dissertation cost management in vietnam large construction projects
DESCRIPTION
TRANSCRIPT
1
Dissertation
Cost management in Vietnam large construction projects
Table of content
Chapter 1. INTRODUCTION ....................................................................................................... 3
1.1 Research Background .................................................................................................. 3
1.2 Research Objectives ..................................................................................................... 4
Chapter 2. LITERATURE REVIEW ............................................................................................ 5
2.1 Project and Project Management ................................................................................. 5
2.1.1 Project Investment ......................................................................................................... 5
2.1.2 Project Management ...................................................................................................... 6
2.1.3 Content of project management ..................................................................................... 8
2.2 Construction Project Management ............................................................................. 18
2.2.1 Construction project ..................................................................................................... 18
2.2.2 Construction project management ............................................................................... 18
Chapter 3. METHODOLOGY .................................................................................................... 19
3.1 Research Strategy....................................................................................................... 19
3.2 Research Paradigm and Design ................................................................................. 19
3.2.1 Qualitative research ..................................................................................................... 19
3.2.2 Quantitative research ................................................................................................... 19
3.3 Data Collection .......................................................................................................... 19
3.4 Data Analysis ............................................................................................................. 19
Chapter 4. Results and Discussions ............................................................................................. 20
4.1 Respondent’s profile .................................................................................................. 20
4.2 Empirical Results ....................................................................................................... 20
4.2.1 Ranking of Factors ....................................................................................................... 20
4.2.2 Spearman’s Rank Correlation ....................................................................................... 24
4.2.3 Factor Analysis ............................................................................................................ 25
Chapter 5. Conclusion ................................................................................................................. 27
Reference Error! Bookmark not defined.
3
Chapter 1. INTRODUCTION
1.1 Research Background
Vietnam has seen a speedy growth rate of the economy in recent time (Sharkey, 2012).
Together with that economic growth rate, the development of infrastructure and the process
of the urbanization are considered to be considerable booms. Added to this, there is an
increasingly important role of the construction industry for domestic economy (Ling et al.,
2009; Le et al., 2010). According to GSO (2011), the amount of capital spent on construction
sector has achieved the value of 13,202 billion VND, and that sector has made great
contributions to the level of GDP (Gross Domestic Product) at 53.276 billion VND (GSO) in
2005 (1$USD = 20,900 VND). Nevertheless, the implementation process of the construction
projects has faced several issues, and beside these issues, there are two considerable problems,
namely delay and cost overruns (Ling and Hoang, 2010; Nguyen et al., 2007; Nguyen et al.,
2004). Due to the two above-mentioned problems, the frequent effects could possibly be the
failures of the projects, the decline of profit margin, and the unbelief of the people in the
Governmental funded projects.
Therefore, the study has been performed and carried out in order to figure out the main
reasons of two problems, namely delay and cost overruns in the construction phase of
Vietnamese construction projects. The reasons related to the time and cost extension can stem
from different periods of the projects, the works, and the circumstances; however, the main
problems often result from the construction phase.
There has been a dramatic development of construction projects in Vietnamese market
since 2000, and thus, the study can just focus only on some large construction projects in
Vietnam. Giving an exact definition of large construction projects seems to be pretty hard and
therefore, in the study, it is referred to Nguyen et al. (2004) about the definition of large
construction projects. In this study, the definition of a large construction project is related to
the project with the total budget of more than one million USD.
1.2 Research Objectives
The study will mainly focus on the construction phase of the projects. And the purposes of
the study will be:
To define and classify the reasons of the delay and cost overrun in the context of
their occurrence and their extent of severity as well as check the significance of the
reasons of the delay and cost overrun.
To test strong combination among the ranks of the respondents as well as to reveal
the basic existent interconnection of these above-mentioned reasons according to
the extent of their occurrence.
To make a comparison between Vietnamese conditions and several selected
nations.
5
Chapter 2. LITERATURE REVIEW
2.1 Project and Project Management
2.1.1 Project Investment
Source: Chen et al. (2011)
Figure 2-1Cycle of an investment project
Table 2-1 Project constraints
Project condition Prior constraints
Difficult conditions Project expense
Plan satisfaction and guarantee of enterprise
development. Performance, quality or service
Urgent requirements, importance of competition Time
Importance of the safety Technical standards
Source: Long and Ohsato (2008)
2.1.2 Project Management
Source: Adams and Barnd (2008)
Figure 2-2 Project Cycle
Table 2-2 Trade-off situations
Situation Symbol Time Cost Completion
A
A1 Fixed Change Change
A2 Change
Fixed Fixed
A3 Change Change Fixed
B
B1 Fixed Fixed Change
B2 Fixed Change Fixed
B3 Change Fixed Fixed
C
C1 Fixed Fixed Fixed
C2 Change Change Change
Source: Chen and Tsai (2011)
7
Source: Xu et al. (2012)
Figure 2-3 Relationship among three objectives: time, cost, and result
A. Characteristics of project management
Table 2-3 Basic differences between production management and project management
Process of production management in line Project management
The task is repetitive and continuous. The task is not repetitive and continuous but it
is new and changeable.
