THE FRAMEWORK FOR MINIMIZING CONSTRUCTION TIME AND

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THE FRAMEWORK FOR MINIMIZING CONSTRUCTION TIME AND COST OVERRUNS IN PADANG AND PEKANBARU, INDONESIA

HARISAWENI

A thesis submitted in fulfilment of the requirements for the award of the degree of Master of Science (Quantity Surveying)

Faculty of Built Environment Universiti Teknologi Malaysia

JANUARI 2007

Specially Dedicated to My Lovely: Husband (Ardiyansyah B. Syahrom, S.T), Daughter (Naaila Salwa Ardiyansyah).

My Beloved Parent: Papa (H. M Nasir), and Mama (Dra. Hj. Hernita Rais), Parent-in-law: Papa (Syahrom), and Mamak (Rosni).

Also My Sweet Sister and Brother: (Hersi Oliva, S.Si), (M. Fadli Arif), (Chrisnawati) and family.

ACKNOWLEDGEMENT

Vision, values and courage are the main gift of this thesis. I am grateful for the inspiration and wisdom of many thoughts that have been instrumental in its formulation.

First of all, I have readily acknowledged and thank to Allah SWT, the Omnipotent and Omniscient who created everything and in giving me the ability to begin and complete this project. I also wish to express my sincere appreciation to my supervisors PM. Dr. Rosli Abdul Rashid, PM Dr. Razali B. Adul Hamid and PM Dr. Kherun Nita Bt. Ali, for the guidance, advices, motivations, critics and friendship. Without their help, this thesis would not have been the same as presented here.

I am also indebted to Universiti Teknologi Malaysia (UTM) for support in providing the fellowship scholarship for two semesters.

My sincere appreciation is also extended to Bapak Prof. Ir. Dr. Zainai B. Mohamed and his wife Ibu Rosnah for help and kindness, so that I can pursue my study here. Many thanks to my friends in UTM K’Isal and Sarah, I can not forget about our familiarity and friendship.

Last but certainly not least, I want to thank my husband, papa, mama, my sweet sister and brother, and all of my big family, for their affection, prayer and support throughout my study. I love you all.

ABSTRACT

It has been said that Indonesian constructions often suffer serious cost and time overrun. Kaming et.al., (1997a) and Trigunarsyah (2004) have studied the causes of these problems. However, their studies focused only on the high rise buildings in Jakarta and Yogyakarta. Since Indonesia is a large country with more than 3000 islands, it pertinent to ask whether their findings are also applicable to low-rise constructions in other major cities in the country. It appeared that the low-rise constructions in Padang and Pekanbaru, the two major cities in Sumatera, are also facing the problems of time and cost overrun. The issues bring about some related questions – what are the causes of these problems? Are they similar to the findings made by Kaming and Trigunarsyah? How do contractors and managers in Padang and Pekanbaru manage construction cost and time? Are they adhering to the good practice of project cost and time management? What is considered as the best time and cost management practice? What is good time and cost management framework or model like? Generally, the aim of this study is to answer all these questions. But more specifically, the main objectives are threefold; firstly, to identify the major causes of project time and cost overrun in low - rise projects in Padang and Pekanbaru; secondly, to develop and establish the theoretical framework of a good construction time and cost management practice, and thirdly, to compare the time and cost management as currently practiced by contractors and consultants in Padang and Pekanbaru against the “theoretical” framework of the good time and cost management. The study focused on low-rise projects in Padang and Pekanbaru, Sumatera which are managed by contractors and consultants in class B and M respectively. The study looked at both from contractors’ and consultants’ perspectives. Data and information for the study are collected using a combination of documentary analysis and structured interview techniques. The data were systematically compiled and analysed using descriptive statistic techniques. The study shows that the major causes of project time and cost overrun in Padang and Pekanbaru ranges from lack of labour, lack of equipment to material delivery problems and frequent design changes. The study also highlighted that there are several approaches to efficient and effective project time and cost management. They can be summarized in the form of a framework or model that form the basis for the study. It is found that, generally contractors and consultants in Padang and Pekanbaru have adhered to the good time and cost management framework. However, the main area of concern is their lack of emphasis on the control aspects of the management. They are found to be lacking in monitoring the difference between planned and actual time and cost performance and identifying or establishing the deviation or problems associated with it. The study also pointed out that contractors and consultants in Padang and Pekanbaru need a clear and systematic project time and cost management framework that they can use as guidelines or reference for more efficient management.

vi

ABSTRAK

Kaming et.al., (1997a) dan B. Trigunarsyah (2004) masing-masing telah melakukan kajian berkenaan kepada permasalahaan kelebihan masa dan kos pada projek pembinaan di Indonesia. Kajian mereka hanya terfokus kepada bangunan bertingkattingkat banyak di kota-kota besar di Jawa seperti Jakarta dan Yogyakarta. Tetapi, persoalan sekarang adalah apakah temuan kajian mereka dapat digunakan untuk bangunan bertingkat rendah di kota-kota lain di Indonesia, khususnya Padang dan Pekanbaru di Sumatera. Berkaitan dengan isu tersebut, objektif kajian ini adalah untuk mengenal pasti penyebab-penyebab penting dari kelebihan masa dan kos pada projek binaan bertingkat rendah di Padang dan Pekanbaru, untuk menubuhkan prosedur kerja berdasarkan teori untuk sebuah pengurusan masa dan kos konstruksi yang baik, dan untuk membandingkan pengurusan masa dan kos yang diamalkan oleh perusahaan konstruksi di Padang dan Pekanbaru terhadap prosedur kerja secara teori dalam pengurusan masa dan kos. Kajian ini terfokus kepada projek bangunan bertingkat rendah dan terbatas hanya untuk mengkaji amalan yang digunakan oleh kontraktor dan konsultan golongan B dan M di dua kota besar di Sumatera – Padang dan Pekanbaru. Kajian dilakukan berdasarkan survey temu muka langsung dengan menggunakan set questionnaire yang telah dipersiapkan. Data dikumpulkan dan dianalisa menggunakan metoda penghitungan purata. Kajian menemukan bahwa projek pembinaan di Padang dan Pekanbaru memerlukan sebuah metoda atau amalan untuk mengurus projek selama proses pembinaan sampai dengan sasaran akhir projek dicapai untuk mengurangi kelebihan masa dan kos. Itu dikarenakan permasalahan kelebihan masa dan kos terjadi selama proses tersebut yang disebabkan oleh aktivitas lingkungan sekitar projek, aktivitas peralatan dan pengurusan, aktivitas-aktivitas perubahan, aktivitas material atau bahan dan aktivitas tenaga kerja atau buruh. Setelah penyebab dari kelebihan masa dan kos dikenal pasti, sebagai sebuah metoda untuk membantu dalam pengurusan masa dan waktu di sebuah projek binaan, peneliti telah mencadangkan dan mengembangkan sebuah prosedur kerja. Prosedur kerja ini akan membantu dalam mengurus masa dan kos untuk mengurangi permasalahan kelebihan masa dan kos di lokasi projek binaan karena prosedur kerja tersebut akan memperlihatkan kepada team kerja projek tahapan prosedur kerja yang mereka harus beri perhatian lebih.

vii

TABLE OF CONTENT

CHAPTER

1

TITLE

PAGE

DECLARATION

ii

DEDICATION

iii

ACKNOWLEDGEMENT

iv

ABSTRACT

v

ABSTRAK

vi

TABLE OF CONTENTS

vii

LIST OF TABLES

xi

LIST OF FIGURES

xiv

GLOSSARY

xv

LIST OF APPENDICES

xvi

INTRODUCTION 1.1

Background of the Study

1

1.2

Statement of Issues

3

1.3

Previous Research

6

1.4

Objectives of Research

8

1.5

Research Scope

9

1.6

Thesis Organization

10

viii 2

INDONESIAN CONSTRUCTION INDUSTRY

12

2.1

Introduction

12

2.2

The Indonesian Demography and Economy

12

2.2.1 The Indonesian Construction Industry

13

2.2.2

18

Construction Industry Performance in Padang and Pekanbaru

2.2.3

The Structure of Indonesian Construction

21

Industry 2.2.4

Performance

of

construction

projects

in

27

Indonesian

3

PROJECT TIME AND COST MANAGEMENT

34

3.1

Introduction

34

3.2

Project Time and Cost Management

34

3.2.1

Project Time

35

3.2.2

Project Cost

36

3.2.3

Problems Associated with Project Time and

37

Cost 3.2.4

The Definition of Project Time and Cost

38

Management 3.2.5

4

Project Management Objectives

43

3.3

Implication of Time and Cost Overrun

44

3.4

Causes of Project Time and Cost Overrun

44

PROJECT TIME AND COST MANAGEMENT

51

FRAMEWORK 4.1

Introduction

51

4.2

Definition of Framework

51

4.3

The purpose of Framework

52

ix 4.4

5

ii. Framework Cost Overrun Project Time andi.Cost Management

53

4.4.1 Time and Cost Management in Context of

53

5.2.4 Project Proposed Framework Design in The Questionnair Management

113

5.2.5 Summary of Data Analysis 4.4.2 Framework forthe Time and Cost Management

115 60

5.3 Discussions of Framework 4.4.3 Proposed Framework Development for Management Process

117 71

5.4

128

Summary

79

RESEARCH METHODOLOGY

CHAPTER 6 CONCLUTIONS 5.1 Introduction AND RECOMMENDATIONS

130 79

6.1 Conclusions 5.2 Research Process

130 79

6.2 Recommendations 5.3 Data Collection

133 81

REFERENCES 6 THE MAJOR CAUSES OF TIME AND COST BIBLIOGRAPHY OVERRUN APPENDICES6.1 6.2

135 100 147

Introduction

150 100

The Major Causes of Project Time and Cost Overrun

100

in Padang and Pekanbaru

6.3

7

6.2.1

Contractors Perspectives

101

6.2.2

Consultants Perspectives

103

6.2.3

Combination of the Two Perspectives

106 109

Conclusions

TIME

AND

COST

MANAGEMENT:

A

COMPARISON BETWEEN THE CURRENT Consultant’s PRACTICE6.2.3.1AND THE Perspectives “THEORETICAL

110 110

FRAMEWORK”

i. Time Overrun

110

7.1

Introduction

ii. Cost Overrun

111 110

7.2

The Comparison between Time and Cost Management as

Currently

Framework

Practiced

against

the

Theoretical

110

x 7.3

8

The Detailed Study

116

7.3.1

Time Management

116

7.3.2

Cost Management

124

7.4 Discussions of Framework Development

129

7.5

137

Conclusion

CONCLUTIONS AND RECOMMENDATIONS

138

8.1

Conclusions

138

8.2

Findings and Conclusions

139

8.3

Recommendations

140

8.4

Future Study

141

REFERENCES

142

BIBLIOGRAPHY

157

APPENDIX A

160

APPENDIX B

168

APPENDIX C

175

APPENDIX D

189

xi

LIST OF TABLES

No. 2.1

Title Indonesian GDP by Industrial Origin (billion rupiahs) and the

Page 14

Percentage of the Growth to the GDP (%), 1997-2004 2.2

Value of Construction Works in Indonesia According to the Type of

16

Construction (billion rupiahs) from 2000 to 2004 2.3

Value of Construction Completed by Province (billion rupiahs), in

17

Indonesian Construction Industry since 2000 to 2004 2.4

Total Number of Companies Register under LPJK, GAPEKSINDO

24

and INKINDO by Province. 2.5

Total Numbers of Big, Medium and Small Companies based on The

25

Organization Registered and the Qualification 2.6

Response rate of project completed on time and within budget

28

2.7

Response rate of project completed

28

2.8

Some Example of projects with time and cost overrun problems in

30

Indonesian Construction Projects (Padang) 2.9

Variables of delays and their importance, frequency, and severity in construction

31

in Indonesia (scale of indices for importance,

frequency and severity ranges from 0 to 1) 2.10

Variables of cost overruns, their importance, frequency, and severity

32

in Indonesian construction projects (scale of indices for importance, frequency and severity ranges from 0 to 1). 3.1

Comparative ranking of problems that cause time and cost overruns

46

in different countries (Olomolaiye, et, al., 1998) 3.2

Case studies of the common causes of time and cost overrun

49

3.3

Derive from the synthesis of the previous researches (extracted Table 3.2)

50

xii 4.1

The various practices to reduce project time and cost overrun

59

problems 4.2

The perspectives about several frameworks from several researchers.

74

5.1

Total Numbers of Big, Medium and Small Companies based on The

84

Organization Registered and the Qualification. 5.2

Number of questionnaires distributed

85

5.3

Sample of pilot study questions

87

5.4

Results of the pilot study on causes of time and cost overrun

89

5.5

Results of pilot study – The common causes of time and cost overrun

90

problems (extracted from table 5.2) 5.5

Number of questionnaires distributed

93

6.1

Mean value of the major factors that cause of time and cost overrun

101

problems – contractor’s perspectives 6.2

Time and cost overrun major causes and it activity categories based

102

on the importance scale – contractor’s perspectives 6.3

The rank of the causes of time and cost overrun based on the mean

103

values – contractor’s perspectives 6.4

Mean value of the major factors that cause of time and cost overrun

104

problems – consultant’s perspectives 6.5

Time and cost overrun major causes and it activity categories based

105

on the importance scale – consultant’s perspectives 6.6

The rank of the causes of time and cost overrun based on the mean

105

values – consultant’s perspectives 6.7

The major factors that causes of time and cost overrun problems as

107

perceived by contractors and consultants 6.8

The rank of the causes of time and cost overrun based on the mean

108

values as perceived by contractors and consultants 7.1

The current practices of time management by the contractors –

117

in consultant’s perspective 7.2

The current practice of time management by the contractors based on the frequency occurrence scale – consultant’s perspective

118

xiii 7.3

The current practices of time management by the contractors – – Contractor’s own perspectives

7.4

The current practice of time management by the contractors based on the frequency occurrence scale – Contractor’s own perspectives

7.5

119

119

Mean values and the “average” for the current practices in time management by the contractors as perceived by contractors and consultants

7.6

121

The rank of the current practices in time management by the contractors based on mean values “average” as perceived by the contractors and consultants

7.7

122

The current practices of time management by the contractors based on the frequency occurrence scale as perceived by the contractors and consultants

7.8

The current practices of cost management by the contractors – in consultant’s perspective

7.9

126

he current practice of cost management by the contractors based on the frequency occurrence scale – Contractor’s own perspectives

7.12

125

The current practices of cost management by the contractors – – Contractor’s own perspectives

7.11

125

The current practice of cost management by the contractors based on the frequency occurrence scale – consultant’s perspective

7.10

123

127

Mean values and the “average” for the current practices in time management by the contractors as perceived by contractors and consultants

7.13

128

The rank of the current practices in time management by the contractors based on mean values “average” as perceived by the contractors and consultants

7.14

128

The current practices of cost management by the contractors based on the frequency occurrence scale as perceived by the contractors and consultants

129

xiv

LIST OF FIGURES

No 2.1 1

Title The percentage of the growth of the Indonesian construction sectors

Page

15

(%) based on the GDP value 2.2

Several landmark construction projects in Pekanbaru

19

2.3

Several landmark construction projects in Padang

21

4.1

Basic construction project management philosophy (Ritz, 1994)

60

4.2

Time management cycle in construction industry (Clough, et. al.,

63

2000) 4.3

Control process to control construction project (Ritz, 1994)

65

4.4

The essence of the contractor’s control function (Ndekugri &

66

McCaffer, 1988) 4.5

The trade-off analysis process in project management (Sunny & Kim,

69

1992) 4.6

The proposed framework for survey which developed based on the

77

theory and the practices 5.1

The research stages

80

7.1

The proposed framework for survey (it was included in the

112

questionnaire) which developed based on the theory and the practices 7.2

The survey results about the proposed framework

114

7.3

The developed framework for construction project in Padang and

132

Pekanbaru based on the responds of the respondents to the proposed framework which was included in the questionnaire 7.4

The Detail of the developed framework for Construction Project in Padang and Pekanbaru

133

xv

GLOSSARY

BAPEKIN

: Badan Pengawas Konstruksi dan Investasi Nasional

DPU

: Dinas Pekerjaan Umum

GAPEKSINDO

: Gabungan Pengusaha Konstruksi Indonesia

INKINDO

: Ikatan Konsultan Indonesia

Keppres

: Keputusan Presiden

LPJK

: Lembaga Pengembangan Jasa Konstruksi

LPJKN

: Lembaga Pengembangan Jasa Konstruksi Nasional

PP

: Peraturan Pemerintah

PPMK

: Pusat Penilaian Mutu Konstruksi

REI

: Real Estate Indonesia

BPS

: Biro Pusat Statistik

xvi

LIST OF APPENDICES

APPENDIX

TITLE

PAGE

A

LIST OF RESPONDENT

160

B

PILOT STUDY

168

C

QUESTIONNAIRES

175

D

RIW CALCULATION

189

CHAPTER 1

INTRODUCTION

1.1

Background of the Study

Indonesia is a nation of 13,500 islands scattered between Asia and Australia. It has total land area of 1,904,569 km2, with total population in 2004 was around 217.9 millions and become the fourth most populous nation in the world after China, India and the United States (BPS, 2004).

The growth rate of Indonesian economic showed a better performance. It can show from the increasing of the annual gross domestic product (GDP) of the Indonesian for year to year. The annual gross domestic product (GDP) growth of the Indonesian in 2001 was around 3.83% and it increased sharply became 5.13% in the year 2004, (BPS, 2004). The rapid economic development and a steady growth of population have led to a significant increase in demand for housing, commercial and office buildings, and infrastructure such as roads and highways, airports, seaports, etc in the country.

Indonesian construction industry experiences rapid changes and development since the 1950s. It grew rapidly until the economic crisis in 1997 and since that year until 2004, the construction sector has not shown positive signal to get out of the crisis. Since 1997, performance decreasing for each quarter of steeper than its increasing, and also has sharp fluctuation among quarters. It can be prove based on the annual gross domestic product (GDP) growth based on the industrial origin data.

2 The construction sector growth rate had decreased sharply since 1997, from 6.94% per-annum during the period of 1997 to 2000 to 5.52% per-annum during 2000 to 2004, (BPS, 2000).

The country’s rapid economic growth can also be seen in two major cities in the island of Sumatera, namely Padang and Pekanbaru. Padang and Pekanbaru as the central of West Sumatera and Riau province for the last ten years become the main choice of the investor to invest especially for construction projects for the Sumatera areas (Luthfi, 2006). It causes of their location benefit to have a cooperation link with neighbouring countries Malaysia and Singapore.

Apart from their strategic location, the rapid growth of Padang and Pekanbaru was also induced by the government’s policy of spreading the country’s economic and physical growth to other parts of the country. The government realized in the last 25 years the economic development has been concentrated in Java (particularly in Jakarta) because most of the Indonesia’s population is concentrated in Java (BPS, 2004).

The economic growth of Pekanbaru and Padang itself, from 1998 to 2002 increased to 3.86 % and 2.94% where it was better than other cities in Sumatera where the average of their economic growth was only 0, 57 %. For the GDP value, Pekanbaru city had increased around 46.35% from 1999 to 2000, (www. Pekanbaru. go. id, 2005) and Padang also had increased 35.63% from 1999 to 2002, (www. Padang. go. id, 2005).

Both cities enjoyed many favourable and physical. This can be seen by the development of many new buildings and infrastructure projects to support the increasing commercial and manufacturing activities. In fact, these two cities have been ranked on number 1 until 4 among other cities in Sumatera in term of total value of new construction completed and the number of construction companies. It also has a tendency to increase for year to year (BPS, 2004).

The increase in construction activities in both Padang and Pekanbaru has contributed towards the growth of the two cities but it has also brought to light some

3 of inherent problems that have been mentioned by Kaming et, al., (1997a) and Trigunarsyah (2004). They pointed out that many construction projects in Indonesia suffer the problem of time and cost overrun.

Time and cost are the two major elements in project management, apart from quality and scope. One of the biggest challenges in the management of construction project or to one of the project manager is to ensure that the project is completed on time and within estimated cost. Time and cost are the two elements, which are become the major concern to most clients/ owners and subject of continuous discussion and research. As pointed out by many, one of the interesting aspects of construction that makes it more challenging and sometimes full of surprises is that it is a very fragmented industry. It involves myriads of interrelated activities that are carried out by many separate individuals and organisations with different sizes and expertise that may come from different parts of the country.

Due to the fragmented and complex nature of construction, many problems could arises everyday during the process of construction cause by factors such as weather, material delivery delay, labour dispute, equipment breakdowns, job accidents, change orders, and numerous other conditions. Many things could go wrong during the whole process of construction. All these problems will have serious impact on the performance of the projects, particularly on time and cost.

To the clients, may they be the government or property developer, any delay, cost overrun or both will significantly affect their profit and the viability of the projects. Therefore it is important to properly manage a project time and cost.

1.2

Statement of Issues

Like other developing countries, the Indonesian construction industry is also faced with serious time and cost overruns problems and it is become a matter of great concern to the government, private clients and the Indonesian construction community themselves.

4 Ir. Trisno Ario Sutanto, (2002) said that many construction projects in Indonesia suffer delays because many contractors are lacking in managerial knowledge and skills to manage the projects activities. The Indonesian Country Procurement Assessment Report (2001) on the other hand pointed out that, the main problems facing the Indonesian construction projects is time and cost overrun. It suggested that many firms and companies particular small and medium, lacks managerial competencies and skilled workers and resources. Then, according to Ir. Panggardjito (2001), there has not been enough market pressure to make them improve their capability, capacity and efficiency. These are some of the reasons why many construction projects in Indonesia cannot achieve an efficient time and cost in projects performance or have time and cost overrun problems.

According to Kaming et.al., (1997a) delays and cost overrun are common problem on projects in large project in Indonesia. He identified that 54. 5 % of project managers completed more than 90% of their projects that they handled on time, 15. 2% of completed only between 70 – 90% of their projects and 30. 3% completed less than 70%. It also identifies only 20. 7 % project managers claimed that 90% of their projects that they handled were completed within budget, 51. 7% completed between 70 – 90% of their project and 27. 6% completed less than 70%.

Trigunarsyah (2004) identified that only 30% of the projects were completed within the budget, 34% were less than the budget, and the remaining 36% exceeded the budget. The study also shows that only 47% of the projects were completed within the schedule, 15% ahead of schedule, and 38% were behind schedule. Both of the previous study above shows that, time and cost overrun problems in construction projects in Indonesia need to be overcome. However, their studies were limited to project in Java Island only.

A construction project had the time and cost overrun if it was completed exceeding the time and cost estimated as written in the approval contract (Ali, 1992 and Saldjana, 1998). In the two of previous research above, time and cost overrun were defined as the extension of time beyond planned completion dates traceable to the contractors and it means it have use the same concept with Ali, (1992) and Saldjana, (1998) about when the time and cost overrun occurs.

5 As said above Padang and Pekanbaru as the central of West Sumatera and Riau province for the last ten years become the main choice of the investor to invest for the Sumatera areas specifically for construction projects (Luthfi, 2006). Based on statement above about the time and cost overrun problems that faced of by Indonesian construction industry, it means include in it were Padang and Pekanbaru cities. No previous research has been found about the time and cost overrun problem in Padang and Pekanbaru cities because the two of previous research above concentrated in Java; Kaming et.al., (1997a) concentrated their research in big cities Jakarta and Yogyakarta and B. Trigunarsyah (2004) concentrated the research in all big cities in Java.

Several methods in managing project time and cost have been suggested or developed by experts; practitioners, and researchers. These methods can be considered to be the framework for the management of construction time and cost. Many construction companies, project management firms as well as individual project managers have adopted these methods in managing their projects.

However, despite having these methods, the Indonesian construction is still faced with the problems of time and cost overrun, (Ir. Panggardjito, 2001), The Indonesian Country Procurement Assessment Report and Ir. Trisno Ario Sutanto (2002).

The description of the issues and the previous research on the subject of time and cost overrun in Indonesian construction projects highlight some of major issues which can be summarized as: 1. Many books, journals and dissertation also pointed out the common causes of projects delays and cost overruns. What about in Indonesia? It becomes imperative to know what are the major causes that cause the time and cost overrun occurrence in Indonesia particularly in construction projects in Padang and Pekanbaru? 2. What is considered as the method for construction time and cost management as describe by many time and cost management framework? 3. How do the project managers in Padang and Pekanbaru manage the project time and cost? Do they have or follow or adopt any of the methods

6 management in framework model? If so, to what extent do they adhere to such a framework model in managing projects? A number of contractors and project managers claimed that some elements in the management framework were not carried out or given much attention.

1.3

Previous Research

Based on several previous researches, it is known that time and cost overruns create a bad image for the construction industry in many countries including Indonesia. In several previous researches in several developing countries, we can identify the causes of construction project overrun in terms of time and cost.

The studies relating to project problems that concerns the causes of time delays/ or cost overruns have been conducted worldwide from developed countries such USA and UK (Xiao and Proverbs, 2002a and 2002b) to developing countries such as Kuwait (Kartam et al., 2000), Nigeria (Okpala and Aniekwu, 1988; Mansfield et al., 1994; Dlakwa and Culpin, 1990; Okpala, 1986), Saudi Arabia (Assaf et al., 1995), Thailand (Ogunlana, 1996), Hongkong (Chan and Kumaraswamy, 1997), Malaysia (Wang, 1992) and Jordan (Al-Momani, 2000).

Based on the research results in Thailand construction projects, Ogunlana (1996) said that, construction industry problems in developing countries could be nested in three layers: problems of shortages or inadequacies in industry infrastructure, problems caused by clients and consultants, and problems caused by contractor’s incompetence/ inadequacies. Adequate planning at early stages of project execution is an important factor in reducing delays (time) and cost overrun in developing countries (Chalabi and Camp 1984). The need for a clear intention and understanding of the technical specifications could also reduce bottlenecks in the execution of projects (Jackson, 1990).

Contractors on the other hand, do not honour contract deadlines and use shortages of materials as an excuse, and these problems can be averted if

7 professionals are more prudent in their design and more knowledgeable about the availability and usage of materials (Okpala and Aniekwu, 1988).

The most

important delay (time) and cost overrun factors according to contractors were preparation and approval of shop drawings, delays and cost overrun in contractors’ progress, payment by owners and design changes by owner (Assaf, et. al., 1995).

Poor site management and supervision, unforeseen ground conditions, low speed of decision making involving all project teams, client initiated variations and necessary variations of works indicated by Chan and Kumaraswamy (1997) as cause factors for time and cost overruns in Hongkong. Mansfield et al. (1994) investigated the important factors responsible for delays and cost overruns in highway construction projects in Nigeria such as poor contract management, material shortages, inaccurate estimating and overall price fluctuations.

On the other hand as said above, there was also previous research about time and cost overrun conducted in Indonesia by Kaming et. al., (1997a). This research identifies the variables that influences construction time and cost overrun group these variables into factors and analyse the relationship of these factors and to further enhance understanding of construction delays and cost overruns.

Results of Kaming et. al. (1997a) research reflected the construction management problems on time and cost overrun factors which are limited to highrise projects in Indonesian big cities: Jakarta and Yogyakarta only that are also common in developing countries.

On the other hand this research reflected the construction management problems on time and cost overrun in Sumatera particularly in Padang and Pekanbaru. This research studies the problem that were faced by B (big) and M (medium) companies classification where most of these companies concentrate on low-rise projects such as housing, road and others simple buildings because Padang and Pekanbaru still in developing the city areas concept.

Kaming et. al. (1997b) also investigated five productivity problems that cause time and cost overruns among seven regions in Indonesia, namely Jakarta,

8 Yogyakarta, West Java, Central Java, East Java, Western and Eastern Indonesia. Five specific productivity problems are identified, i. e, lack of materials, rework, absenteeism, lack of equipment and tools and gang interference. Trigunarsyah (2004) survey results point to the fact that contractor involvement in pre-construction phases could reduce time and cost problems during site operation.

The studies in other countries also highlighted the appropriate practices or suggested solution to reduce the overrun problems such as in Japan, USA, UK and Malaysia construction projects. There are also studies about the process and procedures, which is provide a framework about time and cost management stages that can be adopted to reduce overrun problems.

It is good to refer to other practices because it will help in finding a better way to achieve the best results. It also could say that by adapting these other countries practices, processes or the procedures could help or assist Indonesian construction projects avoid being ambushed by unexpected overrun problems especially on time and cost during the construction process. However, through literature study that has been reviewed by researcher, there is no published previous research on this topic in Padang and Pekanbaru even in whole Indonesian construction projects.

1.4

Objectives of Research

Based upon the global notion of Indonesian construction projects condition in the issue statements above, in order to reduce time and cost overrun problems in Indonesian construction projects particularly in Padang and Pekanbaru cities, this research is undertaken to provide a means: 1. To identify the major causes of project time and cost overrun in low - rise projects in Padang and Pekanbaru 2. To establish theoretical framework for a good construction time and cost management

9 3. To compare the time and cost management as currently practiced by construction companies in Padang and Pekanbaru against the theoretical time and cost management framework

1.5

Scope of the Research

This research reviewed available literature to give a clear and precise understanding of the importance of time and cost management in construction projects performance. It also reviewed factors that cause time and cost overrun and the practices or suggested solution in order to reduce the time and cost overrun problems from the previous researches in other countries. Through literature study that has been reviewed by researcher, there is no published previous research on this topic in Padang and Pekanbaru construction industry. These findings will be used as references to support the research survey and the finding results.

The survey was done in Indonesian construction projects with study areas Padang and Pekanbaru with the reason as stated in the research issues and the previous research parts above. Although specific in this two cities area, the results could reflect and assist to other cities in Indonesia which has the same problems in the construction projects especially for time and cost overrun problems.

The objectives of study are to identify the major causes of time and cost overrun, to establish the theoretical framework for a good construction time and cost management that have been synthesized from several previous research and to compare time and cost management as currently practiced by construction companies in Padang and Pekanbaru against it. Then, the outcome of this survey that supported by the reviewed findings will become the basis to reduce the occurrence of the time and cost overrun problems which describe in framework for Indonesian construction projects, particularly Padang and Pekanbaru.

