construction management in developing countries, lecture 5
TRANSCRIPT
Chapter 5
Project Environment in
Developing Countries
(4 hours)
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ProjectEnvironment
Construction IndustryEnvironment
MacroEnvironment
StakeholdersResources
Culture/Practices
Client(Public/Private)
Consultants
Contractors
Suppliers
CommunitiesSpecial InterestGroups
Creditors/Donors
Political Legal Forces
Economic Forces
Social ForcesTechnological
Forces
Government
Construction Industry Environment: Project participants
Project participa
nts
ClientGov/Pvt
Funding
agencies/Don
ors
Contractor
Consultant
Construction
materials suppliers and allied industries
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1. Client
Characteristics1. Over politicized2. Lack of finance3. Corruption4. Inefficient5. Unaccountable6. Frequently changing
personnel7. Frequently changing
designsPrivate Client:8. Low budget9. Delay in payment10.Design change11.No
contract/nonprofessional
Line Agencies:• DoR, DoI, DoLIDAR,
DWSS/KUKL• DWIDP, DSCWM, …• NEA, NT, …Municipal corporationsDDC, VDCIndustries and other private
constructionsPrivate developers and real
estates
Attempts to address some of the negative aspects of the characteristics of Clients are e-bidding, e-governance, detailed specification, third party evaluation etc.Potential thesis topic: Specific problem identification and potential solution using SWOT Analysis
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2. Consultant Consulting services started in 1960s More than 500 consulting engineering and
architectural firms Society of Consulting Architectural and
Engineering Firms (SCAEF) – 1990, SCAEF membership around 135
Provided services in Bhutan, Vietnam, Maldives, Afghanistan, China, India
Potential thesis topic: Analysis of status of consulting industry in Nepal: problem identification and potential solution
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SCAEF Members (incomplete list)S.N. Members S.N. Members
1 Architects Collaborate (Nepal) Pvt. Ltd 39 Masina Continental Associate (P) Ltd. 2 Architects Module Pvt. Ltd 40 MEH Consultant (P) Ltd. 3 Arniko Designers & Planners (P) Ltd 41 Mentor Consultants (P) Ltd 4 Associations for Research & Management Services Pvt. Ltd (ARMS) 42 MRB & Associates (P) Ltd5 Astra Development Network Pvt. Ltd 43 Multi Disciplinary Consultants (P.) LTD 6 Auto Cart Consult (P) Ltd 44 MULTI LAB (P) Ltd7 BDA Nepal (P) Ltd. 45 Multi Software (P) Ltd8 Building Design Authority (P.) Ltd 46 Multi- aim Technology Consult Pvt. Ltd.9 Butwal Power Company Ltd. 47 Mutual Engineering Consultancies Pvt. Ltd10 CEMAT Consultants (P) Ltd. 48 NED Consult (P) Ltd11 CEMECA Consultants (P) Ltd. 49 Nepalconsult (P.) Ltd 12 Consolidated Management Services Nepal (P) Ltd. 50 North Star Engineering Consultants (P) Ltd13 Creative Builders Collaborative Pvt. Ltd 51 PETRO Engineering Consultancy 14 Development Engineering and Management (P) Ltd 52 Premium Consults (P). Ltd15 DIP Consultancy (P) Ltd 53 Project Engineering Consultancy and Research Pvt. Ltd 16 East Consult (P) Ltd. 54 Q.S Technical Pvt. Ltd17 East West Engineering Services 55 R. S. Engineering Services18 Engar Consult (P) Ltd. 56 RITI Consultancy (P). Ltd19 Environments and Resource Management Consultants (P) Ltd. (ERMC) 57 Rural Access Engineering Consultants Pvt. Ltd 20 Everest Engineering Consultants 58 Sand and Stone Consultants (P) Ltd21 Fuji Int'l Design Associates (FIDA) 59 Shah Associates (P) Ltd.22 Full Bright Consultancy (Pvt.) Ltd. 60 Shah Consult International (P) Ltd 23 GENESIS Consultancy Pvt. Ltd 61 SILT Consultants (P) Ltd.24 GEOCE Consultants (P) Ltd. 62 Soil Test (P) Ltd.25 Group of Engineers' Consortium (P) Ltd. 63 SPD Consultants (P) Ltd26 HEET Consult Pvt. Ltd. 64 Sub Structural Consult Pvt.. Ltd 27 Hydro Engineering And Development Company (P) Ltd 65 Sustainable Infrastructure Development Foundations (SIDEF) 28 Hydro Engineering Services (P) Ltd. 66 TAEC Consult P. Ltd.29 Hydro Trans (P) Ltd 67 TEAM Nepal (P) Ltd 30 Innovative Creaters Architects & Engineers (P) Ltd. 68 TECH Studio of Engineering 31 Integrated Consultants Nepal Pvt.Ltd 69 Technical Development Associates (P) Ltd32 Integrated Developments and Research Services (P) Ltd. (IDRS) 70 Technical Interfaces 33 Integrated Management Engineering Research Consultancy (P) Ltd. 71 TIME Consult (P).Ltd34 Integrated Research Applications and Development (IRAD) 72 Total Management Services35 ITECO Nepal (P.) Ltd 73 United Designers & Associates 36 ITECO-CEMAT GEOTECH SERVICES (P). Ltd 74 Water Resources Consult (P) Ltd37 Joshi Associates 75 WELINK Consultants (P) Ltd38 K.D Associates Pvt. Ltd.
