The role of project management practices in avoiding time and cost overruns

The construction sector in Pakistan and the UK


Master's Thesis, 2013

93 Pages


Excerpt

Table of Contents

List of Figures

List of Tables

Acknowledgment

Abstract

Chapter 1: Introduction
1.1 Introduction
1.2 Background of the Research
1.3 Research Problem and Rationale
1.4 Research Aim
1.5 Research Questions

Chapter 2: Literature Review
2.1 Introduction
2.2 Overview of UK and Pakistani Construction Industries
2.2.1 Construction Industry in Global Context
2.2.2 Construction Industry of Pakistan
2.2.3 Construction Industry of the United Kingdom
2.3 Construction Project Management
2.3.1 The Construction Project Lifecycle
2.3.2 The General Construction Process
2.4 Causes of Time/Cost Overruns in Construction Industry
2.4.1 Pakistani Perspective
2.4.2 UK Perspective
2.5 Project Management Practices in Construction Projects
2.5.1 Procurement
2.5.2 Partnering
2.5.3 Risk Management
2.5.4 Value Management
2.5.5 Sustainable Construction
2.5.6 Benchmarking
2.5.7 Supply Chain Management
2.5.8 Lean Construction
2.6 Benefits of Project Management Practices
2.7 Factors Hinder the Adoption of Project Management Practices
2.8 Summary

Chapter 3: Research Methodology
3.1 Introduction
3.2 Methodology of the Research
3.3 Philosophy of the Research
3.4 Research Design
3.5 Research Approach
3.5.1 Qualitative vs. Quantitative
3.5.2 Deductive vs. Inductive
3.6 Research Methods
3.6.1 Methods used for Data Collection
3.6.3 Limitations of the Research Methods
3.6.3 Reliability and Validity of Data
3.7 Data Analysis
3.8 Sample and Population of the Study
3.8.1 Sample Size Determination
3.9 Resources Used
3.10 Research Ethics
3.11 Research Limitations
3.12 Summary of the Chapter

Chapter 4: Results and Analysis
4.1 Introduction
4.2 Description of Acquired Data
4.3 Data Reliability Test
4.4 Respondent’s Designation
4.5 Type of Construction Projects
4.6 Number of Projects Time/Cost Overrun
4.7 Causes of Time/Cost Overrun Projects
4.8 Importance of Project Management Practices
4.9 Use of Project Management Practices
4.10 Benefits of Project Management Practices
4.11 Adequacy of Project Management Practices
4.12 Factors Affecting the Adoption of Modern Project Management Practices
4.13 Summary of the Results

Chapter 5: Discussion on Findings
5.1 Introduction
5.2 Causes of Time and Cost Overruns
5.2 Similarities and Differences between Pakistani and UK PM Practices
5.3 Factors that Hinder the Adoption of PM Practices

Chapter 6: Conclusions
6.1 Introduction
6.2 Conclusion
6.3 Set of Recommendations
6.4 Research Limitations

References

Appendices
Appendix A: Questionnaire
Appendix B: Frequency Tables
Appendix C: Spearman’s Rank Correlation Calculation

List of Figures

Figure 2.1: Theoretical framework of the study

Figure 2.2: The Project Life Cycle

Figure 2.3: The Construction Process

Figure 2.4: Descriptive Model of Mohieldin

Figure 2.5: Features of Partnering

Figure 2.6: Risk Management Process

Figure 2.7: Risk Matrix

Figure 2.8: The Value Management Process

Figure 2.9: Benchmarking process

Figure 2.10: Supply Chain Cube

Figure 3.1: Research Onion of the Dissertation

Figure 3.2: Triangulation research approach

Figure 3.3: Research process

Figure 4.1: Survey respondents

Figure 4.2: UK Professionals

Figure 4.3: Pakistani Professionals

Figure 4.4: UK Respondents

Figure 4.5: Pakistani Respondents

Figure 4.6: Projects cost/time overrun

Figure 4.7: UK Respondents

Figure 4.8: Pakistani Respondents

Figure 4.9: Project management practices in UK and Pakistan

Figure 4.10: UK respondents

Figure 4.11: Pakistani respondents

List of Tables

Table 3.1: Positivist vs. Interpretivist

Table 3.2: Ranking criteria

Table 4.1 – Respondent’s demographics

Table 4.2 – Reliability analysis

Table 4.3 – Causes of time/cost overrun (UK Perspective

Table 4.4 – Causes of time/cost overrun (Pakistani Perspective)

Table 4.5 – Ranking comparison among causes

Table 4.6 – Benefits of PM Practices (UK Responses)

Table 4.7 – Benefits of PM Practices (Pakistan Responses)

Table 4.8 – Ranking comparison benefits

Table 4.9 – Ranking of problematic issues (UK perspective)

Table 4.10 – Ranking of problematic issues (Pakistan perspective)

Table 4.11 – Ranking comparison issues

Acknowledgement

First of all, I would like to thanks Almighty GOD for giving me courage to finish this dissertation on time utilising my best knowledge and skills. A special thanks to my supervisor encouraged me and guided me so well throughout the dissertation period. I am extremely thankful to my parents and other persons who motivated me during this research and also throughout my studies. Last but not least, I am thankful to Huddersfield University for providing me tremendous opportunity for the partial fulfilment of my MSc Business Project Management.

