The common problems in any urban rail projects are procurement which involves huge investment cost and risks treatment in construction and operation of long project life cycle.
HCMC Urban Railway Construction Project is the first Urban Rail Project in Vietnam and there is no good project model available in Vietnam in terms of big scale underground development, urban rail system, legal framework as well as no rail operator.
In addition, in completing this project, big capital is needed and inviting sponsor or investor involves lots of potential risks in Urban Rail PPP project since there is no law and regulation on PPP investment. Therefore, there is no good contractual sample in PPP opportunity in Urban Railway Project. The contractual risk management of concessionaire for Urban Rail in Vietnam shall be considered for the future, because the SPV or Concessionaire will face unforeseeable risks during construction and operation in its Project Life Cycle.
Mr. Gentaku Goto made a case on the Urban Railway Development Applied in Vietnam. His objectives were to: (1) study how to identify, provide treatment Major Risks to be occurred in Project Life Cycle of Urban Railway Project especially in Construction and Operation Phase; (2) study effective Contractual Risk Management in Public Private Partnership of Railway Development Project; and (3) study Key Success Factors and Risks of Urban Railway PPP Project in Vietnam and provide possible solution.
Conclusion
Through literature review and Case study, there are several findings which are useful for Risk Management Plan in the PLC of Urban Rail PPP. Conclusion and findings are summarized below.
Objective # 1
Critical Risks in the PLC of Urban Railway Investment are:
1. There is a tendency that risks can be identified in plan stage of the RMP, while system requirement shall be clarified in this stage. In case study, through preparation of the preliminary design and tender document and basic cost estimate, major risks are identified.
2. It seems that risks are allocated in the contract for its treatment (risk mitigation, avoidance, transfer, allocation, etc.,), while system requirement shall be apportioned into the contract as legal document.
3. Contract document is not a perfect RMP tool, but just a tentative basis of continuous risk management plan. During execution stage, uncertainty in the system requirement shall be continuously and verified to meet the requirement and for further risk treatment.
4. Upon Completion of Execution, System Acceptance shall be made in order to meet the System Requirement. After all uncertainties in the System Requirement are solved, such System is accepted and validated for commencement of the Railway Operation.
5. Risk management in the PLC shall focus on 5W + 3H e.g. When in the PLC stage? Where is the Scope of Work? What kinds of risks are identified? How much is the impact? How often it likely to occur? How much is the severity? To which way such risk will affect to other, and how to treat such Risk?
6. Legal and Political risks always interfere with the project progress in all stages in the PLC, in terms of feasibility of the investment, financial and taxation, construction quality, environment, traffic issues.
7. Project cost increases to VND 47 trillion due to change of demand, design requirement, safety improvement etc. It requires the approval by the National Assembly, one of the biggest Legal Risks, causing over 1 year delay of the project progress. Such delay will cause further cost increase.
8. The major reasons of the cost increase comprises of exchange fluctuation risk (46%), 30% demand increase risk (31%), allocation of future risk in contingency and escalation (29%), price increase for material, labor and equipment (20%), improvement of safety, reliability and convenience (19%).
9. Exchange rate fluctuation is the biggest risk and is commonly occurred in project investment in Vietnam, which should be avoided and eliminated by financer, because such risk factor affects cost increase of VND 12.0 trillion out of total cost estimate of VND47.0 trillion. If this risk is successfully eliminated, National Assembly approval may not need to wait because VND 35.0 trillion is the border line in terms of Law and Regulation (Resolution 49). JICA, as financer of mega project, may be required for big decision making for granting exchange rate fluctuation amount, for risk avoidance purpose, with some barter from Vietnamese side.
10. Demand increases by 30% risk affects scale of facility and equipment in preliminary design causing the project cost increase such as necessity of bigger station box in both underground and elevated, more rolling stocks etc.
11. Contingency rate is increased for change order by 4% and for escalation by 25% in order to allocate risk factor in the future. Due to the risk evaluation in the preliminary design stage and tender stage, the general consultants evaluate more uncertainty in the future of the PLC.
12. Other than the above mentioned major influenced factors, price increase of oil and construction materials, and improvement of safety, reliability and convenience requirement also affect cost increase by 40%. Those kinds of risk factors are not able to be avoided due to requirement by the employer, financer and customer in the future.
13. Technical risks such as design error risk, system integration risk, maintenance risk are not critical because it can be managed by continuous risk management and verification.
14. Demand forecast for revenue calculation shall be less estimated rather than carefully estimated, because demand forecast were overestimated on the average by 65% for major urban rail project investments overseas. It will affect decision making on investment risk treatment, so more conservative investment and cash flow planning is required.
15. At last, establishment of SPV is also critical risk for HCMC City, because this is first urban rail operator and maintenance service provider, on behalf of host government.
For objective number 2:
1) More public means the government body has empowerment for owing assets, technology, know-how, man power, using tax fund, in more traditional and closed (monopoly) market.
2) More private means the Special Purpose Vehicle (SPV), as a private entity, is empowered for owning assets, technology, know-how, man-power, using private fund, in more flexible and competitive market.
3) Eight (8) major responsibility dimensions of PPP options (Ownership, Competitiveness, Strategy, Organization Structure, Personnel Staffing, Funding, Know-How, and Public Image) shall be evaluated for contracting out. If successfully utilize private technology, know-how, funding in competitive market, the project cost will be reduced and money for value will be achieved.
4) Through the stakeholder analysis, it is important that contractual relationship between major party as SPV and the other party shall be analyzed and major risks behind the relationship between the SPV and others are identified. To reduce uncertainty, it should be clearly defined scope of work, responsibility and obligation of parties, time frame, and budget.
5) Procurement of consultant, contractor, input supplier, and off taker etc, shall be done through tendering consisting of 5 steps (request for proposal (tender document), proposal, evaluation of proposal, contract negotiation, contract signing). During the process, risks are identified, mitigated, controlled and apportioned into the contract. The requirement consists of technical and financial.
6) Contractual document shall indicate budget, schedule, man power, scope of work, responsibility and obligation of the both contractual parties, payment condition and technical and other requirements and shall be a basis to continuously monitor the performance against the system requirements in the PLC.
7) Through the contract negotiation, the employer (or the contractor ) ‘s thinking shall be accessed in terms of risk management as below:
- insufficient contingency or budget
- limited study budget
- very limited scope of work (partial construction etc.,)
- procurement of contractor without consideration of quality assurance, safety and health assurance of labor
- misunderstanding that construction cost estimate is the ceiling amount assures the final completed cost estimate, while it actually is tentative estimation we suppose.
8) A clearly defined scope of work is essential, because the employer tends to understand expanded scope of work in case its definition is vague. Especially, if the employer, in many cases, does not understand limitation of the consultant (contractor), prior conditions and assumption for the work,
- service scope and period
- experience and specialty of expertise
- responsibility undertaken
Payment of fees to consultant (contractor) shall not be affected by the factor. The contractual parties cannot control within their capability such as delay or climate factors.
9) Procurement process of the consultant (contractor), its quality and capability shall be evaluated fairly and allocate enough, but not too much fees toward the scope of work. If enough remuneration fee is not secured by the employer:
- quality of the service will be terribly low and will cause bad reputation, losing employment, bankruptcy due to low cost bidding, uncompleted report and output etc.,
- it may cause cash flow problem, low quality outcome, increase of total project life cycle cost, increase of construction cost, further design required and downloaded during the construction stage etc.
10) The relationship between the employer and the consultant (contractor) shall not be against relationship and both sides should share same goal on the project, and objective and prospect shall co-exist.
11) Resources shall not be over-committed in the Contract because it will lower the quality in case committed resources are totally replaced by mobilizing cheaper resources such as young expert.
12) Quality oriented planning is required in the contract to satisfy quality requirement in consideration with understanding of scope of work, implementation plan, manning plan, appropriate scheduling and appropriate budget allocation.
13) Contractual risk shall be mitigated and avoided by doing the followings:
- to understand and carefully study obligation in the service contract
- to identify important but burdensome terms, and provide legal advice on such terms
- to negotiate to eliminate such burdensome terms
For objective number 3:
1) The consultant should understand the importance of performing with due diligence, efficiency and economy in order to meet requirement of money for value, service quality and provide enough performance toward amount of fee.
2) Huge transfer of facility from MAUR, the project owner, to O&M Company will suppose after completion of infrastructure and railway systems and equipment. There is big risk in huge transfer especially; O&M Company is newly established. Therefore, transfer of MAUR staff to new O&M Company as well as gradual transfer of railway facility from MAUR to O&M Company is recommended.
3) After completion and operation of the Railway System, the project will be audited by 3rd party auditor. It is essential for the Employer (as well as the General Consultant) to record effectively and periodically key monitoring indicators for explanation to 3rd party in terms of :
- Improvement of public services: time and accessibility from Ben Thanh to Cat Lai Interchange
- Life opportunity: Increase of population having accessibility less than 10 minutes walk to nearest station.
- Revitalization of region: Increase of Business Zone Area along rail line
- Increase of employment: Increment Ratio of Population working for the Firm along Rail Line.
- Local society: Increment of Sub-Contract Nos. and Value with Local Contractor in the Region.
- Safety : Reduction of Car/ Motorbike Accident along the rail line and city
- Environment : CO2 reduction at the point
4) Transparency operation of the project in the PLC should be ensured for design requirement, tender selection transparency, 3rd party verification on tender result, disclosure of project outline and explanation, construction procedure, documentation recording system, demand forecast and other survey result related to the rail line on website etc. In terms of railway operation, safety, accuracy, environmental friendly and financial validity shall be monitored and opened in website.
5) Performance specification for the project shall be clearly set in the employer’s requirement in tender document and agreed in the contract. After contracting, the contractor shall perform; verify their work to meet the system requirement. Finally, at the completion of work, the system requirement shall be validated through commissioning and testing and system acceptance by the authorized party for rail operation.
6) Legal & regulation requirement: it is important for all the stage to study legal requirement in terms of overall project management, design, tendering, construction quality, environment, operation, government permission, auditing and accounting, taxation, etc, as well as to know whose authority to approve it if the proposal is beyond the law and regulation. Those legal restrictions shall cause critical issues such as delay of schedule, cost increase, re-work, and finally the cancelation of the project. Considering severity, risk treatment shall be considered case by case.
7) Risk capital: Funding is ensured by HCMC People’s Committee for Urban Railway Line 1 for establishing Operation and Maintenance Company as the State Owned Enterprises by funding 100% government fund. In the future, RMP for Share Issued Privatization (SIP) is also needing long term strategy for privatization, because SIP is required huge transfer of assets, human resources, technology and know-how to private sector. It takes time to develop competitive and transparent market for rail operation services.
His abstract thesis is copied and posted.
Abstract
To obtain benefit from Urban Rail Investment, it takes several decades to show actual reasonability of the investment while huge capital expenditures are easily spent through the Project Life Cycle. Two theory approaches are taken in Literature Review and Case Study to apply Risk Management Plan in the Project Life Cycle in order to identify, handle, control, treat major risks which will be occurred in the Project Life Cycle of Urban Railway Investment including Design, Construction, Operation stages as well as to apply Public Private Partnership in Urban Rail in order to study effective Contractual Risk Management among the Stakeholders in Public Private Partnership of Railway Development Project.
The Case Study for Ho Chi Minh City Urban Railway Construction Project (Ben Thanh –Suoi Tien Section) Line 1 is analyzed in order to apply actual Risk Management Plan to breakdown Risk Factors of Project Delay and Cost Increase etc, and find our Key Success Factors of Urban Railway PPP Project in Vietnam. This research can hopefully be a hint to find out connection between Risk Factors in activities in the Project Life Cycle.
Keywords ; Risk Management, Project Life Cycle, Urban Railway, Public Private Partnership, Stakeholder Risk Management, Construction and Operation
Tuesday 19 July 2011
Monday 18 July 2011
Project Management Strategies in Public Construction Project
The organization of PMU in public construction in Cantho City, Viet Nam is in initial development and in the process of improvement. There’s no enough manpower to do some functions and some people have to do many tasks at the same time. They are lack of knowledge and experience to operate and coordinate the project. During the project management process, they face organizational problem, poor quality, delay and so on. The Project Management and Project Management Unit is one issue which Cantho city pays much attention to.
Mr. Ta Chi Nhan made a case on Cantho University PMU And Dormitory Project Of Cantho University. The objectives of his study were to: (1) identify the project management functions practiced in PMU; (2) discuss the effectiveness of the project management functions in terms of project performance; (3) investigate the selected PMU order to analyze the strengths and the weaknesses of the management in practice; and propose recommendation for project management improvement.
Conclusions
After the review, analyses and study of the project management functions, practice in PMU and dormitory project of Can Tho University, it was revealed that project time management, cost, and procurement are applied. However, the risk and scope management function are not taken in to consideration.
The actual performance of this project is considered poor because the time completion was 7 months delayed and the cost overrun is about 120%. The reasons for the delay are as follows:
1. Construction contract between the owner and EPC contractor was unit-price contract which based on basic design. At that time, the technical design drawings and cost estimating are not clear. A lot of details were not specified as to what type and size. Therefore, the owner-supervisor has no sufficient information to supervise and the construction team has no sufficient information to implement. They had to wait for the design team to make a clear technical design.
2. Communication management plan is not good. The owner contacted with construction manager who did not have enough power to solve the problems from design to construction.
3. Supplying fund from state to the owner for project was untimely.
The reasons for cost overrun is because of unclear technical design and unit-price construction contract, the design team adjusted the design drawings and the owner had to pay for new specifications of doors, fences, electrical equipments, water supply equipments and so on.
