are many costs of poor quality such as delays, and damaged goods.
Therefore, quality management is important to implement in the organization to ensure the quality of products or services. Moreover, it also can be reduce cost and time that can lead the organization to be loss by increasing their quality level.
Hidden costs of poor quality Juran (1993, P.23)Mr. Kittawat Sukosi made a research to study the project strategy and quality management. In order to accomplish this major objective, three majors were needed to achieved:
1. To study quality activities in the differences of project strategy of construction sites in Thailand.
2. To study how construction sites measure quality performance in the differences of project strategy.
Conclusion
Quality management is important for conducting premium performance of construction services.
Nowadays, quality management has been used for many construction companies in Thailand. In order to study about the relationship between project organization and quality management, two objectives was established. The first objective is “To study quality activities in the differences of project strategy of construction sites in Thailand”. This objective was established for study the mechanism of quality management activity in differences of strategy. The second objective is
“To study how construction sites measure quality performance in the differences of project strategy”. The purpose of this objective is to study about measurement of quality performance in differences of strategy.
Quality Activity
The project which established differentiation strategy is required to conduct ISO 9000 series, especially ISO 9001:2008 (newest version), while cost-leadership strategy is not require ISO standard. Quality manual report is just only established for differentiation project. Cost leadership strategy is focused on zero defects, while differentiation strategy has varied aspects such as safety and environment. QMR and quality manager is in-charge only differentiation project.
There are some activities which implemented for all cases such as quality inspection and testing, internal quality audit, equipment calibration, and corrective and preventive action. Environmental inspection and testing is implemented for some differentiation strategy. All cases are conducting safety management, but only differentiation project were implemented based on OHSHA 18000. Quality improvement program are performed for both strategies. However, the improvement relies on the quality activity that implemented and keeps record for analysis.
Quality Performance
In order to measure quality management, quality performance is an indicator of quality measurement. Cost-leadership strategy measures cost reduction and amount of rework in order to reach zero defect objectives. Customer satisfaction is implanted for both strategies, however, the factors of customer satisfaction checklist is differences. Internal audit is implemented in every case. The audit report can be used as a quality performance; again, the issue of internal audit of each project is different. Non-conformance report is performed only in differentiation project in order to improve work procedure by using this report. All cases have performed safety report, however, only differentiation project will raised safety to be a major issue in quality management. Moreover, environmental report is implemented in the differentiation project (only
on case study).
Recommendation for Further Study
This study is completed to discover the familiarities and differences of quality activity and quality performance. As a result, there is one case which they implement all of quality management system (QMS), safety management system, and environmental management system.
Interestingly, this approach can be implemented as an integrated management system. Therefore, the further study can be about the advantage and disadvantage of integrated management system.
His thesis abstract is copied and posted.
Abstract
The research aims to study relationship between project strategy and quality management. The scope of study was limited in Thailand. Qualitative method was used as a research methodology in order to accomplish the research objectives. Five cases in Thailand were selected in this study.
All of data in this study was given by the interviewees. Cross case analysis was implemented in order to find out the familiars and differences of quality activity and quality performance in each case study.
The result of the study was divided into two parts. The first part is quality activity in differences strategy. Cost-leadership strategy is performed quality management, but ISO 9001 was not established as a quality management system. However, quality assurance (QA) and quality control (QC) are implemented such as quality inspection procedure, internal quality audit, quality inspection and testing, and quality documentation system. Construction project which used differentiation strategy is established ISO 9001, especially 2008 version. Safety management is performed in order to reduce accident which can lead to enhance quality performance. The quality activities are based on ISO 9001:2008 such as combine audit, safety inspection, quality inspection and testing, environmental inspection and testing, control of non-conformance work, and quality documentation system.
Quality performance is the second result. Cost-leadership strategy is using cost of rework and number of defected nonconformities work in order to measure quality performance. Audit result is also the tool to evaluate quality performance throughout the entire project. Audit report, nonconformance work report, safety report, and environmental report are as the indicator of measurement of quality performance which the project which used differentiation strategy is using. Moreover, customer satisfaction is one of the quality performance indicators which both of strategies is evaluating. However, the measurement approach of customer satisfaction of each strategy is different.
Wednesday 25 May 2011
The On-Site Behavior of a Construction Project Team during the Implementation of the Planning and Quality System
Changing the procedures and process of the traditional system to the new system involves so many problems.