Abstract

Over the past two decades, the Pakistani construction sector is experiencing many problems particularly housing shortages, cost and time overruns, and construction defects due to lack of adequate project management practices. The purpose of this study is to investigate the role of project management practices in Pakistan compared to the UK to avoid time and cost overruns of construction projects. A blend of primary and secondary data collection methods are used to achieve this aim where primary data is collected through survey method. The findings of the paper suggest that Pakistani construction industry is different from the UK in terms of not adequately practicing most of the project management practices. A majority of construction participants agreed that such practices are inherent to avoid the cost/time overruns but some problematic factors are hindering the implementation of those practices in Pakistan. Some of the critical factors include changes in the scope of the project, lack of knowledge, skills and experience, fear of change, lack of top management commitment, and excessive bureaucracy. The paper concludes with a set of recommendations to Pakistani construction sector explaining how they can adopt modern PM practices undertaken in developed countries particularly in the UK to avoid the cost/time overruns.

Chapter 1: Introduction

1.1 Introduction

This chapter provides a reasoned discussion on research problem and research background to set the scene for developing aim and research questions of the study. Furthermore, the chapter also includes research questions, research rationale, and theoretical framework of the study.

1.2 Background of the Research

Project management includes many activities such as planning, organising, monitoring, controlling, and securing resources to achieve quality project delivery according to the scheduled time and within the estimated budget (Munns and Bjeirmi, 1996). Each construction project is different in nature and on the basis of infrastructure activities. In addition, different types of projects have different start and end dates with fixed or flexible deliverables. The criteria of work are also different in construction industry compared to other manufacturing industries. The Project Management (PM) practices in construction context are given high importance in terms of achieving best quality product and also to avoid construction cost/time overruns (Potts, 2008). These key PM practices include procurement, partnering, risk management, value management, sustainable construction, benchmarking, supply chain management, and lean construction (Potts, 2010; Cheng et al., 2012). It must be understood that all PM practices are critical to adopt at the same time due to extreme pressure to finish projects on time (Potts, 2010).

The United Kingdom has many centuries of experience in the construction industry. Many of the best PM practices in construction have been developed in Britain and spread around the world to be used by other nations. In a way, UK construction industry sets the standards for efficient, high quality and timely construction practices. The nation has a number of leading and authorised project management associations that offer training and guidance for project managers (APM, 2012; PMI, 2012). A range of studies appreciates the role of PM practices for achieving construction project success in the UK (Munns and Bjeirmi, 1996; Baker et al. 2008). However, they also highlight some issues that hinder the adoption of modern PM practices in the UK construction industry.

On the other hand, in Pakistan many leading construction firms from the UK, USA and other European nations have taken up construction projects in Pakistan. Hence, the flow of PM practices and methods in construction industry of Pakistan has been initiated already. The Pakistani Project Management Association (LPMA) is a body formed by the project managers in Pakistan which is responsible for training and providing help to project managers for better results (Pakistani Project Management Association, 2012). But still the level of PM practices in Pakistan is inadequate compared to the UK.

With this background, the thesis attempts to find out to what extent PM practices used in Pakistani construction industry are different or similar from those utilised by UK construction professionals? Also, to identify the factors that hinder the adoption of significant PM practices to avoid construction cost/time overruns?

1.3 Research Problem and Rationale

Construction industry in any economy is subject to different threats and issues that cause extra cost and time with considerable affect on quality if they are not correctly evaluated. However, construction industry requires greater management when compared with other industries (Baker et al. 1999). Unfortunately, the construction sector in Pakistan has suffered from sanction during the last period, which made it working under inefficient conditions and operating with outdated technology in many cases. Pakistani authorities set out their vision for the future development of the construction sector to reverse this situation after the sanction have been lifted by attracting more foreign investments in different domains and taking forward the country’s construction industry.