The case study has also found out strengths and weaknesses of PMU in practice of project management in each area. With a general view through the three phases of this project (FS, design, construction), the following have been recognized:
- In terms of project time management, PMU was good at schedule development and control schedule in FS phase, but they could not control schedule in design and construction phase.
- In terms of project cost management, the strengths were that PMU applied good tools and technical, they hired verification consultant about cost, but PMU made a mistake in which type of contract when determining budget.
- In project quality management, PMU checked quality management system (quality plan, QA, QC) of construction team of EPC contractor and it was good. In contrast, performance quality control of design team of EPC contractor was not good. Major defect (lack of specifications in technical design) came from time for design shortly. As a result, PMU could not control quality of technical design.
- In project human resources management, the owner hired supervisors and had a good project team management.
- In FS phase, project communication management of PMU was good at communication plan (schedule, meeting plans), but in design and construction phase, flowcharts of the information flow in the project had problems.
- In terms of project procurement management, the owner and PMU selected good FS consultant, verification, supervise consultant by their dossier of proposals. In design and construction phase (EPC contractor), the owner and PMU conducted procurements (as unit-price contract) not good.
- In project safety management, PMU and the owner’ supervisor checked safety plan, safety plan execution, administration and reporting of contractor. They were good. But they have not examined health for staffs and workers.
- In project environmental management, contractor had environmental plan, assurance, and control good.
Recommendations
In order to help PMU in implementation project management functions better, government should add more policies, regulations and require implementation strictly such as follows:
a. The owner is not allowed to assign EPC contractor in unit-price contract which base on basic design.
b. The government should provide sufficient capital funds to keep the building schedule in accordance with the approved building schedule.
c. More policies and instructions for project management should be applied.
His thesis abstract is copied and pasted.
Abstract
For a successful construction project, good implementation of project management functions is required first and very important. In Vietnam today, the State invests in many public projects. Most of them, state establish project management Unit to manage project directly according to law and regulations of Vietnam.
This report review project management theory, management functions commonly applied in developed countries and developing countries, studying concurrent the project management functions according to laws and regulations of Vietnam.
The report studies a typical project management Unit in Can Tho city, identify and analyze the practical application of project management functions. Since then, the report reviews the strengths, weaknesses and suggests improvements for this project and can be applied to other similar projects.
Mr. Ta Chi Nhan made a case on Cantho University PMU And Dormitory Project Of Cantho University. The objectives of his study were to: (1) identify the project management functions practiced in PMU; (2) discuss the effectiveness of the project management functions in terms of project performance; (3) investigate the selected PMU order to analyze the strengths and the weaknesses of the management in practice; and propose recommendation for project management improvement.
Conclusions
After the review, analyses and study of the project management functions, practice in PMU and dormitory project of Can Tho University, it was revealed that project time management, cost, and procurement are applied. However, the risk and scope management function are not taken in to consideration.
The actual performance of this project is considered poor because the time completion was 7 months delayed and the cost overrun is about 120%. The reasons for the delay are as follows:
1. Construction contract between the owner and EPC contractor was unit-price contract which based on basic design. At that time, the technical design drawings and cost estimating are not clear. A lot of details were not specified as to what type and size. Therefore, the owner-supervisor has no sufficient information to supervise and the construction team has no sufficient information to implement. They had to wait for the design team to make a clear technical design.
2. Communication management plan is not good. The owner contacted with construction manager who did not have enough power to solve the problems from design to construction.
3. Supplying fund from state to the owner for project was untimely.
The reasons for cost overrun is because of unclear technical design and unit-price construction contract, the design team adjusted the design drawings and the owner had to pay for new specifications of doors, fences, electrical equipments, water supply equipments and so on.
The case study has also found out strengths and weaknesses of PMU in practice of project management in each area. With a general view through the three phases of this project (FS, design, construction), the following have been recognized:
- In terms of project time management, PMU was good at schedule development and control schedule in FS phase, but they could not control schedule in design and construction phase.
- In terms of project cost management, the strengths were that PMU applied good tools and technical, they hired verification consultant about cost, but PMU made a mistake in which type of contract when determining budget.
- In project quality management, PMU checked quality management system (quality plan, QA, QC) of construction team of EPC contractor and it was good. In contrast, performance quality control of design team of EPC contractor was not good. Major defect (lack of specifications in technical design) came from time for design shortly. As a result, PMU could not control quality of technical design.
- In project human resources management, the owner hired supervisors and had a good project team management.
- In FS phase, project communication management of PMU was good at communication plan (schedule, meeting plans), but in design and construction phase, flowcharts of the information flow in the project had problems.
- In terms of project procurement management, the owner and PMU selected good FS consultant, verification, supervise consultant by their dossier of proposals. In design and construction phase (EPC contractor), the owner and PMU conducted procurements (as unit-price contract) not good.
- In project safety management, PMU and the owner’ supervisor checked safety plan, safety plan execution, administration and reporting of contractor. They were good. But they have not examined health for staffs and workers.
- In project environmental management, contractor had environmental plan, assurance, and control good.
Recommendations
In order to help PMU in implementation project management functions better, government should add more policies, regulations and require implementation strictly such as follows:
a. The owner is not allowed to assign EPC contractor in unit-price contract which base on basic design.
b. The government should provide sufficient capital funds to keep the building schedule in accordance with the approved building schedule.
c. More policies and instructions for project management should be applied.
His thesis abstract is copied and pasted.
Abstract
For a successful construction project, good implementation of project management functions is required first and very important. In Vietnam today, the State invests in many public projects. Most of them, state establish project management Unit to manage project directly according to law and regulations of Vietnam.
This report review project management theory, management functions commonly applied in developed countries and developing countries, studying concurrent the project management functions according to laws and regulations of Vietnam.
The report studies a typical project management Unit in Can Tho city, identify and analyze the practical application of project management functions. Since then, the report reviews the strengths, weaknesses and suggests improvements for this project and can be applied to other similar projects.
Wednesday 13 July 2011
Risk and Project Contract Management for Preventing and Solving Disputes in FIDIC Contract
Any project has to deal with problems/issues that can affect its objectives. These issues are sometimes predictable, but in some cases it is impossible to predict. Once it is predicted, the project team shall have proactive counter-measures, and thus limit the possible impact of risks. Risk management is the process of pre-defining risks that may occur in the project, analyzing, and finding appropriate measures for the purpose of increasing the opportunity of success and minimizing damage to the project. Regardless of the size and nature of the project, risk management should be implemented in accordance with the ordering process with the appropriate tools and effective solution.
It is essential to reinforce the capability of identifying risks and contract management in construction projects closely. The control and adjustment of risks are to carry out risk dealing with plans in reality in order to reduce and minimize risks of the project. Moreover, strict management of contract is the only way to prevent disputes and litigations of the project. It is wise that the parties should seek negotiation, discussion or conciliation once disputes occur. Using an amicable settlement approach is simple, effective and inexpensive while adopting claim and arbitration approach is more complicated, costly and time consuming.
Mr. Dang Thai Son made a case study on can tho bridge construction project to: (1) study issues on project risk management: implicit risks, the tenor and process of project risk management; (2) study issues on project contract management: signing and implementing the project contract, amending, canceling or terminating the contract; and (3) 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 good side, the Contractor has implemented good management for best results. To start with, the Contractor designed a hierarchy of management with well-targeted goals as well as backup plans. This helped the project progress even in case of force majeure. Second, good management on quality and quantity also contributed to the success of this work. Various aspects of working requirements such as materials, equipment, construction methods and skilled labors 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. This was done thanks to a third-party specializing in the field of environmental protection. Finally, the Contractor always followed the most important motto: "Safety first." The disastrous accident in foundation settlement showed the nature of risk on the 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 Cantho 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 us 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, we see that 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 thanks to have 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).
Among the three Contract Packages, Package -1 and Package-2 achieved good target. Especially Package-2 completed all the works of the project on schedule without complaints even exceeding the progress compared to that set by the Ministry of Transport. Although Package-2 was a major item of the bridge and very complicated for construction, with all endeavors and efforts of the whole expatriates, engineers, staff and workers of the Main Contractor: Taisei-Kajima-Nippon Steel Joint Operation and his sub-contractors, finally they made good delivery system for the project.
However, the project suffered big delay from Package-3, the Contractor of this Package received many complaints from the Owner because he could not manage his work schedule, while the works of the other two Packages were successfully completed.
Once again, apart from the strengths achieved as analyzed in Chapter 3, 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 pasted.
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
It is essential to reinforce the capability of identifying risks and contract management in construction projects closely. The control and adjustment of risks are to carry out risk dealing with plans in reality in order to reduce and minimize risks of the project. Moreover, strict management of contract is the only way to prevent disputes and litigations of the project. It is wise that the parties should seek negotiation, discussion or conciliation once disputes occur. Using an amicable settlement approach is simple, effective and inexpensive while adopting claim and arbitration approach is more complicated, costly and time consuming.
Mr. Dang Thai Son made a case study on can tho bridge construction project to: (1) study issues on project risk management: implicit risks, the tenor and process of project risk management; (2) study issues on project contract management: signing and implementing the project contract, amending, canceling or terminating the contract; and (3) 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 good side, the Contractor has implemented good management for best results. To start with, the Contractor designed a hierarchy of management with well-targeted goals as well as backup plans. This helped the project progress even in case of force majeure. Second, good management on quality and quantity also contributed to the success of this work. Various aspects of working requirements such as materials, equipment, construction methods and skilled labors 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. This was done thanks to a third-party specializing in the field of environmental protection. Finally, the Contractor always followed the most important motto: "Safety first." The disastrous accident in foundation settlement showed the nature of risk on the 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 Cantho 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 us 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, we see that 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 thanks to have 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).
Among the three Contract Packages, Package -1 and Package-2 achieved good target. Especially Package-2 completed all the works of the project on schedule without complaints even exceeding the progress compared to that set by the Ministry of Transport. Although Package-2 was a major item of the bridge and very complicated for construction, with all endeavors and efforts of the whole expatriates, engineers, staff and workers of the Main Contractor: Taisei-Kajima-Nippon Steel Joint Operation and his sub-contractors, finally they made good delivery system for the project.
However, the project suffered big delay from Package-3, the Contractor of this Package received many complaints from the Owner because he could not manage his work schedule, while the works of the other two Packages were successfully completed.
Once again, apart from the strengths achieved as analyzed in Chapter 3, 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 pasted.
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 12 July 2011
Sustainable Construction: A Study of Drivers, Barriers and Design Practices in Building Projects in Thailand
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Monday 11 July 2011
Project Organization and Responsibilities Management in Construction Project
The management of any project is also a series of difficult tasks and challenges because of the variation in the implementation process as well as in determining the final output.
On the basis of knowledge on "Organizational management in construction project", combined with the actual work being applied to the formulation of the organizational chart of project management and regulations functions, duties and powers of the divisions, departments on the gas pipeline project of Lot B-Omon (EPC contract-onshore part), Mr. Nguyen Viet Hien made a case to: (1) study the theories and practice of project organization structure and responsibilities; (2) study the existing practice of PVC in project structure and responsibilities; (3) discuss the effective of the structure and responsibilities in terms of communication, coordination, work performance, job satisfaction and productivity; and (4) propose recommendation for improvement.
Conclusions
With the knowledge learned from AIT and through research, the management and administration of construction gas pipeline project Block B-O Mon see the nature and importance of the stage of organization and assignments for various departments, and parts, individual, which is extremely large. It is crucial to the successful implementation and management of projects with high efficiency.
It is also found out that the managers face risk and volatility in process implementation, in managing any project which also set difficult tasks and challenges.
Although, currently the process technology and process for project management advanced models have been deployed and applied by the managers, the fact also showed that even when the detailed plan was map out, and using the method of operations are very professional, but can still the elements and issues adversely affect the success of the project.
Some key issues in the company's project management system are summarized such as follows:
1. Practice of project organization structure and responsibilities: In the organization chart, there are no parts forecasting, evaluation and control risks and remediation projects.
2. The theories of project organization structure and responsibilities: The organization charts applied the horizontal structures, so it’s lack of coordination/communication between the Site office with the Head office and between departments, sections of the Site office.
Below are some solutions for the effective structure and responsibilities in terms of communication, coordination, work performance, job satisfaction and productivity:
1. To set up or hire professionals perform forecasting, evaluation and control risks and remediation projects.
2. Increase manpower to form a coordination group; strengthen the communications.
3. Many non-standardized process: Implementation is based on practical experience, lack of standard documentation procedures, instructions, guides of implementation. Many useful tools and techniques are not applied in the process of project management. Project management officers are not trained and not equipped with modern management knowledge.
4. The establishment of planning and implementation process is not good. There is no specific planning for the management of projects. Work scope, or quality plan for each project work are also unclear. Control activities and implementation project of the project team members almost exclusively based on experience.
5. There are no standards and procedures, no formal system operations to measure and assess the level of success and failure of each stage, processes, projects and the implementation of project team members. So there is no firm foundation to plan for performance improvement of project managers.
6. There was a formal process to evaluate and audit procedures, guidelines and recommendations, implement improvements (in quality management system ISO 9001). However, due to limited knowledge and skills of staff in modern project management, it may not have much performance improvement as expected.
7. No procedures or guidelines for collecting information of subcontractors or suppliers on the project issues, the lessons learned to store in a convenient place for use in analyzing and managing projects in the future. So, there is also no official information about the history and lessons learned knowledge database system. All project documents, after completion of the project, needed to be kept in the library.