Ali, (1992) and Saldjana, (1998) had defined about time and cost overrun and also Kaming, et. al., (1997a) and Trigunarsyah, (2004). They have same definition

10 about when the time and cost overrun occurs. This study also uses that definition as one of delimitation of this study.

The sources of data are the class B (big) and M (medium) contractors and consultants in these two cities (Padang and Pekanbaru) because they have more experience and active in project activities per-year. The companies that are included in this classification are companies with vast experiences in managing projects.

However, for Padang and Pekanbaru cities, kind of projects that are executed are many but most of them include in low-rise buildings such as housing, offices and others simple projects. Other limitation for this research is the companies selected for this research must be registered with INKINDO for consultants, GAPEKSINDO for contractors and LPJK for all companies that are not registered under any of them. Further limitation about the research sample will discusses in the methodology of the research.

1.6

Thesis Organization

Chapter 2 reviews Indonesian construction industry, which discusses about the Indonesian demography and economic, its construction industry as general and particularly in Padang and Pekanbaru, the structure and the performance of the construction industry; company qualifications, company organizations, project procurement system, and the problems and the current practices of project management in Indonesian construction projects.

Chapter 3 reviews project time and cost management which discusses about the definition of project time and cost, the definition of project time and cost management, project management objectives, problems associated with project time and cost, and the issues in project time and cost management and its implication to the project performance.

11 Chapter 4 reviews project time and cost management framework which discusses about what is the framework itself, the purpose of framework, the framework for project time and cost management, and the proposed framework for each the project management stages.

Chapter 5 describes the methodology that adopted to conduct this research.

Chapter 6 presents data analysis results on the major causes of project time and cost overrun based on the survey, discussions and the literature review findings as an achievement of the first objective of this research.

Chapter 7 presents data analysis results on comparison of the time and cost management as currently practiced by Indonesian construction projects particularly in Padang and Pekanbaru as areas of study against the theoretical framework for a good construction time and cost management which were described in literature review findings results. From these discussions a proposed framework would be developed that can be used to reduce time and cost overrun problems for construction projects in Padang and Pekanbaru. This chapter shows the achievement of the second and third objective of this research.

Chapter 8 presents the conclusions of this research and the recommendations for future research.

CHAPTER 2

INDONESIAN CONSTRUCTION INDUSTRY

2.1

Introduction

Indonesia has experienced rapid economic development for the last 15 years. It has brought about a significant increase in construction activities that has benefited the country as a whole, but it also brought to light the problem that many construction projects suffered time and cost overrun. Before going further into the issues, it is most appropriate to consider Indonesia as a country; its demography, economies and construction industry.

2.2

The Indonesian Demography and Economic

The Indonesian people occupy the world's largest archipelago, stretching more than 3,000 miles from mainland Southeast Asia eastward between Australia and the Philippines. Lying astride the sea lanes of communication between the Pacific and Indian oceans, Indonesia consists of over 13,500 islands with total land area of 1,904,569 km2, (Bresnan, 1997). Total population of Indonesia in 1990 and 2000 was 178.5 millions and 206.3 millions, respectively. While total population in 2004 was around 217.9 millions and it is the fourth most populous nation in the world after China, India and the United States, (BPS, 2004).

13 For the year 2004, growth rate of Indonesian economic showed a better performance than 2003. The annual gross domestic product (GDP) of the Indonesian in 2003 was 2, 045.9 trillion rupiahs and it increased in the year of 2004 become 2, 095.4 trillion rupiahs. Value of GDP on construction sector was 112, 571.3 billion rupiahs in 2003 and 134, 388.1 billion rupiahs in 2004, (BPS, 2004). Table 2.1 below will show the annual gross domestic product (GDP) of the Indonesian from 19972004 based on the industrial origin and also the percentage of the growth.

2.2.1

The Indonesian Construction Industry

Indonesian construction industry has under gone changes and development since the 1950s and grown rapidly until the 1997. The construction sector is very much depends on Indonesian economic as a whole. The economic crisis between 1997 to 2000 causes the industry to suffer and it is not yet recovers.

Table 2.1 show the GDP of various economic sectors of the Indonesian Economic. The table shows that the growth of the Indonesian construction industry has been slow after the down turn in 1997. The growth of Indonesian construction industry had decreased sharply from 7.44% in 1997 to 6.46% in 1998. It has also drop considerably from 7.14% in 2000 to 5.30% in 2001. The table also show that the Indonesian construction industry is yet to fully recover from the impact of the 1996 financial crisis. It describe clearly in Figure 2.1, after the table.

14

Table 2.1 Indonesian GDP by Industrial Origin (billion rupiahs) and the Percentage of the Growth to the GDP (%), 1997-2004 Industrial origin 1.

1997

1998

1999

2000

2001

2002

2003

2004

101, 009.4

172, 827.6

216, 913.6

218, 397.6

263, 327.9

298, 876.8

325, 653.7

354, 435.3

16.09

18.08

19.54

16.92

15.63

16.04

15.93

15.38

55, 561.7

120, 328.6

109,974.1

166, 563.1

182, 007.8

161, 023.8

169, 535.6

196,892.4

8.85

12.59

9.91

12.91

10.81

8.64

8.28

8.55

168, 178.0

238, 897.0

287, 702.6

336, 053.2

506,319.6

553, 746.6

590, 051.3

652, 729.5

26.79

25.00

25.92

26.04

30.07

29.73

28.83

28.34

7, 832.4

11,283.1

13, 429.0

15, 072.4

10, 854.8

15, 392

19, 540.9

22, 855.4

1.25

1.18

1.21

1.17

0.64

0.83

0.95

0.99

46, 678.8

61, 761.6

74, 496.4

92, 175.9

89, 298.9

101, 573.5

112, 571.3

134, 388.1

7.44

6.46

6.71

7.14

5.30

5.45

5.50

5.84

99, 581.9

146, 740.1

176, 663.7

196, 049.5

267, 656.1

314, 646.7

337, 840.5

372, 340

15.86

15.35

15.92

15.19

15.90

16.87

16.55

16.19

38, 530.9

51, 937.2

55, 189.6

64, 550.1

77, 187.6

97, 970.3

118, 267.3

140, 604.2

Percentage of growth (%)

6.14

5.43

4.97

5.00

4.59

5.26

5.77

6.09

Financial, ownership and business services

54, 360.3

69, 891.7

70, 641.8

80, 047.2

135, 369.8

154, 442.2

174, 323.6

194, 542.2

Percentage of growth (%)

8.66

7.31

6.36

6.20

8.02

8.29

8.51

8.44

55, 962.0

82, 086.8

104, 968.7

121, 775.3

152, 258.0

165, 602.8

198, 069.3

234, 244.4

8.92

8.59

9.46

9.43

9.04

8.89

9.68

10.18

627, 695.5

955, 753.5

1, 109, 979.5

1, 290,684.2

1,684,280.5

1,863,274.7

2,045,853.5

2,303,031.5

100 %

100 %

100 %

100 %

100 %

100 %

100 %

100 %

Agriculture, livestock, forestry & fishery Percentage of growth (%)

2.

Mining and quarrying Percentage of growth (%)

3.

Manufacturing industry Percentage of growth (%)

4.

Electricity, gas and water supply Percentage of growth (%)

5.

construction Percentage of growth (%)

6.

Trade, hotel and restaurant Percentage of growth (%)

7.

8.

9.

Transport and communication

Services Percentage of growth (%)

Source: Statistical Yearbook of Indonesia (BPS, 2000 and BPS, 2004)

14

15

The percentage of the growth of the Indonesian construction sectors based on the GDP value (%) 8 7 6 (%)

5 4 3 2 1 0 1997

1998

1999

2000

2001

2002

2003

2004

Year

Figure 2.1 The percentage of the growth of the Indonesian construction sectors (%) based on the GDP value

The growth of the Indonesian construction industry has greatly influenced the country’s economic development. Construction is considered unique in that it can stimulate the growth of other industrial sectors. The construction values become the main component of output structure of construction companies. Total value of construction that has finished during 2003 was decreased if compared with 2002. Total of construction value that have finished in 2002 was about 22.2 trillion rupiahs and in 2003 was about 20.2 trillion rupiahs or decreased about 9.0 percent but in 2004 it was increased 20.3 percent become 24.3 trillion rupiahs (BPS, 2004). Data about the total value of construction work completed and its value by type in Indonesian construction industry since 2000 to 2004 can be seeing in Table 2.2 as follows.

16 Table 2.2. Value of Construction Works in Indonesia According to the Type of Construction (billion rupiahs) from 2000 to 2004 Description

2000

2001

2002

2003

2004

- Residential

1,232,932

1,412,543

1,595,983

1,372,103

1,695,054

- Non-residential

4,300,840

4,614,605

5,129,961

4,547,594

5,503,004

- Electrical installation

1,062,649

1,227,349

1,427,610

1,167,857

1,443,168

- Water supply installation

126,065

142,327

160,843

153,374

194,151

- Sanitary installation

33,542

34,623

41,455

37,100

45,675

- Foundation

30,332

23,489

26,249

22,839

24,855

- Sound system, AC, lift, etc

30,410

46,158

51,654

41,807

56,771

- Water supply network

283,327

162,447

205,467

183,499

197,478

- Gas pipe installation

105,469

46,550

106,400

86,656

120,923

- Electricity network

358,868

292,507

349,616

313,834

359,596

- Road & bridge works

6,397,989

6,185,981

7,001,463

6,547,822

7,827,454

- Irrigation/ drainage

2,019,787

1,372,300

1,558,438

1,427,471

1,536,090

30,314

109,487

130,597

107,473

238,306

210,706

175,675

716,799

694,054

870,267

721,397

3,240,289

3,674,823

3,450,716

4,228,121

16,944,628

19,086,328

22,177,359

20,154,199

24,340,912

-

Electric power supply

- Construction or improvement of airport, harbor, bus station, etc - Other construction works - Total of value

Source: Statistical Yearbook of Indonesian 2004, (BPS, 2004)

Table 2.2 above shows the value of the construction works from 2000 – 2004. It shows that there is an increase in value but the annual rate of growth is not very favorable.

Table 2.3 below will shows the performance of the construction industry of the various provinces in Indonesia. It shows that the value of work of construction in West Sumatera and Riau province where Padang and Pekanbaru is located be increase year to year.

17 Table 2.3 Value of Construction Completed by Province (billion rupiahs), in Indonesian Construction Industry since 2000 to 2004 2000

2001

2002

2003

2004

328,361

371,310

419,878

446,492

494,865

- North Sumatera

438,030

515,255

996,107

993,748

1,360,81

- West Sumatera

345,371

397,937

458,503

469,008

520,171

- Riau

475,346

529,060

596,692

598,112

668,544

- Jambi

101,042

121,837

146,910

144,242

163,154

- South Sumatera

529,770

620,572

729,811

648,999

856,580

- Bengkulu

147,476

153,153

159,050

124,254

165,174

- Lampung

127,321

136,272

153,555

137,078

168,690

- Kepulauan Bangka Belitung

103,469

113,486

148,913

142,725

160,206

- DKI Jakarta

3,070,608

3,303,698

3,554,482

2,958,110

3,824,321

-

West Java

1,722,946

2,007,558

2,338,805

1,828,482

2,724,825

-

Central Java

1,305,114

1,469,297

1,654,135

1,563,100

1,665,517

-

DI Yogyakarta

142,129

168,861

202,763

182,674

242,161

-

East Java

1,974,964

2,109,459

2,253,113

2,293,341

2,411,107

-

Banten

309,789

366,871

434,401

420,883

468,188

-

Bali -Bali Island

401,890

464,625

556,326

473,089

654,648

-

West Nusa Tenggara -Lombok Island

635,778

733,752

846,822

928,797

1,054,180

566,446

643,540

731,380

692,990

743,834

Year Sumatera Island - Nanggroe Aceh Darussalam

Java Island

- East Nusa Tenggara -Timor island Kalimantan Island -

West Kalimantan

303,226

348,832

401,980

404,482

446,141

-

Central Kalimantan

539,353

584,055

658,815

780,333

883,104

-

South Kalimantan

228,132

241,455

255,864

236,803

270,946

-

East Kalimantan

911,673

1,135,488

1,459,066

1,119,456

1,230,348

Sulawesi Island -

North Sulawesi

240,215

254,938

269,596

213,946

285,628

-

Central Sulawesi

176,116

213,558

263,601

229,965

254,443

-

South Sulawesi

853,839

986,952

1,243,376

1,189,102

1,336,575

-

South East Sulawesi

143,780

168,635

195,616

199,458

222,894

-

Gorontalo

21,371

24,254

27,407

31,864

36,404

-

Maluku -Maluku’s Island

64,688

69,474

72,254

70,263

72,257

-

North Maluku -Halmahera Island

45,739

50,389

56,839

55,273

58,998

-

Papua -Irian Jaya Island

690,646

781,754

891,299

837,131

896,085

16,944,628

19,086,328

22,177,359

20,154,199

24,340,912

Total of value

Source: Statistical Yearbook of Indonesian 2004, (BPS, 2004)

18 2.2.2

Construction Industry Performance in Padang and Pekanbaru

The country economic performance has also influence the economic and physical growth of many of its major cities. Two of them are Padang and Pekanbaru. There two cities have experience favorable economic and physical growth that saw through the growth of the construction sector. For the proper of this study, it is most appropriate to consider the growth of the economy and the construction of these two cities.

a)

Pekanbaru

Pekanbaru is the capital city of province of Riau and it located in the East of Sumatera (See in Fig. 2.3 below). In 1988 Riau province had a population of 2.842.955 and in 1999 it had increased to 3,345,467. In 2004, the approximated total is around 5,000,000 people and half of them settled in Pekanbaru (www. Pekanbaru. go. id, 2005).

The economic growth of Pekanbaru itself from 1998 to 2002 increased to 3.86 % with a value 504,384 billion rupiahs. At the same time it was better than other cities in Sumatera where the average of their economic growth was only 0, 57 %. On the other hand, GDP of Pekanbaru cities had increased 46.35% with values 2,194 million rupiahs in 1999 and 3,212 million rupiahs in 2000. The major income of Pekanbaru comes from petroleum, palm oil and industrial sectors especially construction industry (www. Pekanbaru. go. id, 2005).

Although the Indonesian economy is not stable yet, the property business and the construction activities in Pekanbaru in 2005 are still growing up. According to Kampriwoto (2004) as Head of Indonesian Real Estate Organization (REI) it can be proven by the number of the demand for housing projects, school, shops and the infrastructure buildings.

Kampriwoto (2004) stated that, the highest demand in construction projects for Pekanbaru is for housing projects. During 2005, all the developers, contractors and consultants have targeted to build around 4000 housing projects. Start of January

19 until May 2005, around 2500 of the housing projects were completed and sold out. Till the end of 2005, around 1500 of the housing projects were planned to be built and have to be completed. Beside the housing projects, other projects that have also high demand are infrastructure projects especially roads because in recent years many new cities around Pekanbaru are developed. Its need many new roads and also the improvement of the old roads to connect Pekanbaru and the new cities. Figure 2.2 below shows several landmark construction projects that have been constructed in the last five years in Pekanbaru.

“Kelok 9” Fly-over

“Koto Panjang” Dam

Renovation of “Simpang 3” Airport Figure 2.2 Several landmark construction projects in Pekanbaru

20 b)

Padang

Padang is the capital city of West Sumatera with a total land area of 42,297.30 km2. Today, the population of West Sumatera in 2000 was 4,400.000 with density 104/ km2. The economic growth of Padang city from 1998 until 2002 had increased to 2.94% with value 363,440 billion rupiahs. The GDP value of Padang city is 2,485 million rupiahs in 1999 and 3,590 million rupiahs in 2002. The major income of Padang city comes from cement, coalmines and farm (www. Padang. go. id, 2005).

Same with Pekanbaru, according to Kampriwoto (2004) housing projects also have high demand in Pekanbaru but not as high as in Pekanbaru. Until end 2005, only 2500 housing project demanded has yet to be completed. Recently, for the last 5 years, landmark construction projects that have been constructed in Padang are “Minang” International Airport (MIA) and fly-over to the airport (“Ketaping”/ “Dukuh” fly-over) because its location is at the border of Padang city. Besides that public roads were built to connect to the entire area around the international airport. The new international airport also highlighted the need to improve many old roads in around Padang; make it wider to make the traffic flow smoothly (www. Padang. go. id, 2005). Figure 2.3 below, shows several landmark projects in Padang that have been constructed for the last 5 years.

“Minang” International Airport (MIA)

21

“Ketaping’s/ Duku’s” gate and fly – over perspectives

“Siti Nurbaya” Bridge Figure 2.3 Several landmark construction projects in Padang

2.2.3

The Structure of Indonesian Construction Industry

a) Company Qualifications

The Indonesian construction industry is made up of mainly the contractors, consultants, government’s agencies, material supplier, and professional firms and companies. The government and professional bodies have been the key players in bringing about the change and development of the industry in terms of technology, work procedures and business practices.

In 2001 the government set up a Construction Development Board (LPJK) to regulate and oversee the systematic practice of contractors and consultants. These include certification of the contractor and private consulting company’s status, proper providing recommendations for them to get government projects. With its establishment all private or public contracting and consulting firms and companies

22 must now register with LPJK. Before LPJK was established, one of Indonesian construction companies were registered and followed the procedures of one of many construction organizations that were exists such as GAPENSI (Association of Indonesian entrepreneurs), IKADIN (Association of Indonesian Trading), etc, beside have to register with GAPEKSINDO (Indonesian Contractors Association) for contractors companies and INKINDO (Indonesian Association of Consultants) for consultants companies.

Besides setting up the organization and board for construction companies, the government also set up arrangement procedures or systems for construction industry and act as controller. In setting up the arrangement procedures or systems, government published the construction laws and standards relating to technical procedures of construction industry projects.

As mentioned above, one of LPJK responsibilities as one of the board or the institution under the government is to oversee the proper certification of the status of contractor and consultant firms. LPJK have classified the consultant and contractor firms into the following qualifications (LPJK, 2003): Consultant qualification: •

K or small qualification Companies under this class are companies that have the ability to execute construction projects valued less than 200 million rupiahs.



M or medium qualification Companies under this class are companies that have the ability to execute construction projects valued between 200 million and1 billion rupiahs.



B or big qualification Companies under this class are companies that have the ability to execute construction projects valued at more than 1 billion rupiahs.

Contractor qualification: •

K or small qualification Companies under this class divided become three groups based on the ability to execute the construction projects with range values:

23 K3: have the ability to execute construction projects valued less than 100 million rupiahs. K2: have the ability to execute construction projects more than 100 million rupiahs but less than 400 million rupiahs. K1: have the ability to execute construction projects more than 400 million rupiahs but less than 1 billion rupiahs. •

M or medium qualification Companies under this class are companies that have the ability to execute construction projects valued more than 1 billion but less than 10 billion rupiahs.



B or big qualification Companies under this class are companies that have the ability to execute construction projects valued more than 10 billion rupiahs.

b) Company Organizations

The Indonesian construction industry is made up of the following organization or/and agencies: 1. Government bodies; as stated above such as GAPENSI (Association of Indonesian entrepreneurs), IKADIN (Association of Indonesian Trading), LPJK (Construction Development Board) and etc. 2. Private

organization;

GAPEKSINDO

(Indonesian

Contractors

Association) for contractors companies and INKINDO (Indonesian Association of Consultants) for consultants companies.

This study only concerns the companies that have registered with LPJK as the government bodies and with GAPEKSINDO and INKINDO as the private organization.

Today as stated by head of LPJKN (National Construction Development Board) Sulistijo (2003) there are a total of 39, 884 companies that have registered with LPJK, 4, 372 contractors have registered with GAPEKSINDO and 2, 567 consultant firms have registered with INKINDO. Refer to Table 2.4 below.

24 Table 2.4. Total Number of Companies Register under LPJK, GAPEKSINDO and INKINDO by Province. No

LPJK

GAPEKSINDO

INKINDO

JUMLAH

1344 792 518 646 385 464 312 122 3786 522 2031 1662 4797 946 1204 1080 2508 765 1443 2500 340 670 267 1551 0 0 1156 422 446 0

318 84 110 217 25 107 0 350 24 33 335 0 127 225 12 81 285 0 0 650 126 0 228 380 54 85 23 87 106 0

205 101 184 197 56 0 49 74 364 201 85 73 276 75 58 0 20 46 124 0 57 130 59 79 0 11 41 2 0 0

1867 977 812 1060 466 571 361 546 4174 756 2451 1735 5200 1246 1274 1161 2813 811 1567 3150 523 800 554 2010 54 96 1220 511 552 0

Total 32679 4072 Source: Construction Development Board Data, (LPJK, 2003)

2567

39318

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

LPJKD Nangroe Aceh Darussalam Sumatera Utara Sumatera Barat Riau Jambi Sumatera Selatan Bengkulu Lampung Daerah Khusus Ibukota Jakarta Jawa Barat Jawa Tengah Daerah Istimewa Jogyakarta Jawa Timur Kalimantan Barat Kalimantan Tengah Kalimantan Selatan Kalimantan Timur Sulawesi Utara Sulawesi Tengah Sulawesi Selatan Sulawesi Tenggara Bali Nusa Tenggara Barat Nusa Tenggara Timur Maluku Maluku Utara Banten Gorontalo Bangka Belitung Papua

Table 2.4 above, shows the distribution and registration of each contractors and consultants companies by each province. LPJK also stated the total number of companies for each qualification based on data on 2003. For detail it can be see in Table 2.5 below but its only shows the total number of companies in Pekanbaru and Padang cities as the areas of study for this research.

25 Table 2.5 Total Numbers of Big, Medium and Small Companies based on The Organization Registered and the Qualification. Areas & Company

LPJK

GAPEKSINDO

INKINDO

(Both)

(Contractor)

(Consultant)

Pekanbaru: -

K (Small)

144

40

47

-

M (Medium)

83

31

10

-

B (Big)

5

3

7

Padang -

K (Small)

132

53

37

-

M (Medium)

29

6

13

-

B (Big)

16

2

5

Source: Construction Development Board Data by Province, (www.LPJK.go.id, LPJK, 2003)

c) Project Procurement Systems

According to LPJK (2003), the financial sources for the construction industry and the ownership for the construction projects in Indonesia are divided into: a) Government Funds are given to government owned construction projects that develop public facility, civil building, infrastructure, and industry. b) Private Funds are usually used for establishing commercials building such as hotels, condominiums, tourism facilities, and others. An individual or a group or company controls this fund with interest to help the government in developing the country as well as for profit. c) Combined funds from government and private sectors This fund is used to develop the country’s natural resources such as petroleum mines and gas mines. This construction project is owned by the government but organized by the private company. d) Loan from Overseas This fund is to develop major infrastructure and loans from another country that specializes in certain construction such as Japan to build dams.

26 Most of public work projects in Indonesia, including any construction projects under government authority or under state owned companies, are awarded on a competitive basis using the traditional approach; professional designers (consultants) and constructors (contractors) are engaged in separate contracts.

Professional designers referred to consultants have to be responsible about the construction design based on function and all the stipulation in each construction process. Consultants also prepared the time and cost estimated as general for owner tendering document. If all these things have been completed, the projects are ready for tendering to all the contractors (Petunjuk Teknis Keppres No.18, 2000). For the contractors, they usually would not be involved until the designs have been completed. Many private sector projects have also been using the similar approach (Trigunarsyah, 2004).

According to “Petunjuk Teknis Keppres No.18” (2000) and “Peraturan Pemerintah (PP) Republik Indonesia No.29” (2000), there are 4 methods of project tendering or project auction, namely as following: 1. Open/ Public Tendering The tender project is officially and publicly announced including through mass media and electronic media. All contractor companies that fulfill the qualification requirements have equal opportunity to participate the project tender. 2. Close tendering The tender project is officially and publicly announced including through mass media and electronic media but it is only for special projects, which only followed by companies that have special abilities or technology and also have to fulfill the qualification requirements. 3. Direct selection The tender project does by choosing directly one company. This method is used when there is a special condition and the project has to start as soon as possible including urgents condition that was caused by nature disaster and others. Beside that, this methods was also chosen if the project valued less than 50 million rupiahs, and does not need high technology and have small risks.

27 4. “Swakelola” This project tender is by negotiating directly between the owner and contractor for the price, schedule and technical procedures.

The qualification requirements according to “Petunjuk Teknis Keppres No.18” (2000) and “Peraturan Pemerintah (PP) Republik Indonesia No.29” (2000) means here as: 1. The company must have company authorization, certification, and qualification from government, government board and company organization. 2. Project planning and project supervisor must have skill certification. 3. Engineer who is involved in the project process must have skill certification in the particular area they are involved. 4. Workers who are hired as supervisor, inspector or special works also must have skill certification.

For the skill certification, government has given this responsibility to the company association or organization (GAPEKSINDO for contractors and INKINDO for consultants) to oversee proper certification gift for the engineer based on their own regulation. However, the association tries to gives top priority to getting projects to its members (Indonesia country procurement assessment report, 2001).

2.2.4

Performance of Construction Projects in Indonesia

So far, the discussion has been concentrating on the economic performance of the country (Indonesia) as a whole, the two provinces (Pekanbaru and Padang) and the construction sectors. They show a favorable scenario. But what about the technical and managerial performance of the industry, specifically concerning project time and cost.

A study by Kaming et. al., (1997a) shows time and cost overrun are a common problem in projects in Indonesia. Table 2.6 shows that about 54. 5 % of project managers completed more than 90% of their projects on time, 15. 2%

28 completed only between 70 – 90% and 30. 3% completed less than 70% (suffer delay). It also identifies only 20. 7 % project managers claimed that 90% of their projects were completed within budget, 51. 7% completed only between 70 – 90% and 27. 6 % completed less than 70% (suffer cost overrun).

Table 2.6 Response rate of project completed on time and within budget Percentage of projects successfully completed by project managers Less than 70 %

70 - 90%

Over 90 %

- On time (%)

30.3

15.2

54.5

- Within budget (%)

27.6

51.7

20.7

Sources: (Kaming, et., al., 1997a)

A study by Trigunarsyah (2004) shows that only 30% of the projects were completed within the budget, 34% completed the projects less than the budget, and the remaining 36% completed the project, exceeded the budget. The study also shows that only 47% of the projects were completed within the schedule, 15% completed the projects ahead of schedule, and 38% of the projects were completed behind schedule. See Table 2.7 below.

Table 2.7 Response rate of project completed Budget Status completed

Time % Completed

Status completed

% Completed

- Within the budget

30

-

Within the schedule

47

- Less than the budget

34

-

Ahead of the schedule

15

- Exceeded the budget

36

-

Behind the schedule

38

Sources: (Trigunarsyah, 2004)

Both of the previous research above shows the time and cost overrun in Indonesian construction project but it was different in grouping the response rate. However, all delays usually create higher cost. There are some examples of project that had delays and cost overruns as shown in Table 2.8. Time and cost overruns

29 occur as shown in table schedule in “tahun anggaran” columns. The differences between planning and actual performance can be seen from the table. For example project no 1; planning for physical work must be completed 21.96 % from total work with 20 % budget from all of cost estimated in June but in actual percentage the physical work was completed 5 % with budget 29.6 % from the total estimated.

30

Table 2.8 Some Example of projects with time and cost overrun problems in Indonesian Construction Projects (Padang) (Source: Laporan Kinerja Proyek Jalan dan Jembatan Dinas Pekerjaan Umum (DPU) Sumbar) DIP NO

1

1

NAMA PAKET PROYEK 2 Paket Proyek : pembangunan jalan indrapura Tapan dan Silaut

SCHEDULLE TAHUN ANGGARAN 2003

APBN (Rp)

LOAN (Rp)

3

4

1,500,000,000.00

TOTAL (Rp)

NILAI KONTRAK No. KONTRAK TGL. KONTRAK ADDENDUM

VOLUME PJG. EFF PJG.FUNGS

SPMK

6

7

8

5 (3+4)

1,500,000,000.00 ADD

1,463,086,000.00 01/PKK/W.03Bb.03.23.01/2003 6-Jun-2003 1,499,086,000,00

9

4.00 KM 4.00 KM

Fisik 6-Jun2003 Keu

Pengawasan Supervisi Konstruksi : Paket 8 : Pengawasan Teknik Berkala Jalan Sepanjang 4,10 Km

2

Paket 9 : Pengawasan Teknik Berkala Jalan Sepanjang 4,20 Km Paket 10 : Pengawasan Teknik Berkala Jalan Sepanjang 8,50 Km

120,450,000.00

120,450,000.00

98,969,750.00 KU.08.08/P3JJ-SB/SPK-V05 13 Mei 2003

Fisik 4.10 KM Keu

134,900,000.00

134,900,000.00

115,827,800.00 KU.08.08/P3JJ-SB/SPK-V06 13 Mei 2003

Fisik 4.20 KM Keu

265,000,000.00

265,000,000.00

250,018,580.00 KU.08.08/P3JJ-SB/SPK-V07 13 Mei 2003

Fisik 8,50 KM Keu

KONTRAKTOR KONSULTAN

JAN

FEB

MAR

APR

MEI

JUN

JUL

AGST

10

11

12

13

14

15

16

17

18

Renc

0.00

0.00

0.00

0.00

0.00

21.96

28.68

76.28

Real Dev Renc Real Dev

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

5.00 16.96 20.00 29.50 9.50

30.12 1.44 41.00 33.93 7.07

61.76 14.52 75.00 33.93 41.07

Renc Real Dev Renc Real Dev

20.00 7.00 13.00 20.00 22.18 2.18

40.00 27.89 12.11 40.00 27.89 12.11

60.00 46.48 13.52 60.00 27.89 32.11

PT. RIKA PERKASA PRATAMA

Renc Real Dev Renc Real Dev

20.00 7.00 13.00 20.00 21.92 1.92

40.00 27.64 12.36 40.00 27.64 12.36

60.00 46.15 13.85 60.00 27.64 32.36

CV. INDO SARANA ENG

Renc Real Dev Renc Real Dev

20.00 8.88 11.12 20.00 18.87 1.13

40.00 27.27 12.73 40.00 27.27 12.73

60.00 43.46 16.54 60.00 27.27 32.73

PT. SARANA MULTI DAYA

20

PT. RAVE KARYA MANDIRI PT. SARANA MULTI DAYA

30

31 Overall, cost overruns were found to be more common than delays on highrise projects in Indonesia. This research results also by Kaming, et.al., (1997a). It may give a clearer picture of delayed and cost overrun situations in Indonesia. It is, however, undesirable that delays and cost overruns do occur in significant proportions in Indonesia.

