Improvement of Organizational Structure for Power Plant Project Management of PetroVietnam

Electric energy is crucial for the development of Vietnam. From 2006-2010, the actual consumption of electric energy is the same with the actual generated net electric energy of about 13.7% per year to gain 85.4 billion KWh in 2010 only. There are many different power sources such as thermal power, hydropower, nuclear power etc. But in Vietnam, country's electricity is mainly produced from thermal power and hydro-power. However, in Vietnam's power system nowadays, the rate and capacity of hydro-power is being decreased if compared to the capacity and other electrical power sources.

The PetroVietnam (PVN) is implementing the accelerated development program. As a leading economic Group in Vietnamese energy sector including search, exploration and exploitation of oil and gas, power generation, PVN is assigned as the big investor of many important projects, including projects on thermal power plants. PVN is also one of the leading biggest Vietnamese State-Owned companies with the aim of looking for investment partners who are reliable and have enough financial capacity and modern technology to develop and build the power plants quickly in order to meet the electricity demand growth in Vietnam.

With this big task, PetroVietnam now is in “hot development” status. PVN has invested & built the first power plant since 2005 with only one Management Board (MB). Now, PVN is managing five thermal power plant projects at the same time. Besides, the objective of MBs is usually changed very fast, but organization structure for all MBs is still same with the first MB in the beginning. Therefore, PVN’s management for power projects still has some outstanding issues which are the weakness in organizational structure for project management. LE ANH THONG made a case study which objectives were to:

1. Deeply understand the existing organizational structure of PVN power plant project to analyze the strength and weakness, advantages & disadvantages of the existing system

2. propose recommendation for improvement

Conclusion

The objectives of Petrovietnam Power Plant Projects (PVN’s PPP) are usually changed very fast, but PVN still has kept the beginning type of organizational structure which is “Functional Structure” from 2004 up to now. Although this structure have some minor advantages, this structure is not suitable with the growth of PVN’s PPP which has caused some weakness and disadvantages in PVN’s PPP management so far. With four individual Management Boards, they have not achieved perfect result, and in case there are complicated tasks such as different features, sizes, location and many changes which are usually very fast and extreme in PVN power plant projects, it is very difficult to control the scope, contingency funds, and overall project value. It is also 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 Report, 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 advantages of the Proposed Improvement are efficient use  of  resources of the whole Proposed General Management Board where specialized  individuals can be shared and transferred from one it’s Branch to other Branches or among all 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, etc. These are the most useful and most efficient in this proposal.

With the detailed analysis and proposal, the strength and 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 Improvement will not be enough to improve everything for PVN’s project management. It is necessary with best effort to apply some more other solution in order to gain actually significant improvement and overcome other outstanding weakness of PVN’s project management.

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 Objective 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