8. The specific issues such as lack of leadership skills and professional skills; lack of human resources; the corporate culture has no adequate attention; lack of equipment, instrument with new technology in construction; implement management and operating under the ISO was not good; missing parts management information and communication technology and project management software; lack of coordination between the site office with the Head office and departments, sections of the site office, have no best policies yet and the conditions for employees to work long- term attachment to the company; there are not parts forecasting, evaluation and control risks and remediation projects; and bonus issue may be addressed to encourage.
Recommendations
To manage and operate projects with high economic efficiency of the company should focus on improving a number of areas
1. Need to further strengthen the training of managers of modern construction projects for the company staff. The training includes knowledge and skills in project management for individuals, for organizations, and the experience in the administration and project management. It is needed that the introduction of management systems procedures and guidelines to the construction project management teams by international professional staff. The staffs need training and orientation on the management to further their vision, to appreciate better the importance and effectiveness of the project. Building management systems and common standards and procedures is necessary to guide the project team members to be more effective in managing the project.
2. The company should pay more attention on the process of planning the project to ensure that all work will be started and completed under his control.
3. The company needs to improve the system of formal procedures and guidelines to standardize all project management processes within the company. Guidance on the scope of each process is also needed. This helps to keep the consistency of quality and improve the effectiveness of management processes.
4. The company needs to improve and enhance the effectiveness of ISO9001 assessment and audit procedures used by auditor’s competent professionals, in construction project management, and training of project’s good and creative self-auditor.
5. The company must establish and apply the official standards, tools, guidance on measurement and evaluation of the success, failure of the project aim to gather experiences and lessons learned for the management projects in the future.
6. The company should develop a project management office or a center, where the project management staff can easily access the historical information and learned all the projects lessons, reference tools of modern project management and engineering. And besides, the company should develop procedures and guidelines for collecting, and storing the data. These works will be helpful for the management of future projects especially newcomers.
7. The specific issues such as: Training or hiring new people with sufficient skills to meet the work of construction projects to work in the project; Dealing with partners vulgar, may utilize and enlist the help up to the job of Investors and other stakeholders; Rent Contractors outside the work required to use new technology (HDD); Strengthening human resources and Establishment of ISO and IT management team in charge; Increase manpower to form a group: set up and manage and coordinate the process; Increase salary, Enhance cultural life, recreation... information to employees; Making the reward process, timely laborers on construction sites...
His thesis abstract is copied and posted.
Abstract
We know that with any country the development is also based on the platforms: There are firm infrastructures; there are perfect superstructures. Construction industry in the world in general and Vietnam in particular, in recent years had an integration process and booming. It is increasingly contributing to make the infrastructure more and more sustainable. It will set the stage for the construction and development of the country stronger in the future.
The operation and effective management of construction projects have special meaning for large construction enterprises: its highly profitable enterprise, for the country, it reduces the costs of the project, it saves time to perform construction projects, it ensures the quality, engineering, art, durableness and safety of the works ... Get to know the great significance that, and increasingly for the purpose of improving knowledge of general and personal knowledge of the executive management of construction projects under way to reach economic efficiency and the highest profit; How to implement the most advanced project, the best.
So I found myself out and register for the course of AIT MPM. With the knowledge learned through research and apply the "Project organization and responsibilities in construction project management - A case study of the gas pipeline project block B-Omon", I have prepared this thesis. It partly reflects the process of implementing the construction organization for the project. It is a solid foundation to establish the best prerequisites for the next stage of the project implementation process.
On the basis of knowledge on "Organizational management in construction project", combined with the actual work being applied to the formulation of the organizational chart of project management and regulations functions, duties and powers of the divisions, departments on the gas pipeline project of Lot B-Omon (EPC contract-onshore part), Mr. Nguyen Viet Hien made a case to: (1) study the theories and practice of project organization structure and responsibilities; (2) study the existing practice of PVC in project structure and responsibilities; (3) discuss the effective of the structure and responsibilities in terms of communication, coordination, work performance, job satisfaction and productivity; and (4) propose recommendation for improvement.
Conclusions
With the knowledge learned from AIT and through research, the management and administration of construction gas pipeline project Block B-O Mon see the nature and importance of the stage of organization and assignments for various departments, and parts, individual, which is extremely large. It is crucial to the successful implementation and management of projects with high efficiency.
It is also found out that the managers face risk and volatility in process implementation, in managing any project which also set difficult tasks and challenges.
Although, currently the process technology and process for project management advanced models have been deployed and applied by the managers, the fact also showed that even when the detailed plan was map out, and using the method of operations are very professional, but can still the elements and issues adversely affect the success of the project.
Some key issues in the company's project management system are summarized such as follows:
1. Practice of project organization structure and responsibilities: In the organization chart, there are no parts forecasting, evaluation and control risks and remediation projects.
2. The theories of project organization structure and responsibilities: The organization charts applied the horizontal structures, so it’s lack of coordination/communication between the Site office with the Head office and between departments, sections of the Site office.
Below are some solutions for the effective structure and responsibilities in terms of communication, coordination, work performance, job satisfaction and productivity:
1. To set up or hire professionals perform forecasting, evaluation and control risks and remediation projects.
2. Increase manpower to form a coordination group; strengthen the communications.
3. Many non-standardized process: Implementation is based on practical experience, lack of standard documentation procedures, instructions, guides of implementation. Many useful tools and techniques are not applied in the process of project management. Project management officers are not trained and not equipped with modern management knowledge.
4. The establishment of planning and implementation process is not good. There is no specific planning for the management of projects. Work scope, or quality plan for each project work are also unclear. Control activities and implementation project of the project team members almost exclusively based on experience.
5. There are no standards and procedures, no formal system operations to measure and assess the level of success and failure of each stage, processes, projects and the implementation of project team members. So there is no firm foundation to plan for performance improvement of project managers.
6. There was a formal process to evaluate and audit procedures, guidelines and recommendations, implement improvements (in quality management system ISO 9001). However, due to limited knowledge and skills of staff in modern project management, it may not have much performance improvement as expected.
7. No procedures or guidelines for collecting information of subcontractors or suppliers on the project issues, the lessons learned to store in a convenient place for use in analyzing and managing projects in the future. So, there is also no official information about the history and lessons learned knowledge database system. All project documents, after completion of the project, needed to be kept in the library.
8. The specific issues such as lack of leadership skills and professional skills; lack of human resources; the corporate culture has no adequate attention; lack of equipment, instrument with new technology in construction; implement management and operating under the ISO was not good; missing parts management information and communication technology and project management software; lack of coordination between the site office with the Head office and departments, sections of the site office, have no best policies yet and the conditions for employees to work long- term attachment to the company; there are not parts forecasting, evaluation and control risks and remediation projects; and bonus issue may be addressed to encourage.
Recommendations
To manage and operate projects with high economic efficiency of the company should focus on improving a number of areas
1. Need to further strengthen the training of managers of modern construction projects for the company staff. The training includes knowledge and skills in project management for individuals, for organizations, and the experience in the administration and project management. It is needed that the introduction of management systems procedures and guidelines to the construction project management teams by international professional staff. The staffs need training and orientation on the management to further their vision, to appreciate better the importance and effectiveness of the project. Building management systems and common standards and procedures is necessary to guide the project team members to be more effective in managing the project.
2. The company should pay more attention on the process of planning the project to ensure that all work will be started and completed under his control.
3. The company needs to improve the system of formal procedures and guidelines to standardize all project management processes within the company. Guidance on the scope of each process is also needed. This helps to keep the consistency of quality and improve the effectiveness of management processes.
4. The company needs to improve and enhance the effectiveness of ISO9001 assessment and audit procedures used by auditor’s competent professionals, in construction project management, and training of project’s good and creative self-auditor.
5. The company must establish and apply the official standards, tools, guidance on measurement and evaluation of the success, failure of the project aim to gather experiences and lessons learned for the management projects in the future.
6. The company should develop a project management office or a center, where the project management staff can easily access the historical information and learned all the projects lessons, reference tools of modern project management and engineering. And besides, the company should develop procedures and guidelines for collecting, and storing the data. These works will be helpful for the management of future projects especially newcomers.
7. The specific issues such as: Training or hiring new people with sufficient skills to meet the work of construction projects to work in the project; Dealing with partners vulgar, may utilize and enlist the help up to the job of Investors and other stakeholders; Rent Contractors outside the work required to use new technology (HDD); Strengthening human resources and Establishment of ISO and IT management team in charge; Increase manpower to form a group: set up and manage and coordinate the process; Increase salary, Enhance cultural life, recreation... information to employees; Making the reward process, timely laborers on construction sites...
His thesis abstract is copied and posted.
Abstract
We know that with any country the development is also based on the platforms: There are firm infrastructures; there are perfect superstructures. Construction industry in the world in general and Vietnam in particular, in recent years had an integration process and booming. It is increasingly contributing to make the infrastructure more and more sustainable. It will set the stage for the construction and development of the country stronger in the future.
The operation and effective management of construction projects have special meaning for large construction enterprises: its highly profitable enterprise, for the country, it reduces the costs of the project, it saves time to perform construction projects, it ensures the quality, engineering, art, durableness and safety of the works ... Get to know the great significance that, and increasingly for the purpose of improving knowledge of general and personal knowledge of the executive management of construction projects under way to reach economic efficiency and the highest profit; How to implement the most advanced project, the best.
So I found myself out and register for the course of AIT MPM. With the knowledge learned through research and apply the "Project organization and responsibilities in construction project management - A case study of the gas pipeline project block B-Omon", I have prepared this thesis. It partly reflects the process of implementing the construction organization for the project. It is a solid foundation to establish the best prerequisites for the next stage of the project implementation process.
Thursday 7 July 2011
Improvement of Organizational Structure for Power Plant Project Management of PetroVietnam
PVN has invested & built the first power plant since 2005 with only one Management Board (MB). The objectives of the MBs change very fast but the organization structure for all MBs is still same from the beginning. Therefore, PVN’s management for power projects has still some outstanding issues which are the weakness in organizational structure for project management.
Mr. Le Anh Thong made a case study which objectives were to: (1) deeply understand the existing organizational structure of PVN power plant project, to analyse the strength and weakness, advantages & disadvantages of the existing system; and (2) propose recommendation for improvement.
Conclusion
The objectives of PetroVietnam Power Plant Projects (PVN’s PPP) are usually changed very fast, but PVN has still kept the type of organizational structure which is “Functional Structure” since 2004. Although this structure has some advantages, but this structure is not suitable with growth of PVN’s PPP which has caused some weakness and disadvantages in its management so far. With four individual Management Boards, they have not achieved perfect result in time. It is very difficult to control the scope, contingency funds, overall project value; and also it is very difficult to monitor or audit the project’s progress, stakeholder’s commitment, results achieved and the leading indicators of failure, and so on.
Recommendation
Therefore, with the study and analyses of this case study, the proposed improvement is given in which the essential issue of this proposed improvement is the recommendation to apply the Matrix Structure for One General Management Board instead of the Functional Structure for Four existing Individual PVN’s project management organizational board. Consequently, the advantages of the Proposed PVN’s project management organization will be almost same the advantages from the Matrix Structure.
The most important advantage of the Proposed Improvement is efficient use of resources of the whole Proposed General Management Board where specialized individuals can be shared and transferred from one Branch to another or in any PVN’s projects. Therefore, the project management cost is minimized; the total quantity management staff shall be decreased, but the professional grade is easily increased. These are the most useful & efficiency of this proposal.
With the detailed analyses and proposal, the strength & advantages of the proposed improvement are very clear and prevailed to compare with its disadvantages. Besides, there has the proposed solution to solve for these disadvantages. Therefore, it should be considered as preliminary study to apply in the PVN’s thermal power project management with the additional study needed.
However, the proposed improvements will not be enough to improve everything for PVN’s project management. It is necessary with best effort to apply some other solutions in order to gain actual significant improvement and overcome other outstanding weakness of PVN’s project management.
His thesis abstract is copied and pasted.
Abstract
Electric Power is an essential energy for people’s daily life and one of the major factors in labor productivity growth. It helps to develop the economy of the countries in the world, especially for the developing countries like Vietnam. Consequently, it’s very important to know how to manage power plant projects effectively and successfully.
PetroVietnam (PVN) who is the biggest Economic Group of Vietnamese State-Owned Groups has been assigned by Government to invest & build some power plants. So it is necessary for PVN to improve their power plant project management. With the scope of my report, I will mention about the improvement for organizational structure of PVN’s thermal power plant project management and my Management Board.
The Objecctive of my Report is the Proposal to improve ORGANIZATIONAL STRUCTURE of PVN’s PPP to manage PETROVIETNAM POWER PLANT PROJECTS (PVN’s PPP), and solve their weakness/disadvantages & gain better effectiveness and success.
The reason to find the above Ojective are the objectives of PVN’s PPP are usually changed very fast, but PVN still has kept the beginning type of organizational structure from 2004 up to now, and some weakness/disadvantages were found in PVN’s PPP management so far.
Therefore, the case chosen for my report which is the organizational structure of PVN’s PPP.
By the analyses based on theory of organizational structure for project management colland my experience during a long time work in PVN’s PPP, my recommendation of the Proposal in my Report is the application of the Matrix Structure for One General Management Board instead of the Functional Structure used by many PVN’s individual Management Boards that expected to gain the above Objective to PVN’s PPP management.
Mr. Le Anh Thong made a case study which objectives were to: (1) deeply understand the existing organizational structure of PVN power plant project, to analyse the strength and weakness, advantages & disadvantages of the existing system; and (2) propose recommendation for improvement.