The summary of research about variables/ causes of delays and cost overruns by Kaming, et.al., (1997a) is show in Tables 2.9 and 2.10 below. This study is limited to high-rise projects only in big cities particularly Jakarta and Yogyakarta, Indonesia.

Table 2.9 Variables of delays and their importance, frequency, and severity in construction

in Indonesia (scale of indices for importance, frequency and severity

ranges from 0 to 1)

Variables/ causes Of delays

Unpredictable Weather

Importance Index

Frequency

Rank

Severity

Index

Rank

Index

Rank

0.60

11

0.39

11

0.24

11

0.88

3

0.56

7

0.51

5

0.80

5

0.60

5

0.49

6

0.69

9

0.43

10

0.33

10

Material shortage

0.79

6

0.63

3

0.52

4

Equipment shortage

0.68

10

0.45

9

0.33

9

Skilled labor shortage

0.72

7

0.58

6

0.43

7

Location restriction

0.72

8

0.52

8

0.40

8

Inadequate planning

0.88

2

0.61

4

0.55

3

Poor labor productivity

0.87

4

0.74

2

0.65

2

Design changes

0.93

1

0.98

1

0.91

1

Conditions Inaccuracy of material Estimate Inaccurate Prediction Craftsmen production Inaccurate Prediction Equipment

Mean

0.78

0.59

0.48

32 Table 2.10 Variables of cost overruns, their importance, frequency, and severity in Indonesian construction projects (scale of indices for importance, frequency and severity ranges from 0 to 1).

Variables/ causes

Importance

Frequency

Severity

Of cost overruns

Index

Rank

Index

rank

Index

rank

Unpredictable weather

0.56

6

0.43

6

0.25

6

0.78

2

0.68

1

0.54

1

0.80

1

0.63

2

0.49

2

0.71

3

0.52

3

0.37

3

0.65

4

0.46

4

0.35

4

0.61

5

0.45

5

0.31

5

0.54

7

0.40

7

0.25

7

conditions Material cost increased by inflation Inaccurate quantity take-off Labor cost increased due to environment restriction Lack of experience of project location Lack of experience of project type Lack of experience of local regulation Mean

0.66

0.51

0.37

Source: Result of Kaming, et.al., (1997a) research.

Tables 2.9 and 2.10 above have shown the variables and their important existence where it became the causes of time and cost overruns. In the discussion above it had been reviewed and identified by the previous research about the problems and the project management implementation in Indonesian construction industry performance. It had been identified that one of the problems facing by Indonesian construction industry is time and cost overrun and it also identified the causes – So, what is actually that time and cost overrun?

33 Ali (1992) and Saldjana (1998) pointed out that a construction project experience time and cost overrun if it is completed exceeding the time and cost stipulated in the contract. Kaming et.al., (1997a) and Trigunarsyah (2004) defined time and cost overrun were defined as the extension of time and cost beyond planned completion dates traceable to the contractors. For the purpose of this research, researcher used the same definition about the project time and cost overrun.

According to “Keputusan Menteri PU No. 10. (1991)” a project is considered 100% completed if the contractor fulfils following requirements: •

The work quantity that was planned was achieved,



The quality of the complete work fulfill the requirements of the contract and the customer,



Management administration already completed,



The owner has settled all payments to the contractors.

At the end of the time and cost estimates, if the project physical works complete less that 100% but more than 80%, the contractor could ask the owner to extend the project and the additional cost handled by them. If the owner agrees with the contractor’s request, the contractor has to finish the work on time with the extended time requested. If the contractor still cannot finish the project on time, the contractor must pay a sum of money referred as a penalty; maximum 5% from the contract values per-day to the owner (“Keputusan Menteri PU No. 10, 1991).

The discussion above had been reviewed and identified by the previous research about the problems and the project management implementation in Indonesian construction industry performance. It had been identified that one of the problems facing by Indonesian construction industry is time and cost overrun and also identified the causes. Therefore, it is essential for Indonesia, in its quest for greater economic development and to be more competitive, to develop proper and effective strategies for its construction industry; to ensure the project completed on time, within the budgeted cost and the desired quality of work.

CHAPTER 3

PROJECT TIME AND COST MANAGEMENT

3.1

Introduction

The focus of this study is on construction time and cost. This chapter discusses the aspect of the construction time and cost, their attributes, and issues. The discussion also look at the aspects of planning and control of project time and cost and the related aspects.

3.2

Project Time and Cost Management

Before going into detail about project time and cost management, it is appropriate to look into the elements of time and cost, how they are defined and estimated.

35 3.2.1

Project Time

i) What is Project Time?

Project time has been defined as the completion of the project on the date stated in the contract, or interim completion dates required for phases of the work (Clough et. al., 2000).

It is also defined as the duration that is needed to complete the work starting from site processions until finished. “Duration” is the time, usually in days, taken to complete the entire project, from starting the first task to finishing the last one (Sunny and Kim Baker, 2003). Estimating the duration of tasks is the most important. Unfortunately, this is like trying to predict the future. It is only a guess, but there are better ways to guess than others.

It can be concluded that project time is the duration or time schedule that needed to complete all the project work.

ii) How to Estimate the Project Time?

To estimate the project time, there are several options that can use to make the estimates (the guesses) as good as possible. They are as follows: ƒ

Based on records of previous project files that are detailed. It is enough to aid in developing time estimates.

ƒ

Find a similar task in a completed project plan to see how long it took to get done. This is called an analogous estimate.

ƒ

Get an objectives expert’s opinion. Expert’s opinion guided by historical information should be used whenever possible.

36 3.2.2

Project Cost

i) What is Project Cost?

Project cost has been defined as the amount of commitment in terms of money that is required to produce a construction product such as building. Project cost, to the building contractor, represents all those items included under the heading of the expenditures (Ashworth, 2004). Project cost is quantitative assessments of the likely costs of the resources (labor, materials, supplies, etc) required to complete all project activities (Duncan, 1990).

It can be concluded that project cost is the amount of money that is required to complete all project activities.

ii) How to Estimate the Project Cost?

The cost estimate of the project is often prepared as early as during the feasibility stages of the project before a complete drawing are produced. A detailed project cost estimate and cost plan or budgets are normally prepared as soon as the design has been finalized.

The purpose of cost estimated is to provide an indication of the probable cost of the project. To estimate the project cost there are two samples of methods, they are as follows: ƒ

Unit method The unit method of approximate estimating consists of choosing a

standard unit of accommodation and multiplying this by an approximate cost per unit. This technique is based on the fact that there is usually a close relationship between the cost of building and the number of functional unit accommodates. By functional units it means those factors which express the intended use of building better than any other. For example; school – costs per pupil place, hospital – cost per bed place, car parks – costs per car space, and etc.

37 ƒ

Element cost per square meter - GFA method This is the element cost divided by the gross floor area (GFA). It provides

the elemental cost contribution to the overall rate per square meter GFA for the project. For example, the area of the upper floors may be calculated as 360m2. Then, multiply this by the updated element unit rate. Assuming that a current rate is RM 40 per m2, so, the costs become RM 14,400.

3.2.3

Problem Associated with Project Time and Cost

Due to the fragmented and complex nature of construction project, many projects suffer from time and cost overruns. Delays and cost increase (overrun) in construction project are the issues of this research. So, what is project time and cost overrun?

i) Time Overrun

According to Kaming et.al., (1997a) and Trigunarsyah (2004), time overrun is the extension of time beyond planned completion dates traceable to the contractors. Elinwa and Joshua (2001) defined it as the lapse between the agreed estimation or completion data and the actual data of completion.

Indonesian government regulation through “Keputusan Menteri PU No. 10. (1991)”, T. H Ali (1992) and Saldjana (1998) mentioned that a construction project experience time overrun if it was completed exceeding the time estimated as written in the approval contract. This research used this concept or definition when the time overrun occurs. But, if the project works complete less that 100% but more than 80%, the contractor could ask the owner to extend the project and the additional cost handled by them. If the owner agrees with the contractor’s request, the contractor has to finish the work on time with the extended time requested. If the contractor still cannot finish the project on time, the contractor must pay a sum of money referred as

38 a penalty, maximum 5% from the contract values per-day to the owner (“Keputusan Menteri PU No. 10, 1991).

ii) Cost Overrun

Elinwa and Joshua (2001) defined it same with the time overrun as the lapse between the agreed estimation or completion data and the actual data of completion. Indonesian government regulation through “Keputusan Menteri PU No. 10. (1991)”, T. H Ali (1992) and Saldjana (1998) mentioned that a construction project experience cost overrun if it was completed exceeding the cost estimated as written in the approval contract.

3.2.4

The Definition of Project Time and Cost Management

Project Management Body of Knowledge (Spinner, 1997; Badiru and Pulat, 1995) identified the function of management in construction projects where nine major functional areas are including in it, they are: integration management, scope, quality,

time,

cost,

risks,

human

resources,

contract/

procurement

and

communications management.

Project management defined as the application of knowledge, skills, tools and techniques to ensure the project is completed on time, within cost and fulfills the quality standard. Architect George T. Hendry in Degoff and Friedman, (1999), defines management in construction project as a group of management activities and engineering services related to a program, carried out during the pre-design, design and construction phase that contributes to the control of time and cost in a new facility.

39 Construction project sites are generally complex because of the extensive use of sophisticated plant, equipment, modern methods of construction, multidisciplinary and multitasked aspects of its project workforce (Evelyn Ai Lin Teo, et.al, 2004). That is why management in construction project is needed to organize, arranges every function, actions and everyone involved. Management will help to settle everything in the right place (Cartin, 1993).

Application of this principle (management in construction project) to construction has resulted in the development of techniques for management control of construction cost, time, resources and project finance, treating the entire construction process as a unified system. So, a comprehensive project management control will applied from inception to completion of construction operations.

Focus of this research only on time and cost management. So, what is project time and cost management? Generally, time and cost management in construction project is define as centralized of time and cost planning, organizing and controlling in the fieldwork or in the construction sites to meet the goals of schedule, cost and quality estimation (Ritz, 1994).

i) Project Time management

PMBOK’s (1996) defines project time management as the effective and efficient use of time to facilitate the execution of project, which starts from planning, scheduling and controlling the project to achieve the time objectives. Degoff and Friedman, (1999) defines project time management as the development of a project time schedule, to manage that schedule, and to ensure the project completes within the approved time schedule. Therefore, schedule is important to manage time, which involves defining project activities, sequencing the activities, developing the schedule, executing the schedule and controlling the plans during project execution.

40 Project time management includes the processes required to ensure timely completion of the project (Duncan, 1990). Overviews of the major processes in project time management are as follows: ƒ

Activity definition – identifying the specific activities that must be performed to produce the various project deliverables.

ƒ

Activity

sequencing



identifying

and

documenting

interactivity

dependencies. ƒ

Activity duration estimating – estimating the number of works periods which will be needed to complete individual activities

ƒ

Schedule development – analyzing activity sequences, activity durations, and resources requirements to create the project schedule.

ƒ

Schedule control – controlling changes to the project schedule.

Techniques that are usually used in managing project time are as follow: ƒ

Critical Path Methods (CPM); Calculated a single, deterministic early and late start and finish date for each activity based on specified, sequential network logic and a single duration estimate. The focus of CPM is on calculating float in order to determine which activities have the least scheduling flexibility, (Clough, et. Al., 2000).

ƒ

Program Evaluation and Review Technique (PERT); uses sequential network logic and weighted average duration estimate to calculate project duration. Although there are surface differences, PERT differs from CPM primarily in that uses the distribution’s mean (expected value) instead of money likely estimate originally used in CPM, (PMBOK, 1996).

ƒ

Bar Chart; it’s the simplest project management technique for scheduling, planning and controlling. It shows graphically or in tabular form the daily costs and accumulated costs over a designated period. In projects of normal delivery or stable performance, the general contractor creates the bar chart once an award is made and each bar represents the beginning, duration and completion of some designated segment of total project. Together, the bars

41 make up a time schedule for the entire job, (Ritz, 1994 and Degoff & Friedman, 1999).

ii) Project Cost Management

In PMBOK’s (1996) describes, project cost management is defined as a requirement for financial control of the project, which is accomplished through accumulating, organizing and analyzing data and reporting the cost information. Clough et. al., (2000) defines project cost management as the process of determining the total cost of the project, to manage that cost, and to ensure that the project is completed within the approved budget or cost. Keeping within the budget, and knowing when and where the costs are deviating are the keys to efficient and effective cost management and profitable operations.

Project cost management includes the processes required to ensure that the project is completed within the approved budget (Duncan, 1990). Although management discretion may occasionally dictate otherwise, an effort is usually made to achieve gains in time with the least possible increase in project cost. If project management has to make schedule adjustments at an additional cost, it is necessary to understand how the costs of construction operations vary with time (Clough et. al., 2000).

Two techniques that are usually used in managing project cost are as follow: ƒ

Cash Flow One of managing cash flow activities is to make sure that there is still enough

money to cover the cost of performing project-employees payment, charges for material, subcontractor invoices and others suitable with the established estimation. The key to manage cash flow is to ensure that cash comes in balance with what goes out. Key effective in cash flow control is aggressively addressing negative cost variance and cost inefficiencies as soon as they are identified, rather than hoping that things will get better as the project goes on. Even when projects have only positive cash flow and cost variances, it is important not to let that flow and variance become

42 worse. A concentrated effort should be made to keep it that way because as stated above it becomes difficult to get back on track.

ƒ

Cost Plan Spinner (1997) and Gido and Clement (1999) mentioned that the cost

planning starts with the proposal for the project. The cost section of a proposal may consist of tabulations of the contractor’s estimated costs for such elements as labors, materials, subcontractors, equipment and others. In addition, the proposal might also include an amount for contingencies, to cover unplanned expenses. It can conclude that cost plan is the task of allocating sums to the various project activities scheme from starting the first task to finishing the last one.

According Gido and Clement (1999), allocating total project costs for the various elements, such as labor, materials and equipment, to the appropriate work packages in the work breakdown structure (WBS) will establish a total budgeted cost (TBC) for each work package. Once a total budgeted cost has been established for each work package, the second step in the project budgeting process is to distribute each TBC over the duration of its work packages in order to determine how much of money should be spent at any point in time. This amount is calculated by adding up the budgeted costs for each time period up to that point in time. This total amount, known the cumulative budgeted cost (CBC), will be used in analyzing the cost performance of the project. The CBC for the entire project for each work package provides a baseline against which actual cost and work performance can be compared at any time during the project.

Once the project starts, it is necessary to keep track of actual cost and committed cost so that they can be compared to CBC. After this has been done, the project cost performance can be analyzed by looking at the total budgeted cost, the cumulative budgeted cost, the cumulative actual cost and the cumulative earned value. They are used to determine whether the project is being performed within budget and whether the value of the work performed is in line with the actual cost.

43 3.2.5

Project Management Objectives

The main objective of a project is that to get the project to be completed on a certain time, within cost or budget and within the prescribed performance (quality and function). It could say that project must be complete as listed follows: P

: At the desired performance level

C

: Within cost or budget constraints

T

: On time

S

: While holding the scope of the project constant and while using resources efficiently and effectively.

The first three of these are referred to as the P, C, and T of the project. They are also recognized as good, cheap and fast, (P = good; C = cheap; T = fast). The relationship between four of them (P, C, T, and S) can be written with a general equation as follows:

C = f (P, T, S)

The equation means, Cost is a function of Performance, Time and Scope. Generally speaking, the cost of the project will increase as P, T, and S increase, except in the case of trying to crash the project.

In the description above it has been pointed out that time and cost are the two of the critical elements influencing the success of the project. It is therefore crucial to balance them with quality requirements, i.,e., meeting the functionality and performance expected by the clients. But as pointed out by Clough et. al., (2000) most of construction projects meet the quality specifications but were seldom completed within budget and time. According to Sigurdsen (1995), poor time and cost planning and control causes a project to exceed the pre - determined project cost and time.

44 3.3

Implication of Time and Cost Overrun

Time and cost overrun have an implication and affection to the construction project performance and to the client or project owner. Time and cost certainty is known to be the top priorities of construction clients (Davenport, 1997). Although affected by many internal and external factors, construction time and cost is considered a good and measurable indicator of project performance. However, low cost and speedy project are not always the main concern of clients today; instead time and cost certainty is becoming increasingly important (Flanagan et al., 1998) and it is one of the most important contractor performance criteria for clients’ satisfaction (Soetanto et al., 2001 and Construction Industry Board, 1996).

Client satisfaction is an important determinant of contractor performance evaluation and comparison (Sidwel, 1988) and it is the driving force for continuous improvement of contractor performance (Ahmed and Kangari, 1995). Companies differentiate themselves from competitors and maintain a competitive edge by providing and keeping clients satisfied (Torbica and Stroh, 2001).

Clients’ long term interest to the performance of contractor is in the work performed. It must be conform to the specifications established for the project. Low cost and speedy construction should be achieved because it has significant implication to the client’s interest about the way of contractor work in the project performance (Xiao and Proverbs, 2001). Beside that, delays (time overrun) and cost overrun are costly and often result in disputes and claims, impair the feasibility for project owners, and retard the development of the construction industry (Odeh, A. M and Battaineh, H. T, 2002).

3.4

Causes of Project Time and Cost Overrun

The serious implication or effect of time and cost overrun to the project performance and to the client can made it necessary to consider the causes of such problems. Many researches have highlighted the causes of project cost and time

45 overrun. Arditi et al. (1985), Olakwa and Culpin (1990), Mansfield et al. (1994), Ogunlana et al. (1996), and Al-Khalil and Al-Ghay (1999), attribute the problems of cost and time overruns to poor project management practice, government polices, economic factors and natural environmental issues. Chalabi and Camp's (1984) review of project delays in developing countries during the planning and construction stages. They found that delays and cost overruns of construction projects occur entirely in the very early stages of the project i. e. during the planning stages of project development.

Frimpong and Oluwoye (2003) found out that the problem of project delays and cost overrun faced by the construction companies are caused by: 1. Project financing factors: monthly payment difficulties, contractors, financial difficulties, and fraudulent practice. 2. Natural conditions factors: bad weather and unexpected natural events, unexpected subsoil and ground conditions, and environmental concern. 3. Materials factors: procurement problems, important materials, late delivery and difficulties in obtaining materials at official prices. 4. Labour factors: shortages, low skill level and industrial relations (labour and management relation) 5. Plant/ Equipment factors: frequent breakdowns, shortages, transportation problems and low efficiency. 6. Project planning and controlling related factors causes of overruns: deficiencies in planning, scheduling and cost estimate preparation, insufficient project manager authority and influence, communication among the various parties and inadequate control procedures. 7. Economics factors: fluctuations in material and plant/ equipment cost and inflation. 8. External factors: social events, government policies and politics, restrictions and delays in inspection and testing of completed work. 9. Contractual relationship factors: poor contract management, low bid, slow decision-making, claims/ disputes, contract negotiation and insurance problems.

46 However, the ranking of each problem in term of seriousness or magnitude varies from country to country. Table 3.1 shows an international comparison of the findings for countries such as USA, Indonesia, UK and Nigeria as conducted by Olomolaiye, et, al., (1998). He asked the respondent to rank the problems that cause time and cost overrun. Although the studies are different in their approach and methodology, and pose some risk in using them for serious comparative analysis, it is possible to draw some inferences from these figures by using the reported indices as measures of the importance attached to the problems in the different countries. One notable similarity is that lack of materials at the workplace is the worse problem in all four countries.

Table 3.1 Comparative ranking of problems that cause time and cost overruns in different countries (Olomolaiye, et, al., 1998)

Problem

UK

Nigeria

Indonesia

USA

Lack of materials

1

1

1

1

Gang interference

2

6

3

5

Repeat work

3

2

2

3

Supervision

4

4

6

4

Lack of equipment/tools

5

3

5

2

Absenteeism

6

5

4

6

The table shows that, the causes of time and cost overrun in the construction projects are the same among different projects.

Hutcheson (1990) also carried out the study on construction problems with the aim of evaluating the problems of cost reduction on series of projects in developing countries. He found that the most frequent cause of delay in completion of construction projects in Vietnam was the delivery of materials. Al-Momani (2000) investigated the causes of delays on 130 public projects in Jordan, and the results indicated that the main cause of delay in construction of public projects could be

47 associated with designers, user changes, weather, site conditions, late deliveries and economic conditions.

Another study about time and cost overrun causes was in the UK construction project. Xiao and Proverbs (2002) stated that changes of design during construction have been perceived as one of the main problems faced by the UK construction industry and be the causes of time and cost overrun. The fact that there is more design variations (change orders) in the UK construction process is both strength and a weakness of the traditional British system.

A study on time and cost overrun in the Malaysian construction industry has also been carried out. According to Kharuddin, (2002), the main causes of time and cost overrun are as follows: •

Client/ government/ regulatory agencies: bureaucratic delays, changes in regulations.



Funding/ fiscal: changes in government funding policy, liaison between several financiers.



Project organization: authority of the architect or engineer or the S.O., involvement of individuals or outside bodies that are not a party to the contract.



Design: adequacy to meet the needs, realism of design.



Construction contractors: experience, financial stability.



Construction materials: availability of an adequate and timely supply of materials, excessive wastage, reliability of quality.



Construction labour: availability of an adequate and timely supply of labour, industrial relations, foreign workers, etc.



Construction plant: availability of an adequate and timely supply of plant, availability of skilled operations.



Logistic: Access to site.

Another research on time and cost overruns in the Malaysian construction industry carried out by Wang (1992). He stated that the major factors, among others,

48 that can influence the development of the construction industry and its performance are as follows. All these factors may be broadly classified under three groupings: •

Resource grouping: Manpower resources, material resources, equipment resources, financial resources and technical and managerial personnel.



Industry grouping: Constructors’/ builders’/ contractors’ organization, capability and capacity, use and application of technology, teamwork approach in construction and development processes and practices and tradition of the industry.



External factor grouping: Education, training and research in construction and development, laws, regulations and other government controls in connection with the construction industry and prevailing social, political and economic conditions.

For the purpose of this study the causes of time and cost overrun are tabulated and compared. See table 3.2 below.

49

INDONESIA

Table 3.2 Case studies of the common causes of time and cost overrun USA UK

Conducted by Kaming, et.al., (1997): 1. Unpredictable weather conditions 2. Inaccuracy of material estimate 3. Inaccurate prediction craftsmen production 4. Inaccurate prediction equipment 5. Material shortage 6. Equipment shortage 7. Skilled labour shortage 8. Location restriction 9. Inadequate planning 10. Poor labour productivity 11. Design changes 12. Material cost increased by inflation 13. Inaccurate quantity take-off 14. Labour cost increased due to environment restriction 15. Lack of experience of project location 16. Lack of experience of project type 17. Lack of experience of local regulation Conducted by Krishna (2001) 1. Mis-management 2. Wrong techniques implementation 3. Not discipline to the time schedule 4. Added work/ design changes

Conducted by Assaf, et., al., (1995): 1. Materials 2. Manpower 3. Equipment 4. Financing 5. Environment, 6. Changes 7. Government regulations 8. Contractual relationships 9. Scheduling and controlling techniques. Conducted by Xiao and Proverbs (2002): On construction site lack of care Conducted by Frimpong & Oluwoye (2003): 1. Project financing factors 2. Natural conditions factors 3. Materials factors 4. Labour factors 5. Plant/ Equipment factors 6. Project planning and controlling related factors 7. Economics factors 8. External factors 9. Contractual relationship factors

Conducted by ShammasTomma et al., (1998): 1. Short-term financial consideration 2. Reflected in uncooperative, antagonistic and suspicious relationships with accusations, recriminations and blame common Proverbs et al., (2000), stated that: 1. Changes of design during construction 2. Work on site in the UK suffers from a lack of care Harvey and Ashworth in Xiao and Proverbs (2002): 1. Poor supervision and management 2. Insufficient communication 3. Reluctant to investigate error and feedback experience 4. Under motivated workforce

MALAYSIA

Conducted by Wang (1992): 1. Manpower resources, 2. Material resources, 3. Equipment resources, 4. Financial resources, 5. Technical &managerial personnel, 6. Constructors’/ builders’/ contractors’ organization, capability and capacity, 7. Use & application of technology, 8. Teamwork approach in construction & development processes, 9. Practices and tradition of the industry, 10.Education, training and research in construction & development, 11.Laws, regulations & other government controls in connection with the construction industry, 12.Prevailing social, political and economi conditions Khairuddin A.R (2002): 1. Construction labour 2. Client/ government/ regulatory agencies 3. Funding/ fiscal 4. Project organization 5. Design changes 6. Construction contractors: experience, financial stability 7. Construction materials 8. Construction plan 9. Logistic: Access to site.

49

50 Basically, there are some others research but all previous research that have been discussed above could be representative to illustrate the time and cost overrun causes. Summary of the synthesis above about the common causes of time and cost overrun and can be seen in Table3.3 following. It was based on the same opinion (as shown by bold and italic ones) about the activities that have time and cost overrun from the previous researcher that was listed in Table 3.2 above.

Table 3.3 Derive from the synthesis of the previous researches (extracted from Table 3.2)

No.

The common causes of time and cost overrun:

1

Unpredictable weather conditions

2

Inaccuracy of material estimates

3

Inaccurate prediction of equipments

4

Material shortage

5

Equipment shortage

6

Poor labour productivity

7

Material cost increased by inflation

8

Labour cost increased due to environment restriction

9

Added work/ design changes during construction

10

Natural condition factors

11

Logistic: Access to site

CHAPTER 4

PROJECT TIME AND COST MANAGEMENT FRAMEWORK

4.1

Introduction

One of the objectives of this research is to establish theoretical framework for a good project time and cost management based on documentary analysis of books and previous researcher. So, the discussion on this chapter focuses on the project time and cost management framework and reviews the work of several researchers and writers about it. Before focusing the discussion on it, it is essential to clarify the meaning of the word “framework” in context of this research first.

4.2

Definition of Framework

The word of “framework” has been defined in many ways. Some writers referred to it as a prescriptive set of things to do, while others chose to represent frameworks in the form of diagrams, graphical representations, flowcharts or pictures.

Struebing and Klaus (1999) described framework as a sound implementation plan defining what the organization should do, what it is trying to do and how it is going to do it, and ensuring that each step builds on the previous one.

52 For the purpose of this research, a framework defines as an implementation “plan” of what needs to be done are and how to carry them out to achieve the project objective. Plan in here describes as process and procedures. So, project time and cost management framework defines as an implementation of process and procedures of what needs to be done and how to carry them out for good time and cost project management in order to achieve the project objective.

4.3

The Purpose of Framework

According to Dale (1995), the purpose of a framework is to provide guidelines to organizations in introducing the various elements to fit the organizational rules.

Dale (1995) stated that by having a “framework”, project team members will know their role, and responsibility or what they have to do and could monitor the progress of the assigned tasks (their responsibility) and regularly provide data on progress including schedule and cost implementation. All of these will be reported at regular project review meetings. If actual progress falls behind planned progress or unexpected events occur, the project manager takes immediate action. He or she obtains input and advice from team members regarding appropriate corrective action and how to replant those parts of project.

On the other hand, Aalbregtse et., al., (1991) have his own way to show the need of a framework by provide some reasons why a framework is needed. These are follows: •

Most importantly it supports the implementation of management standard and improves the chances that management standard adoption will be successful.



With a framework, the organization becomes more aware and is able to adopt it in much more comprehensive, controlled and timely manner.

53 Najmi, Kehoe, and Dennis, (2000) described the main characteristics of a framework are as follows: •

Acts as a guideline.



Result oriented.



Literary and empirically supported.



Time dependent.



Continuous improvement oriented.

Based on description above, it can be conclude that the purpose of framework is to provide guidelines for the project team members to make they know their role, and what they have to do and could monitor the progress of the assigned tasks (their responsibility) and regularly provide data on progress.

4.4

Project Time and Cost Management Framework

4.4.1

Time and Cost Management in Context of Project Management

The discussions so far highlight the definition of framework and the purpose of the framework. Beside that, in the previous chapter it were highlighted the definition, the major process and the techniques that usually use in project time and cost management. Therefore, this sub chapter discusses more detail about project time and cost management as theoretical. It also discusses about the practices based on previous research in carry out the project time and cost management that could help to reduce the time and cost overrun problems, so, then all the project work could be completed on time and within budget.

According to Clough, et al., (2000), the basis for project time management is a current operational plan and time schedules that are consonant with established project time schedule. Gido and Clement (2003) pointed out that time schedule is used for an effective early warning device for detecting when and where the project may be falling behind the time schedule. It is useful for checking and analyzing the

54 progress of the work and to take whatever action maybe required, either to bring the work back on schedule or to modify the schedule to reflect changed job conditions. If it shows that corrective actions are necessary to bring the work back on schedule or to modify the schedule to reflect the changed job conditions, it must be made regarding how to revise it.

The project cost management, it is based on pre-contract estimate and cost plan. In the project cost estimate it involves in identifying required resources, estimating the cost of those resources, developing a project baseline, comparing progress against the baseline and controlling costs it self. Besides these it also involves in implementing a cost control system, publishing cost status report, analyzing cost performance, determining changes to the cost baseline, managing the changes and taking corrective action.

Clough, et al., (2000) also stated that in an environment of constant change, the established time and cost goals of construction project must be met because job activities seldom start and finish exactly as scheduled or within cost. No project plan can ever be perfect. Deviations will inevitably develop as the project progresses. Consequently, the network must be corrected as needed, and calculations must be updated occasionally so that the current job schedule and the cost expenditure will reflect actual job experience to date. The latest updated schedule and the cost expenditures (cash flow) reflects the actual present job condition and constitutes the current basis for project time and cost control.

Clough, et al., (2000) and Gido and Clement (2003) have highlighted that, the basis of time management is scheduling. Scheduling in one of project time is the process of converting sequenced project task into an achievable timetable. A project time schedules described here provide time-phased plans that permit portions of the work to be organized, sequenced, and controlled so that the entire project is completed in an organized and efficient manner (Spinner, 1997).

