1
Dissertation
Cost management in Vietnam large construction projects
Table of content
Chapter 1. INTRODUCTION ..............
3.4 Data Analysis............................................................................................................
3
Chapter 1. INTRODUCTION
1.1 Research Background
Vietnam has seen a speedy growth rate of the economy in recent time (Sha...
therefore, in the study, it is referred to Nguyen et al. (2004) about the definition of large
construction projects. In th...
5
Chapter 2. LITERATURE REVIEW
2.1 Project and Project Management
2.1.1 Project Investment
Source: Chen et al. (2011)
Figu...
2.1.2 Project Management
Source: Adams and Barnd (2008)
Figure 2-2 Project Cycle
Table 2-2 Trade-off situations
Situation ...
7
Source: Xu et al. (2012)
Figure 2-3 Relationship among three objectives: time, cost, and result
A. Characteristics of pr...
Working environment is relatively stable. Working environment has frequent changes.
2.1.3 Content of project management
Ta...
9
Information of similar projects Support documents Implementation report
Implementation strategy Project implementation s...
Project selection methods Product analysis
Division structure of the previous
similar projects
The assessment of the exper...
11
Input Input Input
Project division structure List of activities List of activities
Project scope report Product descrip...
Implementation schedule, time management schedule,
up-to-date required resources
Up-to-date implementation schedule, the a...
13
The methods to determine cost deviation
Additional plans, foundation calculations
Output Output
Basis cost (initial cos...
Human resource management
Organizational plan Recruitment Staff development
Input Input Input
Project interface Human reso...
15
Analysis of the related parties Informational skills
Information acquisition system
Information distribution system
Out...
Information of similar projects
Risk resources and incidents which cause
risks
Cost estimation and time estimation
Tools a...
17
Table 2-13 Bidding management
Bidding management
Purchasing plan Plans to look for resources Seller analysis
Input Inpu...
Payment request, exchange for
goods
Acceptance records of
contract liquidation
2.2 Construction Project Management
2.2.1 C...
19
Chapter 3. METHODOLOGY
In the Chapter 2, the foundations related to the theory have been mentioned and the model
for do...
Chapter 4. Results and Discussions
4.1 Respondent’s profile
4.2 Empirical Results
4.2.1 Ranking of Factors
Figure 4-1 Freq...
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...
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
Cont...
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
Consulta...
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...
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...
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
FactorsDC1
FactorsDC2
FactorsDC3
Factors...
27
Chapter 5. Conclusion
Through the analysis of questionnaire survey, the issues related to delay and cost overrun
in the...
model for contractor selection as well as project type needs to be built in VCI. Besides, there
is one suggestion from thi...
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Dissertation cost management in vietnam large construction projects

  1. 1. 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
  2. 2. 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. 3. 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
  4. 4. 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. 5. 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)
  6. 6. 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. 7. 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.
  8. 8. 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. 9. 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
  10. 10. 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. 11. 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
  12. 12. 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. 13. 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
  14. 14. 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. 15. 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
  16. 16. 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. 17. 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
  18. 18. 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. 19. 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
  20. 20. 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. 21. 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
  22. 22. 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. 23. 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
  24. 24. 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. 25. 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 InitialEigenvalues Rotation Sumsof Squared Loadings Series1 Series2 Series3 Series4 Series5 Series6 Series7
  26. 26. 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 FactorsDC1 FactorsDC2 FactorsDC3 FactorsDC4 FactorsDC5 FactorsDC6 FactorsDC7
  27. 27. 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
  28. 28. 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 : assignmentsource@gmail.com Blogger : http://assignmentsource.blogspot.com/ Website : http://assignmentsource.com/

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