Conclusion
The objectives of PetroVietnam Power Plant Projects (PVN’s PPP) are usually changed very fast, but PVN has still kept the type of organizational structure which is “Functional Structure” since 2004. Although this structure has some advantages, but this structure is not suitable with growth of PVN’s PPP which has caused some weakness and disadvantages in its management so far. With four individual Management Boards, they have not achieved perfect result in time. It is very difficult to control the scope, contingency funds, overall project value; and also it is very difficult to monitor or audit the project’s progress, stakeholder’s commitment, results achieved and the leading indicators of failure, and so on.
Recommendation
Therefore, with the study and analyses of this case study, the proposed improvement is given in which the essential issue of this proposed improvement is the recommendation to apply the Matrix Structure for One General Management Board instead of the Functional Structure for Four existing Individual PVN’s project management organizational board. Consequently, the advantages of the Proposed PVN’s project management organization will be almost same the advantages from the Matrix Structure.
The most important advantage of the Proposed Improvement is efficient use of resources of the whole Proposed General Management Board where specialized individuals can be shared and transferred from one Branch to another or in any PVN’s projects. Therefore, the project management cost is minimized; the total quantity management staff shall be decreased, but the professional grade is easily increased. These are the most useful & efficiency of this proposal.
With the detailed analyses and proposal, the strength & advantages of the proposed improvement are very clear and prevailed to compare with its disadvantages. Besides, there has the proposed solution to solve for these disadvantages. Therefore, it should be considered as preliminary study to apply in the PVN’s thermal power project management with the additional study needed.
However, the proposed improvements will not be enough to improve everything for PVN’s project management. It is necessary with best effort to apply some other solutions in order to gain actual significant improvement and overcome other outstanding weakness of PVN’s project management.
His thesis abstract is copied and pasted.
Abstract
Electric Power is an essential energy for people’s daily life and one of the major factors in labor productivity growth. It helps to develop the economy of the countries in the world, especially for the developing countries like Vietnam. Consequently, it’s very important to know how to manage power plant projects effectively and successfully.
PetroVietnam (PVN) who is the biggest Economic Group of Vietnamese State-Owned Groups has been assigned by Government to invest & build some power plants. So it is necessary for PVN to improve their power plant project management. With the scope of my report, I will mention about the improvement for organizational structure of PVN’s thermal power plant project management and my Management Board.
The Objecctive of my Report is the Proposal to improve ORGANIZATIONAL STRUCTURE of PVN’s PPP to manage PETROVIETNAM POWER PLANT PROJECTS (PVN’s PPP), and solve their weakness/disadvantages & gain better effectiveness and success.
The reason to find the above Ojective are the objectives of PVN’s PPP are usually changed very fast, but PVN still has kept the beginning type of organizational structure from 2004 up to now, and some weakness/disadvantages were found in PVN’s PPP management so far.
Therefore, the case chosen for my report which is the organizational structure of PVN’s PPP.
By the analyses based on theory of organizational structure for project management colland my experience during a long time work in PVN’s PPP, my recommendation of the Proposal in my Report is the application of the Matrix Structure for One General Management Board instead of the Functional Structure used by many PVN’s individual Management Boards that expected to gain the above Objective to PVN’s PPP management.
Tuesday 5 July 2011
Risk Management on New Residential Development Project
In recent years, many real estate companies in Vietnam have been establishing and many New Residential Zone Projects were established. In Binh Duong City many of new residential zone Infrastructure development projects have been delayed and these projects suffer cost over run due to many reasons such as land compensation issues, lack of social agreement, insufficient capital for buying the land, late permitted from authority especially in master plan and architectural city design, poor in design and construction, water treat and environment issue and so on. In those projects managers could not deal with the risks and uncertainties which they met in project implementation process.
Mr. Bui Hai Nam made a case on Vo Minh Duc Project, Binh Duong Province to find risk management means that are associated with the project network structure. The objectives of his study were to: (1) find out risk factors in construction and analyzing the relationship of these factors and thereby enhance understanding of construction risks ; (2) propose strategies to effectively eliminate or mitigate major risks, and (3) propose solutions that identify and prevent risks in similar projects
Conclusions
In general, risks from various sources in construction is unavoidable, but it can be minimized. There are several ways to handle risks such as the risk of their transfer to other subjects, reducing the negative impact of the risks, and accepting some or all of the consequences of a specific risk.
The determination of activities and investments, analysis and evaluation, with measures to control and reduce the impact of risks is urgently needed to ensure the feasibility and effectiveness of the project. Risk management should be evaluated and implemented from the first steps of the project and continue in all project implementation cycle. The process involved a construction project in general, as well as developing infrastructure for new residential projects, must be carefully prepared from the initial stages until the end, handing over the project for investors. Moreover, there are several organizations and partners participated in a construction project, especially in new urban projects in infrastructure development. The organization is concerned with land owners, customers, designers, contractors, subcontractors, consultants, suppliers, materials, electricity, water supply, customers, agencies and public facilities, and government. Thus, the establishment of a relationship, and this all opinion really are necessary.
In the project of new urban development, there are many risks affecting the progress of the project implementation, project quality, project financing and timing of delivery and government customers. To cope with risk, it is necessary to establish a strategy that can be effective and efficient in response. Risks and uncertainties from various sources can not be eliminated, but can be reduced, transferred or retained.
There are several ways to handle risks such as transfer risk to another party, avoiding risk, reducing the negative impact of the risks, and accepting some or all of the consequences of a particular risk.
In large projects, limiting the risk is extremely important. Effective implementation of the limited risk will save a lot of time and money to the owner and main contractor for the project.
To deal with risks, it is necessary to establish an effective strategic and effective response. Thus, this research project attempted to identify risk and implement a risk management study for the new urban projects.
Identify major risks
- There are many consulting organization specialized in designing technical infrastructure to participate in the design.
- There are many different contractors from specialized technology, building on the same site on the surface and underground at the same time.
- Running time the project lasts.
- After building the technical infrastructure is completed, the developer must transfer to the agency offices, government management.
- Based on the level of impact and likelihood, we can draw the main risk factors affecting the project schedule. The results are summarized in Table below.
His thesis abstract is copied and pasted.
Abstract
A lot of the risky management researches are targeted to the construction projects. Number of studies are stressing the importance and superiority of the co-operation and less formal risk management means, but concrete methods are not introduced. In addition, the use of already developed risk management methods is modest at construction sites.
Projects Urban VO MINH DUC of ThanhNguyen Real Estate Investment & Constructions Corporation has been building between 2008 to 2012. But so far, the project has achieved only about 20% workload on its completion. The progress delay has been caused by so many factors and different causes. Risks appear frequently causes damage to the efficiency of investment projects. The question for us to research, resolve and identify and evaluate the impact of risks, control them to ensure effective pre-defined investment project.
The major risk factors in this project:
- Political environment, nature, infrastructure;
- Economic environment, currency markets;
- Technical factors within the project;
- Non-technical factors within the project;
- Implementation of construction factor.
Research was conducted in 10 / 2010, when five full interview is done in construction projects urban Vo Minh Duc. Interviews were targeted to the representatives of the designers, builders and customers. Apart from the documents obtained from the interviews, subjects also use data sources of other projects and the investors are from The Highlands Company
Theory and practice in managing risk in projects Vo Minh Duc urban poor. In this project, the limitations of risk management is lack of organization, lack of required conditions such as time, resources and cost, managers are not familiar with risky management. In addition, policy factors from the State is also cause to delay for this project.
Mr. Bui Hai Nam made a case on Vo Minh Duc Project, Binh Duong Province to find risk management means that are associated with the project network structure. The objectives of his study were to: (1) find out risk factors in construction and analyzing the relationship of these factors and thereby enhance understanding of construction risks ; (2) propose strategies to effectively eliminate or mitigate major risks, and (3) propose solutions that identify and prevent risks in similar projects
Conclusions
In general, risks from various sources in construction is unavoidable, but it can be minimized. There are several ways to handle risks such as the risk of their transfer to other subjects, reducing the negative impact of the risks, and accepting some or all of the consequences of a specific risk.
The determination of activities and investments, analysis and evaluation, with measures to control and reduce the impact of risks is urgently needed to ensure the feasibility and effectiveness of the project. Risk management should be evaluated and implemented from the first steps of the project and continue in all project implementation cycle. The process involved a construction project in general, as well as developing infrastructure for new residential projects, must be carefully prepared from the initial stages until the end, handing over the project for investors. Moreover, there are several organizations and partners participated in a construction project, especially in new urban projects in infrastructure development. The organization is concerned with land owners, customers, designers, contractors, subcontractors, consultants, suppliers, materials, electricity, water supply, customers, agencies and public facilities, and government. Thus, the establishment of a relationship, and this all opinion really are necessary.
In the project of new urban development, there are many risks affecting the progress of the project implementation, project quality, project financing and timing of delivery and government customers. To cope with risk, it is necessary to establish a strategy that can be effective and efficient in response. Risks and uncertainties from various sources can not be eliminated, but can be reduced, transferred or retained.
There are several ways to handle risks such as transfer risk to another party, avoiding risk, reducing the negative impact of the risks, and accepting some or all of the consequences of a particular risk.
In large projects, limiting the risk is extremely important. Effective implementation of the limited risk will save a lot of time and money to the owner and main contractor for the project.
To deal with risks, it is necessary to establish an effective strategic and effective response. Thus, this research project attempted to identify risk and implement a risk management study for the new urban projects.
Identify major risks
- There are many consulting organization specialized in designing technical infrastructure to participate in the design.
- There are many different contractors from specialized technology, building on the same site on the surface and underground at the same time.
- Running time the project lasts.
- After building the technical infrastructure is completed, the developer must transfer to the agency offices, government management.
- Based on the level of impact and likelihood, we can draw the main risk factors affecting the project schedule. The results are summarized in Table below.
His thesis abstract is copied and pasted.Abstract
A lot of the risky management researches are targeted to the construction projects. Number of studies are stressing the importance and superiority of the co-operation and less formal risk management means, but concrete methods are not introduced. In addition, the use of already developed risk management methods is modest at construction sites.
Projects Urban VO MINH DUC of ThanhNguyen Real Estate Investment & Constructions Corporation has been building between 2008 to 2012. But so far, the project has achieved only about 20% workload on its completion. The progress delay has been caused by so many factors and different causes. Risks appear frequently causes damage to the efficiency of investment projects. The question for us to research, resolve and identify and evaluate the impact of risks, control them to ensure effective pre-defined investment project.
The major risk factors in this project:
- Political environment, nature, infrastructure;
- Economic environment, currency markets;
- Technical factors within the project;
- Non-technical factors within the project;
- Implementation of construction factor.
Research was conducted in 10 / 2010, when five full interview is done in construction projects urban Vo Minh Duc. Interviews were targeted to the representatives of the designers, builders and customers. Apart from the documents obtained from the interviews, subjects also use data sources of other projects and the investors are from The Highlands Company
Theory and practice in managing risk in projects Vo Minh Duc urban poor. In this project, the limitations of risk management is lack of organization, lack of required conditions such as time, resources and cost, managers are not familiar with risky management. In addition, policy factors from the State is also cause to delay for this project.
Friday 1 July 2011
CEIM open applications for August 2011 intake
We open the application for August 2011 intake for AIT Thailand campus. Limited numbers of scholarships are available for talented applicants. Some of the scholarships are Royal Thai Government scholarship, The King of Thailand scholarship, The Queen of Thailand Scholarship, Asian Development Bank scholarship etc.
What is CEIM? CEIM master and doctoral programs aim to prepare engineers to manage large construction projects starting from planning, design, tendering, construction and commissioning.
What will you learn? you will learn important knowledge and skills in project management in construction such as project planning/scheduling, project cost and financial management, organizational management, project contract, project risk, project quality management, project performance management and project financing.
Where will you work after graduation? You can work in strategic industries that highly need project management such as:
- Contractors (highway, building, oil/gas and energy)
- Consultants
- Property and real estate developers
- Bank and Invesment companies
- Public Private Partnership Consortium
- Financial and Banking institutions that lend fundings for construction projects
- hotel and apartment development
- oil and gas construction
What else will you learn during your study with us in AIT?
AIT is a very multicultural insitute. Our students and faculty members come from different parts of the world such as Thailand, Vietnam, Bangladesh, India, Taiwan, Pakistan, Indonesia, China, Korea, European Union. Aside from studying knowledge, you will also learn different cultures and different ways of thinking from your friends; and develop your global international networking.
Please contact CEIM Secretary (Ms. Woranuch, phone 025246060 or email woranuch@ait.ac.th) for further information.
Visit CEIM: http://www.set.ait.ac.th/ceim
How to apply? http://www.ait.ac.th/AIT/admissions/admissions
Regards
Dr. BHW Hadikusumo
Associate Professor
CEIM Coordinator
MPM Coordinator
Contractor Prequalification Criteria, Tendering Criteria, and Tendering Procedure in Cambodia Building and Housing Construction Projects
The construction industry can be considered as one of the largest industries that can contribute significant fraction of national product in Cambodia. However, people in this business face many problems such as prequalification, tendering and selecting a contractor.
Mr. Puoy Puthitha made a research to give the suitable selection criteria whether it will be effective in building construction projects in Cambodia. The process of contractor selection can be achieved, unless the prequalification, tendering criteria and tendering process will be linked to project performance in term of time, cost, quality, and customer satisfaction. It means that different project types and objectives should have different proportion on each selection criteria.
The purpose of his research is to define contractor prequalification criteria, tendering criteria, and tendering procedure in Cambodia building and housing construction projects and then how the contractor prequalification, tendering criteria and tendering procedure affect the project performance. The specific objectives of his research were to: (1) study effective contractor prequalification criteria; (2) study effective contractor tendering criteria; (3) study effective contractor tendering procedure; and (4) how contractor prequalification criteria, tendering criteria, and tendering procedure affect project performance.