Before a project time schedule gets the final approval and distribution, the project team will review it for any changes and revisions because a complete schedule for complex project should go through at least a couple of rounds of

55 reviews before it is finalized to get the perfect time scheduling. A project time schedule based on realistic estimates will also provide a superior guideline for guiding the project towards a cost effective and timely completion. However, the project time estimates will affect the project cost estimates because in the project time estimates it includes planned start and expected finish dates for the project elements that cost will be allocated too.

Pierce, Gardner and Dunham (2002) suggested that a good effective project time and cost management should include the following: 1. Planning of work to be performed to complete project. 2. Good estimation of time, labour and cost. 3. Clear communication of scope and request task. 4. Timely accounting of physical progress and cost expenditures. 5. Periodic, re-estimation of time and cost to completion. 6. Frequent, periodic comparison of actual progress and expenditures to schedules and budget, both at the time of comparison and at project completion.

Based on description above it can conclude that, a project time and cost management here means to provide time and cost plans that permit portions of the work to be organized, sequenced, and controlled so that the entire project is completed in an organized and efficient manner.

So far the discussion above has been focused on the general aspects of project time and cost and their management. Next discussion will focuses on the practices as suggested by several researches and writers to carry out project time and cost management to reduce the time and cost overrun problems, so, then all the project work could be completed on time and within budget.

It is good to refer to other practices because it will help in finding a better way or develop new ways to achieve the best results. Otto von Bismarck once said, “Fools you are… to say you learn by your experiences…. I prefer to profit by others mistakes and avoid the price of my own.” This is a pragmatic approach to adopt practices by others, who have achieved better performance.

56 Strictly on the practices of project time and cost management research that have been carried out by Bennet et al., (1987), Morton (1994), and Flanagan (1998) on Japan construction projects, Assaf et al., (1995) and Xiao and Proverbs (2002) on USA construction projects, Evans (1995), Construction Industry Board (1996), Egan (1998), and Xiao and Proverbs (2002) on UK construction projects and Wang (1992) and Khairuddin, (2002) on Malaysia construction projects have carried out similar study. They are all highlighted process and procedure of good time and cost management practices where can be considered as the practices that could help to reduce time and cost overrun problems on construction project and completed all the project work on time and within cost.

Unlike western culture, which is based on competition, Japanese culture is based on cooperation, coordination, communication, and long-term partnerships (Haley, 1994). One example of the implementation of that system in Japanese construction companies was that it was found that over 90% of Japanese contractors had planning and monitoring meetings (which can function as means of problem solving, planning, and as a channel for enquiring about assignment, information collection and coordination) in their companies twice a week or more and over 80% of them even did so daily (Xiao and Proverbs, 2002). Xiao and Proverbs (2002) also stated this is in contrast with USA works on construction sites. In USA construction sites it was lack of care; 84 per cent respectively had planning and monitoring meetings between the teamwork on only once a week or less.

It has also been found that in the Japanese construction sites, the team work closely with projects through good coordination and communication team works (Agile Construction Initiative, 1998). Contractors need to embrace their team and develop closer working relationships of mutual benefit as a “win-win” situation favored by all in managing the works on construction sites. It will improve the teamwork performance and help to achieve the common goals of the company to achieve profit by reducing time and cost overrun. In the Japanese management construction practices there also exists an across-the-board commitment to quality work and every individual feels responsible for that. Workers are encouraged to suggest and practice ways to improve their operations (Levy, 1990).

57 Construction projects in USA try to achieve time and cost savings by relying on prefabrication and greater levels of factory production to provide anything and hopefully saving time and cost from it. From that they can achieve higher degree of standardization and improve efficiency with mass production. Prefabrication can improve quality, safety and efficiency, and mechanization can help reduce time and labour on site (Evans, 1995; Construction Industry Board, 1996; Egan, 1998).

The UK construction industry attempts to reduce the time and cost overrun by using prefabrication and greater levels of factory production because this requires less labour work time. This is also due to the easy access to superior technology or expertise that will accelerate the completion of the activity (Evans, 1995; Construction Industry Board, 1996; Egan, 1998 in Xiao and Proverbs 2002).

Wang (1992) pointed out there are several strategic steps and program that can be taken in order to help to reduce time and cost overrun risk in Malaysian construction are as follows: 1. Continuity of work to maintain continuous manpower employment, material consumption and equipment use and deployment, 2. Sufficiency in supply of skilled, semi-skilled and unskilled workers, 3. Sufficiency in supply of construction material and component parts, 4. Sufficiency in supply of construction tools, equipment, plants and transportation vehicles, 5. Provision of adequate and timely finance, 6. Appropriate education and training of workers, supervisory personnel, technicians, technologists and managers in construction, 7. Appropriate education and training of consultants and personnel who supervise and administer contracts, 8. Adoption of teamwork approach by parties involved in the industry to reduce confrontational attitude which cause friction and results in in-efficiency and poor productivity, 9. Improvement in application of technical management techniques & systems, 10. Adoption of a set of code of practice to regulate the conduct of professional practitioners and to take disciplinary action against errant parties,

58 11. Adoption of a set of code of behavior to regulate the conduct of constructors/ builders/ contractors and to take disciplinary action against errant parties.

However, to make the construction industries effective and efficient the construction teamwork must extend well beyond the production function to other closely related functions including upgrading their technological and managerial capacity and increase their implementation capability. In fact, what should be emphasized is the necessity of making each person involving in the team be aware of the fact that he/ she is a member of team and that his/ her work/ efforts is important to the team as a whole. In the event he/ she fail to perform his/ her part of the work, it will affect the work of others and may even critically obstruct the smooth progress of the project as a whole (Wang, 1992).

Table 4.1 below compares the practices that are suggested by the different writers and research in term to achieve efficient and effective project time and cost management or to reduce the time and cost overrun problems in construction projects and completed the project work on time and within cost.

59

Table 4.1 The various practices to reduce project time and cost overrun problems JAPAN

USA & UK

MALAYSIA

Levy, (1990) stated that: On Japanese construction sites, there exist an across-theboard commitment to the quality works and every individual feels responsible for that. Workers are encouraged, suggest and practice ways to improve their operations. Agile Construction Initiative, (1998) stated that: The teamwork to be closely associated with projects through good coordination and communication in managing the construction works. Haley, (1994) support by Xiao and Proverbs, (2002) stated that: Japanese culture is based on cooperation, coordination, communication, and long-term partnerships are commonplace. One sample of the implementation of that system in Japanese construction companies was it has been found that over 90% of Japanese contractors had planning and monitoring meetings (which can function as a way of problem solving, planning, and as a channel for assignment, information collection and coordination) in their companies twice a week or more and over 80% of them even did so daily. Agile Construction Initiative, (1998) stated that: The teamwork to be closely associated with projects through good coordination and communication in managing the works.

Evans, (1995); Construction Industry Board, (1996); Egan, (1998) in Xiao and Proverbs (2002). stated that: Almost the same with construction in USA, UK construction industry try to achieve time and cost saving by relies on prefabrication and greater levels of factory production to provide anything and hopefully saving time and cost from it.

Wang (1992) stated that: 1. Continuity of work to maintain continuous manpower employment, material consumption and equipment use and deployment, 2. Sufficiency in supply of skilled, semi-skilled and unskilled workers, 3. Sufficiency in supply of construction material and component parts, 4. Sufficiency in supply of construction tools, equipment, plants and transportation, 5. Provision of adequate and timely finance, 6. Appropriate education and training of workers, supervisory personnel, technicians, technologists and managers in construction, 7. Appropriate education and training of consultants and personnel who supervise and administer contracts, 8. Adoption of teamwork approach by parties involved in the industry to reduce confrontational attitude which cause friction and results in inefficiency and poor productivity, 9. Improvement in application of technical and management techniques and systems, 10. Adoption of a set of code practice to regulate the conduct of professional practitioners and to take disciplinary actions against errant parties, 11. Adoption of a set of code behavior to regulate the conduct of constructors/ builders/ contractors and to take disciplinary actions against errant parties.

From that they have the higher degree of standardization, which involves mass production and can improve efficiency, prefabrication that can improve quality, safety and efficiency, and mechanization. That is help to reduce time and labor on site. Due to that they used it because by using prefabrication and greater levels of factory production means requires less time, labor and may access to superior technology or expertise that will accelerate the completion of the activity.

59

60 The practices that were reviewed will be used as references to help in proposing a solution for Indonesian construction projects particularly for construction projects in Padang and Pekanbaru in term to reduce the time and cost overrun. Adoptioning other countries practices could assist construction projects in Padang and Pekanbaru avoid being ambushed by unexpected overrun problems during the construction process. Basically, there are some others research but all previous research that have been discussed above could be representative to illustrate the practices that could help to reduce the time and cost overrun problems.

4.4.2

Framework for Project Time and Cost Management

As pointed earlier, framework is all about process and procedure of doing something to achieve a particular results objective. In establishing the framework for time and cost management it is pertinent to analyze the theoretical concept of time and cost management.

Perspective of effective framework for management of construction process was provided by Ritz (1994). He divides it into three main components: Planning, Organizing, and Controlling as shown in Figure 4.1 below.

Plan

Organize

Control

Fig. 4.1 Basic construction project management philosophy (Ritz, 1994)

i) Planning

Planning is the master plan for executing the field work, from bidding to completion and turnover to the owner. The master plan must operate within the

61 restrains of overall project financing, strategic schedules dates, allocation of project resources, and contracting procedures.

For the contractor, construction planning also involves the determination of construction strategy for the project. According to Lewis (1995) construction planning at the contractor level includes: 1. The determination of what has to be done. This involves the assessment of work content for each work task or project activity involved in the construction plan. 2. The prescription of how each work task is to be performed. This involves the selection of construction methods and related support and management procedures. 3. The enumeration of required resources as a result of decisions relating to the selection, level and extent of resources availabilities to the project. 4. The order in which things are to be done. This involves an understanding of the technological process involved in the construction methods. 5. Decisions as to when things are to be done. Although planning is essential to management, the implementation and control of plan is far more difficult and demanding on managerial skill because of the many complex factors and events that enter into the execution of a plan. Consequently, project control is concerned with ensuring that. 6. The proper resources (materials, equipment and labour) are available at the right place and the right time. 7. The relevant field decision makers and agents are properly briefed as to what has to be done, when and how. 8. Resources are used effectively. 9. The resulting work output meets all contractual and quality control requirements.

ii) Organizing Stages

The activities in the organizational activities area cover deployment of the human resources and systems required to meet the master plan and the project schedule. In this area the management must:

62 1. Prepare organization charts and personnel loading curves, 2. Write key position descriptions, 3. Issue site operating procedures, 4. Mobilize and motivate the field staff, 5. Arrange site facilities and system, 6. Issue and start control procedures: plan the field organization based on the scope of work and the personnel plan. Issue detailed construction procedures promptly to instruct and guide the new organization. Mobilize the staff and suitable facilities to kick off the project on schedule. Start the cost controls immediately, as it will help saving cost.

iii) Controlling Stages

The project is monitored, controlled, and adjusted as necessary until completed (Sunny and Kim, 1992). Control in construction project is an important and necessary part of performing the project. Control itself is the process of assigning and modifying work, cost, time and objectives in order to complete the project successfully. A good and effective control process will highlight the things that do not proceed as planned.

The control functions are to monitor all phases of the work to meet the universal goal of the construction as specified; be completed on a certain time, within cost or budget and within the prescribed performance. Otherwise, as mentioned earlier, time and cost are the two of the critical elements that could influence the success of the project. So, the project control has to assure that a construction project can be completed within time and cost planned. Time was monitored by check the physical progress against the project schedule. Cost is monitored through a cost control system based on the project budget. Project control prevents a schedule (time) and cost from expanding out of control (overrun).

Figure 4.2 below shows a model of time management cycle as suggested by Clough et. al (2000). It shows that field operations are subjected to periodic cycles of the time management sequence. Considering the process and procedure involve it can be assumed that this model can also be need for cost management.

63

Establish Operational

Measure & Report progress

Compare Actual Achievement with Planned

Determine effect on Completion Date

Plan & Implement Corrective Action

Update Operational Schedule

Figure 4.2 Time management cycle in construction industry (Clough, et. al., 2000)

The project control process continues throughout the project because there could be some situations in which time, performance and cost are affected. Badiru and Pulat (1995) suggested that some of the important factors that could affect the project and thus need to be considered when controlling a construction projects are: 1. Factors affecting time: supply delays, delays of key tasks, change in customer specifications, unreliable time estimates, time consuming technical problems, and new regulation that need time to implementation. 1. Factors affecting performance: poor design, poor quality, maintenance problems, complicated technology, change in statement of work, conflicting objectives, employee morale, and poor retention of experienced workforce. 2. Factors affecting cost: inflation, incorrect bids, high labour cost, budget revision, high overhead costs, inadequate budget, and increase scope of work.

As basically, in managing time and cost, management in project execution requires a control process, which consists of the following four steps (Gray and Larson, 2000):

64 1. Setting a baseline plan The baseline plan provides the elements for measuring performance during project process. In addition, there is a work package that defines the work, duration (time), and cost. 2. Measuring progress and performance 3. Comparing plan against actual because plans seldom materialize as expected. It becomes imperative to measure deviation from the plan to determine if action is necessary. Periodic monitoring and measuring the status of the project allow for comparisons of actual versus expected plans. It is crucial that the timing of status reports be frequent enough to allow for early detection of variations from the plan and early corrections of causes. Status reports should take place several times in order to be useful for proactive correction. 4. Taking action If deviations from the plans are significant, corrective actions will be needed to bring the project back in line with the original or the revised plan. In some cases, condition or scope can change, which in turn, will require a change in the baseline plan to recognize the new information.

Badiru and Pulat (1995) also recommended the project control process steps but it as general, they are as following on be: 1. Determine the criterion for control. This means that the specific aspects that will be measured should be specific. 2. Set practices standards. Standards maybe based on industry practice, prevailing project agreements, work analysis, forecasting, and etc. 3. Measure actual performance. Quantitative and non-quantitative factors may require different measurement approaches. This step also requires reliable project tracking and reporting tools. Project status, no matter how unfavourable, must be reported. 4. Compare actual performance with the specified standard. The comparison should be objective and consistent based on the specified control criteria. Meet periodically to determine what has been achieved and remains to be done. 5. Identify unacceptable variance from expectation.

65 6. Determine the expected impact of the variance on overall project performance. 7. Investigate the source of the poor performance. 8. Determine the appropriate control actions needed to overcome the variance observed. 9. Implement the control actions with total dedication. 10. Ensure the poor performance does not recur elsewhere in the project.

Then, Ritz, (1994) has also developed a model for the process of control in construction project. This can be shown in Figure 4.3 below:

Identification of Deviation

Comparison of Actual Against

Analysis Causes of Deviation

Program of Corrective Action

Measurement of Actual

Implementation of Correction

Actual Performance

Desired Performance

Fig. 4.3 Control process to control construction project (Ritz, 1994)

However, to control a project process, one must be able to measure the performance. The ability to measure accurately is a crucial aspect of control. Measurements are taken on each of the three components of project constraints: time, performance and cost. This process must occur regularly throughout the project and regular reporting period should be established to compare actual progress with planned progress. Reporting can be; daily, weekly, or monthly, depending on the complexity or overall duration of the project. If the project is expected to have an overall duration of a month, the reporting period might be as short as a day.

As pointed by Gido and Clements (1999), during each reporting period, there are two kinds of data or information that need to be collected:

66 1. Data of the actual performance which includes: •

The actual time that activities start and finish.



The actual costs expended and committed.

2. Information on any change to the project scope, schedule and budget.

Ndekugri and McCaffer (1988) also illustrated all the contractor’s endeavors in controlling the construction project process, as shown in Figure 4.4 below. It only describes the monitoring, evaluating and remedying phases of control loop.

C. MONITOR A. PLAN

B. EXECUTE

1. Establish a schedule 2. Establish a budget

Implement in accordance with the budget & schedule

E. TAKE REMEDIAL ACTION 1. 2. 3. 4. 5.

Modify plan Supervise more effectively Increase skill Use more efficient plant Submit claims

F. UPDATE HISTORICAL DATA FOR FUTURE • Estimating • Accounting • Justification & qualification of claims

Measure performance in term of: 1. Quantities of work items completed 2. Resources expended 3. Cost incurred 4. Elapse time

D. EVALUATE 1 Which operations are not being performed satisfactorily? 2. For a problematic operation: - What has gone wrong: • Labour? • Plant? • Materials? • Subcontractors? • Overhead? - Who is responsible? - What is the trend? - How much longer it will take? - What will the final cost be? 3. What will the final cost of the project be?

CONTROL

Fig. 4.4 The essence of the contractor’s control function (Ndekugri & McCaffer, 1988)

67 According to PMBOK guide books (1996), there are several output by doing time controlling, they are as follow: ƒ

Schedule updates. Schedule update is any modification to the schedule information which is used to manage the project. Appropriate schedule updates require adjustment to other aspect of the overall project plan. Revisions are a special category of schedule updates. Revisions are changes to the scheduled start and finish dates in the approved project time schedule.

ƒ

Corrective action. Corrective action is anything done to bring expected future project time schedule performance into line with the project plan. Corrective action in the area of project time management often involves expediting: special action taken to ensure completion of an activity on time or with the possible delay.

ƒ

Lesson learned or historical database. The causes of variances, the reasoning behind the corrective action chosen, and any other types of lessons learned from schedule control should be documented so that they become part of the historical database for this project or and other projects of the performing organization.

For cost control the output are as follow: ƒ

Revised cost estimates. Revised cost estimates are modifications to the cost information used to manage the project and appropriate stakeholders must be notified as needed.

ƒ

Budget Updates. Budget updates are changes to an approved cost baseline.

ƒ

Corrective Action. Corrective action is anything done to bring expected future project time schedule performance into line with the project plan.

ƒ

Estimate at completion. It is forecast of total project costs based on project performance.

ƒ

Lesson Learned.

68 After analyzing and synthesizing the various project control framework it can be concluded that even after careful planning, organizing, controlling and obtaining consensus from the project team, the project process may still require significant changes to the original plan. In spite of the countless reasons for making changes, there are only four factors that can affect a project plan (Sunny and Kim 1992); 1. Changes in goals (objectives). 2. Staffing levels: a change in staff is likely to affect the time schedule and perhaps the budget. 3. Budget allocations: a change in budget may affect the objectives that can be accomplished, and this will affect everything else in the plan in some way. 4. Time schedule: a change in time schedule may affect the budget and others.

A project is an interrelated system where there is no a change in one part of the system without affecting the others. Time and cost management is concerned very much with this changes i.e. change in any one project construction element mostly affect the two of this things. The following steps in Figure 4.5 by Kettering in Sunny and Kim (1992), summarize an easy to follow method for analyzing project changes and to plan the corrective actions.

69

Gather Information on the Problem

Review Goals and Objectives

Establish Priorities

o Time o Cost o Performance

Review Status of Project

List Alternatives

o Time o Cost o Performance

Analyze Alternatives

Make Decisions and Revise the Plan

Fig. 4.5. The trade-off analysis process in project management (Sunny & Kim, 1992)

A step-by-step methodology is helpful to understand the trade offs in making the project changes. Understanding the trade offs in a project change is always a matter of understanding the impact a change to one parameter has on the others. Implementing the changes in a project is not always as simple as changing the plan. Changes to project plan must be communicated effectively, understood by the people affected, and accepted as necessary and appropriate with the established estimation i. e. time and cost estimation. To implement it Sunny and Kim, (1992), described some tactics for dealing with resistance to project changes. They are as follows: •

Hold the performance for the project constant. In this option, the goals and objectives are kept constant. This may require additional resources to make the original date, and thus increase the cost for the project as well, in case the schedule may be lengthened or otherwise modified to maintain performance without adding additional resources.

70 •

Add equipment. Additions or changes in equipment may solve performance and schedule problems in production oriented projects, but sometimes have a significant impact on the budget.



Change operating and administrative procedures. Sometimes excessive reporting or unnecessary administrative procedures can bog a project down. Simple changes in reports, meetings or other procedures can often free up time that would be better spent on completing project tasks, thus minimizing the requirement for schedule changes.



Scrap part or the entire project. This reduces cost and time requirements and affects performance criteria. If the project goals and objectives are changed radically, a completely new project plan is in order or if the project is scrapped because of new corporate priorities or environmental changes, then the current project must be terminated, etc.

As a sample, Gido and Clement, (1999) described the following steps of corrective actions that are used at the contractors level. 1. Identify potential causes of problem. 2. Gather data and verify the most likely causes. Whether it is through asking question, interviewing people, running test, reading reports, or analyzing data, it takes time. However, it must be done to focus on the rest of the corrective action process. 3.

Identify possible solutions.

4. Evaluate the alternative solutions. 5. Determine the best solution. 6. Revise the project plan. When the best solution has been selected, it is necessary to prepare a plan for implementing that solution. Specific tasks need to be identified, along with their estimated costs and durations. The resources and persons needed for each task must also be identified. The project team members who are responsible for this implementation should control it. The effect of control actions to the overall project plan must be checked in the first place to determine the possible impact of the solution. 7. Implement the solution. Once, when the best solution has been chosen, everyone in the project should go ahead and perform his or her respective tasks.

71 8. Determine whether the problem has been solved. Once the solution has been implemented, it is important to determine whether the problem has indeed been solved. Here is where the team goes back to compare the results of implementing the solution to the problem.

According to Serpell and Alarcon (1998) in order to ensure the effectiveness of activities in the construction sites when it changes happen, it is necessary to use a structured flexible framework that serves as a guideline for these efforts. All these efforts have been directed to construction performance improvement through the reduction of waste activities. The methodology represents a systematic attempt to organize the implementation of performance process during the changes in construction projects. However, this framework should be flexible and adaptable to the specific needs of each construction project situation.

4.4.3

Proposed Framework for Project Management Process

Reviews above had described the needs of framework in each of construction projects stages: planning, organizing and controlling and also illustrated the existing framework. It illustrated in basic construction philosophy by Ritz, (1994) as shown in Figure 4.1.

The framework has been developed from repeated experiences of supporting construction companies’ projects in their performance effort. The use of a structured framework provide systematic information gathering about the construction process and a sequence of logical steps based on a general problem solving approach that increase the potential of a successful improvement project. Within the framework it is very important to select the appropriate tools and methods to carry out the improvement activities process during the construction process (Serpell and Alarcon, 1996).

72 For managing time and cost in one of construction projects, there are three kinds of existing framework that can be use for controlling and two kinds for project changes activities.

In controlling step as general they are: (1) is time and management cycle in construction industry designed by Clough et. al., (2000) as shown in Figure 4.2, (2) is control process to control construction project designed by Ritz, (1994) as shown in Figure 4.3, and (3) is the essence of the contractor’s control function framework designed by Ndekugri and Mc Caffer, (1998) as shown in Figure 4.4.

The first framework designed by Clough et. al., (2000) as shown in Figure 4.2 above has described time and cost that need to be checked and analyzed, the progress of job, and possible actions required; either to bring the job back on schedule or to modify the schedule to reflect changed job condition. To that end, the field operations are subjected to periodic cycles of the time and cost management as shown above. This periodic cycle is used for the day-to-day time and cost control of the project during the process not only in the planning stages.

The second framework designed by Ritz, (1994) as shown in Fig.4.3 above has described the basic mechanism of the control function that keeps the work of the project on target to meet the goals. Project control has to assure that a construction project can be completed within time and cost. Badiru and Pulat (1999) supported it by recommended project control process steps. But a definition of control that Ritz (1994) thinks is particularly appropriate for project work is the work of constraining, coordinating and regulating action in accordance with plans to meet specific objectives.

Planning and organizing are certainly important in leading towards meeting the project goals, but effective project control is absolutely essential. It might be a little off target on planning and organizing, but it cannot fail even with little bit in control and come out whole. This framework was described of Ritz (1994) definition in the key function of the project management system as shown in Figure 4.3 above in controlling part. If the cost and time control system has to be effective based on

73 framework control above, it must be based on estimated cost and time planning. A detailed input part and time and cost cycle in project must be shown.

The third framework designed by Ndekugri and McCaffer, (1988) as shown in Figure 4.4 above described the essence of the contractor’s control function framework. This framework described what has to be done in the monitoring (controlling), evaluating and remedying phases of the control loop and also gives detailed descriptions of the possible action that contractors should take in each step. The basic approach is comparing the actual or anticipated final time and cost of work items against predetermined standards.

Those frameworks designed by Clough et. al., (2000), Ritz, (1994) and Ndekugri and McCaffer, (1998) have the same purpose: controlling the project and the same cycling steps. Ndekugri and McCaffer, (1988) proposed a more concise framework description than Ritz, (1994) because it gives detailed descriptions of the possible actions that contractors should take in each step. On the other hand there are existing frameworks for project changes, which designed by Sunny and Kim, (1992) as shown in Fig. 4.5.

The framework designed by Sunny and Kim (1992) described a step by step framework that project team should do if faced with the changes in their project plan before the best decision or a revised the project plan can be made. It is important to verify the causes of the changes so that when the changes are required the rest of the project plan can be adjusted to complete the project as planned. Changes in the project plan must be effectively understood and accepted by the people affected in the project team because otherwise the changes will not be effectively implemented. Basically, this framework models almost the same with Ritz’s, (1994) framework in Figure 4.3 above.

Another aim of this stage is to assure the maintenance of the implemented changes, and to assure the short and long term benefits expected from them. In addition according to the Serpell and Alorcon (1998) the frameworks that will be used for improvement during the changes have same requirements necessary for achieving good results. One of them is obtaining commitment of all the people

74 involved in any improvement effort during the changes. Without their support and participation it is not possible to achieve improvements. A second important requirement is to carefully plan the implementation of improvement actions during the project changes. This stage is by far the most difficult and complex one.

The explanations above have gives illustration about the existence of framework in each stage of construction project process. These processes have been organized into several steps as illustrated in several frameworks above. Table 4.2 below will shows the overviews or perspectives about several frameworks above.

Table 4.2 The perspectives about several frameworks from several researchers. Researcher 1. Ritz, (1994) - Figure 3.3

Perspectives about his/ her framework It described of Ritz (1994) definition in the key function of the project management system but a detailed input part and time and cost cycle in project that must be shown was not described.

2. Clough et. al.,(2000) - Figure 3.4

This periodic cycle is used for the day-to-day time and cost control of the project during the process not only in the planning stages. It described in the generally stages.

3. Ritz, (1994) - Figure 3.5

It is described of the basic mechanism of the control function that keeps the work of the project on target & accordance with plans to meet the goals and it have to be developed.

4. Ndekugri & McCaffer, (1988) - Figure 3.6

This framework described what has to be done in the monitoring (controlling), evaluating and remedying phases of the control loop and also gives detailed descriptions of the possible action that contractors should take in each step. The basic approach this framework is comparing the actual or anticipated final time and cost of work items against predetermined standards. It is only described a step by step methodology that project team should do if faced with the changes in their project plan before the best decision or a revised the project plan can be made.

5. Sunny & Kim, (1992) - Figure 3.7

Summary: Those frameworks which has designed by six researchers above shows that the cycling steps in each framework almost the same and it also have the same purpose; to control the project. But it can shows that Ndekugri and McCaffer, (1988) proposed a more concise framework description than others because it gives detailed descriptions of the possible actions and the endeavours that contractors should take in each step to make that each steps implementations more effective.

To provide an overview of the existing practices in Indonesian construction process especially in term of time and cost overrun problems based on summary in

75 Table 4.2 above, Ndekugri and McCaffer (1988) contractor’s endeavours framework in controlling the construction project process is the suitable mode to propose. This because of Ndekugri and McCaffer (1988) framework describes clearly each phases of control loop what contractors as project executor should do in term of controlling the project process. On the other hand, others framework describes the methodology to organize the implementation of construction performance process as general.

In term of the issues in Indonesian construction industry about time and cost overrun, this framework will be describes about time and cost overrun problems during the construction process because time and cost overrun were occur or happen in this stage. Due to Ndekugri and McCaffer (1988) framework mode, a propose framework will be more developing and concentrating in monitoring or controlling stages until take the remedial action stages especially for the time and cost management.

Based on Ndekugri and McCaffer, (1988) framework, in monitoring or controlling stages it could be identifying the problem and do evaluating about the problems. Through evaluating it could know which operations or activities are not being performed satisfactorily, what has gone wrong or the causes and from all of that it could plan the remedial action that should do to reduce or avoid the problems.

When the problems and the causes had been identified, the project manager have to check the chance to take remedial actions by gathering information on that problems, list the alternatives solution, evaluate or analyze it and make decision to have the corrective actions and the revise plans while an opportunity still exists to address problem areas.

The remedial actions could do such as by modify the plan, supervise more effectively, increase skill and productivity, use more efficient plan, determine who is will be responsible and many others things that could do. Once a decision on which revision actions to take, they must be incorporated into the time schedule and cost estimated. If the planned corrective measures result in acceptable time schedule and cost estimated, the construction project process can be continued (Gido and Clement, 1999 and Clough et. al., 2000).

76 Refer to Indonesian construction management it had been identify that, mostly, construction companies in Indonesia still did not follow the managerial practices such as the implementation of INKINDO framework by the consultant company within companies by various reasons, (Wisnuhadi, 2000).

In general each company uses the past experience as a basis for managing the construction projects to avoid or reduce problems during the execution process. Even, in fact there is several companies in Indonesian construction industry managed their project according to the process and the procedure that produce by the association or the government. But, sometimes several process or procedure not carried out efficiently and effectively. Figure 4.6 below will describe the propose framework that developed based on the theory and the others practices which is get from the literatures findings. In this research survey it will be try to identify the way of the implementation and get the respondent perspectives about the project management stages to manage and control the project process through the proposed framework.