The level of human resource is low. The level of human resource is high.
A large number of products and services are
produced in one period (serial production).
It focuses on one kind or a certain number of
products and services (single production).
The existence of the companies and the enterprises
is long. The existence of the project is limited.
The statistics are available and useful for decision-
making.
The statistics are not much and thus, they are
not used for decision-making.
It does not cost much when fixing the mistakes. Wrong decisions cost too much.
Holding by the group is popular. There is new recruitment for each project.
The responsibility is obvious and adjusted through
time.
The division of responsibility changes based on
the nature of each specific project.
Working environment is relatively stable. Working environment has frequent changes.
2.1.3 Content of project management
Table 2-4 Content of project management
Project management
Overall plan Scope management Time management
Planning Scope identification Job identification
Plan implementation Planning Time estimation
Change management Scope change management Progress management
Cost management Quality management Human resource management
Resources planning Quality assurance planning Salary and labor planning
Cost calculation Quality assurance Recruitment and training
Estimation Quality management Team development
Cost management
Information management Supply, trade management Project risk management
Information management planning Supply planning Risk identification
Establishment of information
distribution channels
Choice of the contractors
and bidding management Risk assessment
Progress report Contract management and
supply progress
Program planning for investment
risk management
Table 2-5 Project planning management
Integration management
Plan development Plan implementation Control the entire change
Input Input Input
Output of other plans Project plan Project plan
9
Information of similar projects Support documents Implementation report
Implementation strategy Project implementation strategy Change requirement
Limited factors Action programme
Assumptions
Tools and techniques Tools and techniques Tools and techniques
Project planning method General management skills Change control system
Knowledge and skills of relevant parties Knowledge, skills, and products Supervision management
Project management information system The order of implementing the
tasks of the project Implementation evaluation
Organizational procedures Support planning
Project information system
Output Output Output
Project planning Work results Up-to-date project plan
Support documents Change requirement Action programme
Lessons learned
Table 2-6 Project scope management
Scope management
Start Scope management Scope identification
Input Input Input
Product description Product description Project scope report
Strategy planning Implementation decision Limited factors
Project selection criteria Limited criteria The assumptions
The market of the project The assumptions The output of other plans
The information of similar
projects
Tools and techniques Tools and techniques Tools and techniques
Project selection methods Product analysis Division structure of the previous
similar projects
The assessment of the experts Cost/interest analysis Project division methods
The selection of the options
The evaluation of the experts.
Output Output Output
Implementation decision Project scope report Project division structure
The decision of project
management director Support documents
Limited factors Project scope management plan
The assumptions
Scope inspection Scope change inspection
Input Input
Work results Project division structure
Product profile Change requirement and implementation report
Scope management plans
Tools and techniques Tools and techniques
Inspection
Project change management system
Implementation evaluation
Support plans
Output Output
Official acceptance The change in project scope
Action programme
Lessons learned
Table 2-7 Project time management
Time management
Activities identification Activities arrangement Estimated execution time
11
Input Input Input
Project division structure List of activities List of activities
Project scope report Product description Assumptions, human resource
requirement
The information of similar projects The order of implementing
compulsory work The availability of resources
Binding factors and assumptions External influential factors The information of the previous
projects
Binding factors and assumptions
Tools and techniques Tools and techniques Tools and techniques
Project division Activity on node (AON) The evaluation of the experts
WBS of similar projects Activity on Arrow (AOA) General evaluation
Calculation methods of execution
time
Output Output Output
List of activities Network diagram of the project Estimated execution time
Detailed support Up-to-date activity list Up-to-date activity list
Up-to-date project division
structure
Work schedule Project schedule control
Input Input
Network diagram of the project. Project implementation schedule, progress reports,
and change requirement of time management plan
Estimated execution time for each work and schedule
Resource requirements. Resource description
Limited factors and assumptions
Tools and techniques Tools and techniques
Maths analysis, reducing execution time of the project Control system of the changes in implementation
schedules
Project management software The calculation of time deviation, and project
management software.
Output Output
Implementation schedule, time management schedule,
up-to-date required resources
Up-to-date implementation schedule, the adjustments
in the activities
Lessons learned.
Table 2-8 Project cost management
Cost management
Human resource management Estimated cost
Input Input
Structure of work divisions. Structure of work divisions
Similar information of the previous projects. Required resources.
