Hanoi and Hochiminh city are two special municipality of Vietnam with a rapid economic development and attracted too many immigrants from rural areas. So, the necessary investment for new infrastructure and expand the territory of the city is necessary, to meet for population growth is to widen the area of urban construction.
However, the implementation of new residential development projects in Ho Chi Minh City areas is still slow and not uniform. The nature of this project is done with large capital, deployed for a long time with many elements involved with the impact of regulations and policies exist in many indispensable element of risk. A proven fact that most projects are late on schedule, and costs exceed the total initial investment and difficulties in connection with the infrastructure system of the area outside the project. Besides the land policy issues as well as land clearance is the main risks affecting the project objectives.
Mr. Nguyen Hoang Anh Chuong made a research to study the risks arising from the new residential development projects in Ho Chi Minh City specifically in small and medium scale project. His case study focused on the Phuoc Kien residential development project invested by the Saigon South Development Corporation (Sadeco). The objective of his study is to identify and find out the risks or uncertainties occur in each stage of implementing processes of a new residential development project. Then assess and analysis any impact factors, and propose to treat a risk to enhance the efficiency of project and ensure project objective.
In order to achieve his goal, the following objective needs to be completed:
1. To identify and find out criterial factors affecting the project time and cost in new residential development project.
2. Propose strategies to effectively eliminate or mitigate major risks.
3. Propose solutions that identify and prevent risks in similar projects
Conclusions
The case in this report describes a practical implementation in the early stages of urban development policy of Vietnam in general and Ho Chi Minh City in particular, and obviously has revealed high-risk factors can seriously affect the success of the project. Actually, Vietnam present has enormous efforts to overcome policy and reduce the cumbersome procedures in investment, but investors still face a lot of problems (risks) when implement project.
The report may not offer the most complete of risk factors in various stages of project implementation, but also clear description of the risk factors may affect the efficiency projects that most projects in Vietnam are all experiencing the problem of clearance, delay progress and project costs incurred up compared to initial estimates. The author proposed appropriate strategies to mitigate these major risks as shown in the table below.
Recommendations
In scope of this report, the author has just emphasized major risks affecting on Phuoc Kien project objective. The findings of this study are expected to contribute to identify major risks and more effective risk management process in project. To achieve this objective, this study proposes some recommendation:
1. Survey, evaluation and recommendations appropriate solution for compensation and ground clearance, to ensure the interests of the parties to minimize delays in this stage. And to set up land use planning consistent with the project requirement in each stage and progress of the mobilization of capital investment
2. Researched the plan for construction planning to ensure compliance with long-term development strategy, taking factors fluctuations in policy and plan for appropriate preventive.
3. To train or mobilize experts with full experience in the concerned fields, such as planning, design, construction techniques, financial ... to set up competence project team for the best implementation.
4. Perform measurements, impact of risk to the investment effectiveness of the project, potential for success of the project when the impact of risk. As analyzed above, evaluating economic efficiency-financing of the project should focus review.
5. Conducting activities to control and limit the adverse impact of risks to ensure the effective investment of project. Risk control plan should be implemented in conjunction with several measures from the active standby unreasonable resources to deal with the risks, actively avoid and share the risk, promptly response when risks occur.
6. Establishing early warning systems and handling risk.
7. Develop a plan to mobilize capital to meet the progress of the project.
8. Risk management should be considered as an important part of project management.
9. Risks management need to be considered into related regulation. Construction Law or Government Decrees.
10. Especially focus on the initiation stage: Investment report, Feasibility Study, Project planning and Detail Design.
11. Proposes in specific institution for risk management in terms of time, cost, resource, regulation, guideline, process and content by the government. For example, the cost estimated for risk management could be considered as essential part among the total investment cost of the project.
12. The Investors should pay appropriate attention to risk management along with project planning while those institution and policies do not approve.
13. In entire project life cycle need to identify sufficient risk of external and internal environment of the project in accordance with reality. Risks occur in each stage of project are also very different but they have the relation and interaction. Each environment have several potential risks, the risks can affect each other both inside and outside the project, and risks could change over time. Therefore the identification of risk should be conducted, update regularly. Especially in the preparation stage for the investment decision must fully recognize the risks can occur throughout the project life cycle.
Besides, investors should accept the extra costs to make good the following rules(10 Golden rules of Project Risk Management, ProjectSmart.com.uk):
1. Make Risk Management Part of Your Project
2. Identify Risks Early in Your Project
3. Communicate About Risks
4. Consider Both Threats and Opportunities
5. Clarify Ownership Issues
6. Prioritise Risks
7. Analyse Risks
8. Plan and Implement Risk Responses
9. Register Project Risks
10. Track Risks and Associated Tasks
His thesis abstract is copied and posted.
ABSTRACT
The construction industry is one of the most dynamic, risky and challenging businesses because of their implementing time is very long with huge investment capital and various participating components. However, the industry has a very poor reputation for managing risk, with many major projects failing to meet deadlines and cost targets.
Risk is inherent in construction projects and managing risks in construction projects has been recognised as a very important management process in order to achieve the project objectives in terms of time, cost, quality, safety and environmental sustainability. Therefore, project risks must be properly analyzed and mitigated to ensure the success of any project.
The purpose of risk management is to identify potential problems before they occur so that risk-handling activities may be planned and invoked as needed across the life of the product or project to mitigate adverse impacts on achieving objectives. To effectively manage the risk in construction project, it is necessary for organizations to identify important risk, then provide a suitable tool to measure their effects in each stage of project life cycle and suggest the effective solution methods as minimised, shared, transferred, avoided or accepted but can not be ignored