77

YES CONTROL

ORGANIZE

PLAN

Compare Actual Achieving with Planning

Identification Deviations/Problems

Feedback

Goals Achievement

Major Activities Identification Things That Have Related With Time & Cost

Identify: - Job Description - Activities - Resources - Time Schedule - Cost/Budget

- Schedule

-

Activities Cost/Account Qualities Document Resource Equipment

Check Through The Report: - Schedule Activities - Equipment - Work progress - Change Order/Work - Accounting

a. Identify:

-

Activities Purchasing Equipment Others

b. Group in : - Categories - Department - Item - Resources

Team Works - Suitable/ Match With Planning -

Instrument/Tools: - Software - CPM - Bar Chart - S Curve

Analyze cause of Deviations

Planning of Corrective Actions

-

Efficiency Effectiveness On Time Within Budget Qualitative/As Specified/Standard

Sub Activities

Analyze It

- Identification Problem

Implementation of Corrective Actions

- Some Correction

Project Report: - Daily - Weekly * - Monthly * As specified/Standard

Fig. 4.6 The proposed framework for survey which developed based on the theory and the practices

77

78 However, by have this proposed framework as a fit guidance, the project manager and the team members could monitor the progress of the assigned tasks (their responsibility). Thus, have the line as guidance’s that could be followed if they are also faced the time and cost overrun problems with the same causes. This proposed framework would develop again based on the survey results and supported by the literature review findings through the previous research.

CHAPTER 5

RESEARCH METHODOLOGY

5.1

Introduction

This chapter discusses the methods used in this research to achieve its objectives. It can be divided into three parts. The first part explains the research stages. The second part looks more closely at data collection methods and the last part is explains how the approach of developing a framework.

5.2

Research Process

A number of representations of the research process as general have been collected in Figure 5.1 below.

80

Preliminary Research

Stage 1

Literature Reviews

Stage 2

Identify issues/ problems

Determine research areas

Stage 3

Research Design

Determine the sample & its size

Determine the types of data required

Determine the method/ technique of data collection

Data Collection

Stage 4

Literature review findings

Questionnaires

Data Analysis

Writing

Figure 5.1 The research stages

a. Stage 1: preliminary research to find out: ƒ

Determine the data analysis methods

Research rough idea.

b. Stage 2: Literature review ƒ

Determine research areas

ƒ

Identify issues/ problems; which includes about:

Stage 5 Stage 6

81 -

Project management, the structure and the practices in Indonesian construction industry; includes in it are Padang and Pekanbaru.

-

The basic concept of project time and cost in theory.

-

The issues in project time and cost in Indonesian construction projects and in several countries based on previous research that have been done.

-

The basic concept of management for project time and cost in theory.

-

The practices for project time and cost management based on previous research in several countries.

-

Framework in project time and cost management as theoretical.

c. Stage 3: Research design; which includes about: ƒ

Determine types of data required

ƒ

Determine the method/ technique of data collection

ƒ

Determine the survey sample and its size

ƒ

Determine data analysis methods

d. Stage 4: Data collection. The objectives of data collection refer to the research issues and the objective. The way of data collection, survey sample and its size refers to research design. e. Stage 5: Survey analysis. The survey data was analysed by calculating the mean value from the data. f. Stage 6: Last stage of research. In this stage writing up will be done to present the research results.

5.3

Data Collection

This part discusses how the data collection was carried out such as the survey, to whom and how the survey was done, the sample size, and how the survey data was analyzed.

82 a). The Techniques

The research uses face to face survey using a set of prepared detailed questionnaires to collect of data. It was sent to the selected respondent. The method is considered appropriate for this type of research because it: •

Ideally examines the perception of the sample



Is less time consuming and cheaper



Is better able to reach a wider respondent

The questionnaire also offers some level of confidentiality and allows respondents to give true opinions on issues asked. b). Sample / Respondent

The sample of this research as stated in the scope/ delimitation of this research are the contractor and consultant which includes in B and M classification in Padang and Pekanbaru who have registered with INKINDO (Ikatan Konsultan Indonesia) for consultants, GAPEKSINDO

(Gabungan

Pengusaha

Konstruksi

Indonesia) for

contractors or LPJK for all companies that did not register with either of these.

They were choosing because they have more experience and active in project activities per-year. Refer to company qualification in chapter 2, M or medium qualification for Consultant Company are companies that have the ability to execute construction projects valued between 200 million and 1 billion rupiahs and B or big qualification are companies that have the ability to execute construction projects valued at more than 1 billion rupiahs. For the contractor company M or medium qualification is companies that have the ability to execute construction projects valued more than 1 billion but less than 10 billion rupiahs and B or big qualification are companies that have the ability to execute construction projects valued more than 10 billion rupiahs. However, kind of projects that are executed by company B and M qualification in

83 Padang and Pekanbaru cities are many but for most of them include in low-rise buildings such as housing, offices and others simple projects.

Before distributing the questionnaires as the methods that was used to collect the data for this research, the sample size has to be estimated from the population; for example, the proportion of the total number of companies where the questionnaires were to be distribute.

According to Bailey (1978), it is not possible to study the entire population and therefore a sample must be determined. We can define a sample as a subset or proportion of the total population. A 100 (hundred) percent sample would be the entire population; a one percent sample would consist of only 1 one out of every 100 entities in the population. On the other hand with reference to Simon (1978), samples in research at the Master and doctoral level are likely to be closer to a pretest range of 25 to 100 sample size. The sample size ought to depend on the proportions of the sample that have the characteristics the researcher is interested in, the purpose of the study, the value of the information and the cost.

Another factor in determining sample size is the degree precision needed on the desired final result (Slonim, 1969). Blalock (1960) indicates that in terms of just statistics an n of 50 is a minimum size. Champion (1970) in Adams and Schvaneveldt (1985) for the same reason suggests that 30 is the very minimum and still calls for considerably larger samples if one is to control for certain variables and lay claim that the sample accurately “mirrors” the population. Cohen and Manion (1985) also stated the same, a sample size of 30 is held by many to be the minimum number of cases if the researcher plans to use some form of statistical analysis to the data, though techniques are available for the analysis of samples below 30. Baker (1999) also stated that the sample size where the population is under 1000, it is generally thought that a sample size of 30% is good. For populations of 10,000 or more a sample size of 10% may be adequate.

84 Through references to all theory above, there are five statements; Blalock (1960), Champion (1970), Simon (1978), Cohen and Manion (1985) and Baker (1999) said that 30 to 50 are the minimum for sample size for one research. So, for this research, based on the theory above, a sample size of 50 as minimum was taken, where from all the company registered under INKINDO, GAPEKSINDO and LPJK.

For this research, total of questionnaire that distributed was 55 with detail 30 to class B and M contractors and consultants’ in Pekanbaru and 25 in Padang. Table 2.5 which reproduced in Table 5.1 below, show the number of big and medium companies in Pekanbaru and Padang that registered with their organization GAPEKSINDO (for contractor), INKINDO (for consultant) and LPJK as board for construction companies for both (for consultant and contractor). Table 5.1 Total Numbers of Big, Medium and Small Companies based on The Organization Registered and the Qualification. Areas & Company

LPJK

GAPEKSINDO

INKINDO

(Both)

(Contractor)

(Consultant)

Pekanbaru: -

K (Small)

144

40

47

-

M (Medium)

83

31

10

-

B (Big)

5

3

7

Padang -

K (Small)

132

53

37

-

M (Medium)

29

6

13

-

B (Big)

16

2

5

Source: Construction Development Board Data by Province, (www.LPJK.go.id, LPJK, 2003)

The total number of questionnaires collected or received are; 22 from contractors and consultants in Pekanbaru and 16 from those in Padang. So, totally the numbers of questionnaires collected or received from both of those cities are 38 questionnaires. It is because some respondents have said that they are not interested to fill out the

85 questionnaires form with so many reasons such as it is better to interview them than ask them to fill out questionnaires. So, some respondent did not respond. Table 5.2 below will describe all the description above. Table 5.2 Number of questionnaires distributed Respondent

Padang

Pekanbaru

1.

Consultant

Distributed (Number) 10

-

INKINDO

3

2

4

2

-

LPJK

7

4

6

4

2.

Contractor

15

10

20

16

-

GAPEKSINDO

4

6

9

7

-

LPJK

11

4

11

9

25

16

30

22



Received (Number) 6

Distributed (Number) 10

Received (Number) 6

The respondent that have participated to fill out and reply the questionnaires with background civil engineering are 10 people is project manager, 5 people main supervisor of project, 12 people field supervisor of project and 11 people are architect. c). The Questionnaire

The questionnaire was developing based on the pilot study that carried out in the early part of research. Previous research about time and cost management in several countries, the best practices or approach and existed framework, which described in literature review findings, used as references to do the pilot study.

To identify the major causes of time and cost overrun in Indonesian (particularly Padang and Pekanbaru) construction projects through the pilot study, the causes that had been listed will be given to the respondents (Refer to Table 3.2 in previous chapter). Table 3.2 shows the summary of the causes of time and cost overrun in construction projects in various countries. The table was prepared to propose the synthesizing of the

86 common causes among the various countries. The table was listed all the time and cost overrun causes and classified it into some categories.

The pilot study for identifying the current practices of time and cost management in Indonesia construction industries particularly Padang and Pekanbaru also based on others previous research, they listed all the various practices to minimize project time and cost overrun problems (Refer to Table 4.1 in previous chapter). Table 4.1 shows the summary of the various practices to minimize project time and cost overrun problems in various countries. The table was prepared to propose the synthesizing of the various practices among the various countries.

Sample of the pilot study that shows the common causes of time and cost overrun like the one elaborated in Table 5.3 below. The complete questions of pilot study are shown in appendix. For the activities categories it was based on the same opinion (as shown by bold and italic ones) about the activities that have time and cost overrun from the previous researcher that was listed in Table 3.2. For the causes it will take all from the listed. Respondents were asked to choose the causes and classify it based on the activity categories.

87 Table 5.3 Sample of pilot study questions ACTIVITY CATEGORIES (1) Materials,

THE CAUSES - Shortages of materials - Material changes - Late delivery - Damage, and poor quality manufacturing of materials - Others : -

(2) Manpower,

- Shortages of labour - Labour skill - Nationalities of labourers - Others : -

(3) Equipment,

- Equipment failure - Shortages and late delivery of the equipment - Low productivity or skill of operator of the equipment - Others : -

(4) Environment,

- Climatic conditions - Social and cultural impact - Geological problems - Others : -

(5) Changes,

- Result of omissions, errors, and change of scope by owners - Others : -

(6) Scheduling and controlling techniques

- Poor planning and scheduling practices - Lack of management expertise in project control - Poor record keeping and maintenance - Others : -

88 In this pilot study, respondents were asked to choose the causes and classify it based on the activity categories. Results of the pilot study are shown in Table 5.4 below. Then, based on the pilot study results in the questionnaires those factors were grouped by the researcher into five major categories; preparation project activities, construction activities, material supply, labour and additional work due to design changes. That result will be shows in Table 5.5 where actually it was extracted from results in Table 5.4. That results show that some of the causes that were classified before had been changed to other categories based on the respondent’s suggestion. Based on that pilot study results, the questionnaires were design. All the causes for the time and cost overrun are based on the respondent answer or respond in the pilot study above.

Sets of questionnaires were distributed and collected from the two types of respondents: contractors and consultants. In the questionnaires, respondents (contractors and consultants) were only asked to rank it based on the importance scale and the occurrence frequency in their company. Based on the rank, mean were calculated to show what activities and which causes had much influence on project performance and cause time and cost overrun in many Indonesian construction projects particularly Padang and Pekanbaru.

Mean value between contractors and consultants were calculated separately to describe the activities and factors that cause time and cost overrun as reported by consultants and contractors. This is because their positions in construction projects are different: one acts as a planner and the other as an executor of the project. But, at the end, the results were combined too, to shows which factors or causes had much influence on project performance and cause time and cost overrun in many Indonesian construction projects based on the responds from both of them.

89 Table 5.4 Results of the pilot study on causes of time and cost overrun ACTIVITY CATEGORIES (1) Materials,

THE CAUSES - Shortages of materials

0%

- Material changes

0%

- Late delivery

70 %

- Damage, and poor quality manufacturing of materials

0%

- Others : - Limited stocks

20 %

- Transportation problem in delivery

(2) Manpower,

%

10 %

- Shortages of labour (lack of labour)

30 %

- Labour skill (limited)

70 %

- Nationalities of labourers

0%

- Others : -

(3) Equipment,

(4) Environment,

- Equipment failure

0%

- Shortages and late delivery of the equipment

0%

- Low productivity or skill of operator of the equipment

0%

- Others : - Lack of equipment

100 %

- Climatic conditions (weather)

50 %

- Social and cultural impact

10 %

- Geological problems

0%

- Others : - Site condition out of plan

20 %

- Location in the middle of public facility

(5) Changes,

- Result of omissions, errors, and change of scope by

20 %

0%

owners

(6)

Scheduling

and

controlling techniques

- Others : - Design changes

50 %

- Over estimation

20 %

- Delayed activities

30 %

- Poor planning and scheduling practices

0%

- Poor management in project control

0%

- Poor record keeping and maintenance

0%

- Others : - Poor management

100 %

90 Table 5.5 Results of pilot study – The common causes of time and cost overrun problems (extracted from table 5.4) ACTIVITY CATEGORIES (1) Materials,

THE CAUSES - Late delivery - Limited stocks - Transportations problem in delivery

(2) Manpower/ Labour,

- Shortages of labour (lack of labour) - Labour skill (limited)

(3) Equipment & management

- Over estimation - Lack of equipment - Delayed equipment activities - Poor management - Climatic conditions (weather)

(4) Environment,

- Social and cultural impact - Site condition out of plan - Location in the middle of public facility

(5) Changes,

- Design changes

The main objectives of the questionnaire were to achieve the research objectives. It also to obtain the respondents comments or opinions about proposed framework which was also included in the questionnaire. Details about the questionnaires are described as follows.

This questionnaire contains five parts: Part 1 Company information in general.

91 Part 2 Question on the perspectives about management in general. This part contains three questions with scale important model. The respondents were asked to rank based on scale of importance; 1 (one) for very important, 2 (two) for important, 3 (three) fairly important, 4 (four) not too important and 5 (five) least important.

Part 3 The objectives of this part are: to find out in which activities time and cost overrun problems come out and its major causes in each companies where the questionnaire be distributed.

Part 4 The objectives of this part are: to find out time management implementation or current practices in the companies; the time management factors that get less attention to do by the contractor where in fact, it could be help or should become a solution for the contractors to reduce the time overrun problems. This part involves two kinds of question models; first, choosing one accurate answer model and second, making a rank model based on frequency of occurrence in their company.

Part 5 Objectives of this part are: to find out cost management implementation or current practices in the companies; the cost management factors that get less attention to do by the contractor where in fact, it could be help or should become a solution for the contractors to reduce the cost overrun problems. Beside that in this part the respondents also ask to give their opinion about the proposed framework that has been design by researcher based on the theory and the practices in time and cost management from previous research. So, in this part also involves two kinds of question models; choosing the accurate answer mode and making a rank mode based on frequency scale of occurrence in the company.

92 d). Questionnaires Distributions

As stated above in the research sample, the questionnaires were distributed to the companies identified. Questionnaires were disseminated to: (i)

Class B and M contractors

(ii)

Class B and M consultants

Refer to the sample size theory above, a total sample size of 50 as minimum was taken, where from all the companies registered with INKINDO, GAPEKSINDO and LPJK. They were chosen randomly where they have to fulfil the certain specification; for B and M class based on the company’s experience, project value per-year and how active they are in the project activities for the last year until the present time.

Researcher comes to Padang and Pekanbaru GAPEKSINDO’s office (contractor organization), INKINDO’s office (consultant organization) and LPJK’s office to ask about list of company that were included in B and M qualification. Then, researcher chose randomly the company. Mostly, researcher chose the company that still executing the project at that time or just finished their project.

The questionnaires were distributed directly by researcher or self administered to all of the class B and M contractors and consultants in Padang and Pekanbaru. The main advantage of this method is the researcher can collect all the completed responses within a short period of time compared with if the questionnaires were sent through mail. Any doubts that the respondents might have regarding any questions could be clarified immediately by the researcher. Moreover the researcher could motivate the respondents to give their honest answers to the questions.

93 e). The Analysis of Data

Data from the questionnaire was analyzed to determine the condition of Indonesian construction industry in terms of factors that influence time and cost and the causes of time and cost overruns according to the contractors and consultants.

In this research, the main data was collected or obtained through questionnaire. The responses in the questionnaires were analyzed by calculate the mean value. Mean value was used to determine the various factors responsible or be the causes for project delays and cost overrun. It also was used to determine the various perspectives about the factors that get less attention to do by the contractor where in fact those factors could be help or should become a solution to minimize the time and cost overrun problems by the contractor itself and the consultant.

According to Kennedy and Neville (1986) The Arithmetic Mean is the common type of average, often referred to simply as the average or mean. The mean is thus the sum of the observations divided by their number. The mean of a set of empirical data may be designated as the “point of balance” of the sample data analogous to the centre in mechanics. The true mean of population is usually denoted by µ. The mean of a sample is written as x. The values of x and µ become identical when the sample is, in fact, the total finite population; in such a case either symbol may be used. A simple example will be given to illustrate some computation.

The Mean is written as : n ∑ fi . xi i=1

X =

n ∑ j=1

fx

94 Where: fi = the frequency of any value xi xi = factors that want to compute n = the sum of factors X = The Arithmetic Mean Where: fx = the sum of the frequency of any value xi

Szulc (1965) refers to this as Weighted Arithmetic Mean. The general equation for this average is written as follows:

n ∑ wi . xi

I=1

X=

n ∑

xn

j=1

w1 x1 + w2 x2 + w3 x3 + …… + wn xn X= x1 + x2 + x3 + …….. + xn Where: xi = the particular values of variable or factors wi = the numbers by which multiply these values. This number called weights. i = number of factors n = the sum of the factor Where: xn = the sum of the particular values of variable or factors It can be said that The Weighted Arithmetic Mean of variable x is equal to the sum of the separate values of the variable multiplied by the corresponding weights and divided by the sum of the weights multiplied by the number of factors. The equation for Weighted Mean according to Watson et., al., (1993), is the same with Szulc’s (1965) equation. When we compute the simple arithmetic mean of a set of numbers, we assume

95 that all the observed values are of equal importance, and we give them equal weight in our calculation. In situations where the numbers are not equally important, we can assign to each a weight that is proportional to its relative importance and calculate The Weighted Mean (Watson et., al., 1993). The equation that we used in calculating The Weighted Mean can be used for calculating frequency weighted. It is basically the same with the equation above; where it only changes the factors values (xi) with the frequency values (fi). From the description above we can conclude that basically the equation of The Arithmetic Mean from Kennedy and Neville, (1986), Weighted Arithmetic Mean (Szulc, 1965; Sachs, 1984), and The Weighted Mean (Watson, et., al., 1993) are the same; the differences between them are only in the names and the symbols used in each equation.

There are possible advantages as well as disadvantages to using the arithmetic mean or often referred to simply as the average or mean equation above (Kennedy and Neville, 1986).

Some of the advantages are: ¾ The calculations are simpler. The sample statistic is very easy to compute. Most of the work is in ranking the observations and this can be made easier with shortcut techniques. ¾ The assumptions are few and not very restrictive. The form of the distributions needs to be known. ¾ The data may be in ordinal form only. ¾ Real differences in location parameters may be more easily detected. This is particularly true when the populations’ deviate considerably from normality or the location parameters are not means. Some of the disadvantages are: ¾ There may be loss in efficiency. Some information may be sacrificed when the quantitative nature of the data is replaced by ranks

96 The Mean values for all the delay and cost overrun causes factors were calculated using mean equation. There are two kinds of rank data model that were analyzed with this mean equation. First, rank data based on scale of importance. It was used to determine the various factors responsible or be the causes for project delays (time) and cost overrun. Secondly, rank data based on scale of frequency occurrence in the company. It was used to determine the various perspectives about the factors that get less attention to do by the contractor which also could be the causes for project time and cost overrun. In fact, those factors could be help or should be a solution to minimize the time and cost overrun problems by the contractor itself and the consultant.

The mean value between contractors and consultants were calculated separately. This is because their positions in construction projects are different: one acts as a planner and the other as an executor of the project. But, at the end, the results were combined too, to shows the responds from both of them. After mean values is got, each factor can be put into each grouping which based on the scale that has determined. The scales as be shown below.

1. Scale for rank data based on scale of importance

Very important/

Important/

Fairly important/

Least important/

Very significant

Significant

Not too significant

Not significant

1

2

3

4

5

2. Scale for rank data based on scale of frequency occurrence ƒ

Scale for frequency occurrence with rank data start from 1 (one) to 7 (seven). It was used to identify the cost management current practices.

Very high occurrence

1

2

Medium/fairly occurrence Least/ Seldom occurrence

3

4

5

6

7

97 ƒ

Scale for frequency occurrence with rank data start from 1 (one) to 10 (ten). It was used to identify the time management current practices.

Very high occurrence

1

2

3

High occurrence

4

Fairly occurrence

5

6

Least occurrence

7

8

None

9

10

Analysis results based on the scale grouping in point 1 (one) were interpreted as the major to the minor causes of time and cost overrun problems. The major to the minor causes of time and cost overrun were interpreted based on the mean values rank. The mean values would be rank from the lowest until the highest ones where the lowest mean value interpreted as the major causes and the highest mean values become the minor one. To make it clear the scale shows above is to represent the following: 1 – 2 : Very important/ very significant; to indicate that the activities are the major/ very significant causes of the time and cost overrun so, the project manager have to take care or carried out very well to this factors to avoid its occurred and cause time and cost overrun problems. 2 – 3 : Important/ significant; to indicate that the activities are the significant causes of the time and cost overrun and the project manager still have to take care to this factors occurred and cause time and cost overrun problems. 3 – 4 : Fairly important/ not too significant; to indicate that the activities are include as the causes of the time and cost overrun but not too significant but the project manager still have to take care to avoid this causes occurred and cause the overrun problems. 4 – 5 : Least important/ not significant; to indicate that the activities are also include as the causes of the time and cost overrun but not significant but the project manager still have to take care to avoid this causes occurred.

The scale grouping in point (two) were interpreted as the major to the minor frequency occurrence of the practices that actually should be done by the contractors in order to minimize the time and cost overrun problems. The major to the minor frequency occurrence of the practices were interpreted based on the mean values rank. The mean

98 values would be rank from the lowest until the highest ones where the lowest mean value interpreted as the major or very high occurrence and the highest mean values become the minor one.

The frequency occurrence scale divide to two parts; firstly, with rank 1 (one) to 10 (ten) for the time management practices and secondly, with rank 1 (one) to 7 (seven) for the cost management practices. To make it clear the scale shows above is to represent the following: ¾ Scale for frequency occurrence with rank data start from 1 (one) to 10 (seven) which was used to identify the time management current practices. 1 – 3 : Very high occurrence; to indicate that the particular activities are most of the time being carried out well by the contractors. 3 – 5 : High occurrence; to indicate that the particular activities are often being carried out well by the contractors. 5 – 7 : Fairly occurrence; to indicate that the particular activities are usually being carried out well by the contractors. 7 – 9 : Least occurrence; to indicate that the particular activities are seldom being carried out well by the contractors. 9 – 10 : Non-occurrence; to indicate that the particular activities are not carried out at all by the contractors. ¾ Scale for frequency occurrence with rank data start from 1 (one) to 7 (seven) which was used to identify the cost management current practices. 1 – 3 : Very high occurrence; to indicate that the activities are often being carried out well by the contractors. 3 – 5 : Fairly occurrence; to indicate that the activities are usually being carried out well by the contractors. 5 – 7 : Least occurrence; to indicate that the activities are seldom being carried out well by the contractors.

99 Based on those analysis results, the researcher also proposed a framework for conducting activities in order to reduce time and cost overrun problems as implemented. Besides the scale grouping, this data analysis also used statistic descriptive methods. This method gives explanation or description of data for each factor shown by tabulation, how much mean value and so on.

Results of this survey data analysis means had been helped researcher in achieving half of the objectives of this research. Another half of objective was achieved through the literature reviews or theories synthesizing where in this research it was be the second objective. f). Discussion of Analysis Results

This part, discusses the analysis results that were achieved from this research. Refer to objectives of this survey, the researcher found out about the current practices of time and cost management and the causes of the time and cost overruns problems. Then, researcher would do comparison between the current practices of time and cost management in construction projects in Padang and Pekanbaru against “the theoretical framework”. “The theoretical framework” was produced based on the theories and other countries practices to minimize problems of time and cost overrun (refer to chapter 4). Refer to the comparison results, researcher will come out with a new framework (developed framework) that will be used in managing time and cost in construction projects in Padang and Pekanbaru where this framework could help in order to minimize time and cost overruns problems.

CHAPTER 6

THE MAJOR CAUSES OF TIME AND COST OVERRUN

6.1

Introduction

One of objectives of this study is to identify the major causes of time and cost overrun in low - rise projects in Padang and Pekanbaru. This chapter discusses the analysis considers the issues from 3 (three) perspectives; contractor’s, consultant’s and combined.

6.2

The Major Causes of Project Time and Cost Overrun in Padang and Pekanbaru

As highlighted earlier one of objectives of this study is to ascertain the major causes of time and cost overrun in projects in Padang and Pekanbaru. The survey requires the respondent to give them perspectives on the significant of the causes of cost and time overrun according to liker scale 1 – 5. The scales represent the significance of each cause of time and cost overrun.

The mean value between contractors and consultants were calculated separately (refer to the research methodology in Chapter 5) to describe the activities and factors that cause time and cost overrun as reported by consultants and contractors. This is because their positions in construction projects are different: one acts as a planner and the other as an executor of the project. But, at the end, the

101 results were combined too, to shows which factors or causes exactly that had much influence on project performance and cause time and cost overrun in many Indonesian construction projects based on the responds from both of them.

The mean values for each factors that have got, will be rank from the lowest until the highest ones. Then, those factors will be put into each grouping based on the importance scale that has determined (refer to methodology part). The importance scale to the activities and factors that cause time and cost overrun as reported by consultants and contractors will be ranking from 1 (one) to 5 (five) importance scale. The scales as be shown below.

Very important/ Very significant

1

6.2.1

Important/ Significant

2

Fairly important/ Least important/ Not too significant Not significant

3

4

5

Contractor’s Perspectives

The result of the survey is tabulated as shown in Table 6.1.

Table 6.1 Mean value of the major factors that cause of time and cost overrun problems – contractor’s perspectives No. Activity Categories 1 Environment

The causes Site condition out of plan Social condition Location in the middle of public facilities

Mean 4.3269 2.1635 2.1635

Mean

2.8846 2

Equipment and Management Over estimation Lack of equipment Delayed activities Weather Poor management

4.6703 2.3352 2.3352 4.6703 2.3352

3

Material

Late in delivery Limited stocks Transportation problem in delivery

4.0055 2.6703 2.6703

4

Manpower/ Labour

Limited skilled labour Lack of labour

2.4615 1.2308

5

Changes

Design changes

3.8846

3.2692

3.1154

1.8462 3.8846

102 Table 6.1 shows the significance of each cause of time and cost overrun for construction projects. It shows that the mean value of the level of significance ranges from 1.2308 to 4.6703. Table 6.2 shows the breakdown of the causes of time and cost overrun according to the level significance.

Table 6.2 Time and cost overrun major causes and it activity categories based on the importance scale – contractor’s perspectives Very important Labour - Lack of labour

Important Environment - Social condition - Location in the middle of public facilities Equipment & management - Lack of equipment - Delayed activities - Poor management Material - Limited stocks - Transportation problem in delivery Labour - Limited skilled labour

Fairly important Changes - Design changes

Least important Environment - Site condition out of plan Equipment management - Over estimation - Weather Material - Late in delivery

Analysis results based on the mean values and the importance scale grouping above were interpreted as the major to the minor causes of time and cost overrun problems. The mean values would be rank from the lowest until the highest ones where the lowest mean value interpreted as the major causes and the highest mean values become the minor one. The rank is as shown in Table 6.3.

103 Table 6.3 The rank of the causes of time and cost overrun based on the mean values – contractor’s perspectives The causes of time & cost overrun 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14.

Lack of labour Social condition Location in the middle of public facilities Lack of equipment Delayed activities Poor management Limited skilled labour Limited stocks Transportation problem in delivery Design changes Late in delivery Site condition out of plan Over estimation Weather

The mean values 1.2308 2.1635 2.1635 2.3352 2.3352 2.3352 2.4615 2.6703 2.6703 3.8846 4.0055 4.3269 4.6703 4.6703

Table 6.3 above shows that the mean values of each cause do not different much and most of them are in the important scale. It means that in the contractor’s perspectives all those causes are truly as the causes of time and cost overrun problems. It also indicated that most of the activities are the important/ significant causes that cause the time and cost overrun problems and the project manager still have to take care and avoid to this factors occurrence. Like has been stated before the results based on the mean values and the importance scale grouping above were interpreted as the major to the minor causes of time and cost overrun problems.

6.2.2

From Consultant’s Perspectives

The result of the survey according to consultant’s perspectives is tabulated as shown in Table 6.4.

104 Table 6.4 Mean value of the major factors that cause of time and cost overrun problems – consultant’s perspectives No.

Activity Categories

The Causes

The Mean perCauses Activities

1 Environment

Site condition out of plan Social condition Location in the middle of public facility

2 Equipment and Management

Over estimation Lack of equipment Delayed activities Weather Poor management

3 Material

Late in delivery Limited stocks

Mean Categories 2.0667 2.0667 2.0667 1.3429 1.3429 1.3429 1.3429 1.3429 1.1622 1.1622

Transportation problem in delivery

1.1622 1.1622

4 Manpower/ Labour

Limited skilled labour Lack of labour

1.375 1.375

5 Changes

Design changes

1.2727

1.2727

Results in Table 6.4 show the activity categories and its causes mean values according to consultant’s perspectives. Then, based on that mean values those factors/ causes will be put into each grouping based on the importance scale that has been determined before. The complete results of the factors that cause of time and cost overrun and its activity categories based on the importance scale will show in Table 6.5.

105 Table 6.5 Time and cost overrun major causes and it activity categories based on the importance scale – consultant’s perspectives Very important

Important

Labour - Lack of labour - Limited skilled labour Equipment & management - Over estimated - Lack of equipment - Delayed activities - Weather - Poor management Material - Late in delivery - Limited stocks - Transportation problem in delivery Changes - Design changes

Environment - Site condition out of plan - Social condition - Location in the middle of public facilities

Fairly important -

Least important -

The importance scale grouping based on the mean values above were interpreted as the major to the minor causes of time and cost overrun problems. The mean values would be rank from the lowest until the highest ones where the lowest mean value interpreted as the major causes and the highest mean values become the minor one. The mean values rank for each causes that cause time and cost overrun in contractor’s perspectives shown in Table 6.6.