Limit the scope Unit price, estimated time for each task
The description of required resources The information of similar projects
Implementation strategy
Tools and techniques Tools and techniques
The evaluation of the experts Mathematic formula
The suggestion of many different options Excel software
Output Output
Required resources and the quantity Estimated cost
Supporting detailed calculations
Cost management plan
Budget draft Cost control
Input Input
Estimated cost Plan cost and financial statements
Work breakdown structure Change requirements
Project implementation schedule Cost management plan
Tools and techniques Tools and techniques
Tools and techniques to estimate cost Cost change testing system
13
The methods to determine cost deviation
Additional plans, foundation calculations
Output Output
Basis cost (initial cost plan) The estimation of adjustment cost
The recalculation of the budget.
The estimation of total project cost
Table 2-9 Project quality management
Quality management
Quality plan Quality assurance Quality inspection
Input Input Input
Product description Results of quality control
measurements Quality control plan
Standards and regulations Operational targets Identification of operational targets
Other output procedures
List of acceptance criteria
Tools and techniques Tools and techniques Tools and techniques
Cost/Benefit analysis Technical tools to manage quality plan Inspection, monitoring, and testing.
Standards The form of quality test Chart
Experiences
Trend analysis, cause and effect
analysis
Output Output Output
Quality management plan Quality improvement Quality improvement
Identification of operational
targets Acceptance regulations
Acceptance list
Completing acceptance table as in the
list
Output of other procedures
Table 2-10 Human resource management
Human resource management
Organizational plan Recruitment Staff development
Input Input Input
Project interface Human resource description Personnel of the project
Human resource demand Documents on recruitment
instructions Project plan
Bindings
Human resources management plan
The report on using Human
resources
Comments from the outsiders
Tools and techniques Tools and techniques Tools and techniques
Similar projects Negotiation General management skills
Instruction documents Probation Arrangement and training
Organizational theory Recruitment
Analysis of the related parties
Output Output Output
Human resource management
plan
Assignment of the personnel
in the project
Improvement of the criteria in using
human resources
Detailed diagram Guidance for the project team Input of performance evaluation of
using labour
Detailed supporting
Table 2-11 Information management
Information management
Relevant plans of the project Information distribution
Input Input
Required market demand Work results
Information technology and the bindings Information management plan
Assumptions
Tools and techniques Tools and techniques
15
Analysis of the related parties Informational skills
Information acquisition system
Information distribution system
Output Output
Management plan Project profile
Evaluation report End of the project in administration
Input Input
Project plan, work results Project evaluation documents
Other records of the project - Project product documents
Tools and techniques Tools and techniques
Overview on the entire project organization Tools and techniques to make reports on
project implementation
Deviation analysis
Trend analysis
Additional value analysis
Tools and techniques for information
distribution
Output Output
Evaluation report Execution acceptance record
Change requirements Lessons learned
Table 2-12 Risk managemente
Risk management
Identification Risk measurement
Input Input
Outputs of other plans Risks acceptance of participating parties
Information of similar projects Risk resources and incidents which cause
risks
Cost estimation and time estimation
Tools and techniques Tools and techniques
Brainstorm Expected monetary value
Cause and effect analysis Statistic summary
Interviews Decision tree
Expert’s evaluation
Output Output
Risk resources Opportunities against risk
Incidents which cause risks Opportunities for risks
Input of other procedures
Risk countermeasures Risk prevention control
Input Input
Opportunities against risks Risk management plan
Opportunities for risks Existing risky incidents
Defined risky incidents
Tools and techniques Tools and techniques
The purchase the products and services The development of risk precautions
Limit plan
Prevention, insurance purchasing
Output Output
Risk management plan Editing activities
Input of the decisions Update additional management plan
Risk limiting plan Up-to-date addition for management plan
Commitment contract
17
Table 2-13 Bidding management
Bidding management
Purchasing plan Plans to look for resources Seller analysis
Input Input Input
Product description Work list Purchasing documents
Purchasing sources Other output plans List of sellers
Purchasing conditions
Bindings and assumptions
Tools and techniques Tools and techniques Tools and techniques
Analysis and evaluation of
experts Standards Bidding
The options of contract forms Expert’s evaluation Advertising
Output Output Output
Purchasing plan Purchasing documents Proposed plans
Work list Evaluation criteria
Up-to-date list of work
Selection of sources Contract management End of contract
Input Input Input
Proposed plans Work results Contract documents
Criteria to evaluate Change requirements
Project implementation
strategy Bill of sales
Tools and techniques Tools and techniques Tools and techniques
Contract negotiation Change testing system Inventory and purchasing
acconting
Payment system Sales report
Independent calculations Payment system
Output Output Output
Contract Contract changes Contract documents
Payment request, exchange for
goods
Acceptance records of
contract liquidation
2.2 Construction Project Management
2.2.1 Construction project
2.2.2 Construction project management
19
Chapter 3. METHODOLOGY
In the Chapter 2, the foundations related to the theory have been mentioned and the model
for doing research has been performed. And the Chapter 3 will introduce the research method
in order to make some adjustment to scales and examine research models and given
hypothesises. This chapter will contain two main parts: the first part will be the presentation
about research design, and the second part will represent scale of research definitions and the
adjustment of these definitions.