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Characteristics of Consultants
1. Inadequate fee/cut-throat competition
2. Confused type of morale
3. Undue pressure from client and contractor
4. No liability5. No corporate
culture6. Unhealthy
competition7. High turnover
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Can you develop consultant’s performance evaluation system, as a part of your thesis?
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SCAEF Code of ConductA consulting engineer will:•be honest and fair and will serve the client and the public with devotion,•be dedicated to the advancement of the competence of the engineering profession, and•use knowledge and skill in the service of humanityResponsibility towards the nation•Moral responsibility•Involvement in community development•Refrain from works which are against national interestResponsibility towards the client•Gain and maintain client’s confidence•Loyal to the client•Protect interest of the client•Safeguard client’s confidential information•Disclose conflict of interestResponsibility towards the profession•Necessity of formal qualification•Refrain from claiming skill outside area of expertise•Exercise greater skill in specialized jobs•High quality of skill•Limiting to agreed remuneration: cannot ask for higher remuneration by trapping client into difficult situation•Refrain from holding position with potential for conflict of interest•Engage in professional development through regular updating on knowledge & skills11
1. Strengths• Over 20 years Experiences working on
development projects • English capability • Dedication, hard working and honesty • Experiences working with int’l organizations • Knowledge of int’l standards and guidelines • Expertise available in many sectors, particularly
in hill & mountain infrastructure • Well equipped (both office and field
equipments) • Capability and willingness of working in difficult
situations (terrain/climate/conflict) • Competitive in cost • Networking through SCAEF 2. Weakness• Institutional development at infancy • Lack of supportive policy and legislation • Lack of clarity in policy, regulation on
consulting services • Lack of an accreditation system • Lack of matured professionalism among
consulting firms • Lack of training • Lack of learning from the past experiences • Human resource constraint • Lack of promotion and awareness of
consulting profession • Unable to compete in the int’l market as a
firm/consortium Lack of business networking and marketing
Opportunities• Being a developing country, Nepal offers a
promising domestic market with a lot of infrastructure projects to come
• Neighboring two latest international markets - China and India
• Increasing opportunities from international aid agencies
• Government policy on outsourcing consulting services
• Increasing use of consulting services by the private sector
• WTO membership FIDIC and TCDPAP membership
Threats• Unhealthy competition/corruption • Political instability • Poor economy • Brian drain • WTO/globalization/foreign competition • Different
policies/guidelines/procedures/documents applied by the Government and different international aid agencies (ADB, WB, etc)
Government indifference in supporting national consulting industry
SWOT Analysis of Consulting Services
Perform SWOT Analysis of Clients, Consulting Services, Contractors, …12
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Compared to other countries, Nepal’s portfolio performance has suffered due to the prolonged procurement process, weak project management capacity and weak performance of consultants and contractors. Contract awarding and disbursement in Nepal is far lower than the ADB average of 47% and 66% percent, respectively. Do you dis/agree?
3. ContractorClass A B C D Total
Number 172 (130)
337 (49)
1328 (49)
10,000 (13)
11837 (241)
Source: FCAN 2008Number in parenthesis are from FCAN publication Sept 2011, V.17, N. 20. They represent registered contractors.On line database in preparation phase.http://www.fcan.org.np/pages.php?pid=40New System: Classification of Contractors is dynamic; a function of annual turnover.
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http://www.grin.com/en/e-book/280463/status-of-class-a-construction-entrepreneurs-in-nepal A thesis
Federation of Contractors’ Association of Nepal (FCAN) – 1990,
Further info: www.fcan.org.np Construction Business Act 2055
(1999) Construction Business Development
Council and Construction Business Development and Implementation Committee
GDP contribution about 9% (CBS, 2001)
One of the largest employer (1 million)
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Characteristics of Contractors
1. Low bid2. Low management skill3. Less use of technology4. Family business5. Use of low paid
informal manpowerFurther reading: G. Ofori: Challenges of Construction Industries in Developing Countries: Lessons from Various Countries Informal Labour in the Construction Industry in Nepal, ILO, Working Paper 187, 2002
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FCAN Code of Conduct (selected only)
1. Contractors shall not be involved in any activity against fundamental principles of morality.
5. Contractors shall not be involved in any form of corruption.6. Contractors shall not be involved in any activity which may be
deemed immoral and illegal/criminal.15.Members and office bearers are prohibited from misuse of
authority for personal gain.16.Members and office bearers are prohibited from accepting
jobs through unsealed quotation, hand receipt documents of users’ community, daily wage (amaanat), quotation, or from organizations like National Construction Company Nepal (NCCN).