First, staff members of the contractor have many questions with the new system, but they would not want to find the answers.
Second, the payment of the subcontractor is often delayed and uncorrected in accordance with B.O.Q even though the system has applied the earned value concept.
Third, the traditional on-site work processes have not matched with new system because lack of documentation support on-site.
Fourth, many staff members do not understand how to perform their work in better ways; furthermore, some of them are reluctant to change and think that this is a burden.
Fifth, top management needs to review the accurate information but the project site always covers the truth.
Sixth, sharing the values and norms from existing employees to new employees are lacking and so on.
These problems arise from the lack of knowledge about the benefits of the program and what is the process flow from top to bottom. In addition, due to reluctance of some staff to change and play with the new approach, leaders of the team need to play the crucial role to unite all employees in the purpose of motivation and creating the commitment. As a result, the acknowledgment of which process systems are changed in functions of the project site, and who are in the important position to make the change occurring during the new system implementation in accordance with change management concept are unavoidable.
Mr. Janeyut Naiyarat made a case study which primary purpose was to investigate and find out how construction project teams to behave during the implementation of the new system. To achieve the main objective, the following sub-objectives were needed:
To investigate the on-site behavior of project teams while the implementation of planning and quality system
To propose the on-site behavior of project teams affecting the success of the implementation of planning and quality system
Conclusion
The on-site behavior of the construction project teams
Organizational Support - Based on the result of data analysis, the organization provided full support from top managers. There is the specific policy for Planning and Quality system. For staff, the new operational procedures are established along with Planning and Quality form in each project. To transfer know-how to all, the new operational form is demonstrated by executives on-site. Moreover, to ensure the continuous use of Planning and Quality system, construction projects are visited periodically by executives and audit team. Finally, the incentive and rewards are given to appropriate staff accordingly.
Top level (Project Manager, Project Engineer, Site Manager) – Results showed that most of the staff in these levels comply with the policy. The enforcement of the new policy is adopted by top level as well as the specific procedure is established regarding with natures of the project.
Middle level (Senior Site Engineer, Senior Office Engineer) – Result showed that all staff are enforced to comply with the policy by the top level. However, while most of them seem to be forced to participate and use Planning and Quality form, senior site engineer as a key leader in the fourth case study perceiving the opportunity to grow will to lead his project to success in the new system implementation. For others, they all emphasize on the progress of work according to their leaders.
Operational level (Site Engineer, Office Engineer) - Most of site engineers are new graduates and lack of experience, so it depends on the leaders to provide any activities to facilitate site engineers. The behavior of site engineer can reflect the understanding of leaders and the group climate of each case study. In case study I and IV, most of them realize about the benefits by using Planning and Quality form and will to collaborate with all activities and use the form continuously in order to improve individual and project performance. On the other hand, staffs in other case studies reluctant to use the operational form because of lack of understanding about the benefits and lack of facilitating from their leaders. However, to submit the form with the consideration for passing the probation, they make the illusion by trying to fill in the form. Therefore, there are both case study I and IV can success in the implementation of planning and quality system.
The behavior affecting the success of the implementation of the new system
Organizational Support - Based on the result of data analysis, the organization provided full support from top managers. There is the specific policy for Planning and Quality system. For staff, the new operational procedures are established along with Planning and Quality form in each project. To transfer know-how to all, the new operational form is demonstrated by executives on-site. Moreover, to ensure the continuous use of Planning and Quality system, construction projects are visited periodically by executives and audit team. Finally, the incentive and rewards are given to appropriate staff accordingly having good performance.
Top level (Project Manager, Project Engineer, Site Manager) - Staff in this level so as the leader of the team have to comply with the policy. The top level is necessary to participate in entire processes in order to show the serious emphasis on the new system and get staff involvement. Other responsibility of top level is to modify the form regarding with the nature of the project for operational level. Also, the tasks should be assigned effectively to subordinates by top level in order to enforce indirectly to use the form and to get understanding. Moreover, to ensure that staff is using the form constantly, monitoring closely at the early stage and periodically at the next stage has to be performed. Importantly, to develop the team during the implementation of the new system, the arrangements of formal and informal activities are strictly concerned.
Middle level (Senior Site Engineer, Senior Office Engineer) – Executives and top level has to comply with the policy. They have to participate and have to use Planning and Quality Form, while the senior site engineer should cooperate between top level and operational level and to lead the project to success in the new system implementation. In addition, the modified documentation designed by agreeing with all staffs in the team should be developed by senior site engineer. Moreover, to get staff using the form continuously, closely monitoring should be adopted in the middle level.