3.1 Research Strategy
3.2 Research Paradigm and Design
3.2.1 Qualitative research
3.2.2 Quantitative research
3.3 Data Collection
3.4 Data Analysis
Chapter 4. Results and Discussions
4.1 Respondent’s profile
4.2 Empirical Results
4.2.1 Ranking of Factors
Figure 4-1 Frequency index (F.I.) of listed causes
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
Overall
Owner
Contractor
Consultant
21
Figure 4-2 F.I. rank of listed causes
0
5
10
15
20
25
Overall
Owner
Contractor
Consultant
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
Overall
Owner
Contractor
Consultant
Figure 4-3 Severity index (S.I.) of listed causes
Figure 4-4 S.I. rank of listed causes
0
5
10
15
20
25
Overall
Owner
Contractor
Consultant
23
Figure 4-5 Importance index (I.I.) of listed causes
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
Overall
Owner
Contractor
Consultant
0
5
10
15
20
25
Overall
Owner
Contractor
Consultant
Figure 4-6 I.I. rank of listed causes
4.2.2 Spearman’s Rank Correlation
Figure 4-7 Spearman’s Rank Correlation
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
Spearman rank
correlation
coefficient
Significance
level
Spearman rank
correlation
coefficient
Significance
level
Spearman rank
correlation
coefficient
Significance
level
Frequency index Severity index Importance index
Owners – Contractors
Contractors – Consultants
Owners – Consultants
25
4.2.3 Factor Analysis
Figure 4-8 Scree plot of factors
Figure 4-9 Total variance explained
0
10
20
30
40
50
60
70
Total % of Variance Cumulative % Total % of Variance Cumulative %
Component Initial Eigenvalues Rotation Sums of Squared Loadings
Series1
Series2
Series3
Series4
Series5
Series6
Series7
Figure 4-10 Factor analysis loading results
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
Factors DC1
Factors DC2
Factors DC3
Factors DC4
Factors DC5
Factors DC6
Factors DC7
27
Chapter 5. Conclusion
Through the analysis of questionnaire survey, the issues related to delay and cost overrun
in the construction stage have been defined and ranked based on varied opinions of
participating parties and three main index types. In general, there are five key reasons,
namely poor site management and supervision, poor project management assistance, financial
difficulty of owners, financial difficulty of contractors; design change. According to
Spearman’s rank correlation test, there is no disagreement among parties about the rankings
of these above-mentioned causes. Factor analysis has been used in order to classify these
causes into principal factors. Based on factor analysis, there are seven basic factors, including
Slowness and Lack of constraint; Incompetence; Design; Market and Estimate; Financial
capability; Government; and Worker. Comparing with other researches, the conclusion is that
developing world has to face similar concerns in their development progress. And two main
concerns are competency and finance.
Based on the above outcomes, the reasons related to delay and cost overrun of
construction projects mainly come from human problems as well as management weakness.
Therefore, it is essential and urgent to improve the abilities of managers and workers in VCI.
It requires greater demand for human resource training programs in construction field and
focuses on both quantity and quality. In the context of Vietnamese conditions, training
programs just focus on structure designs and pay less attention to planning, management, and
organization knowledge. It is necessary to stress on the feasibility of the projects and good
performance, especially for the Government-funded projects. Building and applying a
comprehensive mechanism with the combination between project feasibility, contractor
selection, and financial problems is of great importance to any project. Also, an appropriate
model for contractor selection as well as project type needs to be built in VCI. Besides, there
is one suggestion from this study that contract management be paid more attention. Despite
the decrees, circulars, or contract templates regulated by Vietnamese Government, the
experts and professionals should get involved in order to perform contract tasks or make
appropriate adjustments to realistic project conditions.
Through the conclusions of this study, the practitioners can understand more about the
influential impacts on project duration as well as project budget in the construction phase.
Taking the potential risks into consideration for current and future construction projects, the
participating parties in the project could minimize the problems related to delay and cost
overrun. These findings can become good references for both participants in VCI and those in
developing nations.
Further researches are needed in building practical models to assess schedule change as
well as cost change in order to match with VCI conditions. Currently, this part has
experienced the involvement of mathematical models and artificial intelligence models.
However, those models are still scattered and they haven’t got any appraisals. The outcomes
of this study could be considered as input variables in these models.
This document is provided by:
VU Thuy Dung (Ms.)
Manager
Center for Online Writing Resources
Facebook : https://www.facebook.com/vu.thuydung.5076
Email : [email protected]
Blogger : http://assignmentsource.blogspot.com/
Website : http://assignmentsource.com/