Conclusion
There are four main findings in this study such as follows:
1. The effectiveness of contractor prequalification criteria in building construction projects.
2. The effectiveness of contractor tendering criteria in building construction projects.
3. The effectiveness of contractor tendering procedure in building construction projects.
4. Contractor prequalification criteria, tendering criteria, and tendering procedure have different affected on project performance.
In order to get the effective or significant factors and sub-factors from contractor prequalification criteria, tendering criteria and tendering procedure, the results were combined the ranking by mean with the correlation analysis results.
Contractor Prequalification Criteria
1. Financial Consideration: financial stability, financial status, Bank arrangement and bonding capacity.
2. Past Performance: failure to have completed projects, schedule overruns, cost overruns, past failures, owner/contractor relationship
3. Technical Ability: technical expertise, possessed plant and equipment, experience
4. Management Capability: past performance and quality, project management organization, experience of technical personnel
Contractor Tendering Criteria
1. Price: fixed capital cost, variable tender costs during the contract period, maintenance costs
2. Technical Skills: design quality, technical expertise
3. Methodology: program of works, division of works into sub-contracts, key performance indicators, reporting and recoding systems
4. Relevant Experience: project cost
5. Past Performance: quality standards, target performance level; tender price, variations and final cost.
Contractor Tendering Procedure
1. Tender Evaluation: tender quality (technical evaluation); tender price (financial evaluation); determine lowest bid; responsiveness, and responsibility
2. Tender Submission: sealing and marking of the tenderers, tender forms and tender specification document; tender terms and condition for bid preparation; post offer negotiation
3. Prequalification and Registration: prequalification requirement
The following description in details about the conclusion of this research study will support the conformation of each objective. All the results are computerized by SPSS software in order to get the data analysis results.
Project Performance in Building Construction Projects
Most of consultant companies in Cambodia had carefully focused on the process of selecting the qualified contractors in order to get the project successfully. In addition, the project owners were spent enough time in selecting the qualified contractors, particularly running projects and the quality control. As a result, the projects were finished within the budget, the quality of construction projects was good, and the contractors could be able to satisfy to the customer’s requirements.
The Effectiveness of Contractor Prequalification Criteria
Financial consideration found to be the main key factor for contractor prequalification criteria in Cambodia building and housing construction project, this result is related each other, which mean in order to be successful in performing the effective contractor prequalification process, the project owners have an important role in making the right decision for selecting the main contractors for construction works based upon the financial information of the contractors.
The Effectiveness of Contractor Tendering Criteria
The Price found to be the important factor for contractor tendering criteria in Cambodia building and housing construction project. Most of the tenderers still rely on tender price which has been proven its competency to acquire the contracts. The other contractor tendering criteria also are quite significant stimulated in contractor selection?
The Tender evaluation found to be the important selection process for contractor tendering procedure in Cambodia building and housing construction project.
This process is to financially and technically evaluate the tenderers’ performance in order to acquire the projects. The other contractor tendering procedures also are quite significant stimulated in performing the construction tendering practice.
The Correlation between Contractor Prequalification Criteria and Project Performance
The result shows that past performance, technical ability, and management capability are perceived to be the dominant contractor prequalification criteria affecting all project performance in terms of cost, time, quality, and customer’s satisfaction. While, financial consideration was perceived to affect only time, quality, and customer’s satisfaction. But Contractor’s organization and Past experience did not show any correlation with project performance. It can be concluded that most of the project owners focused on these two factors as somewhat important on how to acquire the qualified contractors by regarding to the perceived impact of the other decision factors on contractor prequalification decision making; the projects were still cost overrun and overtime. That’s why the customer did not satisfy in their performance. This is due to external factors such as lack of accurate data from the contractors, imprecise information, subjective information, and subjective judgment. Furthermore, they were also suffered from the rising of construction costs because of the materials fluctuation, lack of updating their technical performance, and lack of government regulation. Particularly, the projects were stopped due to heavy rain and flooding. Therefore, the external factors need a lot of information for assessing their impacts in order to achieve the project successfully in construction industry,
The Correlation between Contractor Tendering Criteria and Project
Performance
The result indicates that Price and Methodology are perceived to be the dominant contractor tendering criteria affecting all project performance in terms of cost, time, quality, and customer’s satisfaction. While, Technical skills, Relevant experience, and Past performance were perceived to affect only cost, time, and quality. But Resources and Management skills and systems did not show any correlation with project performance.
However Resources, Management skills and systems can be considered as somewhat important. The contractor tendering criteria had the moderate mean for resources, management skills and systems, the projects were not success. This is because the project owners did not much focused on the information of resources, and management skills and systems. Even these two criteria were somewhat important in selecting the qualified tenderers, the projects were still cost overruns, over time, unqualified quality, and the client didn’t satisfy. It might be affected by other external factors which were concerned with project performance.
The Correlation between Contractor Tendering Procedure and Project
Performance
The result indicates that Tender evaluation and Tender submission are perceived to be the dominant contractor tendering procedure affecting all project performance in terms of cost, time, quality, and customer’s satisfaction. While, prequalification and registration were perceived to affect only cost, time, and quality. But Contract award/execution, Tender opening, and Invitation to tender did not show any correlation with project performance. However, the Contract award/execution, Invitation to tender, and Tender opening can be concluded as somewhat important. Even the project owners had depicted clearly their requirements in construction contracts during their contract award/execution, invitation to tender, and tender opening; the tenderers were not successful yet to receive the owner’s requirement. Furthermore, the tenderers had been considered as some part of important in these stages, but the project owners and consultants were still not accepted their performance yet as well. The reason is that it might be affected by other external factors which were concerned with project performance.
His thesis abstract is copied and posted.
Abstract
The construction industry today is a highly competitive industry with an enormous amount of risk, particularly many conflicts, problems, adversity, and uncertainty. The construction projects are usually confronted with many conflicts, problems, and uncertainty due to a result of failure in selecting a competent contractor. To perform the project success, the owner’s team has an important role to figure out these many conflicts and problems such as schedule delays, cost overrun, low productivity, and contract disputes by being able to evaluate the contractor’s performance in the proper way. This study is based on quantitative research through questionnaires and carries on to first identify the contractor performance criteria in terms of prequalification criteria, tendering criteria, and tendering procedure and to help the project owners to assess the tenderer’s performance. Second, this study aims at describing how the contractor prequalification criteria, tendering criteria, and tendering procedure affect project performance.
This study was conducted in Cambodia building consultant and construction companies to study effective contractor prequalification criteria, tendering criteria, and tendering procedure for being able to select the competent contractors. In each case, the criteria have been ranged the scores in order to facility the project owners are able to evaluate with flexibility. The result found that first financial consideration, past performance, and technical ability in contractor prequalification criteria; second price, technical skills, and methodology in contractor tendering criteria; third tender evaluation, tender submission, and contract award/execution in contractor tendering procedure respectively are important and should be applied when performing contractor prequalification and tendering systems in practice. They all are the main concern in order to achieve the successful projects.
Based on the correlation analysis result, it shows that different contractor prequalification criteria, tendering criteria, and tendering procedure are significantly positively and differently affected on project performance. That means different contractor prequalification criteria, tendering criteria, and tendering procedure have different affects on project performance. Furthermore, the results from the correlation analysis show that Past performance, Technical ability, Management capability, Price, Methodology, Tender evaluation, and Tender submission are perceived to be the dominant contractor prequalification criteria affecting all project performance in terms of cost, time, quality, and customer’s satisfaction. While, Financial consideration were perceived to affect only time, quality, and customer’s satisfaction. At the same analysis, Technical skills, Relevant experience, Past performance in construction tendering, and Prequalification and Registration were perceived to affect only cost, time, and quality. But Contractor’s organization, Past experience, Resources, Management skills and systems, Contract award/execution, Tender opening, and Invitation to Tender did not show any correlation with project performance. Practically, the two case studies above showed the correlated study between quantitative and qualitative study. The result indicated that the factors among the construction tendering practices above were tended to the project successfully.
Mr. Puoy Puthitha made a research to give the suitable selection criteria whether it will be effective in building construction projects in Cambodia. The process of contractor selection can be achieved, unless the prequalification, tendering criteria and tendering process will be linked to project performance in term of time, cost, quality, and customer satisfaction. It means that different project types and objectives should have different proportion on each selection criteria.
The purpose of his research is to define contractor prequalification criteria, tendering criteria, and tendering procedure in Cambodia building and housing construction projects and then how the contractor prequalification, tendering criteria and tendering procedure affect the project performance. The specific objectives of his research were to: (1) study effective contractor prequalification criteria; (2) study effective contractor tendering criteria; (3) study effective contractor tendering procedure; and (4) how contractor prequalification criteria, tendering criteria, and tendering procedure affect project performance.
Conclusion
There are four main findings in this study such as follows:
1. The effectiveness of contractor prequalification criteria in building construction projects.
2. The effectiveness of contractor tendering criteria in building construction projects.
3. The effectiveness of contractor tendering procedure in building construction projects.
4. Contractor prequalification criteria, tendering criteria, and tendering procedure have different affected on project performance.
In order to get the effective or significant factors and sub-factors from contractor prequalification criteria, tendering criteria and tendering procedure, the results were combined the ranking by mean with the correlation analysis results.
Contractor Prequalification Criteria
1. Financial Consideration: financial stability, financial status, Bank arrangement and bonding capacity.
2. Past Performance: failure to have completed projects, schedule overruns, cost overruns, past failures, owner/contractor relationship
3. Technical Ability: technical expertise, possessed plant and equipment, experience
4. Management Capability: past performance and quality, project management organization, experience of technical personnel
Contractor Tendering Criteria
1. Price: fixed capital cost, variable tender costs during the contract period, maintenance costs
2. Technical Skills: design quality, technical expertise
3. Methodology: program of works, division of works into sub-contracts, key performance indicators, reporting and recoding systems
4. Relevant Experience: project cost
5. Past Performance: quality standards, target performance level; tender price, variations and final cost.
Contractor Tendering Procedure
1. Tender Evaluation: tender quality (technical evaluation); tender price (financial evaluation); determine lowest bid; responsiveness, and responsibility
2. Tender Submission: sealing and marking of the tenderers, tender forms and tender specification document; tender terms and condition for bid preparation; post offer negotiation
3. Prequalification and Registration: prequalification requirement
The following description in details about the conclusion of this research study will support the conformation of each objective. All the results are computerized by SPSS software in order to get the data analysis results.
Project Performance in Building Construction Projects
Most of consultant companies in Cambodia had carefully focused on the process of selecting the qualified contractors in order to get the project successfully. In addition, the project owners were spent enough time in selecting the qualified contractors, particularly running projects and the quality control. As a result, the projects were finished within the budget, the quality of construction projects was good, and the contractors could be able to satisfy to the customer’s requirements.
The Effectiveness of Contractor Prequalification Criteria
Financial consideration found to be the main key factor for contractor prequalification criteria in Cambodia building and housing construction project, this result is related each other, which mean in order to be successful in performing the effective contractor prequalification process, the project owners have an important role in making the right decision for selecting the main contractors for construction works based upon the financial information of the contractors.
The Effectiveness of Contractor Tendering Criteria
The Price found to be the important factor for contractor tendering criteria in Cambodia building and housing construction project. Most of the tenderers still rely on tender price which has been proven its competency to acquire the contracts. The other contractor tendering criteria also are quite significant stimulated in contractor selection?
The Tender evaluation found to be the important selection process for contractor tendering procedure in Cambodia building and housing construction project.
This process is to financially and technically evaluate the tenderers’ performance in order to acquire the projects. The other contractor tendering procedures also are quite significant stimulated in performing the construction tendering practice.
The Correlation between Contractor Prequalification Criteria and Project Performance
The result shows that past performance, technical ability, and management capability are perceived to be the dominant contractor prequalification criteria affecting all project performance in terms of cost, time, quality, and customer’s satisfaction. While, financial consideration was perceived to affect only time, quality, and customer’s satisfaction. But Contractor’s organization and Past experience did not show any correlation with project performance. It can be concluded that most of the project owners focused on these two factors as somewhat important on how to acquire the qualified contractors by regarding to the perceived impact of the other decision factors on contractor prequalification decision making; the projects were still cost overrun and overtime. That’s why the customer did not satisfy in their performance. This is due to external factors such as lack of accurate data from the contractors, imprecise information, subjective information, and subjective judgment. Furthermore, they were also suffered from the rising of construction costs because of the materials fluctuation, lack of updating their technical performance, and lack of government regulation. Particularly, the projects were stopped due to heavy rain and flooding. Therefore, the external factors need a lot of information for assessing their impacts in order to achieve the project successfully in construction industry,
The Correlation between Contractor Tendering Criteria and Project
Performance
The result indicates that Price and Methodology are perceived to be the dominant contractor tendering criteria affecting all project performance in terms of cost, time, quality, and customer’s satisfaction. While, Technical skills, Relevant experience, and Past performance were perceived to affect only cost, time, and quality. But Resources and Management skills and systems did not show any correlation with project performance.
However Resources, Management skills and systems can be considered as somewhat important. The contractor tendering criteria had the moderate mean for resources, management skills and systems, the projects were not success. This is because the project owners did not much focused on the information of resources, and management skills and systems. Even these two criteria were somewhat important in selecting the qualified tenderers, the projects were still cost overruns, over time, unqualified quality, and the client didn’t satisfy. It might be affected by other external factors which were concerned with project performance.