Operational level (Site Engineer, Office Engineer) - Site engineer should listen and comply with the policy. Participating in all activities to be a part of a team and getting understanding the new system. To understand the benefits and to use the form effectively, site engineers should try out using it and learn from mistakes. In addition, asking questions while having problems and proposing idea while finding the better ways are necessary for site engineers. Importantly, to improve the performance of the project, using the form stably and reporting the progress realistically are essential to detect the problems on-site. The weakness of the form can identify in order to amend to be practical and conformant with the uniqueness of each project.
His report summary is shown below.
His thesis abstract is copied and posted.
Abstract
In construction company especially building sector, there are huge amount of investment by developer while economics expansion; as well, intelligently spending the budget with refined contractor must be concerned. It is the most important for building contractors to improve or change their operational system in order to compete with others. The sample contractor in Thailand is implementing the new system so-called planning and quality system. The purpose of this system is to facilitate staffs on-site via the tools such as the two-week schedule, the cost control plan and the quality checklist. It affected directly to site engineer who normally work with less emphasizing on documentation. To comply with the new policy, staffs in this contractor have to change their working style. Therefore, a change management process is necessary to adopt because the change always has problems, for example, reluctant to change due to lack of understanding and knowledge, lack of sharing information and fear of losing control and overload of current tasks and responsibilities. Moreover, the practical behavior of construction project team during the new system implementation is not well known and the existing literature is very rare in Thailand.
In order to know how to behave of construction project teams during implementing the new system, the objective of this research are established to 1) To investigate the practical behavior of project teams while the implementation of planning and quality system, 2) To propose the behavior of project teams affecting the success of the implementation of planning and quality system.
The data was collected via interview in four condominium projects implementing the new system located in Bangkok and Nonthaburi. The interviewees have classified into three groups of each project. The first group is the top management level that comprises of project manager, project engineer and site manager. The second group is the middle management level that comprises of senior site engineer and senior office engineer. The last group is the operational level having a responsibility to use planning and quality control form that comprises of site engineer and office engineer. The following section is to present the finding of this study.
First, staff members of the contractor have many questions with the new system, but they would not want to find the answers.
Second, the payment of the subcontractor is often delayed and uncorrected in accordance with B.O.Q even though the system has applied the earned value concept.
Third, the traditional on-site work processes have not matched with new system because lack of documentation support on-site.
Fourth, many staff members do not understand how to perform their work in better ways; furthermore, some of them are reluctant to change and think that this is a burden.
Fifth, top management needs to review the accurate information but the project site always covers the truth.
Sixth, sharing the values and norms from existing employees to new employees are lacking and so on.
These problems arise from the lack of knowledge about the benefits of the program and what is the process flow from top to bottom. In addition, due to reluctance of some staff to change and play with the new approach, leaders of the team need to play the crucial role to unite all employees in the purpose of motivation and creating the commitment. As a result, the acknowledgment of which process systems are changed in functions of the project site, and who are in the important position to make the change occurring during the new system implementation in accordance with change management concept are unavoidable.
Mr. Janeyut Naiyarat made a case study which primary purpose was to investigate and find out how construction project teams to behave during the implementation of the new system. To achieve the main objective, the following sub-objectives were needed:
To investigate the on-site behavior of project teams while the implementation of planning and quality system
To propose the on-site behavior of project teams affecting the success of the implementation of planning and quality system
Conclusion
The on-site behavior of the construction project teams
Organizational Support - Based on the result of data analysis, the organization provided full support from top managers. There is the specific policy for Planning and Quality system. For staff, the new operational procedures are established along with Planning and Quality form in each project. To transfer know-how to all, the new operational form is demonstrated by executives on-site. Moreover, to ensure the continuous use of Planning and Quality system, construction projects are visited periodically by executives and audit team. Finally, the incentive and rewards are given to appropriate staff accordingly.
Top level (Project Manager, Project Engineer, Site Manager) – Results showed that most of the staff in these levels comply with the policy. The enforcement of the new policy is adopted by top level as well as the specific procedure is established regarding with natures of the project.
Middle level (Senior Site Engineer, Senior Office Engineer) – Result showed that all staff are enforced to comply with the policy by the top level. However, while most of them seem to be forced to participate and use Planning and Quality form, senior site engineer as a key leader in the fourth case study perceiving the opportunity to grow will to lead his project to success in the new system implementation. For others, they all emphasize on the progress of work according to their leaders.