18. Since inferior quality works of a contractor defame all the contractors, no one shall be involved in unhealthy competition and inferior-quality works.
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In the absence of proper coordination among project partners, the project environment deteriorates.
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A site engineer sent this message to the design engineer:"Steel roof and column already constructed, kindly send us the foundation drawings.“Moral: Please send foundation drawings before superstructure drawings19
4. Funding (Donor/lending) agencies
World Bank ADB JICA SDC European Union Helvetas GIZ DFID Various countries IFC IMF EXIM Banks
Donor driven projects Less contribution for
countries’ development compared to their claim
High handedness Improper/misuse of
funds Fund repatriation
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5. Material Suppliers and allied industries
Industries – reinforcement and cement, but not adequate
• Major materials from outside the country
• Low quality materials• Unreliable supply when needed
• Sharp rise in the price of construction materials
Federation of Construction Material Suppliers
Federation of Crusher and Mining Industries (2014)
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Management Aspect of Project Environment in Developing Countries
Top levelStrategic planning
Middle levelManagement
control
Operational level
Operation control
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Top level management
1. Overwork2. Authoritarian3. Centralized decision making4. Politically influenced
(party affiliation based hiring)5. Involved in many activities
Do not concentrate on one project6. Less trust to subordinates7. Unclear vision/ objective (Concentrated on
self-benefit)8. High turnover rate
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Middle level management1. Less
management/administrative skill2. Over worked (Understaffed)3. High liability/responsibility low
authority4. Unwilling to take decision/action5. Low motivation
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Operational level 1. High operation cost (Inefficient)2. Low productivity3. Low salary4. Low morale5. Unaware of corporate culture6. Lack of training7. Lack of professionalism8. Less mechanization9. Politically influenced10. Over staffed and under utilized11. Distrust of higher management
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Legal Aspect of Project Environment in Developing Countries(refer http://www.lawcommission.gov.np/ for complete list)
Acts related to construction industry Public Procurement Act 2063 (2007), amended on Asar 8,
2068 Construction Business Act 2055 (1999) Labor Act 2048 (1992) Contract Act 1999 Income Tax Act, 2002 VAT Act, 1997
Rules and regulations related to construction industry Standard Bidding Document, Nat’l Competitive Bidding for
above 6 Million Rupees 2010, Public Procurement Regulation 2064, Construction Business Regulation 2056
Public Private Partnership White Paper, Fast Track, small projects, implementable
regulation lacking Built, Operate and Transfer / Built , Own, Operate and
Transfer Nepal Arbitration Council Construction project dispute related court cases
Company Act, 2006Insurance Act, 1992Immigration Act, 1992FITT Act, 1992Int’l Laws, conventions, bilateral agreements
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Social Aspect of Project Environment in Developing Countries
People’s expectations from construction projects Investors as profit mongers
Gender aspects of employment in construction projects
Safety of workers (Safety Last Culture!) Construction projects as bargaining chips (rent
seeking culture) Local attitude towards construction projects as
exploitation of their natural resources Lack of skilled workers and lack of professionalism High priority to social customs and low priority to
quality works Bribery/corruption as an accepted social norm Gullible workers and cunning labor leaders/ social
mobilizers Role of social mobilizers in construction project Role of politicians in construction project
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Financial Aspects Nepal Accounting Standards on construction
contracts(https://www.ican.org.np/_downloads/accstd/NAS13.pdf)
Financial institutes (Banks, Finance companies, Cooperatives, private lenders…)
Investment institutes Foreign Direct investment (FITT Act) Safety of investment: nationalization, minimum
profit margin Profit Margin and justifiable/reasonable profit Profit sharing Transparency e-bidding and e-procurement Corruption
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Potential Thesis topic: Strengths and weaknesses in financial institutes’ policies and practices related to construction industry in Nepal.
External Parameters affecting Project Environment International agencies Multinational agencies Supranational agencies Bilateral agreements, BIPPA Multilateral agreements, WTO, PPP Nepal’s over-dependence on India for
construction materials/equipments/fuel and transit
Politics and changing policies Skilled human resources migrating to
other countries
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Answer these questions.
Discuss the factors which determine the role of major types of participants in a construction project? How can they play their role in creating positive/negative project environment?
Discuss the characteristics of (a) client, (b) consultant, (c) contractor and (d) donor agencies involved in an infrastructure development type of construction project in a typical developing country?
Discuss the factors which determine the role of major participants in a construction project. How can they play their role in creating positive/negative project environment?
Discuss the characteristics of top level, middle level and operational level management staff in a construction management in developing countries. Suggest ways to improve the coordination among the three tiers of management staff for better management of a construction project.
Discuss, with specific examples, the social, economic, political, legal and technological factors influencing project environment in a developing country.
Discuss the positive and negative role a local community leader can play in success of a construction project. How can the potential negative role of a local community leader in construction project be minimized?
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Further Readings:Public Procurement Act
White paper on PPPContract Labour in Nepal, DP Chapagain
End of Chapter5
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