Over the past two decades, Pakistani construction sector is facing many problems particularly housing shortages, cost/time overrun, and construction defects due to the two significant reasons: (1) slow progress and limited capacity of its construction sector (Abubaker et al, 2008); and (2) lack of adequate Project Management (PM) practices such as procurement, partnering, risk management, value management, sustainable construction, benchmarking, supply chain management, and lean construction (Grifa, 2006; Ministry of Planning, 2011). Furthermore, it is also identified that infrastructural activities at vast level are required to build or upgrade roads, ports, airports, railways, and new homes (Ngab, 2007). Hotels, resorts, and other tourist places also require significant infrastructural changes. The need for quick developments to meet political, economic, social, and technological standards is the new challenge for the construction industry in Pakistan. The above issues and challenges are witnessed due to lack of technical abilities, lack of PM practices, inadequate managerial competencies, improper planning/scheduling techniques, and problematic circumstances in the industry (ibid). As a result, construction industry in Pakistan is facing many issues such as time overrun, cost overrun, and quality problems.

People working in construction domain are also subject to expose wide varieties of internal issues such as environmental, contractual, financial, stakeholders, communication risk etc.; and external risks such as political and regulatory risks. Consequently, the project’s success could be influenced in many aspects such as cost, time, and quality if these issues are not handled properly (Charoenngam and Yeh, 1999). The issues and challenges stated above are important at this time when construction industry in Pakistan is facing problems such as cost/time overruns, housing shortages, and construction defects (Abubaker et al. 2008). In order to avoid the impact of these issues and threats, the project management becomes an essential topic in the desire of delivering successful projects (ibid).

From the above discussion it can be acknowledged that the construction industry in Pakistan requires adopting innovative PM practices. But unfortunately very limited research is available in the literature that how Pakistan can adopt latest PM practices undertaken in the developed countries to avoid construction cost/time overruns (Tumi et al. 2009; Shebob et al. 2012). Also, researcher’s community has paid little attention in exploring causation factors that hinder Pakistani construction industry to adopt modern PM practices (Hammad et al. 2011). This literature gap exists because of lack of comparative studies that compare and evaluate PM practices used in Pakistan with those of undertaken in developed countries. Therefore, there is a strong need to conduct a study that fills this gap by highlighting major issues in the Pakistani construction industry and devise a solution how identified issues and threats can be mitigated to achieve project success.

The primary focus of this research is first to explore current PM practices undertaken in the Pakistani construction industry and then compare them with the practices used in the UK for evaluation purposes; or in other words, this study aims to explore how Pakistani construction industry is different from the UK particularly in terms of PM practices. Also, this research is subject to investigate problematic events and factors that hinder Pakistani construction industry to adopt latest PM practices. It is believed that providing a set of appropriate recommendations for adopting and improving PM practices in Pakistani construction sector to avoid cost/time overruns will significantly contribute to the construction project management domain.

1.4 Research Aim

The core aim of this research is to investigate the role of Project Management (PM) practices in the UK and Pakistan to avoid construction time/cost overruns. To achieve this aim, a comparative study is conducted to find out the differences and similarities between UK and Pakistani construction industries on the basis of utilising PM practices to avoid chronic issues like cost and time overruns.

1.5 Research Questions

The research questions to achieve underlying aim of the research are drafted below:

To what extent, PM practices used in the Pakistani construction industry are different or similar from those utilised in UK construction industry

Which factors hinder the adoption of significant PM practices in the Pakistani construction industry?

How Pakistan can adopt modern PM practices to avoid construction cost/time overruns?

Chapter 2: Literature Review

2.1 Introduction

This chapter provides an overview of the UK and Pakistani construction industries. The discussion also includes a comprehensive literature review on PM practices in Pakistani and UK construction sectors. In addition, factors that hinder the adoption and implementation of PM practices are also the part of the debate.

A diagram of theoretical framework is depicted in figure 2.1 which illustrates that this study is based on investigating the role eight PM practices in the UK and Pakistani construction industries. The comprehensive investigation through survey and literature evidences allows the researcher to devise a set of suggestions and recommendations to Pakistani construction industry to adopt modern PM practices undertaken in the UK construction industry to avoid time and cost overruns.

illustration not visible in this excerpt

Figure 2.1: Theoretical framework of the study

2.2 Overview of UK and Pakistani Construction Industries

The construction industry in any country is interrelated with many other industries due to its complex procedures and an assembly of several building components such as land, materials and equipment (Kwakye, 1998). In the words of Gorgenländer (2011), construction industry is a “sector of national economy engaged in the preparation of land and construction, alteration, and repair of buildings, structures, and other real property” (p. 14). Each construction project is different on the basis of its nature, type, and size and therefore requires professional skills and knowledge to complete it on time within estimated budget. The unique characteristics of construction projects help construction parties (e.g. client, project manager, contractor, consultant) to combine various activities and technologies with each other in an organised manner. The activities in construction industry largely depend on design, planning, government policies, tools and techniques, and the structure of the buildings. This is the reason that construction industry is highly vulnerable to slumps and booms in the economy.