Operational level (Site Engineer, Office Engineer) - Most of site engineers are new graduates and lack of experience, so it depends on the leaders to provide any activities to facilitate site engineers. The behavior of site engineer can reflect the understanding of leaders and the group climate of each case study. In case study I and IV, most of them realize about the benefits by using Planning and Quality form and will to collaborate with all activities and use the form continuously in order to improve individual and project performance. On the other hand, staffs in other case studies reluctant to use the operational form because of lack of understanding about the benefits and lack of facilitating from their leaders. However, to submit the form with the consideration for passing the probation, they make the illusion by trying to fill in the form. Therefore, there are both case study I and IV can success in the implementation of planning and quality system.
The behavior affecting the success of the implementation of the new system
Organizational Support - Based on the result of data analysis, the organization provided full support from top managers. There is the specific policy for Planning and Quality system. For staff, the new operational procedures are established along with Planning and Quality form in each project. To transfer know-how to all, the new operational form is demonstrated by executives on-site. Moreover, to ensure the continuous use of Planning and Quality system, construction projects are visited periodically by executives and audit team. Finally, the incentive and rewards are given to appropriate staff accordingly having good performance.
Top level (Project Manager, Project Engineer, Site Manager) - Staff in this level so as the leader of the team have to comply with the policy. The top level is necessary to participate in entire processes in order to show the serious emphasis on the new system and get staff involvement. Other responsibility of top level is to modify the form regarding with the nature of the project for operational level. Also, the tasks should be assigned effectively to subordinates by top level in order to enforce indirectly to use the form and to get understanding. Moreover, to ensure that staff is using the form constantly, monitoring closely at the early stage and periodically at the next stage has to be performed. Importantly, to develop the team during the implementation of the new system, the arrangements of formal and informal activities are strictly concerned.
Middle level (Senior Site Engineer, Senior Office Engineer) – Executives and top level has to comply with the policy. They have to participate and have to use Planning and Quality Form, while the senior site engineer should cooperate between top level and operational level and to lead the project to success in the new system implementation. In addition, the modified documentation designed by agreeing with all staffs in the team should be developed by senior site engineer. Moreover, to get staff using the form continuously, closely monitoring should be adopted in the middle level.
Operational level (Site Engineer, Office Engineer) - Site engineer should listen and comply with the policy. Participating in all activities to be a part of a team and getting understanding the new system. To understand the benefits and to use the form effectively, site engineers should try out using it and learn from mistakes. In addition, asking questions while having problems and proposing idea while finding the better ways are necessary for site engineers. Importantly, to improve the performance of the project, using the form stably and reporting the progress realistically are essential to detect the problems on-site. The weakness of the form can identify in order to amend to be practical and conformant with the uniqueness of each project.
His report summary is shown below.
His thesis abstract is copied and posted.
Abstract
In construction company especially building sector, there are huge amount of investment by developer while economics expansion; as well, intelligently spending the budget with refined contractor must be concerned. It is the most important for building contractors to improve or change their operational system in order to compete with others. The sample contractor in Thailand is implementing the new system so-called planning and quality system. The purpose of this system is to facilitate staffs on-site via the tools such as the two-week schedule, the cost control plan and the quality checklist. It affected directly to site engineer who normally work with less emphasizing on documentation. To comply with the new policy, staffs in this contractor have to change their working style. Therefore, a change management process is necessary to adopt because the change always has problems, for example, reluctant to change due to lack of understanding and knowledge, lack of sharing information and fear of losing control and overload of current tasks and responsibilities. Moreover, the practical behavior of construction project team during the new system implementation is not well known and the existing literature is very rare in Thailand.
In order to know how to behave of construction project teams during implementing the new system, the objective of this research are established to 1) To investigate the practical behavior of project teams while the implementation of planning and quality system, 2) To propose the behavior of project teams affecting the success of the implementation of planning and quality system.
The data was collected via interview in four condominium projects implementing the new system located in Bangkok and Nonthaburi. The interviewees have classified into three groups of each project. The first group is the top management level that comprises of project manager, project engineer and site manager. The second group is the middle management level that comprises of senior site engineer and senior office engineer. The last group is the operational level having a responsibility to use planning and quality control form that comprises of site engineer and office engineer. The following section is to present the finding of this study.
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