Table 6.6 The rank of the causes of time and cost overrun based on the mean values – consultant’s perspectives The causes of time & cost overrun 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14.

Late in delivery Limited stocks Transportation problem in delivery Design changes Over estimation Lack of equipment Delayed activities Poor management Lack of labour Social condition Site condition out of plan Location in the middle of public facility Weather Limited skilled labour

The mean values 1.1622 1.1622 1.1622 1.2727 1.3429 1.3429 1.3429 1.3429 1.375 2.0667 2.0667 -

106 Results in Table 6.6 above show the major to the minor factors that cause the time and cost overrun based on the mean values ranking according to consultant’s perspectives. It can show that the mean values of each cause do not different much and most of them are in the very important scale. It means that in the consultant’s perspectives all those causes are truly as the causes of time and cost overrun problems. It also indicated that most of the activities are in the very important/ very significant causes that cause the time and cost overrun problems and the project manager have to take care and avoid to this factors occurrence. For the factors that did not have the mean values it means that in the consultant’s perspectives those factors are not be the cause of time and cost overrun.

6.2.3

Combination of the Two Perspectives

In achieving the objectives of this research to identify the major causes of the time and cost overrun, the mean values were calculated from the individual time and cost overrun causes. Therefore, the mean values from both of the respondents were combined and then do calculation for the mean “average”. Based on the mean “average” values, each cause would be rank from the lowest or the very important to the lowest or the least one. This ranking also made it possible to cross-compare the importance of the variable as seen by the different groups.

Table 6.7 will shows the summarized mean values for each cause, and its mean “averages” as perceived by contractors and consultants.

107 Table 6.7 The major factors that causes of time and cost overrun problems as perceived by contractors and consultants Contractors Factors Categories

Mean

Consultant Mean

“Average” Mean

Environment Location condition out of estimated

4.3269

2.0667

3.1968

Social condition

2.1635

2.0667

2.1151

Location in the middle of public facility

2.1635

-

-

Over estimation

4.6703

1.3429

3.0066

Lack of equipment

2.3352

1.3429

1.8391

Delayed activities

2.3352

1.3429

1.8391

Weather

4.6703

-

-

Poor management

2.3352

1.3429

1.8391

Late in delivery

4.0055

1.1622

2.5839

Limited stocks

2.6703

1.1622

1.9163

Transportation problem in delivery

2.6703

1.1622

1.9163

Equipment and management

Material

Manpower/ Labour Limited skilled labour

2.4615

-

-

Lack of labour

1.2308

1.3750

1.3029

1.2727

2.5787

Additional works Design changes

3.8846

The interpretation about the major or the very significant to the minor or not significant causes of the time and cost overrun based on the mean values rank as perceived by contractor’s and consultant’s perspectives will describe in Table 6.8 below. The lowest mean value interpreted as the major causes and the highest mean value becomes the minor one.

108 Table 6.8 The rank of the causes of time and cost overrun based on the mean values as perceived by contractors and consultants 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14.

Causes categories Lack of labour Lack of equipment Delayed activities Poor management Limited stocks Transportation problem in delivery Social condition Design changes Late in delivery Over estimation Location condition out of estimated Location in the middle of public facility Weather Limited skilled labour

“Average” Mean 1.3029 1.8391 1.8391 1.8391 1.9163 1.9163 2.1151 2.5787 2.5839 3.0066 3.1968 -

Table 6.8 above has shown that the smallest to the highest mean values for the very important to the least important causes of time and cost overrun. The rank shows which factors or causes that had much influence until the minor one on project performance and it cause time and cost overrun in many construction projects in Padang and Pekanbaru.

It also show that the mean values of each cause do not different much and most of them are in the very important and important scale. It indicated that most of the activities are in the very important/ very significant causes that cause the time and cost overrun problems and the project manager have to take care and avoid to this factors occurrence. It means that from both groups of respondent’s perspectives all those causes are truly as the causes of time and cost overrun problems. For the factors that did not have the mean values it means that in their (contractors and consultants) or only from one of them perspectives those factors are not be the cause of time and cost overrun.

To support the result on time and cost overrun cause, the reasons were identified for all the factors from both groups of respondents (contractors and consultants) and it is almost the same. They are as follows:

109 •

In project field preparation, most of the problems come from the community around the project location that did not support the project performance and project location exists in the middle of public facility.



Design did not match with field situation. When design changes happen, there is an additional/ addendum work; extra work means extra time.



Material supply depends on weather condition, inadequate stock of material in the market and transportation problem to bring material to market location. This results in delaying the supply of material and delaying project performance.



Technical problems in construction activities such as equipment problem, labour job description and the scheduled works.

6.3

Conclusions

Based on the survey on the condition of Padang and Pekanbaru construction projects, a good method/ practices is needed to manage the project from estimating phase, during construction process or performance until project goals are achieved in order to minimize the time and cost overruns. It can be seen from the descriptions in Table 6.1 to Table 6.8 where time and cost overrun occur because of the environment activities, equipment and management activities, changes activities, material activities and manpower/ labour with all the causes for each activity during construction process in achieving the goals. Those tables also reveal that the causes of time and cost overrun between contractors and consultants are almost the same, and in fact it occurs more with contractors as project executor.

CHAPTER 7

TIME AND COST MANAGEMENT: A COMPARISON BETWEEN THE “THEORETICAL FRAMEWORK”

7.1

Introduction

We have already identified the major causes of time and cost overrun in construction projects in Padang and Pekanbaru. This chapter discusses the third objective of this research i. e comparing the theoretical framework of time and cost management with that current practice by contractors and consultants in Padang and Pekanbaru.

The discussion is divided into two parts; firstly, it looks into the overall practice of project management based on the framework developed in chapter 4. The second part, considers the performance of the various remedial activities in the construction time and cost management.

7.2

The Comparison between the Current Practice and the Theoretical Framework

In order to achieve the third objective of this study, a survey was carried out to establish the current time and cost management as practiced by the contractors and consultants in Padang and Pekanbaru. The survey was based on the management

111 framework developed in chapter 4 (see Figure 4.6). The result of the survey is then compared to the management model or framewok. It is to establish the differences between the framework that adopted by the contractors and consultants in Padang and Pekanbaru and the “theoretical best management” practice.

The time and cost management framework as shown by Figure 4.6 was produced by reviewing and synthesizing the work of several researchers and experts on this subject. The proposed framework reproduced here in Figure 7.1 forms the basis for this survey. That framework shows that, the entire step almost the same with the other existing theoretically framework (refer to Fig. 4.2, Fig. 4.3, Fig. 4.4 and Fig. 4.5 in Chapter 4), which was reviewed but sometimes several process or procedure,

not

carried

out

efficiently

and

effectively.

112

PLAN

CONTROL

ORGANIZE

Compare Actual Achieving with Planning

Identification Deviation/ Problems

Check through the report: Schedule Activities Equipment Work progress Change Order/Work Accounting

Analyze cause of Deviations

Feedback

Goals Achievement

Major Activities Identification things that have related with time and cost management

Identify: - Job Description - Activities - Resources - Time Schedule - Cost/Budget

- Schedule

-

Activities Cost/Account Qualities Document Resource Equipment

-

a. Identify:

-

Activities Purchasing Equipment Others

b. Group in : - Categories - Department - Item - Resources

Organize: - Team Works - Suitable/ Match with planning

Instrument/Tools: - Software - CPM - Bar Chart - S Curve

Planning of Corrective Actions

-

Efficiency Effectiveness On Time Within Budget Qualitative/As Specified/Standard

Sub Activities

Analyze It Implementation of Corrective Actions

Project Report: - Daily - Weekly * - Monthly * As specified/Standard

Fig. 7.1 The proposed framework for survey (it was included in the questionnaire) which developed based on the theory and the practices

112

113 The survey indicated that most contractors and the consultants adhere or follow most of the steps shown on the framework but there are several processes or procedures that are not carried out efficiently and effectively. The responds of the respondent’s is shown in Figure 7.2 below. It shows the activities that are not carried out or not implemented in very comprehensive manner.

Most of the respondents pointed out that sometimes facts in the project site do not suit with the estimated time and cost and having a fixed framework will not solve the problems. Therefore, the framework should be appropriate with the project site condition because nowadays most of the project executor still uses the past experience as a basis to avoid or reduce problems on the project site i.e. to avoid or reduce time and cost overrun. The contractors and the consultants acknowledged that they have their own way to solve the overrun problems.

PLAN

ORGANIZE

Identification things that have related with time and cost management

Identify: - Job Description - Activities - Resources - Time Schedule - Cost/Budget

Compare Actual Achieving with planning

CONTROL

Identification Deviations/Problems

Feedback

Goals Achievement

Major Activities - Schedule

-

Activities Cost/Account Qualities Document Resource Equipment

-

Check through the report: Schedule Activities Equipment Work progress Change Order/Work Accounting

a. Identify:

-

Activities Purchasing Equipment Others

b. Group in : - Categories - Department - Item - Resources

Organize: - Team Works - Suitable/ Match With Planning

Instrument/Tools: - Software - CPM - Bar Chart - S Curve

Project Report: - Daily - Weekly * - Monthly * As specified/Standard

Analyze cause of Deviations

Planning of Corrective Actions

-

Efficiency Effectiveness On Time Within Budget Qualitative/As Specified/Standard

Sub Activities

Analyze It Implementation of Corrective Actions

Group of activities that have not been implemented in comprehensive manner by the contractors according to both of respondents (contractors and consultants)

Fig. 7.2 The survey results about the proposed framework

114

115 The survey shows that majority of respondent i. e contractors and consultants have failed to properly carried out activities under two headings; (1) compare actual achievement with planning and (2) identification of deviations/ problems. This happen because most of the project executor uses past experience as a basis to avoid or reduce problems at this stage.

The survey also revealed that the source of the problem of time and cost overrun is in the two main activities. Therefore, it is important to give for them emphasis on the two stage i. e compare actual achievement with planning and identification deviations/ problems until the remedial action stages.

For this purpose, a detaile study was carried out to establish the extent of the performance of the activities under the two headings. It is based on the following components or activities.

TIME MANAGEMENT: -

To make sure all of the activities appropriate with the time schedule

- To determine activity strategy/ work program - To discipline to the time schedule - To plan & control work time - To determine the causes of delay - To analyze the causes of delay - To coordinate the persons who involved and to reschedule the project performance - To analyze all of the work has appropriated with the time schedule - To plan the solution to overcome the delay - To do coordination about planning, scheduling and projecting progress in regular time

COST MANAGEMENT: -

Finding the alternative solutions to overcome the cost overrun

- Analyzing project financial - Determining the potential activities to reduce the cost overrun risks - Controlling budget in all of activities and make the correction soon if there is a problem

116 - Making sure the financial budget appropriate with the cost estimated - Analyzing the activity that always suffers by cost overrun - Controlling for project budget

7.3

The Extent of Performance of Activities for Time and Cost Management

7.3.1

Time Management

The survey on the performance of activities associated with time management was carried out based on the following scale: Very high occurrence

1

2

High occurrence

3

4

Fairly occurrence

5

6

Least occurrence

7

8

None

9

10

The study looks into the performance of these activities from three perspectives: a). Consultant’s perspectives b). Contractor’s perspectives c). Combination of the two perspectives (Consultant’s and contractor’s perspectives)

a). Consultant’s Perspectives

The results of the survey based on consultant’s perspectives tabulated in Table 7.1. The table shows the mean value for each component of the questionnaires.

117 Table 7.1 The current practices of time management by the contractors – in consultant’s perspective No.

Mean value

Factors

1

Determine activity strategy/ work program

8.6667

2

Plan & control work time

6.8333

3 4 5 6 7 8 9 10

Determine the causes of delay Analyze the causes of delay Plan the solution to overcome the delay Make sure all of the activities are appropriate with the time schedule Analyze all of the work is appropriated with the time schedule Coordinate planning, scheduling and projecting progress in regular time Coordinate the people involved, to reschedule the schedule of project field Keep to the time schedule

5.1667 4.8333 4.1667 5.1667 4.6667 5.25 4.25 6

The mean values in Table 7.1 shows that the smallest to the highest or the very high occurrence to non-occurrence practices based on the mean values. It shows that the mean value of the level of occurrence ranges from 4.1667 to 8.6667. Table 7.2 shows the breakdown of the current practices of time management by the contractors according to the consultant’s perspective according to the level of frequency occurrences.

Table 7.2 The current practice of time management by the contractors based on the frequency occurrence scale – consultant’s perspective Very high

High occurrence

Fairly occurrence

Least occurrence

None

occurrence -

-

Plan

the

solution

to

-

overcome the delay -

-

-

Coordinate

the

people

-

Determine the causes of

Determine

delay

strategy/

Make sure all of the

program

involved, to reschedule the

activities are appropriate

schedule of project field

with the time schedule

Analyze all of the work is

-

Coordinate

planning,

appropriated with the time

scheduling and projecting

schedule

progress in regular time

Analyze delay

the

causes

of

-

Keep to the time schedule

-

Plan & control work time

activity work

-

118 Refer to the results in Table 7.2 above, it show that most of the time management current practices by the contractors are in the high occurrence and the fairly occurrence scale. The high occurrence means that the particular activities are often being carried out well by the contractors and the fairly occurrence means that the particular activities are usually being carried out well by the contractors. Only one the time management current practices that include into the least occurrence scale where it means the particular activities are seldom being carried out well by the project manager. There is no factors was in very high occurrence and the nonoccurrence scale. In the consultant’s perspectives the contractors actually are expected to consider all of these practices in order to minimize the time overrun causes, so, all the factors should be are in the level very high occurrence.

b). Contractor’s Perspectives

The same questions and the way of analysis on the time management as currently practiced by the contractors above were also given to the contractors as a comparison and validation of the consultant’s opinion about them. The mean values were also calculated too from theirs own perspectives. The results are described in table 7.3 below:

Table 7.3 The current practices of time management by the contractors – – Contractor’s own perspectives No.

Factors

Mean Value

1.

Determine activity strategy/ work program

4.4333

2.

Plan & control work time

3.4167

3.

Determine the causes of delay

2.5833

4.

Analyze the causes of delay

2.4167

5.

Plan the solution to overcome the delay

2.0833

6.

Make sure all of the activities appropriate with the time schedule

2.5833

7.

Analyze all of the work has appropriated with the time schedule

2.3333

8.

Coordinate planning, scheduling and projecting progress in regular time

2.625

9.

Coordinate the people involved and to reschedule the project site

2.125

10.

Keep to the time schedule

3.0

119 That result highlights the contractor’s own perspectives on time management current practices. It shows that the mean value of the level of occurrence ranges from 2.0833 to 4.4333. Table 7.4 below will shows the complete results of the breakdown of the current practices of time management by the contractors according to their own perspectives based on the level of frequency occurrences.

Table 7.4 The current practice of time management by the contractors based on the frequency occurrence scale – Contractor’s own perspectives Very high occurrence

-

Plan the solution to overcome the delay

-

Coordinate

the

people

involved,

High occurrence

Keep

-

Plan & control work

to

reschedule the schedule of project -

-

the

time

Least

occurrence

occurrence

-

-

None

-

schedule

Analyze all of the work is appropriated with the time schedule

to

Fairly

time -

Determine

-

Analyze the causes of delay

strategy/

-

Determine the causes of delay

program

-

Make sure all of the activities are

activity work

appropriate with the time schedule -

Coordinate planning, scheduling and projecting progress in regular time

Refer to the results in Table 7.4 above, it show that most of the time management current practices by the contractors according to their own perspectives are in the very high occurrence and some in the high occurrence scale. The very high occurrence means that the particular activities most of the time being carried out well by them and the high occurrence means that the particular activities are often being carried out well by them. There is no factors was fairly occurrence, least occurrence and the non-occurrence scale. So, based on the contractors own perspectives they already consider and carried out most of the practices in the properly way as theoretically and the consultant’s perspectives about them could said not fully valid.

120 c). Combination of the Consultant’s and Contractor’s Perspectives

The mean values above have gave a clear description of the current practices of time management by the contractors based on consultants and contractor’s own perspective.

In order to identify the current practices for the time management, same as with the way of analysis to identify the causes time and cost overrun, the mean values of each of the perspective’s categories was calculated from the “average” of the individual perspectives. Therefore, the mean values from both of the respondents were combined and then do calculation for the “average”. Based on the “average” values, the rank was given for each perspective from the lowest to the highest one. This ranking also made it possible to cross-compare the relative importance of the variable as seen by the different groups. Table 7.5 below will shows the summarized mean values and the mean “averages” for those factors as perceived by contractors and consultants.

121 Table 7.5 Mean values and the “average” for the current practices in time management by the contractors as perceived by contractors and consultants Contractor

Consultant

Mean

Mean

Mean

“Average”

Values

Values

To determine activity strategy/ work program

4.3333

8.6667

6.5

To plan & control work time

3.4167

6.833

5.1249

To determine the causes of delay

2.5833

5.1667

3.875

To analyze the causes of delay

2.4167

4.8333

3.625

To plan the solution to overcome the delay

2.0833

4.1667

3.125

To make sure all the activities appropriate with the time schedule

2.5833

5.1667

3.875

To analyze all the work is appropriated with the time schedule

2.3333

4.6667

3.5

To coordinate planning, scheduling and projecting progress in regular time

2.625

5.25

3.9375

To coordinate the people involved and to reschedule the project performance

2.125

4.25

3.1875

3.0

6.0

4.5

Factors

To keep to the time schedule

The mean values rank from the lowest to the highest as perceived by the contractor’s and consultant’s perspectives above will show in Table 7.6.

122 Table 7.6 The rank of the current practices in time management by the contractors based on mean values “average” as perceived by the contractors and consultants Factors

Mean Values “Average”

1. To plan the solution to overcome the delay

3.125

2. To coordinate the people involved and to reschedule the project performance

3.1875

3. To analyze all the work is appropriated with the time schedule

3.5

4. To analyze the causes of delay

3.625

5. To determine activity strategy/ work program

3.875

6. To make sure all the activities appropriate with the time schedule

3.875

7. To coordinate planning, scheduling and projecting progress in regular time

3.9375

8. To keep to the time schedule

4.5

9. To plan & control work time

5.1249

10. To determine activity strategy/ work program

6.5

Based on the mean values “average” as perceived by contractors and consultants for the current practices of time management by the contractors above, Table 7.7 below will shows the complete results of those factors grouping based on the frequency occurrences scale.

123 Table 7.7 The current practices of time management by the contractors based on the frequency occurrence scale as perceived by the contractors and consultants Very high

High occurrence

Fairly occurrence

occurrence -

Least

None

occurrence -

To plan the solution to overcome the

-

delay -

-

To plan & control

-

-

work time

To coordinate the people involved and

-

To determine activity

to reschedule the project performance

strategy/

To

program

analyze

all

the

work

is

work

appropriated with the time schedule -

To analyze the causes of delay

-

To determine activity strategy/ work program

-

To make sure all the activities appropriate with the time schedule

-

To coordinate planning, scheduling and projecting progress in regular time

-

To keep to the time schedule

Refer to the results in Table 7.7 above, it shows that most of the time management as currently practiced by the contractors as perceived by the contractors own perspectives and consultants perspectives are in the high occurrence scale. The high occurrence means that the particular activities are often being carried out well by the contractors. There is no factors was in very high occurrence, the least occurrence scale and the non-occurrence scale. So, it appears that most of the contractors still have low consideration and ability to consider and give attention to all of these practices. It shows through the mean values of each practice do not different much and it also because of all of the factors are in the high occurrences scale and not in the very high scale.

124 7.3.2

Cost Management

The survey on the performance of activities associated with cost management was carried out based on the following scale:

Very high occurrence

1

2

Medium/fairly occurrence Least/ Seldom occurrence

3

4

5

6

7

The study looks into the performance of these activities from three perspectives: a). Consultant’s perspectives b). Contractor’s perspectives c). Combination of the two perspectives (Consultant’s and contractor’s perspectives)

a). Consultant’s Perspectives

The result of the survey by calculating the mean values for the cost management as currently practices by the contractors according to the consultant’s perspectives shows in Table 7.8.

Table 7.8 The current practices of cost management by the contractors – in consultant’s perspective No

Factors

Mean Value

1.

Controlling project budget

3.9167

2.

Controlling budget in all activities and make the correction as soon as there is 4.4167 a problem

3.

Analyze project finance

4.25

4.

Make sure the financial budget is appropriate with the cost estimated

3.75

5.

Analyze the activity that always suffers due to cost overrun

4.0

6.

Find the alternative solutions to overcome the cost overrun

3.5833

7.

Determine the potential activities to reduce the cost overrun risks

4.0833

125 Table 7.8 above have shown the smallest to the highest mean values for the current practices of cost management by the contractors according to the consultant’s perspectives. It shows that the mean value of the level of occurrence ranges from 3.5833 to 4.4167. That mean values would help in determining the frequency occurrences scale for each practice. Table 7.9 below will show the complete results of it.

Table 7.9 The current practice of cost management by the contractors based on the frequency occurrence scale – consultant’s perspective Very high

Fairly occurrence

Least occurrence

occurrence -

-

Find the alternative solutions to overcome the cost overrun

-

Make sure the financial budget is appropriate with the cost estimated

-

Controlling project budget

-

Analyze the activity that always suffers due to cost overrun

-

Determine the potential activities to reduce the cost overrun risks

-

Controlling budget in all activities and make the correction as soon as

-

there is a problem -

Analyze project finance

Refer to the results in Table 7.9 above, it show that all of the cost management current practices by the contractors are in the fairly occurrence scale. The fairly occurrence means that the activity are usually being carried out well by them. There is no factors was in very high occurrence and the least occurrence scale. It means, those practices according to the consultant’s perspectives are not being carried out well by the contractors.

b). Contractor’s Perspectives

The same questions and analysis on cost management as currently practiced by the contractors were also posed to the contractors as a comparison and validation of the consultant’s opinion about them. Table 7.10 below shows the results.

Table 7.10 The current practices of cost management by the contractors – – Contractor’s own perspectives

126 No

Factors

Mean Value

1.

Controlling project budget

4.3515

2.

Controlling budget in all activities and make the correction as soon as there is

3.606

a problem 3.

Analyze project finance

4.

Make sure the financial budget is appropriate with the cost estimated

3.02

5.

Analyze the activity that always suffers due to cost overrun

3.903

6.

Find the alternative solutions to overcome the cost overrun

3.067

7.

Determine the potential activities to reduce the cost overrun risks

3.365

4.6235

The frequency occurrences scale complete results for each factor based on the mean values above will show in Table 7.11.

Table 7.11 The current practice of cost management by the contractors based on the frequency occurrence scale – Contractor’s own perspectives Very high

Fairly occurrence

occurrence -

Least occurrence

-

Make sure the financial budget is appropriate with the cost estimated

-

Find the alternative solutions to overcome the cost overrun

-

Determine the potential activities to reduce the cost overrun risks

-

Controlling budget in all activities and make the correction as soon as there is a

-

problem -

Analyze the activity that always suffers due to cost overrun

-

Controlling project budget

-

Analyze project finance

Refer to the results in Table 7.11 above, it show that all of the cost management current practices by the contractors according to their own perspectives are in the fairly occurrence scale. The fairly occurrence means that the activity are usually being carried out well by them. There is no factors was in very high occurrence and the least/ seldom occurrence scale. So, it appears that in contractor’s own perspective, they realize that most of them still have low consideration and ability to consider and give attention to all of these practices. It also appears that the consultant’s perspectives about them could say fully valid because the survey and

127 analysis results are the same; all of the factors are in the fairly occurrences scale and not in the very high scale.

c). Combination of the Consultant’s and Contractor’s Perspectives

The identification and the analysis of the current practices of cost management as perceived by the two respondents were also done in the same way as the current practices of time management. The values for the contractors as well as the consultants were combined. Table 7.12 below shows the summarized of the mean values and the mean “Averages” as perceived by contractors and consultants.

Table 7.12 Mean values and the “average” for the current practices in time management by the contractors as perceived by contractors and consultants. Factors

Contractor Mean Values 4.3515

Consultant Mean Values 3.9167

Mean “Average” 4.1341

1.

Controlling project budget

2.

Control budget in all activities and make the correction as soon as there is a problem

3.606

4.4167

4.0114

3.

Analyze project finance

4.6235

4.25

4.4368

4.

Make sure the financial budget appropriate with the cost estimated

3.02

3.75

3.3850

5.

Analyze the activity that always suffers due to cost overrun

3.903

4.0

3.9515

6.

Find the alternative solutions to overcome the cost overrun

3.067

3.5833

3.3252

7.

Determine the potential activities to reduce the cost overrun risks

3.365

4.0833

3.7242

The mean values rank from the lowest to the highest as perceived by contractor’s and consultant’s perspectives above will show in Table 7.13 below.

128 Table 7.13 The rank of the current practices in time management by the contractors based on mean values “average” as perceived by the contractors and consultants. Factors 1. Find the alternative solutions to overcome the cost overrun

Mean Values “Average” 3.3252

2. Make sure the financial budget appropriate with the cost estimated

3.3850

3. Determine the potential activities to reduce the cost overrun risks

3.7242

4. Analyze the activity that always suffers due to cost overrun

3.9515

5. Control budget in all activities and make the correction as soon as there is a problem

4.0114

6. Controlling project budget

4.1341

7. Analyze project finance

4.4368

Based on the mean values “average” as perceived by contractors and consultants for the current practices of cost management by the contractors above, Table 7.14 below will shows the complete results of those factors grouping based on the frequency occurrences scale.

Table 7.14 The current practices of cost management by the contractors based on the frequency occurrence scale as perceived by the contractors and consultants Very high

Fairly occurrence

occurrence -

Least occurrence

-

Make sure the financial budget is appropriate with the cost estimated

-

Find the alternative solutions to overcome the cost overrun

-

Determine the potential activities to reduce the cost overrun risks

-

Controlling budget in all activities and make the correction as soon as there is a

-

problem -

Analyze the activity that always suffers due to cost overrun

-

Controlling project budget

-

Analyze project finance

Refer to the results in Table 7.14 above, it shows that all of the cost management as currently practiced by the contractors as perceived by the contractors own perspectives and consultants perspectives are in the fairly occurrence scale. The fairly occurrence means that the activity are usually being carried out well by them

129 by the contractors. There is no factors was in very high occurrence and the least/ seldom occurrence scale. So, as perceived by the two of respondent perspectives (contractors and consultants), it appears that most of the contractors still have low consideration and ability to carried out these practices because as stated before all of the factors are in the fairly occurrences scale and not in the very high scale.

7.4

Discussions of Framework Development

Based on the literature review and the survey results on the condition of construction projects current practices in Padang and Pekanbaru, a framework is needed to manage the project from estimation phase, during construction process or performance until project goals are achieved in order to minimize the time and cost overruns. It can be seen from the descriptions in the previous analysis (refer to chapter 6) where time and cost overrun problems occur in preparation activities, construction activities, additional work, material stocks activities and labour during construction process and additional works (during construction process in achieving the goals). The analysis also reveals that the causes of time and cost overrun between contractors and consultants are almost the same, and in fact it occurs more with contractors as project executor.

The proposed management framework which included in the questionnaires also received some comments from the respondents. Most of the respondents agree to develop a framework for construction projects in Padang and Pekanbaru in order to help in coordinating and communicating with members in the construction process. By developing the proposed management framework a guideline or stages that have to be followed according to their responsibility in managing time and cost can be developed.

The statement above was also supported by previous research in Singapore and Hong Kong, conducted by Saram and Ahmed (2001). The research indicated that identifying strategic activities and potential delays and ensuring the timeliness of all works are the most important activities. Conducting regular meetings and project

130 reviews and analyzing the project performance, detecting variances and dealing with their effects appear to be the most time-consuming activities. But, all of those things have to be done in order to reduce time and cost overrun problems in construction projects.

Based on the survey results and the literature reviews related to this research, a framework for managing time and cost in term to minimize the time and cost overrun was developed.

Basically, the development of the proposed framework was based on the respondent responds about the proposed framework through questionnaires as shown in Figure 7.2 above. The respondent’s responds about the time and cost overrun causes as shown by the analysis results in chapter 6 would be used as reference in the development of the proposed framework in order to minimize the time and cost overrun. The consultants’ and the contractors’ perspectives about time and cost management current practices in Padang and Pekanbaru were used as reference in developing the framework as an alternative solution in remedy activities to minimize time and cost overrun problems in the construction projects. These perspectives supported by the practices in several countries such as in Japanese construction projects, which was reviewed from the previous research (refer to chapter 4). Figure 7.3 and 7.4 below will illustrate the development of that proposed framework for construction projects in Padang and Pekanbaru.

131

PLAN

Compare Actual Achieving with

CONTROL

ORGANIZE

Planning

Identification Deviations/Problems

Feedback

Goals Achievement

Major Activities Identification things that have related with time and cost management

Identify: - Job Description - Activities - Resources - Time Schedule - Cost/Budget

- Schedule

-

Activities Cost/Account Qualities Document Resource Equipment

-

Check through the report: Schedule Activities Equipment Work progress Change Order/Work Accounting

a. Identify:

-

Activities Purchasing Equipment Others

b. Group in : - Categories - Department - Item - Resources

Organize: - Team Works - Suitable/ Match With Planning

Instrument/Tools: - Software - CPM - Bar Chart - S Curve

Project Report: - Daily - Weekly * - Monthly * As specified/Standard

Analyze cause of Deviations

Plan of the Corrective Actions

-

Efficiency Effectiveness On Time Within Budget Qualitative/As Specified/Standard

Sub Activities

Analyze It Implementation of Corrective Actions

Describe clearly in Figure 7.4 below

Fig. 7.3 The developed framework for construction project in Padang and Pekanbaru based on the responds of the respondents to the proposed framework which was included in the questionnaire

132

132

Identification Deviations/Problems

Analyze cause of Deviations

a. Which phase are mostly happen time and cost overrun?