The Correlation between Contractor Tendering Procedure and Project
Performance
The result indicates that Tender evaluation and Tender submission are perceived to be the dominant contractor tendering procedure affecting all project performance in terms of cost, time, quality, and customer’s satisfaction. While, prequalification and registration were perceived to affect only cost, time, and quality. But Contract award/execution, Tender opening, and Invitation to tender did not show any correlation with project performance. However, the Contract award/execution, Invitation to tender, and Tender opening can be concluded as somewhat important. Even the project owners had depicted clearly their requirements in construction contracts during their contract award/execution, invitation to tender, and tender opening; the tenderers were not successful yet to receive the owner’s requirement. Furthermore, the tenderers had been considered as some part of important in these stages, but the project owners and consultants were still not accepted their performance yet as well. The reason is that it might be affected by other external factors which were concerned with project performance.
His thesis abstract is copied and posted.
Abstract
The construction industry today is a highly competitive industry with an enormous amount of risk, particularly many conflicts, problems, adversity, and uncertainty. The construction projects are usually confronted with many conflicts, problems, and uncertainty due to a result of failure in selecting a competent contractor. To perform the project success, the owner’s team has an important role to figure out these many conflicts and problems such as schedule delays, cost overrun, low productivity, and contract disputes by being able to evaluate the contractor’s performance in the proper way. This study is based on quantitative research through questionnaires and carries on to first identify the contractor performance criteria in terms of prequalification criteria, tendering criteria, and tendering procedure and to help the project owners to assess the tenderer’s performance. Second, this study aims at describing how the contractor prequalification criteria, tendering criteria, and tendering procedure affect project performance.
This study was conducted in Cambodia building consultant and construction companies to study effective contractor prequalification criteria, tendering criteria, and tendering procedure for being able to select the competent contractors. In each case, the criteria have been ranged the scores in order to facility the project owners are able to evaluate with flexibility. The result found that first financial consideration, past performance, and technical ability in contractor prequalification criteria; second price, technical skills, and methodology in contractor tendering criteria; third tender evaluation, tender submission, and contract award/execution in contractor tendering procedure respectively are important and should be applied when performing contractor prequalification and tendering systems in practice. They all are the main concern in order to achieve the successful projects.
Based on the correlation analysis result, it shows that different contractor prequalification criteria, tendering criteria, and tendering procedure are significantly positively and differently affected on project performance. That means different contractor prequalification criteria, tendering criteria, and tendering procedure have different affects on project performance. Furthermore, the results from the correlation analysis show that Past performance, Technical ability, Management capability, Price, Methodology, Tender evaluation, and Tender submission are perceived to be the dominant contractor prequalification criteria affecting all project performance in terms of cost, time, quality, and customer’s satisfaction. While, Financial consideration were perceived to affect only time, quality, and customer’s satisfaction. At the same analysis, Technical skills, Relevant experience, Past performance in construction tendering, and Prequalification and Registration were perceived to affect only cost, time, and quality. But Contractor’s organization, Past experience, Resources, Management skills and systems, Contract award/execution, Tender opening, and Invitation to Tender did not show any correlation with project performance. Practically, the two case studies above showed the correlated study between quantitative and qualitative study. The result indicated that the factors among the construction tendering practices above were tended to the project successfully.
Wednesday 29 June 2011
Factors Affecting the Performance of The International Construction Contractors (ICCs) Doing Business in Cambodia
International construction business is the kind which embodies with serious economic, social, and political ramifications leading to the failure of the international project success in term of time, quality and cost (Walewski, 2003). The difficulties such as client communication, understanding new market, avoiding local politics and supervising the diverse group of professionals are confronted by the international construction business (Kangari and Lucas, 1997). Moreover, the inability to understand the clients’ requirement affects the project success in international business (Ling et al., 2006). The increasing of the misunderstanding, delay and costs resulting from unfamiliar environment and different institution such as regulations, norm, and cognitive-cultural belief with diverse participant are critical things (Will and Levitt, 2010). As Han et al.,(2005) stated that the risk factors associated with overseas construction projects can diminish project profitability .There are many researchers found that the delay and cost are increased due to the confusion among project participants (Flyvberg et al., 2003; Miller and Lessard, 2000; Orr, 2005), and due to dispute resulting from different cultures (Ghopshal, 1987).
Mr. Hout Venghong made a research on an international construction contractor (ICCs) doing business in Cambodia in order to: (1) investigate the current practices of the factors affecting the performance of the international construction contractors doing business in Cambodia; (2) develop the causal relationships affecting the performance of ICCs model of each investigated factors and figured out how each contractor copes with; and (3) propose the recommendation and a framework to the international construction contractors to take into account in order to do business in Cambodia.
Research Findings
Investigated factors affecting the performance of the International Construction
Contractors (ICCs) doing business in Cambodia
Based on the data gathered, there are five factors influencing the decision making of the international construction contractors doing business in Cambodia taking to the account to strategize accordingly in order to execute the project lucratively. The current practices of the factors affecting the performance of ICCs doing business in Cambodia are:
(1) condition of the host country and project owner,
(2) international construction contractors’ ability,
(3) characteristic of organization and participation,
(4) entry mode, and
(5) Uncontrollable variables with nineteen sub-factors.
Develop the causal relationships affecting the performance of ICCs model of each investigated factors and figured out how the firms response to each factor
1. Cambodian Government policy. The government does not have clear procedure for project approval and construction law and regulation for the construction projects. The tax and custom system, still, are not transparent which can affect to the project schedule and performance as well. The unethical practice, construction law and regulation should be completely addressed the firm from the beginning of the planning stage. The procured materials have to be taken with high attention in order to meet the projects’ objectives to avoid delay and cost overrun. Lack of construction law and regulation with weak legal system leads the firm hiring a legal advisor or international lawyer to prepare the legal documents related to avoid the conflict during the projects execution. The legal advisor or lawyer is asked to involve after the international construction contractors awarded the contract.
2. The unskilled labor issue in Cambodia construction sector. This is a big problem challenging the international construction contractors, especially when the project is complex and very specialized. Because construction market in Cambodia is not really attractive yet. There are quite few tall buildings and complex projects in Cambodia. Consequently, this provides less opportunity to the local laborers to experience with similar project. Even the local labor cost is cheap but the problem is unskilled laborers who are mostly farmers, so they will quite the project to go back home.
3. Lack of local skilled engineers who are able to use English as official language, especially for technical terms in construction project. The knowledge of local engineers was considerably limited since they did not have a chance to involve with similar complex projects. The local contractors are lack of knowledge in quality control and they are mostly not qualified for either big projects or specific projects. The employment of the staffs has to be mixed because the local staffs need to coordinate at construction site between the local labors and foreign staffs. The research is also found that the entering of the international construction contractors is to consider market attractiveness with the local government support.
4. Owner delayed payment. It plays a crucial role to the quality of the project, delay payment will results to time delay.
5. No local financial institution to help the contractors or subcontractors. The lack of the big local contractors to join the international construction contractor is one constraint that the international firms do not want to do business in Cambodia. The firm has to ask for the home country contractor or the third country to execute the project. This is still riskier than joint venture with the big local contractor in case they find the suitable local contractor to make a joint venture.
6. Most of the projects are under loan or grant projects from ADB, World Bank or the other financial institution, therefore the international construction contractors did not want to bid the projects, because they are so competitive. On the other hand, the contractors who want to launch their projects with high quality to maintain their good reputation will not bid the public projects, because the project volume reflects to the skilled labors and many subcontractors to execute the project as well.
Recommendation
Based on analysis of current practices of the international construction contractors doing business in Cambodia, below is the summarized recommendation for the International Construction Contractors.
His thesis abstract is copied and pasted.
Abstract
This study aimed to investigate the factors affecting the performance of the international construction contractors (ICCs) doing business in Cambodia. Five firms in Cambodia were investigated through case study approach explanation building strategy as specific analytic approach in case study. The current practice factors/sub-factors were verified with nine industry experts and practitioners experienced in Cambodia construction industry. The administered research questions developed by a researcher being conducted with seven top management level of ICCs. In addition, the secondary data and the direct observation of the construction projects are carried out to get the supportive evidence to the result from the interview session. However, the short interview with the persons who were responsible at construction site was carried out during project direct observation. The research showed that the unethical practice, unclear tax and custom system, material availability, unskilled labor issues, lack of construction law and regulation, lack of legal system, unwillingness of local government support, different practices between the contractor and designer. From the finding, the response of the international construction contractors was pointed out with the each investigated factors accordingly. Objectively, the causal relationships affecting the performance of ICCs doing business in Cambodia was developed with the recommendation for better practices in Cambodia construction industry.
Key words: Factors, Performance, International construction contractors, Business,
Cambodia
Mr. Hout Venghong made a research on an international construction contractor (ICCs) doing business in Cambodia in order to: (1) investigate the current practices of the factors affecting the performance of the international construction contractors doing business in Cambodia; (2) develop the causal relationships affecting the performance of ICCs model of each investigated factors and figured out how each contractor copes with; and (3) propose the recommendation and a framework to the international construction contractors to take into account in order to do business in Cambodia.
Research Findings
Investigated factors affecting the performance of the International Construction
Contractors (ICCs) doing business in Cambodia
Based on the data gathered, there are five factors influencing the decision making of the international construction contractors doing business in Cambodia taking to the account to strategize accordingly in order to execute the project lucratively. The current practices of the factors affecting the performance of ICCs doing business in Cambodia are:
(1) condition of the host country and project owner,
(2) international construction contractors’ ability,
(3) characteristic of organization and participation,
(4) entry mode, and
(5) Uncontrollable variables with nineteen sub-factors.
Develop the causal relationships affecting the performance of ICCs model of each investigated factors and figured out how the firms response to each factor
1. Cambodian Government policy. The government does not have clear procedure for project approval and construction law and regulation for the construction projects. The tax and custom system, still, are not transparent which can affect to the project schedule and performance as well. The unethical practice, construction law and regulation should be completely addressed the firm from the beginning of the planning stage. The procured materials have to be taken with high attention in order to meet the projects’ objectives to avoid delay and cost overrun. Lack of construction law and regulation with weak legal system leads the firm hiring a legal advisor or international lawyer to prepare the legal documents related to avoid the conflict during the projects execution. The legal advisor or lawyer is asked to involve after the international construction contractors awarded the contract.
2. The unskilled labor issue in Cambodia construction sector. This is a big problem challenging the international construction contractors, especially when the project is complex and very specialized. Because construction market in Cambodia is not really attractive yet. There are quite few tall buildings and complex projects in Cambodia. Consequently, this provides less opportunity to the local laborers to experience with similar project. Even the local labor cost is cheap but the problem is unskilled laborers who are mostly farmers, so they will quite the project to go back home.
3. Lack of local skilled engineers who are able to use English as official language, especially for technical terms in construction project. The knowledge of local engineers was considerably limited since they did not have a chance to involve with similar complex projects. The local contractors are lack of knowledge in quality control and they are mostly not qualified for either big projects or specific projects. The employment of the staffs has to be mixed because the local staffs need to coordinate at construction site between the local labors and foreign staffs. The research is also found that the entering of the international construction contractors is to consider market attractiveness with the local government support.
4. Owner delayed payment. It plays a crucial role to the quality of the project, delay payment will results to time delay.
5. No local financial institution to help the contractors or subcontractors. The lack of the big local contractors to join the international construction contractor is one constraint that the international firms do not want to do business in Cambodia. The firm has to ask for the home country contractor or the third country to execute the project. This is still riskier than joint venture with the big local contractor in case they find the suitable local contractor to make a joint venture.
6. Most of the projects are under loan or grant projects from ADB, World Bank or the other financial institution, therefore the international construction contractors did not want to bid the projects, because they are so competitive. On the other hand, the contractors who want to launch their projects with high quality to maintain their good reputation will not bid the public projects, because the project volume reflects to the skilled labors and many subcontractors to execute the project as well.
Recommendation
Based on analysis of current practices of the international construction contractors doing business in Cambodia, below is the summarized recommendation for the International Construction Contractors.
His thesis abstract is copied and pasted.
Abstract
This study aimed to investigate the factors affecting the performance of the international construction contractors (ICCs) doing business in Cambodia. Five firms in Cambodia were investigated through case study approach explanation building strategy as specific analytic approach in case study. The current practice factors/sub-factors were verified with nine industry experts and practitioners experienced in Cambodia construction industry. The administered research questions developed by a researcher being conducted with seven top management level of ICCs. In addition, the secondary data and the direct observation of the construction projects are carried out to get the supportive evidence to the result from the interview session. However, the short interview with the persons who were responsible at construction site was carried out during project direct observation. The research showed that the unethical practice, unclear tax and custom system, material availability, unskilled labor issues, lack of construction law and regulation, lack of legal system, unwillingness of local government support, different practices between the contractor and designer. From the finding, the response of the international construction contractors was pointed out with the each investigated factors accordingly. Objectively, the causal relationships affecting the performance of ICCs doing business in Cambodia was developed with the recommendation for better practices in Cambodia construction industry.
Key words: Factors, Performance, International construction contractors, Business,
Cambodia
Monday 27 June 2011
Influence of Financial Risk for Project Financing throughout Real Estate Development Process: A Case Study of a High Rise Apartment Project in Vietnam
Many risks and opportunities occur in real estate market, especially during development phases (Mou, 2007). However, in Vietnam, there is a lack of knowledge about the influence of financial risk in real estate development process. Therefore, Mr. Nguyen Quoc Trung tried to research the influence of financial risk to project financing throughout development process. Furthermore, his study tried to explore relationship between the financial risk, the development process and the project financing to reduce its influence. The objectives of his study were: (1) to investigate the real estate development process in high rise apartment project and to indentify financial risk factors in each activity of process; (2) assessment the critical factor of financial risk on the development process and the influence of these factors to project financing throughout development process; and (3) purpose the conclusion and recommendation to reducing the influence of these factors on the project financing throughout the development process.