Construction activities

Material stocks activities Labour

Implementation of Corrective Actions

b. What are the causes?

- The things that exceeded the estimated - Lack of equipment - Delayed activities - Weather - Poor management

Preparation activities Additional works

Plan of the Corrective Actions

- Condition out of estimated - Social condition - Location in the middle of public facility

- Changes design

- Late in delivery - Limited stocks - Transportation problem

Time Overrun: - To make sure all of the activities appropriate with the time schedule - To determine activity strategy/ work program - To discipline to the time schedule - To plan & control work time - To determine the causes of delay - To analyze the causes of delay - To coordinate the persons who involved and to reschedule the project performance - To analyze all of the work has appropriated with the time schedule - To plan the solution to overcome the delay - To do coordination about planning, scheduling and projecting progress in regular time

Cost Overrun : - Finding the alternative solutions to overcome the cost overrun - Analyzing project financial - Determining the potential activities to reduce the cost overrun risks - Controlling budget in all of activities and make the correction soon if there is a problem - Making sure the financial budget appropriate with the cost estimated - Analyzing the activity that always suffers by cost overrun - Controlling for project budget

in delivery - Limited skilled labour - Lack of labour

Fig. 7.4 The Detail of the developed framework for Construction Project in Padang and Pekanbaru 133

134 As said before, the proposed framework is developed based on the survey results (through questionnaires responds), they are; the factors that causes the time and cost overrun, the proposed management framework itself which was used to capture the respondents’ opinion about the need of the framework in managing time and cost, and consultant’s and contractor’s perspective as an input for the solutions in remedy activities to reduce time and cost overrun problems in the construction projects.

The following explanations are about the detailed of the development of the framework as illustrated in Figure 7.4 above. It will explain about several practices for the corrective actions in order to minimize the time and cost overrun causes. This explanation will combine with the findings about the practices in other countries based on previous research by several researcher and the literature review findings from books and journal in the previous chapter. The explanations are as follows: 1. Suggested solutions for construction activities a. The items that are over estimated; delayed activities; and poor management. In general the trade off analysis process in project management system step by Sunny and Kim (1992) is adopted to solve the over estimated, delayed activities and poor management problem. Alternative solutions for this problem are more to evaluate the organization management strategy by having good communication and coordination between the project team personnel like Japanese construction practices in identifying problems and solving them. Besides the organization management strategy minimizes the lost production time by increasing the productivity of labour, equipment and resource. This also helps in reducing the time-overrun risks (delayed). Those alternative solutions identified are based on the practices through the literature reviews findings and the survey results.

b. Lack of equipment. When an equipment conflict does occur during construction process such as lack of equipment and it causes delay (time overruns) for the project finishing time, this can be solved by adding a precedence constraint to show that one of the activities involved must be followed by the other, scheduling multiple shifts, and adding an estimated number of days lost (calculate and arrange the

135 time schedule of work) to the overall project duration. All these things actually increase the equipment productivity and minimize the lost production time (Clough and Sears, 2000).

c. Weather. It is important that the probable effect of adverse weather be reflected in the final project time schedule. The usual basis for making time estimate is on the assumption that construction will proceed on every working day. In similar fashion the weather can substantially affect the times required to do certain types of construction work. As a result, the first time the number of days is lost because of the weather has to be estimated and added to the overall project duration. Therefore, when this occurs during the construction process, there is still time to extend and finish the job delayed because of the weather. Another solution is to find other works that are not influenced by weather in the process and increase labour productivity to minimize the lost production time (Clough and Sears, 2000).

2. Preparation Activities In general the preparation project stages follow the trade off analysis process in project management system steps by Sunny and Kim (1992). On the other hand, the alternatives to solve several problems in preparation activities relates to improvement in methodology suggested by Serpell and Alarcon (1998) which is adapted from Ghio et. al.,(1996). They said to ensure the effectiveness of improvement activities it is necessary to use a structured yet flexible methodology that serves as a guideline for these efforts. All of these efforts have been directed to construction performance improvement through the reduction of waste and the elimination of non-value adding activities beginning from the first time the construction project was started: It begins by diagnostics of current situation of problem until the corrective actions and maintenance of changes.

Before embarking on the preparation activities it is necessary to study the project site and job site organization, the construction process and management and to inform community near the project location about the project. This alternative solution was identified from the literature review findings.

136 3.

Additional Work The steps summarized and described by Sunny and Kim (1992), is an easy method to follow for analyzing project changes. A step-by-step methodology will be helpful to understand the trade off in making the project changes. The methodology is further complemented by several other solutions identified in the survey results.

During each of step in the trade off analysis it is important to get the project team, managers, consultant and owner involved to determine their views regarding the impact of the problems and the changes. The engineer from the consultants should make the changes because one of their responsibilities is on design phase. However this still needs approval from other teams in the implementation (Patrick, 2004). Implementing the changes in a project is not as simple as changing the plan or design. The changes must be communicated effectively, understood by people affected and adapted as necessary and appropriate if they are implemented effectively the project goals will be achieved on time and on budget.

4. Material stocks activities Material control is concerned with ensuring that the materials are at the site as needed. Apart from standard procedures, managerial control of job materials is directed primarily towards achieving their timely delivery to the project site (Clough and Sears, 1993). If the material problems come during the construction process it must be issued to the project manager, supervisory and material stockiest department to solve it. Materials should be ordered early enough to ensure that they will arrive when needed, plus some lead time as a safety precaution (Schexnayder & Mayo, 2004). There are also several alternatives that could solve the material problem during construction process based on the survey.

By applying the alternative steps in the developing framework above, it could assist in reducing the time and cost overrun risks in the construction projects site. Revision or improvisation of the project time and cost estimation are commonly

137 required, if this is done, then the rest of the project plan can be adjusted to fit new plan requirements.

5. Labour It is the project labour superintendent’s responsibility to control the labour and coordinate with the field supervisor to make sure that labour work productivity is used as planned. This should be done during the project process.

7.5

Conclusion

This chapter presented the discussions of the research analysis and results. It describes the research’s essential features beginning from the literature review findings, collecting data or survey, the analysis and the expected findings and developing a framework in managing time and cost for construction projects in Padang and Pekanbaru after the causes and the current practices were identified.

The analysis in this chapter also used the consultants’ and the contractors’ perspectives about time and cost management as currently practiced in Padang and Pekanbaru. Their perspectives were used as reference in developing the framework as an alternative solution in remedy activities to reduce time and cost overrun problems in the construction projects. These perspectives supported by the practices in several countries such as in Japanese construction projects, which was reviewed from the previous research.

All the survey results were described in the developed framework. This framework will act as a guideline to show what the stages are that have to be followed in term to reduce the time and cost overrun problems. Has developed a framework it means all the objectives of this research have been achieved

CHAPTER 8

CONCLUSIONS AND RECOMMENDATIONS

8.1

Introduction

This research is concerned with the problems of time and cost overruns in Indonesia construction industry, focusing in Padang and Pekanbaru, Sumatera. It is partly a continuation of the research carried out by Kaming et. al., in 1997. The research by Kaming et. al. (1997a) focused on the causes of time and cost overrun for high-rise buildings in two large Indonesian cities, namely Jakarta and Yogyakarta. This research is more concerned with the causes of time and cost overrun of low rise projects in Padang and Pekanbaru, Sumatera such as housing, office blocks and urban roads. It is also a study on the aspects of construction cost and time management with particular attention given to current practice adopted by the large (B) and medium (M) sized project management and contracting companies in Padang and Pekanbaru as compared to the “theoretical framework” which was produced based on theory and reviews the work of several researchers and writers about it.

This research has three main objectives: (1) To identify the major causes of project time and cost overrun in low - rise projects in Padang and Pekanbaru, (2) To establish theoretical framework for a good construction time and cost management (3) To compare the time and cost management as currently practiced by construction companies in Padang and Pekanbaru against the theoretical time and cost management framework. The study formed a basis for the development of a

139 framework of time and cost management for project managers and contractors in Indonesia, particularly in Padang and Pekanbaru.

8.2

Findings and Conclusions

This research found that, the major causes of time and cost overruns for prjects in Pekabaru and Padang as perceived by the two of the respondents (contractors and consultants) are: (1) In construction activities that were caused by the things that come out of estimated, lack of equipment, delayed activities, weather and poor management, (2) in preparation activities that were caused by location condition that out of estimated, social condition and location of project in the middle of public facility, (3) In additional works that were caused by design changes, (4) In material stock activities that were caused by late in delivery, limited stocks and transportation problems in delivering the stocks, and lastly labour problems that were caused by limited skilled labour and lack of labour. The Research results also indicate that the causes of time and cost overrun between contractors and consultant are almost the same and in fact it was experienced more by contractor as project executor.

This study is also concerned with looking at the construction time and cost management practices that could be representative to illustrate the practices that could help to minimize the time and cost overrun problems by reviews the work of several researchers in several countries such as, USA, UK, Japan and Malaysia. They are all highlighted process and procedure of good time and cost management practices. The practices which reviewed will utilize as component of references for assisting in reserving a solutions for project of constructions in Indonesia especially project of constructions in Padang and Pekanbaru in the case of minimize the happening of time and cost overrun.

The documentary studies from books, dissertations and journals are also done to reviews and synthesis works of several researchers and writers about management framework for project management practices. It was utilized to propose a

140 management framework as theoretically for project management practices like the one as seen at Figure 4.6 on page 77. It including activities and tasks start from estimates phases, construction process until project have ready and reached final purpose.

Study results found that management project and construction companies in Indonesia in fact manage time and cost of project followed the practices like the one seen at frameworks as theoretically. But most of them did not place due attention to compare the actual achievement with planning and identify the deviations/ problems as a continuation from controlling activities as such many of the sub-activities are either not carried out at all or carried out casually. These include sub-activities such as check and analyze the report and also analyze the cause of deviation; plan the corrective action and how to implement it. That has contributed to the time and cost overrun of a project. This is shown by the study results on the causes of time and cost overrun in Chapter 6.

Based on the description above, through this research, the researcher had achieved the objectives of this research and also proposes a framework to minimize time and cost overrun problems in Indonesian construction projects with study areas in Padang and Pekanbaru. Although research was done specifically in Padang and Pekanbaru, these two cities could representatives to reflect time and cost overrun problems in other cities in Indonesia. It is important for every construction company in Indonesia to be aware of how to minimize time and cost overrun risks on them and be ready to face the competition with Construction Companies from other countries in the international competitive market.

8.3

Recommendation

Although this research has achieved all the objective of this research and ultimately could proposed a framework for managing factors that cause time and cost overruns, there is a factor that the researcher recommends others to conduct a survey research particularly in disseminates questionnaires. It as follows:

141 -

During the survey, in order to save time it is better to deliver the questionnaires direct to the respondents and collect them personally because most of the respondents are not interested to fill out the questionnaires form. Some respondents noted that it is better to interview rather than asking them to fill out questionnaires. The advantages of this are: not much time is needed to wait for the replies from the respondents and able to get additional information through interviews while disseminating the questionnaires direct to respondents. However, the disadvantage of this is: it is costly to conduct the survey as the researcher has to go to many places to disseminate the questionnaires directly to the respondents.

8.4

Future Study

a. Further study can be done to determine the causes of time and cost overrun at a construction project by doing study from another side of a management construction such as study on the causes of time and cost overrun from side of owner of project or client. Client or owner of project also can become one of reason that causing the happening of problems of time and cost overrun at construction projects. b. Further study can be done to determine time and cost overrun causes which because of too many formal procedures to be being passed before starting a project such as tender procedures, contract negotiation and governmental bureaucracy. c. Further study can be done to determine the causes of time and cost overrun by focused to one problem like more focus to worker/ labour productivity at small and medium - rise projects, at problems of material, facilities and equipments, unexpected and many other factors.

142

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APPENDIX A

160

LIST KONTRAKTOR PROYEK DI PEKANBARU 2002/ 2003 (GAPEKSINDO) TA 2002/ 2003 NO

NAMA

ALAMAT

KUALIFIKASI

KET.

3

4

5

KONTRAKTOR 1

2

1

PT. WASKITA KARYA

Jl. Dr. Sutomo 70, Pekanbaru

B

-

2

CV PRIMA UTAMA

Jl. Tg. Datuk, Pekanbaru

B

-

3

PT. DALEMA PRATAMA INDAH

Jl. Pasar Bawah Pekanbaru

B

-

4

BINA CIPTA REKAYASA

Jl. Sei Masang 24 Pekanbaru

B

-

5

PT. ADHI KARYA (PERSERO)

Jl. Sudirman 20B Pekanbaru

B

-

6

PT. PANCA SERAYA PERMAI

Jl. Sumatera 50 Pekanbaru

M

-

7

PT GRAHA RUPAT PERSADA

Jl. Potong Lembu Gg. Merpati Lrg. M 85, T. Pinang

B

-

8

PT. ASDP CAB. BATAM

Pelab. Penyeberangan Telaga Pungkur, Batam

-

-

9

PT DHARMA ABDI PRIMAJU

Jl. Ikhlas 1B Sukajadi Pekanbaru

M

-

161 LIST KONTRAKTOR PROYEK DI PEKANBARU 2002/ 2003 (LPJK)

TA 2002/ 2003 NO

NAMA

ALAMAT KUALIFIKASI

KET.

KONTRAKTOR 1

2

3

4

5

1

PT INTRACO PENTA

-

M

-

2

PT KURNIA SUBUR

-

M

-

3

PT PACIFIC INDO PERKASA

-

M

-

4

PT MULYA BANGUN

-

M

-

5

PT SURYA MANDIRI PRATAMA

-

M

-

6

PT BUMI PANGGITA HANDITAMA

-

M

-

7

PT SURYATINDO PERKASA

-

M

-

8

PT ARIAN PRIMATAMA

-

M

-

9

PT BANGAUMAS PERKASA

-

M

-

10 CV ASTAKORA

-

M

-

11 PT. CIPTA BANGUN ABADI

-

B

-

12 CV TIANG ARAS

-

M

-

13 PT. CITRA HOKIANA TRIUTAMA

-

B

-

14 PT SINAR ARENGKA SETIA MAJU

-

B

-

15 PT SINAR DELI PRATAMA

-

B

-

16 PT SURYA MULIA GITAGRAHA

-

B

-

17 SYAM PAYUNG SEKAKI

-

B

-

18 PT RIAU RUNGGO ABADI

-

M

-

19 PT ASTA DWI TOPANG

-

M

-

162 LIST KONSULTAN PROYEK DI PEKANBARU 2002/ 2003 (INKINDO)

TA 2002/ 2003 NO

NAMA

ALAMAT

KUALIFIKASI KET.

KONSULTAN 1

2

3

4

5

-

M

-

2 CV. ASYIDAH CONSULTANT Jl. Cemara No.59 Pekanbaru

M

-

3 CV. KARYA CONSULTAN

M

-

M

-

1 PT. YODYA KARYA

4

Jl. Melur 50, Pekanbaru

CV. KUSNAN ENGINEERING Jl. Riau 24, Pekanbaru

163 LIST KONSULTAN PROYEK DI PEKANBARU 2002/ 2003 (LPJK)

TA 2002/ 2003 NO

NAMA

ALAMAT KUALIFIKASI

KET.

KONSULTAN 1

3

4

5

PT MEGA STRUKTURINDO CONSULTANT

-

M

-

2 CV MISI KEMAJUAN RIAU

-

M

-

MASSA SARANA KOTA CONSULTANT ENGINEERING

-

M

-

4 MULTI KHARISMA KONSULTAN

-

M

-

-

M

-

6 CV TRACE ENG. CONS

-

M

-

7 BINA RIAU JAYA

-

B

-

8 PT SHRIKURNIA

-

M

-

-

M

-

10 PIRAMID RIAU PERKASA

-

B

-

11 SINAR ARENGKA SETIA MAJU

-

B

-

1

3

5

9

2

CV PERSADA NUSANTARA CONSULTANT

NUANSA CIPTA SELARAS CONSULTANT ENGINEERING

164 LIST KONTRAKTOR PROYEK DI PADANG 2002/ 2003 (GAPEKSINDO)

TA 2002/ 2003 NO

NAMA

ALAMAT

KUALIFIKASI

KET.

3

4

5

KONTRAKTOR 1

2

1

PT. SANGKURIANG

Wisma Indah I Padang

M

-

2

CV SARANA MITRA KONSTRUKSI

Padang Panjang

M

-

3

CV. KALI BRANTAS

Jl.Kali Brantas 8 Pabatim-Padang

M

-

4

CV. ANDRICO

Jl.Kali kecil 5 Muara PAdang

M

-

5

CV. GRAFOS

Jl. Jend.Sudirman 34 Padang

B

-

6

PT PEMBANGUNAN PERUMAHAN

Jl. Khatib Sulaiman 58 Padang

B

-

7

PT. RAVE KARYA ABADI

M

-

8

PT. HUTAMA KARYA

B

-

9

PT. WASKITA KARYA

-

B

-

10

PT. PERENCANA&PERANCANG PEMBANGUNAN

-

M

-

M

-

11 PT. JASA KONSTRUKSI&ARSITEK

Jl.Ahmad Yani 15 Padang

JL.Jakarta 5 Ulak karang Padang

165 LIST KONTRAKTOR PROYEK DI PADANG 2002/ 2003 (LPJK)

TA 2002/ 2003 NO

NAMA

ALAMAT KUALIFIKASI

KET.

KONTRAKTOR 1

2

3

4

5

-

M

-

CITRA KARISMA GRAHA NUSANTARA

-

B

-

3 STATIKA MITRASARANA

-

B

-

4 CV SAPTA BERSAUDARA

-

M

-

5 PT SURYATINDO PERKASA

-

M

-

6 PT BARETTAMUDA PRATAMA

-

B

-

7 PT EKSEKUTIF PUTRA UTAMA

-

M

-

1 PT KONCO KARYA 2

166

LIST KONSULTAN PROYEK DI PADANG 2002/ 2003 (INKINDO)

TA 2002/ 2003 NO

NAMA

ALAMAT

KUALIFIKAS KET. I

KONSULTAN 1

2

3

4

5

-

B

-

2 SARANA ENGINEERING

JL. Sumba Blok M. No.7 Pdg

M

-

RISKA ENGINEERING CONSULTANT

-

M

-

1 SARANA CONSULTANT PK

3

167

LIST KONSULTAN PROYEK DI PADANG 2002/ 2003 (LPJK)

TA 2002/ 2003 NO

NAMA

ALAMAT KUALIFIKASI

KET.

KONSULTAN 1

3

4

5

-

M

-

2 PT IGASAR

-

B

-

3 CV HASTA KARYA

-

M

-

-

M

-

5 PT NAN TEMBO CONSULTANT

-

M

-

6 GURANO PRIMAKARSA

-

M

-

7 PT PINCURAN TUJUH

-

M

-

8 PT ASPALINDO INTI SAKATO

-

M

-

9 PT DIMENSI ENGINEERING

-

M

-

10 PT BRATA YUDA

-

M

-

11 PT BARATA

-

M

-

-

M

-

1

4

12

2 PT AMARSIDI ENGINEERING CONSULTANT

PT KONSULINDO PRIMAKARYA ABADI

PT REKACIPTA KONSULINDO PRIMA

APPENDIX B

168

Pilot Study Form

In construction as in any business, time is money. In the construction activity by managing time and cost, one of construction organization can achieves many profits such as cost saving, good quality of work and do all of the project activity with efficiency and effectiveness. To get that it is need a guideline. It is important that members of the construction industry be aware of how the guidelines are implementations and what guidelines are good to adopted to face international competitive market. This research will identify the practices of managing time and cost in Indonesian construction projects and establish a framework as a guideline to manage it refer to others countries practices and previous research. Through this research it will know which is the practices and framework that is suitable to implement in Indonesian construction projects especially to reduce time and cost overrun problems. Because of that I need your help to fill this pilot study form to get the preliminary data to support my research. The information that I get from your company will use just for this research only if you have any question and problem with this pilot study form you can contact me at: Harisaweni Kolej Tun Fatimah Blok H21 Side A Room 201 Universiti Teknologi Malaysia Skudai Johor Bahru Telp. +60127530310/ +62 (0751) 50003/ +6281363300050 Email : [email protected] BAHAGIAN I : Informasi Umum ( Part I : General Information ) 1.1 1.2 1.3

Jenis Perusahaan : Kontraktor/ Konsultan Kind of Company : Contractor/ Consultant Klasifikasi (Classification) : B/ M/ K (Big/ Medium/ Small) Jabatan : Manager proyek (Project manager) Position Arsitek/ Perencana (Architect) Pengawas utama (Main supervisor) Pengawas lapangan (Field supervisor) Lain – lain (nyatakan)………………………. Others (Please state it)………………………

169 BAHAGIAN 2 : Informasi Umum Tentang Manajemen Part 2 : General Information about Management Bahagian berikut ini berisikan pertanyaan tentang manajemen secara umum. Untuk semua pertanyaan sila jawab berdasarkan skala 1 (satu) – 5 (lima) dimana: This part consists about management as general. For all of the questions, please answer it by make it the rank with scale 1 (one) - 5 (five) where: 1 = sangat penting (very important) 2 = penting (important) 3 = tidak begitu penting (not too important) 4 = tidak penting (not important) 5 = tidak tahu (no comment) Silakan jawab pertanyaan berikut berdasrkan skala di atas (please answer the following question based on scale above): Pertanyaan 1 2 3 4 5 1. Adanya suatu aturan managemen di perusahaan The existing of management role in company 2. Aturan tersebut berdasarkan inernational standard That role refer to international standard 3. Mempunyai satu divisi untuk mengawasi penerapan management di dalam perusahaan Have one division to supervise the implementation of the management role

BAHAGIAN 3: Manajemen waktu dan biaya Part 3: Time and Cost management Silahkan pilih satu berdasarkan pengalaman perusahaan anda: (Please choose one based on your company experience): 1. Yang mengontrol waktu selama pengerjaan proyek Who is controlling the project during the project execution? … Pengawas lapangan (field supervisor) … Koordinasi antara pengawas lapangan dengan pengawas utama (Coordination between field supervisor with main supervisor) … Koordinasi antara pengawas utama dengan konsultan/perencana (Coordination between main supervisor with consultant) … Manager proyek (Project manager) … Lainnya / Others (Nyatakan/ State it) ………………………..…………… 2. Apakah Metoda yang digunakan untuk mengatur waktu? What is the method that is used for managing time? … Kurva S (S-Curves) … Critical Path Methods (CPM) … Diagram Batang (bart Chart) … Lainnya/ Others (Nyatakan/ State it)……………………………………… 3. Silahkan pilih penyebab-penyebab terjadinya kelebihan waktu dan biaya pada table dibawah berdasarkan pengalaman perusahaan anda. Please choose the causes of time and cost overrun in table below based on the occurrences happened in your company.

170 ACTIVITY CATEGORIES (1) Materials,

THE CAUSES - Shortages of materials - Material changes - Late delivery - Damage, and poor quality manufacturing of materials - Others : -

(2) Manpower/ Labour,

- Shortages of labour - Labour skill - Nationalities of labourers

- Others : (3) Equipment,

- Equipment failure - Shortages and late delivery of the equipment - Low productivity or skill of operator of the equipment - Others : -

(4) Environment,

- Climatic conditions - Social and cultural impact - Geological problems - Others : -

(5) Changes,

- Result of omissions, errors, and change of scope by owners - Others : -

(6) Scheduling and controlling techniques

- Poor planning and scheduling practices - Lack of management expertise in project control - Poor record keeping and maintenance - Others : -

171 4. Berdasarkan pertanyaan No.3 diatas, efek yang timbul pada pelaksanaan pekerjaan adalah terjadinya penundaan pekerjaan. Silahkan urutkan solusi yang perusahaan anda lakukan untuk mengatasinya. Based on question No.4 (four) and the reason on question No.5 (five) above, the effect to the activity execution is delays. Please make it in rank what is your solution to overcome that problem. … Menambah jam kerja/lembur (Added work time/ overtime) … Menambah pekerja dengan menggunakan pekerja paruh waktu (Added labour by hired part time labour) … Menambah pekerjaan dengan menggunakan perkerja dari bagian lain telah selesai (Added work with use labour from others activity that has been finished) … Lainnya/ Others (Nyatakan/ Notify it)……………………………………… BAHAGIAN 4: Manajemen waktu Part 4: Time management Silahkan pilih satu berdasarkan pengalaman perusahaan anda: (Please choose one based on your company experience): 1

Apakah hal yang kurang diperhatikan oleh kontraktor pada manajemen waktu menurut pengamatan anda? Silahkan urutkan menurut skala kekerapan yang sering terjadi menurut pengamatan anda According to you, what is the factor in time management that gets less consideration from the contractor? Please make it in rank based on the frequency occurs according to your observation: … Menentukan strategi kegiatan/program kerja (Determining activity strategy/ work program) … Perencanaan&pengontrolan waktu kerja (Planning&controlling work time) … Menentukan penyebab terjadinya penundaan suatu pekerjaan (Determining the causes of delay) … Menganalisa penyebab terjadinya suatu penundaan pekerjaan (Analyzing the causes of delay) … Merancang solusi untuk mengatasi penundaan pekerjaan (Planning the solution to overcome the delay) … Memastikan semua pekerjaan sesuai dengan perencanaan waktu (Making sure all of the activities appropriate with the time schedule) … Menganalisa semua pekerjaan telah sesuai dengan perencanaan waktu (Analyzing all of the work has appropriated with the time schedule) … Koordinasi tentang perencanaan, jadwal, dan kemajuan proyek pada rentang waktu yang ditentukan (Do coordination about planning, scheduling and projecting progress in regular time) … Koordinasi antar personnel dalam menjadwal ulang urutan pekerjaan dilapangan (Coordinating the persons who involved, to schedule the scheduled of project field) … Menegakkan disiplin terhadap perencanaan waktu (time schedule) (Discipline to the time schedule)

172 BAHAGIAN 5 : Manajemen Biaya dan Usulan Kerangka Kerja Part 5 : Cost Management and The Proposed Fraamework (i) Silahkan urutkan berdasarkan pengalaman perusaan anda: Please make it in rank based on your company experience: 1. Apa usaha yang dilakukan untuk menghemat biaya (effort to saving cost)? What is your effort to achieve cost saving? (…..) Meningkatkan produktivitas pekerja (Increase the labour productivity) (…..) Mengurangi pekerja dan meningkatkan penggunaan alat/mesin (Reduce the labour but increase to use machine) (…..) Mengurangi kualitas material tetapi tidak mempengaruhi kualitas produk secara signifikan (Change the quality of material but it is not effect to product quality in significant) Lainnya/ Others (Nyatakan/ Notify it)…………………………………….... 2. Hal apakah yang kurang diperhatikan oleh kontraktor menurut pengamatan anda pada manajemen biaya? Silahkan urutkan menurut skala kekerapan yang terjadi menurut pengamatan anda What is the factor that gets less consideration from the contractor in cost management based on your observation? Please make it in rank based on your observation … Mengontrol keuangan proyek (Controlling for project budget) … Mengontrol keuangan pada semua aktivitas dan melakukan kegiatan perbaikan apabila ada permasalahan (Controlling budget in all of activities and make the correction soon if there’s a problem) … Menganalisa keuangan proyek (Analyzing project financial) … Memastikan keuangan proyek sesuai dengan rencana anggaran biaya (Making sure the financial budget appropriate with the cost estimated) … Menganalisa aktivitas yang selalu mengalami pembengkakan biaya (Analyzing the activity that always suffers by cost overrun) … Mencari alternative solusi untuk mengatasi pembengkakan biaya (Finding the alternative solutions to overcome the cost overrun) … Menentukan aktivitas potensial untuk mengalami pengurangan biaya (Determining the potential activities to reduce the cost overrun risks) (ii)

Silahkan jawab pertanyaan berikut ini berdasarkan pengalaman perusaan anda: Please answer the questions below based on your company experiences: 1. Siapa yang mengontrol keuangan project selama pelaksanaan proyek? Who is controlling the project budget during the project execution? (…..) Manager proyek (Project manager) (…..) Manager lapangan (Field manager) (…..) Pengawas lapangan (Field supervisor) Lainnya/ Others (Nyatakan/ Notify it)…………………………………….... 2. Apa teknik yang anda gunakan untuk mengontrol keuangan project? What is the technique that usually used to controlling the project financial? (…..) Diagram batang (Bart chart) (…..) Critical Path Method (CPM) (…..) Aliran tunai (Cash flow)

173 Lainnya/ Others (Nyatakan/ Notify it).…………………………………….... 3. Apakah perusahaan anda mempunyai suatu kerangka untuk mengatur waktu dan biaya proyek? Do you have a framework to manage time and cost in your company? ……………………………………………………………………………… ……………………………………………………………………………… ……………………………………………………………………………… 4. Bagaimana pendapat anda tentang kerangka pada lampiran, apakah cocok diterapkan di perusahaan anda? Sertakan alasannya! What do you think about the framework at the last part, is it appropriate to implement in your company? Gives the reason! ……………………………………………………………………………… ……………………………………………………………………………… ……………………………………………………………………………… 5. Jika ada bagian yang menurut anda tidak begitu penting silahkan coret dan lakukan perbaikan bagaimana harusnya pada kerangka tersebut menurut anda If there is useless things in that framework please make a mark and give your suggestion to repair it. Saya mengaku bahwa jawaban pada pilot study ini adalah benar dan bukan suatu rekayasa oleh peneliti. I acknowledge all of the answer of this pilot study is true and did not invent by the researcher

Tandatangan & Stempel Perusahaan Signature & Company Cop

(……………………………………) Terima kasih atas kerjasama anda Thank you for your co-operation

174

THE PROPOSED FRAMEWORK

YES PLAN

ORGANIZE

CONTROL

Compare Actual Achieving with Planning

Identification Deviations/Problems

Check through the Report: Schedule Activities Equipment Work progress Change Order/Work Accounting

Analyze cause of Deviations

Feedback

Goals Achievement

Major Activities Identification things that have related with time and cost overrun

-

Identify: Job Description Activities Resources Time Schedule Cost/Budget

- Schedule

-

Activities Cost/Account Qualities Document Resource Equipment

-

a. Identify:

-

Activities Purchasing Equipment Others

b. Group in : - Categories - Department - Item - Resources

- Team Works - Suitable/ Match With Planning

Instrument/Tools: - Software - CPM - Bar Chart - S Curve

Project Report: - Daily - Weekly * - Monthly * As specified/Standard

Planning of Corrective Actions

Analyze It

- Identification Problem

- Some Correction

Implementation of Corrective Actions

-

Efficiency Effectiveness On Time Within Budget Qualitative/As Specified/Standard

Sub Activities

APPENDIX C

175

Questionnaire Form Developing Framework for Managing Time and Cost to Increase Quality Works in Indonesian Construction Projects In construction as in any business, time is money. In the construction activity by managing time one of construction organization can achieves many profits such as cost saving, good quality of work and do all of the project activity with efficiency and effectiveness. To get that it is need a guideline. It is important that members of the construction industry be aware of how the guidelines are implementations and what guidelines are good to adopted to face international competitive market. This research will identify the practices of managing time and cost in Indonesian construction projects and establish a framework to manage it refer to others countries best practices and previous research. Through this research it will know which is the best practices and framework and suitable to implement in Indonesian construction projects especially to reduce time and cost management problems. Because of that I need your help to fill this questionnaire to get the data for my research. The information that I get from your company will use just for this research only if you have any question and problem with this questionnaire you can contact me at: Harisaweni Kolej Tun Fatimah Blok H21 Side A Room 201 Universiti Teknologi Malaysia Skudai Johor Bahru Telp. +60127530310/ +62 (0751) 50003/ +6281363300050 Email : [email protected]

BAHAGIAN I : Informasi Umum ( Part I : General Information ) 1.1 1.2 1.3

Jenis Perusahaan : Kontraktor Kind of Company : Contractor Klasifikasi (Classification) : B/ M/ K (Big/ Medium/ Small) Jabatan : ‫ ٱ‬Manager proyek (Project manager) Position ‫ ٱ‬Arsitek/ Perencana (Architect) ‫ ٱ‬Pengawas utama (Main supervisor) ‫ ٱ‬Pengawas lapangan (Field supervisor) ‫ ٱ‬Lain – lain (nyatakan)………………………. Others (Please state it)………………………

176 BAHAGIAN 2 : Informasi Umum Tentang Manajemen Part 2 : General Information about Management Bahagian berikut ini berisikan pertanyaan tentang manajemen secara umum. Untuk semua pertanyaan sila jawab berdasarkan skala 1 (satu) – 5 (lima) dimana: This part consists about management as general. For all of the questions, please answer it by make it the rank with scale 1 (one) - 5 (five) where: 1 = sangat penting (very important) 2 = penting (important) 3 = tidak begitu penting (not too important) 4 = tidak penting (not important) 5 = tidak tahu (no comment) Silakan jawab pertanyaan berikut berdasrkan skala di atas (please answer the following question based on scale above): Pertanyaan 1 2 3 4 5 1. Adanya suatu aturan managemen di perusahaan The existing of management role in company 2. Aturan tersebut berdasarkan inernational standard That role refer to international standard 3. Mempunyai satu divisi untuk mengawasi penerapan management di dalam perusahaan Have one division to supervise the implementation of the management role

BAHAGIAN 3: Manajemen waktu dan biaya Part 3: Time and Cost management Silahkan pilih satu berdasarkan pengalaman perusahaan anda: (Please choose one based on your company experience): 1. Yang mengontrol waktu selama pengerjaan proyek Who is controlling the project during the project execution? … Pengawas lapangan (field supervisor) … Koordinasi antara pengawas lapangan dengan pengawas utama (Coordination between field supervisor with main supervisor) … Koordinasi antara pengawas utama dengan konsultan/perencana (Coordination between main supervisor with consultant) … Manager proyek (Project manager) … Lainnya / Others (Nyatakan/ State it) ………………………..…………… 2. Apakah Metoda yang digunakan untuk mengatur waktu? What is the method that is used for managingtime? … Kurva S (S-Curves) … Critical Path Methods (CPM) … Diagram Batang (bart Chart) … Lainnya/ Others (Nyatakan/ State it)……………………………………… 3. Pada aktivitas manakah permasalahan waktu (juga biaya) sering timbul dan memberikan pengaruh besar terhadap perencaan awal waktu proyek? (Tolong diurutkan) In what activity the time problems (also cost) usually come out and give big influence to the time estimated? Please make it in rank based on frequency occur in your company (Please give it rank, 1-5)

177 …

Aktivitas sekitar lingkungan lokasi proyek (environment activities around project location) … Aktivitas penyedian peralatan dan managementnya (Equipment and management activity) … Pada aktivitas material (In materials activity) … Penyediaan tenaga kerja (Labour/ manpower activity) … Pada activitas perubahan – perubahan (The changes activity) … Lainnya/ Others (Nyatakan/ State it)……………………………………… 4. Berdasarkan pertanyaan No.3, silahkan anda nyatakan alasannya: Based on question No.3 (three), please notify the reason: … Aktivitas sekitar lingkungan lokasi proyek (environment activities around project location) …… Kondisi proyek di luar perencanaan (Site condition out of plan) …… Kondisi Sosial (Social condition) …… Lokasi proyek berada ditengah – tengah fasilitas umum (Location in the middle of public facility) … Aktivitas penyedian peralatan dan managemen-nya (Equipment and management activity) …… Pelaksanaan melebihi apa yang telah diperkirakan (The things over estimated) …… Kekurangan peralatan (Lack of equipment) …… Terjadinya penundaan kgiatan (Delayed activities) …… Cuaca (Weather) …… Managemen yang lemah (Poor management) … Pada aktivitas material (In materials activity) …… Keterlambatan dalam pengiriman (Late in delivery) ……Stok terbatas (Limited stocks) …… Permasalahan pengangkutan dalam pengiriman (Transportation problem in delivery) … Penyediaan tenaga kerja (Labour/ manpower activity) …… Keterbatasan buruh ahli (Limited skilled labour) …… Kekurangan buruh (Lack of labour) … Pada activitas perubahan – perubahan (The changes activity) …… Perubahan perencanaan/ desain (Design changes) BAHAGIAN 4: Manajemen waktu Part 3: Time management Silahkan pilih satu berdasarkan pengalaman perusahaan anda: (Please choose one based on your company experience): 1

Apakah hal yang kurang diperhatikan oleh kontraktor pada manajemen waktu menurut pengamatan anda? Silahkan urutkan menurut skala kekerapan yang sering terjadi menurut pengamatan anda According to you, what is the factor in time management that gets less consideration from the contractor? Please make it in rank based on the frequency occurs according to your observation: … Menentukan strategi kegiatan/program kerja (Determining activity strategy/ work program) … Perencanaan&pengontrolan waktu kerja (Planning&controlling work time)

178 … … … … … … … … 2

Menentukan penyebab terjadinya penundaan suatu pekerjaan (Determining the causes of delay) Menganalisa penyebab terjadinya suatu penundaan pekerjaan (Analyzing the causes of delay) Merancang solusi untuk mengatasi penundaan pekerjaan (Planning the solution to overcome the delay) Memastikan semua pekerjaan sesuai dengan perencanaan waktu (Making sure all of the activities appropriate with the time schedule) Menganalisa semua pekerjaan telah sesuai dengan perencanaan waktu (Analyzing all of the work has appropriated with the time schedule) Koordinasi tentang perencanaan, jadwal, dan kemajuan proyek pada rentang waktu yang ditentukan (Do coordination about planning, scheduling and projecting progress in regular time) Koordinasi antar personnel dalam menjadwal ulang urutan pekerjaan dilapangan (Coordinating the persons who involved, to schedule the scheduled of project field) Menegakkan disiplin terhadap perencanaan waktu (time schedule) (Discipline to the time schedule)

Berdasarkan pertanyaan No.4 (Bahagian 3) dan pertanyaan No.1 (Bahagian 4) diatas, efek yang timbul pada pelaksanaan pekerjaan adalah terjadinya penundaan pekerjaan. Silahkan urutkan solusi yang perusahaan anda lakukan untuk mengatasinya. Based on question No.4 (in part 3) and question No.1 (in part 4) above, the effect to the activity execution is delays. Please make it in rank what is your solution to overcome that problem. a. Menambah jam kerja/lembur (Added work time/ overtime) b. Menambah pekerja dengan menggunakan pekerja paruh waktu (Added labour by hired part time labour) c. Menambah pekerjaan dengan menggunakan perkerja dari bagian lain telah selesai (Added work with use labour from others activity that has been finished) d. Lainnya/ Others (Nyatakan/ Notify it)………………………………………

BAHAGIAN 5 : Manajemen Biaya dan Usulan Kerangka Kerja Part 5 : Cost Management and The Proposed Framework (i)

Silahkan urutkan berdasarkan pengalaman perusaan anda: Please make it in rank based on your company experience: 1. Apa usaha yang dilakukan untuk menghemat biaya (effort to saving cost)? What is your effort to achieve cost saving? (…..) Meningkatkan produktivitas pekerja (Increase the labour productivity) (…..) Mengurangi pekerja dan meningkatkan penggunaan alat/mesin (Reduce the labour but increase to use machine) (…..) Mengurangi kualitas material tetapi tidak mempengaruhi kualitas produk secara signifikan (Change the quality of material but it is not effect to product quality in significant) Lainnya/ Others (Nyatakan/ Notify it)……………………………………....

179 2. Hal apakah yang kurang diperhatikan oleh kontraktor menurut pengamatan anda pada manajemen biaya? Silahkan urutkan menurut skala kekerapan yang terjadi menurut pengamatan anda What is the factor that gets less consideration from the contractor in cost management based on your observation? Please make it in rank based on your observation … Mengontrol keuangan proyek (Controlling for project budget) … Mengontrol keuangan pada semua aktivitas dan melakukan kegiatan perbaikan apabila ada permasalahan (Controlling budget in all of activities and make the correction soon if there’s a problem) … Menganalisa keuangan proyek (Analyzing project financial) … Memastikan keuangan proyek sesuai dengan rencana anggaran biaya (Making sure the financial budget appropriate with the cost estimated) … Menganalisa aktivitas yang selalu mengalami pembengkakan biaya (Analyzing the activity that always suffers by cost overrun) … Mencari alternative solusi untuk mengatasi pembengkakan biaya (Finding the alternative solutions to overcome the cost overrun) … Menentukan aktivitas potensial untuk mengalami pengurangan biaya (Determining the potential activities to reduce the cost overrun risks) (ii)

Silahkan jawab pertanyaan berikut ini berdasarkan pengalaman perusaan anda: Please answer the questions below based on your company experiences: 1. Siapa yang mengontrol keuangan project selama pelaksanaan proyek? Who is controlling the project budget during the project execution? (…..) Manager proyek (Project manager) (…..) Manager lapangan (Field manager) (…..) Pengawas lapangan (Field supervisor) Lainnya/ Others (Nyatakan/ Notify it)…………………………………….... 2. Apa teknik yang anda gunakan untuk mengontrol keuangan project? What is the technique that usually used to controlling the project financial? (…..) Diagram batang (Bart chart) (…..) Critical Path Method (CPM) (…..) Aliran tunai (Cash flow) Lainnya/ Others (Nyatakan/ Notify it).…………………………………….... 3. Apakah perusahaan anda mempunyai suatu kerangka untuk mengatur waktu dan biaya proyek? Do you have a framework to manage time and cost in your company? ……………………………………………………………………………… ……………………………………………………………………………… ……………………………………………………………………………… 4. Bagaimana pendapat anda tentang kerangka pada lampiran, apakah cocok diterapkan di perusahaan anda? Sertakan alasannya! What do you think about the framework at the last part, is it appropriate to implement in your company? Gives the reason! ……………………………………………………………………………… ……………………………………………………………………………… ……………………………………………………………………………… ………………………………………………………………………………

180 5. Jika ada bagian yang menurut anda tidak begitu penting silahkan coret dan lakukan perbaikan bagaimana harusnya pada kerangka tersebut menurut anda If there is useless things in that framework please make a mark and gives your suggestion to repair it. Saya mengaku bahwa jawaban pada questionnaire ini adalah benar dan bukan suatu rekayasa oleh peneliti. I acknowledge all of the answer of this questionnaire is true and did not invent by the researcher

Tandatangan & Stempel Perusahaan Signature & Company Cop

(……………………………………) Terima kasih atas kerjasama anda Thank you for your co-operation

181

THE PROPOSED FRAMEWORK

YES PLAN

ORGANIZE

CONTROL

Identify: Job Description Activities Resources Time Schedule Cost/Budget

- Schedule

Compare Actual Achieving with Planning

Identification Deviations/Problems

Feedback

Goals Achievement

Major Activities Identification Things That Have Related With Time & Cost

-

-

Activities Cost/Account Qualities Document Resource Equipment

-

Check through the Report: Schedule Activities Equipment Work progress Change Order/Work Accounting

a. Identify:

-

Activities Purchasing Equipment Others

b. Group in : - Categories - Department - Item - Resources

- Team Works - Suitable/ Match With Planning

Instrument/Tools: - Software - CPM - Bar Chart - S Curve

Project Report: - Daily - Weekly * - Monthly * As specified/Standard

Analyze cause of Deviations

Planning of Corrective Actions

Analyze It

- Identification Problem

- Some Correction

Implementation of Corrective Actions

-

Efficiency Effectiveness On Time Within Budget Qualitative/As Specified/Standard

Sub Activities

182

Questionnaire Form Developing Framework for Managing Time and Cost to Increase Quality Works in Indonesian Construction Projects In construction as in any business, time is money. In the construction activity by managing time one of construction organization can achieves many profits such as cost saving, good quality of work and do all of the project activity with efficiency and effectiveness. To get that it is need a guideline. It is important that members of the construction industry be aware of how the guidelines are implementations and what guidelines are good to adopted to face international competitive market. This research will identify the practices of managing time and cost in Indonesian construction projects and establish a framework to manage it refer to others countries best practices and previous research. Through this research it will know which is the best practices and framework and suitable to implement in Indonesian construction projects especially to reduce time and cost management problems. Because of that I need your help to fill this questionnaire to get the data for my research. The information that I get from your company will use just for this research only if you have any question and problem with this questionnaire you can contact me at: Harisaweni Kolej Tun Fatimah Blok H21 Side A Room 201 Universiti Teknologi Malaysia Skudai Johor Bahru Telp. +60127530310/ +62 (0751) 50003/ +6281363300050 Email : [email protected]

BAHAGIAN I : Informasi Umum ( Part I : General Information ) 1.1 1.2 1.3

Jenis Perusahaan : Konsultan Kind of Company : Consultant Klasifikasi (Classification) : B/ M/ K (Big/ Medium/ Small) Jabatan : ‫ ٱ‬Manager proyek (Project manager) Position ‫ ٱ‬Arsitek/ Perencana (Architect) ‫ ٱ‬Pengawas utama (Main supervisor) ‫ ٱ‬Pengawas lapangan (Field supervisor) ‫ ٱ‬Lain – lain (nyatakan)………………………. Others (Please state it)………………………

183 BAHAGIAN 2 : Informasi Umum Tentang Manajemen Part 2 : General Information about Management Bahagian berikut ini berisikan pertanyaan tentang manajemen secara umum. Untuk semua pertanyaan sila jawab berdasarkan skala 1 (satu) – 5 (lima) dimana: This part consists about management as general. For all of the questions, please answer it by make it the rank with scale 1 (one) - 5 (five) where: 1 = sangat penting (very important) 2 = penting (important) 3 = tidak begitu penting (not too important) 4 = tidak penting (not important) 5 = tidak tahu (no comment) Silakan jawab pertanyaan berikut berdasrkan skala di atas (please answer the following question based on scale above): Pertanyaan 1. Adanya suatu aturan managemen di perusahaan The existing of management role in company 2. Aturan tersebut berdasarkan inernational standard

1

2

3

4

5

That role refer to international standard 3. Mempunyai satu divisi untuk mengawasi penerapan management di dalam perusahaan Have one division to supervise the implementation of the management role

BAHAGIAN 3: Manajemen waktu Part 3: Time management Silahkan pilih satu berdasarkan pengalaman perusahaan anda: (Please choose one based on your company experience): 1. Yang mengontrol waktu selama pengerjaan proyek Who is controlling the project during the project execution? … Pengawas lapangan (field supervisor) … Koordinasi antara pengawas lapangan dengan pengawas utama (Coordination between field supervisor with main supervisor) … Koordinasi antara pengawas utama dengan konsultan/perencana (Coordination between main supervisor with consultant) … Manager proyek (Project manager) … Lainnya / Others (Nyatakan/ State it) ………………………..…………… 2. Apakah Metoda yang digunakan untuk mengatur waktu? What is the method that is used for managing cost? … Kurva S (S-Curves) … Critical Path Methods (CPM) … Diagram Batang (bart Chart) … Lainnya/ Others (Nyatakan/ State it)……………………………………… 3. Pada aktivitas manakah permasalahan waktu (juga biaya) sering timbul dan memberikan pengaruh besar terhadap perencaan awal waktu (also cost) proyek? (Tolong diurutkan) In what activity the time problems usually come out and give big influence to the time estimated? (Make it in rank)

184 …

Aktivitas sekitar lingkungan lokasi proyek (environment activities around project location) … Aktivitas penyedian peralatan dan managemen-nya (Equipment and management activity) … Pada aktivitas material (In materials activity) … Penyediaan tenaga kerja (Labour/ manpower activity) … Pada activitas perubahan – perubahan (The changes activity) … Lainnya/ Others (Nyatakan/ State it)……………………………………… 4. Berdasarkan pernyataan No.3, silahkan anda nyatakan alasannya : Based on question No.3 (three), please notify the reason: … Aktivitas sekitar lingkungan lokasi proyek (environment activities around project location) …… Kondisi proyek di luar perencanaan (Site condition out of plan) …… Kondisi Sosial (Social condition) …… Lokasi proyek berada ditengah – tengah fasilitas umum (Location in the middle of public facility) … Aktivitas penyedian peralatan dan managementnya (Equipment and management activity) …… Pelaksanaan melebihi apa yang telah diperkirakan (The things over estimated) …… Kekurangan peralatan (Lack of equipment) …… Terjadinya penundaan kgiatan (Delayed activities) …… Cuaca (Weather) …… Managemen yang lemah (Poor management) … Pada aktivitas material (In materials activity) …… Keterlambatan dalam pengiriman (Late in delivery) ……Stok terbatas (Limited stocks) …… Permasalahan pengangkutan dalam pengiriman (Transportation problem in delivery) … Penyediaan tenaga kerja (Labour/ manpower activity) …… Keterbatasan buruh ahli (Limited skilled labour) …… Kekurangan buruh (Lack of labour) … Pada activitas perubahan – perubahan (The changes activity) …… Perubahan perencanaan/ desain (Design changes) BAHAGIAN 4: Manajemen waktu Part 3: Time management Silahkan pilih satu berdasarkan pengalaman perusahaan anda: (Please choose one based on your company experience): 1

Apakah hal yang kurang diperhatikan oleh kontraktor pada manajemen waktu menurut pengamatan anda? Silahkan urutkan menurut skala kekerapan yang sering terjadi menurut pengamatan anda According to you, what is the factor in time management that gets less consideration from the contractor? Please make it in rank based on the frequency occurs according to your observation: … Menentukan strategi kegiatan/program kerja (Determining activity strategy/ work program) … Perencanaan&pengontrolan waktu kerja (Planning&controlling work time)

185 …

Menentukan penyebab terjadinya penundaan suatu pekerjaan (Determining the causes of delay) … Menganalisa penyebab terjadinya suatu penundaan pekerjaan (Analyzing the causes of delay) … Merancang solusi untuk mengatasi penundaan pekerjaan (Planning the solution to overcome the delay) … Memastikan semua pekerjaan sesuai dengan perencanaan waktu (Making sure all of the activities appropriate with the time schedule) … Menganalisa semua pekerjaan telah sesuai dengan perencanaan waktu (Analyzing all of the work has appropriated with the time schedule) … Koordinasi tentang perencanaan, jadwal, dan kemajuan proyek pada rentang waktu yang ditentukan (Do coordination about planning, scheduling and projecting progress in regular time) … Koordinasi antar personnel dalam menjadwal ulang urutan pekerjaan dilapangan (Coordinating the persons who involved, to schedule the scheduled of project field) … Menegakkan disiplin terhadap perencanaan waktu (time schedule) (Discipline to the time schedule) 2. Berdasarkan pertanyaan No.4 (Bahagian 3) dan pertanyaan No.1 (Bahagian 4) diatas, efek yang timbul pada pelaksanaan pekerjaan adalah terjadinya penundaan pekerjaan. Silahkan urutkan solusi yang perusahaan anda lakukan untuk mengatasinya. Based on question No.4 (in part 3) and question No.1 (in part 4) above, the effect to the activity execution is delays. Please make it in rank what is your solution to overcome that problem. a. Menambah jam kerja/lembur (Added work time/ overtime) b. Menambah pekerja dengan menggunakan pekerja paruh waktu (Added labour by hired part time labour) c. Menambah pekerjaan dengan menggunakan perkerja dari bagian lain telah selesai (Added work with use labour from others activity that has been finished) d. Lainnya/ Others (Nyatakan/ Notify it)……………………………………… BAHAGIAN 5 : Manajemen Biaya dan Usulan Kerangka Kerja Part 5 : Cost Management and The Proposed Framework (i) 1.

Silahkan urutkan berdasarkan pengalaman perusaan anda: Please make it in rank based on your company experience: Hal apakah yang kurang diperhatikan oleh kontraktor menurut pengamatan anda pada manajemen biaya? Silahkan urutkan menurut skala kekerapan yang terjadi menurut pengamatan anda What is the factor that gets less consideration from the contractor in cost management based on your observation? Please make it in rank based on your observation … Mengontrol keuangan proyek (Controlling for project budget) … Mengontrol keuangan pada semua aktivitas dan melakukan kegiatan perbaikan apabila ada permasalahan (Controlling budget in all of activities and make the correction soon if there’s a problem) … Menganalisa keuangan proyek (Analyzing project financial)

186 … Memastikan keuangan proyek sesuai dengan rencana anggaran biaya (Making sure the financial budget appropriate with the cost estimated) … Menganalisa aktivitas yang selalu mengalami pembengkakan biaya (Analyzing the activity that always suffers by cost overrun) … Mencari alternative solusi untuk mengatasi pembengkakan biaya (Finding the alternative solutions to overcome the cost overrun) … Menentukan aktivitas potensial untuk pengurangan kelebihan biaya (Determining the potential activities to reduce the cost overrun risks) (ii) 1.

2.

3.

4.

5.

Silahkan jawab pertanyaan berikut ini berdasarkan pengalaman perusahaan anda: Please answer the questions below based on your company experiences: Siapa yang mengontrol keuangan project selama pelaksanaan proyek? Who is controlling the project budget during the project execution? (…..) Manager proyek (Project manager) (…..) Manager lapangan (Field manager) (…..) Pengawas lapangan (Field supervisor) Lainnya/ Others (Nyatakan/ Notify it)…………………………………….... Apa teknik yang anda gunakan untuk mengontrol keuangan project? What is the technique that usually used to controlling the project financial? (…..) Diagram batang (Bart chart) (…..) Critical Path Method (CPM) (…..) Aliran tunai (Cash flow) Lainnya/ Others (Nyatakan/ Notify it).…………………………………….... Apakah perusahaan anda mempunyai suatu kerangka untuk mengatur waktu dan biaya proyek? Do you have a framework to manage time and cost in your company? ………………………………………………………………………………… ………………………………………………………………………………… ………………………………………………………………………………... Bagaimana pendapat anda tentang kerangka pada lampiran, apakah cocok diterapkan di perusahaan anda dan sertakan alasannya! What is your opinion about framework at the last part is it appropriate to implement in your company? Gives your reason! ………………………………………………………………………………… ………………………………………………………………………………… ………………………………………………………………………………… ……………………………………………………………………… Jika ada bagian yang menurut anda tidak begitu penting untuk diterapkan oleh kontraktor silahkan coret dan lakukan perbaikan bagaimana harusnya pada kerangka tersebut menurut anda If there is useless things in that framework please make a mark and give your suggestion to repair it.

187

Saya mengaku bahwa jawaban pada questionnaire ini adalah benar dan bukan suatu rekayasa oleh peneliti. I acknowledge all of the answer of this questionnaire is true and did not invent by the researcher. Tanda tangan & Stempel Perusahaan Signature & Company Cop

(……………………………….)

Terima kasih atas kerjasama anda Thank you for your cooperation

188 THE PROPOSED FRAMEWORK

YES PLAN

ORGANIZE

CONTROL

Identify: Job Description Activities Resources Time Schedule Cost/Budget

- Schedule

Compare Actual Achieving with Planning

Identification Deviations/Problems

Feedback

Goals Achievement

Major Activities Identification Things That Have Related With Time & Cost

-

-

Activities Cost/Account Qualities Document Resource Equipment

-

Check through the Report: Schedule Activities Equipment Work progress Change Order/Work Accounting

a. Identify:

-

Activities Purchasing Equipment Others

b. Group in : - Categories - Department - Item - Resources

- Team Works - Suitable/ Match With Planning

Instrument/Tools: - Software - CPM - Bar Chart - S Curve

Project Report: - Daily - Weekly * - Monthly * As specified/Standard

Analyze cause of Deviations

Planning of Corrective Actions

Analyze It

- Identification Problem

- Some Correction

Implementation of Corrective Actions

-

Efficiency Effectiveness On Time Within Budget Qualitative/As Specified/Standard

Sub Activities

APPENDIX D

Mean values for major causes time and cost overruns according to contractors 5 4 3 2 1 5 4 3 2 1 5 3 5 10 3 26 25 12 15 20 3 5 5 10 4 2 26 25 20 30 8 2 4 4 9 9 0 26 20 16 27 18 0 3 3 0 1 19 26 15 12 0 2 19 9 11 2 2 2 26 45 44 6 4 2 26 26 26 26 26 Mean values for the each cause Environment Site condition out of plan Social condition Location in the middle of public facilities Equipment an Management The things that over estimated Lack of equipment Delayed activities Weather Poor management Material Stocks Activities Late in deliveries Limited stocks Transportation problems in deliveries Manpower/ Labour Limited skilled labour Lack of labour Changes Design changes

2.8846 2 1 1

4.3269 2.1635 2.1635

2 1 2 1 1

4.6703 2.3352 4.6703 2.3352 2.3352

3 2 2

4.0555 2.6703 2.6703

2 1

2.4615 1.2308

5

3.8846

3.2692

3.1154

1.8462

3.8846

26

Total 75 85 81 48 101

2.8846 3.2696 3.1154 1.8462 3.8846

Mean values for major causes time and cost overruns according to consultants 6 5 4 3 2 1 6 5 4 3 2 5 4 2 1 0 1 12 30 20 8 3 0 2 2 2 2 3 5 12 12 10 8 6 6 1 3 1 3 4 1 12 6 15 4 9 8 2 1 2 4 2 3 12 12 5 8 12 4 2 2 5 2 3 2 12 12 10 20 6 6 12 12 12 12 12 12 Mean values for each cause Environment Site condition out of plan Social condition Location in the middle of public facilities Equipment and Management The things that over estimated Lack of equipment Delayed activities Weather Poor management Material Stocks Activities Late in deliveries Limited stocks Transportation problems in deliveries Manpower/ Labour Limited skilled labour Lack of labour Changes Design changes

2.0667 1 1 -

2.0677 2.0667

1 1 1 1

1.3429 1.3429 1.3429 1.3429

1 1 1

1.1622 1.1622 1.1622

1

1.3750

2

1.2727

1.3429

1.1622

1.3750

1.2727

12

1 1 5 1 3 2

Total 62 47 43 44 56

2.0667 1.3429 1.1622 1.3750 1.2727

Mean values for time management activities that get less attentionby contractor according to consultants 10 9 8 7 6 5 4 3 2 1 1 2 3 4 5 8 1 1 0 0 1 0 0 1 0 12 80 9 8 0 0 0 3 3 2 2 0 1 0 0 1 12 0 27 24 14 12 1 0 2 1 1 2 2 1 0 2 12 10 0 16 7 6 0 0 0 4 2 1 1 1 3 0 12 0 0 0 28 12 0 0 1 0 3 1 2 2 2 1 12 0 0 8 0 18 0 1 0 1 2 4 2 2 0 0 12 0 9 0 7 12 1 0 1 1 0 2 4 1 0 2 12 10 0 8 7 0 1 2 1 0 2 0 0 3 3 0 12 10 18 8 0 12 1 0 3 0 0 1 0 1 3 3 12 10 0 24 0 0 0 5 0 3 0 0 0 1 0 3 12 0 45 0 21 0 12 12 12 12 12 12 12 12 12 12

6 5 0 10 5 5 20 10 0 5 0

Mean values for cost management activities that get less attention by contractor according to consultants 7 6 5 4 3 2 1 1 2 3 4 5 6 7 Total 4 1 0 1 0 3 3 12 28 6 0 4 0 6 3 47 3.9167 2 3 2 1 1 1 2 12 14 18 10 4 3 2 2 53 4.4167 0 3 3 2 2 2 0 12 0 18 15 8 6 4 0 51 4.2500 1 1 1 4 3 0 2 12 7 6 5 16 9 0 2 45 3.7500 2 1 2 0 5 1 1 12 14 6 10 0 15 2 1 48 4.0000 0 2 2 3 0 4 1 12 0 12 10 12 0 8 1 43 3.5833 3 1 2 1 1 1 3 12 21 6 10 4 3 2 3 49 4.0833 12 12 12 12 12 12 12

7 0 4 8 4 8 8 16 0 0 0

8 0 0 3 3 6 6 3 9 3 3

9 2 0 0 6 4 0 0 6 6 0

10 0 1 2 0 1 0 2 0 3 3

Total 104 82 62 58 50 62 56 63 51 72

8.6667 6.8333 5.1667 4.8333 4.1667 5.1667 4.6667 5.2500 4.2500 6.0000

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THE FRAMEWORK FOR MINIMIZING CONSTRUCTION TIME AND

THE FRAMEWORK FOR MINIMIZING CONSTRUCTION TIME AND COST OVERRUNS IN PADANG AND PEKANBARU, INDONESIA HARISAWENI A thesis submitted in fulfilment of t...

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