Research findings
1. The real estate development process and financial risk factor happen on this process in high rise apartment project
The first objective of this study is to find the financial risk and development process of high rise apartment project. After analyzing the data, it was found out that financial risk has 4 categories: legal risk, leverage risk, financing risk, inflation risk and risk of construction cost. While the development process of high rise apartment project includes 4 phases, there are project allocating, feasibility study, contract – license – commitment and execution and sell. The financial risk factor in each phase of development process is verified by expert and this supports for the developer, the real estate company and who related in development process of high rise project to get the overview picture of real estate development process and the financial risk happen in each step of process.
2. Assessment the critical factor of financial risk on the development process and the influence of these factors to project financing throughout development process
Base on the frame work, the development process and financial risk happen in each step of process. The researcher assessed all financial risk factors in each step of development process throughout the case study. This assessment was done by the development team of Project A, who directly manages this project. The assessment of influence of financial risk factor in development process and database of this project is analyzed to get the critical factor of financial risk on development process. The financial model of project is integrated with the critical factor of financial risk throughout development process for analyzing influences of critical factor of financial risk to project financing model throughout development process.
This finding shows the practice of development process in high rise apartment project and the influence of financial risk on development process. In this finding, the legal risk and leverage risk can lead to financing risk, inflation risk and risk of construction cost on the development process. Every activity of development process has relationship to each other. So, in each phase of project, the financial risk factor has impact to each other. This finding also shows the gap of perception of Real Estate Company about the influence of financial risk on development process. The Real Estate Company always wants to control the cost of the construction project but the real estate company forgets that the more important is the maximum profit of project. With this reason, the real estate company does not understand the demand of housing characteristic for project design of each segment in market. They always focus on the cost if this project is mid end or low end project. The delay for project operation increases the inflation cost and construction cost but decrease the profit of project.
3. Recommendation to reducing the influence of financial risk to project financing throughout development process.
The project financing in real estate development process is the key for successful project. To reduce the influence of financial risk in each phase of development process is the key for making decision for risk management. In order to achieve the maximum profit of project and control the cost of project, all of financial risk need to reduced and controlled. The recommendation to reducing the influence of financial risk to project financing model throughout development process is summarized in the table below.
His thesis abstract is copied andposted.
ABSTRACT
The real estate company always want maximum the profit and minimum the cost of project. With this purpose, the real estate company manages the financial risk to get the profit and control the cost. The real estate development process is complex project and very risky. In this process, the financial risk impact to project financing dramatically. With this reason, the influence of financial risk to project financing throughout development process is studied to support the real estate company and actor related in development process in order to make solution reducing the influence of financial risk to achieve objective of project.
This research was conducted to fulfill the three objectives. (1) to investigate the real estate development process in high rise apartment project and to identify financial risk factor in each step of development process; (2) to assess the critical factor of financial risk on the development process and the influence of these factors to project financing throughout development process; (3) to purpose the conclusion and recommendation to reducing the influence of these factors on project financing throughout the development process.
The result of this study found that the perception of Real Estate Company do not correspond with the influence of financial risk. The financial risk factor impact the both source of fund and use of f
und of project which is included the project financing model throughout each phase of development process. All of consequence of risk factor is show in execution and sale phase. This makes profit of project decrease dramatically and increase the construction cost. This study also shows that Vietnam has not yet created a convenience environment for the real estate business.
Key words: Real estate, development process, project financing, financial risk, risk factor, case study, Vietnam
Research findings
1. The real estate development process and financial risk factor happen on this process in high rise apartment project
The first objective of this study is to find the financial risk and development process of high rise apartment project. After analyzing the data, it was found out that financial risk has 4 categories: legal risk, leverage risk, financing risk, inflation risk and risk of construction cost. While the development process of high rise apartment project includes 4 phases, there are project allocating, feasibility study, contract – license – commitment and execution and sell. The financial risk factor in each phase of development process is verified by expert and this supports for the developer, the real estate company and who related in development process of high rise project to get the overview picture of real estate development process and the financial risk happen in each step of process.
2. Assessment the critical factor of financial risk on the development process and the influence of these factors to project financing throughout development process
Base on the frame work, the development process and financial risk happen in each step of process. The researcher assessed all financial risk factors in each step of development process throughout the case study. This assessment was done by the development team of Project A, who directly manages this project. The assessment of influence of financial risk factor in development process and database of this project is analyzed to get the critical factor of financial risk on development process. The financial model of project is integrated with the critical factor of financial risk throughout development process for analyzing influences of critical factor of financial risk to project financing model throughout development process.
This finding shows the practice of development process in high rise apartment project and the influence of financial risk on development process. In this finding, the legal risk and leverage risk can lead to financing risk, inflation risk and risk of construction cost on the development process. Every activity of development process has relationship to each other. So, in each phase of project, the financial risk factor has impact to each other. This finding also shows the gap of perception of Real Estate Company about the influence of financial risk on development process. The Real Estate Company always wants to control the cost of the construction project but the real estate company forgets that the more important is the maximum profit of project. With this reason, the real estate company does not understand the demand of housing characteristic for project design of each segment in market. They always focus on the cost if this project is mid end or low end project. The delay for project operation increases the inflation cost and construction cost but decrease the profit of project.
3. Recommendation to reducing the influence of financial risk to project financing throughout development process.
The project financing in real estate development process is the key for successful project. To reduce the influence of financial risk in each phase of development process is the key for making decision for risk management. In order to achieve the maximum profit of project and control the cost of project, all of financial risk need to reduced and controlled. The recommendation to reducing the influence of financial risk to project financing model throughout development process is summarized in the table below.
His thesis abstract is copied andposted.
ABSTRACT
The real estate company always want maximum the profit and minimum the cost of project. With this purpose, the real estate company manages the financial risk to get the profit and control the cost. The real estate development process is complex project and very risky. In this process, the financial risk impact to project financing dramatically. With this reason, the influence of financial risk to project financing throughout development process is studied to support the real estate company and actor related in development process in order to make solution reducing the influence of financial risk to achieve objective of project.
This research was conducted to fulfill the three objectives. (1) to investigate the real estate development process in high rise apartment project and to identify financial risk factor in each step of development process; (2) to assess the critical factor of financial risk on the development process and the influence of these factors to project financing throughout development process; (3) to purpose the conclusion and recommendation to reducing the influence of these factors on project financing throughout the development process.
The result of this study found that the perception of Real Estate Company do not correspond with the influence of financial risk. The financial risk factor impact the both source of fund and use of f
und of project which is included the project financing model throughout each phase of development process. All of consequence of risk factor is show in execution and sale phase. This makes profit of project decrease dramatically and increase the construction cost. This study also shows that Vietnam has not yet created a convenience environment for the real estate business.
Key words: Real estate, development process, project financing, financial risk, risk factor, case study, Vietnam
Wednesday 22 June 2011
Life Cycle Cost Analysis for Hydropower Projects
Life cycle cost is a key economic figure resulted from condensing an almost overwhelmingly large quantity of data (Pelzeter et al, 2007). The accuracy and sensitivity of these data can be difficult to analyze to become reasonable inputs for life cycle costs assessment.
For hydropower projects, there is a master plan to develop these projects in almost every country. However, because of the available budgets, the projects are needed to be ranked in order to decide which projects are necessary, economical and beneficial more than others. Life cycle cost analysis is one of the useful ways in decision making process and long term planning of the project. So, different projects are needed to compare their life cycle costs and incomes. Because of the various factors that can affect on hydropower projects, the uncertainty and the risks are high and difficult to predict.
Mr. Kyaw Min Thu made a case study which major objectives were to: (1) compare the life cycle costs and net present values of hydropower projects/plants with different types of turbine; and (2) identify the major cost contributors in life cycle cost of each project,
Conclusions
In this research, life cycle cost analysis of hydropower projects installed different types of turbine are conducted on the costs incurred in the hydropower plants to determine the most beneficial technology in terms of cost effectiveness. The hydropower plants for this research are selected among the hydropower plants in Thailand which are operating under management of EGAT. To conduct the analysis, all accessible cost data are collected and the researcher followed the cost categories of responsible agencies. All the costs incurred in the selected hydropower plants that can be accessed are considered and then converted into the same period to analyze. The costs data are converted in the same unit (thousand baht per year) at the end of each year within the analysis period.
Moreover, the energy generated data from each selected hydropower plant are collected and calculated the incomes of the power plants each year using the average energy sales price. The incomes getting from the energy generation are considered and calculated as one of the parameters in life cycle cost analysis for wider perspective to determine the outputs. The net present values of the hydropower plants are achieved from the costs and incomes incurred each operation year in the hydropower plants. The analysis’s results are converted into cost per capacity and cost per energy as the capacity of the hydropower plants can affect the results of the analysis.
Among factors influencing the selection of the turbine types of hydropower plants, the result of life cycle cost analysis can be just one of those factors. A final decision may include a number of additional factors outside the LCCA process, such as availability of funding, capability to perform the required construction, expertise and experiences with a particular turbine type and so on.
1. Comparison of Life Cycle Costs of Hydropower Plants
As the capacities of the hydropower plants that can get enough data to conduct analysis are different, the analysis is performed to get the values for unit capacity and unit energy generated for each hydropower plants.
Based on the data analysis for three types of hydropower plants with three different types of turbine, the Francis turbine power plant is more cost-effective than other two types of power plants with respect to the life cycle cost per installed capacity, life cycle cost per energy, net present value per installed capacity and net present value per energy.
The Kaplan turbine hydropower plant and Pelton turbine hydropower stand as decreasing order with respect to their life cycle costs per installed capacity, life cycle costs per energy generated and net present values per capacity and energy generated by the Pelton turbine plant has the larger values than that of Kaplan turbine plant. Thus, the Pelton turbine hydropower plant is more favorable than that of Kaplan plant in terms of cost-effectiveness.
2. Major Cost Contributors in Hydropower Plants
The present values of each cost categories involved in total costs of hydropower plants for each year are calculated to find out the contributors and their ratios in the life cycle costs. The researcher follows the responsible agencies in categorization the costs incurred in the hydropower plants.
In every plant, the life cycle costs spent for civil structures are the largest in the life cycle costs for the whole plants, in other words, life cycle costs of civil structures are major cost contributors in whole life cycle costs of hydropower plants. However, taking account only the operation and maintenance costs, the costs incurred for the electromechanical equipment are the larger than for the civil structures.
In terms of costs per capacity and energy generated, for each cost category, the hydropower plants can be arranged as Kaplan, Pelton and Francis turbine hydropower plant in decreasing order.
According to the results of the analysis, Francis turbine power plant has the least cost per energy generated in all cost categories so Francis turbine is the most favorable among hydropower plants with different types of turbine.
Thus, life cycle costs of civil structures in the analysis period are the major costs contributors in all types of plants while the operation and maintenance costs of the electromechanical equipment are major cost contributors among the total operation and maintenance costs of hydropower plants
His thesis abstract is copied and pasted.
Abstract
The hydropower projects are needed relatively large amount of investment relative to most of the other projects in construction industry. Thus, the decision making on selecting the technologies using in the hydropower plants are needed to analyzed well because of the costs incurred in the whole life of the plant come from the decisions made before starting construction and operation of the plant. Life cycle cost analysis is worth to be conducted as it can give the results not only on the initial costs but also on the costs in the whole life of the studied assets.
In this study, the objective is set to conduct the life cycle cost analysis for the hydropower plants which are installed different types of turbines. The life cycle cost analysis for each type of plant is carried out and the results are shown as per capacity and per energy generated of the plant. The main components of the inputs, which are historical data from hydropower plants, are gathered from the representative agencies. The comparisons of the results of the analysis are performed to select the most cost-effective technology for the hydropower plants in long term basis.
As the results of the analysis, it is found that Francis turbine hydropower plant is more cost effective over than other types.
For hydropower projects, there is a master plan to develop these projects in almost every country. However, because of the available budgets, the projects are needed to be ranked in order to decide which projects are necessary, economical and beneficial more than others. Life cycle cost analysis is one of the useful ways in decision making process and long term planning of the project. So, different projects are needed to compare their life cycle costs and incomes. Because of the various factors that can affect on hydropower projects, the uncertainty and the risks are high and difficult to predict.
Mr. Kyaw Min Thu made a case study which major objectives were to: (1) compare the life cycle costs and net present values of hydropower projects/plants with different types of turbine; and (2) identify the major cost contributors in life cycle cost of each project,
Conclusions
In this research, life cycle cost analysis of hydropower projects installed different types of turbine are conducted on the costs incurred in the hydropower plants to determine the most beneficial technology in terms of cost effectiveness. The hydropower plants for this research are selected among the hydropower plants in Thailand which are operating under management of EGAT. To conduct the analysis, all accessible cost data are collected and the researcher followed the cost categories of responsible agencies. All the costs incurred in the selected hydropower plants that can be accessed are considered and then converted into the same period to analyze. The costs data are converted in the same unit (thousand baht per year) at the end of each year within the analysis period.
Moreover, the energy generated data from each selected hydropower plant are collected and calculated the incomes of the power plants each year using the average energy sales price. The incomes getting from the energy generation are considered and calculated as one of the parameters in life cycle cost analysis for wider perspective to determine the outputs. The net present values of the hydropower plants are achieved from the costs and incomes incurred each operation year in the hydropower plants. The analysis’s results are converted into cost per capacity and cost per energy as the capacity of the hydropower plants can affect the results of the analysis.
Among factors influencing the selection of the turbine types of hydropower plants, the result of life cycle cost analysis can be just one of those factors. A final decision may include a number of additional factors outside the LCCA process, such as availability of funding, capability to perform the required construction, expertise and experiences with a particular turbine type and so on.
1. Comparison of Life Cycle Costs of Hydropower Plants
As the capacities of the hydropower plants that can get enough data to conduct analysis are different, the analysis is performed to get the values for unit capacity and unit energy generated for each hydropower plants.
Based on the data analysis for three types of hydropower plants with three different types of turbine, the Francis turbine power plant is more cost-effective than other two types of power plants with respect to the life cycle cost per installed capacity, life cycle cost per energy, net present value per installed capacity and net present value per energy.
The Kaplan turbine hydropower plant and Pelton turbine hydropower stand as decreasing order with respect to their life cycle costs per installed capacity, life cycle costs per energy generated and net present values per capacity and energy generated by the Pelton turbine plant has the larger values than that of Kaplan turbine plant. Thus, the Pelton turbine hydropower plant is more favorable than that of Kaplan plant in terms of cost-effectiveness.
2. Major Cost Contributors in Hydropower Plants
The present values of each cost categories involved in total costs of hydropower plants for each year are calculated to find out the contributors and their ratios in the life cycle costs. The researcher follows the responsible agencies in categorization the costs incurred in the hydropower plants.
In every plant, the life cycle costs spent for civil structures are the largest in the life cycle costs for the whole plants, in other words, life cycle costs of civil structures are major cost contributors in whole life cycle costs of hydropower plants. However, taking account only the operation and maintenance costs, the costs incurred for the electromechanical equipment are the larger than for the civil structures.
In terms of costs per capacity and energy generated, for each cost category, the hydropower plants can be arranged as Kaplan, Pelton and Francis turbine hydropower plant in decreasing order.
According to the results of the analysis, Francis turbine power plant has the least cost per energy generated in all cost categories so Francis turbine is the most favorable among hydropower plants with different types of turbine.
Thus, life cycle costs of civil structures in the analysis period are the major costs contributors in all types of plants while the operation and maintenance costs of the electromechanical equipment are major cost contributors among the total operation and maintenance costs of hydropower plants
His thesis abstract is copied and pasted.
Abstract
The hydropower projects are needed relatively large amount of investment relative to most of the other projects in construction industry. Thus, the decision making on selecting the technologies using in the hydropower plants are needed to analyzed well because of the costs incurred in the whole life of the plant come from the decisions made before starting construction and operation of the plant. Life cycle cost analysis is worth to be conducted as it can give the results not only on the initial costs but also on the costs in the whole life of the studied assets.
In this study, the objective is set to conduct the life cycle cost analysis for the hydropower plants which are installed different types of turbines. The life cycle cost analysis for each type of plant is carried out and the results are shown as per capacity and per energy generated of the plant. The main components of the inputs, which are historical data from hydropower plants, are gathered from the representative agencies. The comparisons of the results of the analysis are performed to select the most cost-effective technology for the hydropower plants in long term basis.
As the results of the analysis, it is found that Francis turbine hydropower plant is more cost effective over than other types.
Tuesday 21 June 2011
Factors Affecting Operation and Maintenance Costs of Ho Chi Minh City Condominium Projects
The management of condominium project during the operation stage is an emerging problem for project owners. Normally, the owners focus on development stage and construction stage of the project. They mainly concern in problems related to planning, design, and execution (Arditi & Nawakorawit, 1999a).
In order to recommend to owners or property managers appropriate solutions to control and reduce O&M expense. Mr. Duong Quang Minh made a study which, first, will develop operation and maintenance cost system of existing condominium projects. The purpose is to identify the most important costs in this system. Second, the study will investigate the reasons that cause the cost. Thus, the three main objectives of his study were to: (1) build a generic framework for operation and maintenance cost system of existing condominium projects; (2) find out and assess factors affecting on operation and maintenance cost of existing condominium projects; and (3) recommend solutions to reduce or control the impact of the factors that influence on O&M costs.
Conclusions
For Objective 1
The study analyzed cost data from five case studies to identify the most important cost of operating condominiums. Each cost was given a brief definition, its components, and characteristic. Then, the study developed the generic framework of operation and maintenance cost of condominium projects. The framework is benchmark to compare O&M costs between condominiums.
From the benchmarking, the study found that cost for condominium management is the highest cost with about 46.42 percent of total O&M cost. In addition, energies supplying for common activities of condominium are also high with about 18.26 percent of electricity consumption and about 9.23 percent for water consumption. Also, costs of cleaning and waste disposal are high by about 9.61 percent and costs for maintaining lifts are 6.01 percent.
The reasons behind this high cost include:
1. Management cost: The reason may be inappropriate choices between in-house or out-source employment.
2. Energy consumption cost (Electricity and water supply): There are three main reasons that cause high expense for this cost center such as general facility influences, installation of an old-fashion technology in the facilities, and maintenance policy including lack of daily inspection and preventive maintenance.
3. Maintaining lift cost: Maintenance costs of lifts are costs connected to planned maintenance works to the lifts in the common areas of condominium.
4. Cleaning and waste disposal cost: Reasons that may cause cleaning service cost is lack of design specification of cleaning tasks and inappropriate choice of construction material, specially decorated material.
Objective 2
There is no significant difference between in-house and out-sourcing employment condominium managers. In general, both managers pay attention into reducing operation and maintenance costs. However, based on characteristic of each employment type, the condominium managers have different maintenance strategy to perform the maintenance task effectively. Therefore, they have different perception about the factors that influence to O&N costs.
Recommended solutions to reduce or control the impact of the factors that influence on O&M costs
For new condominium projects, property manager is usually the one that handles all the defects or design faults after the completion of construction stage. Base on accumulated experiences in handling the defects from different building projects, the property manager can feed back what they have suffered from the experiences to the project team. Besides, as the property manager's role is to manage the property, they usually meet the tenants that propose many expectations or requirements to make better living condition of condominiums. These expectations may be valuable information for the owner to make the right decision when investing in new condominium project. In order to better manage the project, property manager should:
• Select appropriate in-house or out-sourcing staff to perform maintenance tasks efficiently
• Imply conservation energy program in order to control and reduce energy consumption
• Pay attention in the management of maintenance task for lift system
• Pay attention in the management of cleaning tasks
The recommendations for the first finding are shown in the below.
There are two recommendations for condominium managers. One is for in-house employment condominium and another for out-sourcing condominium.
For in-house employment condominium, if the condominium owners decide to employ in-house staff to perform the maintenance task, they should invite maintenance specialists to give their advisories during the design stage in order to reduce the maintenance costs as well as operation costs. On the other hand, if there is no participation of maintenance experts in the design process and there are many problems occurring during the operation stage, the project owners should use external staff to perform the maintenance work.
For out-sourcing employment condominium, there is a strong wish of out-sourcing condominium manager about the provision of construction material information. In order to perform maintenance tasks efficiently, the project owner should ask the designer that provides the specification about the characteristic of construction material using for the project. Especially in the case that project owner decides to use out-sourcing staffs.
His thesis abstract is copied and pasted.
Abstract
High-rise residential property management sector in Vietnam is still staying at the early stage of development. There is lack of maintenance concept of building development because most of project owners are only attracted in completion project. Condominium managers have not appropriate maintenance policy for the completed building, and it deteriorates faster than expected service year. Maintenance issues become emerging problems that should be concerned. This study aims to investigate practical management of condominium projects in Ho Chi Minh City through management of operation and maintenance expenditures.
Around the areas of HCMC, the researcher visited many exiting condominiums that have been operating since year 2000. In achieving these objectives, opinions of in-house employment condominium managers and out-sourcing employment condominium managers were sampled through structured questionnaires. The data collected were analyzed using descriptive and inferential statistics. There is a difference between condominium manager’s perception about two sub-factors affecting on operation and maintenance cost. They are “Lacking of involvement of maintenance experts during design stage” and “Materials selection does not comply with the client's activities due to inadequate accurate material information source”
On the other hand, real cost data were also collected from five condominium projects. The purpose the study was that identified the most important O&M costs of condominium by comparing costs among condominiums. Benchmarking was established to compare cost each other. The result of comparison was that found out six most important cost including management cost, electricity consumption, water consumption, cleaning and waste disposal, and lift maintenance cost. After all, the study proposed many solutions that not only help condominium managers managing their assets better but also help other participants concerning about maintenance issues for developing new projects.
In order to recommend to owners or property managers appropriate solutions to control and reduce O&M expense. Mr. Duong Quang Minh made a study which, first, will develop operation and maintenance cost system of existing condominium projects. The purpose is to identify the most important costs in this system. Second, the study will investigate the reasons that cause the cost. Thus, the three main objectives of his study were to: (1) build a generic framework for operation and maintenance cost system of existing condominium projects; (2) find out and assess factors affecting on operation and maintenance cost of existing condominium projects; and (3) recommend solutions to reduce or control the impact of the factors that influence on O&M costs.
Conclusions
For Objective 1
The study analyzed cost data from five case studies to identify the most important cost of operating condominiums. Each cost was given a brief definition, its components, and characteristic. Then, the study developed the generic framework of operation and maintenance cost of condominium projects. The framework is benchmark to compare O&M costs between condominiums.
From the benchmarking, the study found that cost for condominium management is the highest cost with about 46.42 percent of total O&M cost. In addition, energies supplying for common activities of condominium are also high with about 18.26 percent of electricity consumption and about 9.23 percent for water consumption. Also, costs of cleaning and waste disposal are high by about 9.61 percent and costs for maintaining lifts are 6.01 percent.
The reasons behind this high cost include:
1. Management cost: The reason may be inappropriate choices between in-house or out-source employment.
2. Energy consumption cost (Electricity and water supply): There are three main reasons that cause high expense for this cost center such as general facility influences, installation of an old-fashion technology in the facilities, and maintenance policy including lack of daily inspection and preventive maintenance.
3. Maintaining lift cost: Maintenance costs of lifts are costs connected to planned maintenance works to the lifts in the common areas of condominium.
4. Cleaning and waste disposal cost: Reasons that may cause cleaning service cost is lack of design specification of cleaning tasks and inappropriate choice of construction material, specially decorated material.
Objective 2
There is no significant difference between in-house and out-sourcing employment condominium managers. In general, both managers pay attention into reducing operation and maintenance costs. However, based on characteristic of each employment type, the condominium managers have different maintenance strategy to perform the maintenance task effectively. Therefore, they have different perception about the factors that influence to O&N costs.
Recommended solutions to reduce or control the impact of the factors that influence on O&M costs
For new condominium projects, property manager is usually the one that handles all the defects or design faults after the completion of construction stage. Base on accumulated experiences in handling the defects from different building projects, the property manager can feed back what they have suffered from the experiences to the project team. Besides, as the property manager's role is to manage the property, they usually meet the tenants that propose many expectations or requirements to make better living condition of condominiums. These expectations may be valuable information for the owner to make the right decision when investing in new condominium project. In order to better manage the project, property manager should:
• Select appropriate in-house or out-sourcing staff to perform maintenance tasks efficiently
• Imply conservation energy program in order to control and reduce energy consumption
• Pay attention in the management of maintenance task for lift system
• Pay attention in the management of cleaning tasks
The recommendations for the first finding are shown in the below.
There are two recommendations for condominium managers. One is for in-house employment condominium and another for out-sourcing condominium.
For in-house employment condominium, if the condominium owners decide to employ in-house staff to perform the maintenance task, they should invite maintenance specialists to give their advisories during the design stage in order to reduce the maintenance costs as well as operation costs. On the other hand, if there is no participation of maintenance experts in the design process and there are many problems occurring during the operation stage, the project owners should use external staff to perform the maintenance work.
For out-sourcing employment condominium, there is a strong wish of out-sourcing condominium manager about the provision of construction material information. In order to perform maintenance tasks efficiently, the project owner should ask the designer that provides the specification about the characteristic of construction material using for the project. Especially in the case that project owner decides to use out-sourcing staffs.
His thesis abstract is copied and pasted.
Abstract
High-rise residential property management sector in Vietnam is still staying at the early stage of development. There is lack of maintenance concept of building development because most of project owners are only attracted in completion project. Condominium managers have not appropriate maintenance policy for the completed building, and it deteriorates faster than expected service year. Maintenance issues become emerging problems that should be concerned. This study aims to investigate practical management of condominium projects in Ho Chi Minh City through management of operation and maintenance expenditures.
Around the areas of HCMC, the researcher visited many exiting condominiums that have been operating since year 2000. In achieving these objectives, opinions of in-house employment condominium managers and out-sourcing employment condominium managers were sampled through structured questionnaires. The data collected were analyzed using descriptive and inferential statistics. There is a difference between condominium manager’s perception about two sub-factors affecting on operation and maintenance cost. They are “Lacking of involvement of maintenance experts during design stage” and “Materials selection does not comply with the client's activities due to inadequate accurate material information source”
On the other hand, real cost data were also collected from five condominium projects. The purpose the study was that identified the most important O&M costs of condominium by comparing costs among condominiums. Benchmarking was established to compare cost each other. The result of comparison was that found out six most important cost including management cost, electricity consumption, water consumption, cleaning and waste disposal, and lift maintenance cost. After all, the study proposed many solutions that not only help condominium managers managing their assets better but also help other participants concerning about maintenance issues for developing new projects.
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