2.2.1 Construction Industry in Global Context

The worldwide construction industry trends have shown considerable growth in different economies. Several researchers believe that construction industry plays a vital role in the development of an economy. Giang and Pheng (2010) assert that the construction industry is a vital contributor to an economy’s growth that interlinks many industries with each other. Bosch and Philips (2003) suggest that the contribution of the construction industry to a country’s development can be measured through its GDP contribution. They estimated that construction industry contributes nearly 10 percent to the world GDP. Another study conducted by Crosthwaite (2000) reveals that the construction industry in developed countries contributes around 6 to 9 percent to GDP; but the figure is different in case of developing countries which accounts for 3 to 5 percent. Lowe (2003) argued that the contribution in developed countries is between 7 to 10 percent; and the range in developing countries is 3 to 6 percent. Thus the contribution of the construction sector to the world’s economy cannot be ignored in any case.

2.2.2 Construction Industry of Pakistan

The economy of Pakistan is largely based on oil revenues which accounts for nearly 80%. The other sectors including construction industry are comprised of 20%. The country produces nearly £41.4 billion GDP each year, and the per capita income of Pakistan is highest in the region which was approximately £7,190 in 2011 (Ngab, 2007). Pakistan lacks adequate water resources; in fact, it is considered as one of the poorest countries in terms of limited water resources.

The construction industry in Pakistan contributes around 5.2% to gross GDP and it provides work to nearly 3.2% of the total workforce (Ngab, 2007). The Pakistani construction sector has experienced several reforms over the past five decades. Since the early 1950s, the construction sector in Pakistan has played a vital role in the development of its economy when the country became independent from the Italian occupation. At the beginning, construction activities were performed for social purposes but with the passage of time it emerged into people’s cultures and values, and consequently the skills and knowledge were transferred generation to generation. Therefore, the vast experience and enriched skills of the construction participants allow Pakistan to improve the infrastructure of the country by increasing the volume and scale of construction activities (ibid).

The country faced a construction boom during 1970s when it was ranked as one of the frequent consumers of cement. In the past two decades Pakistan has planned and constructed ‘The Great Man Made River’ project which is considered as one of the world’s biggest water projects. The public sector in Pakistan played a central role in developing country’s infrastructure in the context of economic and social development plans. Between 1990 and 2010, the public sector organisations successfully completed 86% construction projects (Ministry of Planning, 2011). But the industry faced some serious problems in the past due to heavy reliance on foreign experts (Ngan, 2007).

Time and cost overruns are the most frequent problems in Pakistani construction projects. Several studies mentioned that most of the public construction projects faced concurrent construction delays during design and construction phases (Hatush et al. 2005) and most of the local and international bodies failed to achieve quality outcomes due to some critical causes of delays where contractor and client organisations are mostly responsible for a majority of delays due to lack of adopting adequate project management practices (Hamzah et al. 2011). According to Abounahia (1998), more than 70% public construction projects were delayed in Pakistan due to several crucial factors. Abubaker et al. (2008) reported 69% construction project suffered from delays and only 31% finished on time and within the estimated budget since 2000 to 2008. Another recent study reveals that more than 50% construction projects in Pakistan are cost/time overrun (Hamzah et al. 2011). However, the ratio is decreasing due to the adoption of some innovative project planning techniques.

2.2.3 Construction Industry of the United Kingdom

The construction industry in the UK is extremely diverse and a key deliverer of major public construction projects (Murdoch and Hughes, 2002). The construction industry in the UK contributes around 8% to the gross GDP and provides employment to nearly 2.1 million people in the country (CIA World Factbook, 2012). The UK construction industry is popular in terms of using innovative planning techniques and procurement methods (Cashman and Preene, 2012). The industry has contributed in developing several landmark projects globally, either on the basis of construction or in design and management. The project managers, consultants, and contractors from the UK are invited internationally due to their new knowledge and modern working methods. Many UK consultants established their offices in the South East of England and London as they can be approached and consulted easily for huge infrastructural projects within and outside the country. The importance of British Standards and Codes, and the skills and knowledge of UK professionals is evident from their engagement to work in rebuilding World Trade Centre after the disastrous event of 9/11 (Winch, 2010).

Over the past two decades, the construction output is declined due to the impact of the adverse economic downturn and recession effects (BBC News, 2012a), as the output in 1990s was ranked at third with 12% of total European output (Meikle, 1999). Additionally, the construction industry is adversely affected hit by the 2008 recession. Limited availability of mortgage and weak household incomes also prevent construction activities in the UK. The builders are more focused on selling existing sites rather than investing money on constructing new buildings. As the country is recovering well from the recession, so it is forecasted that the construction sector will grow nearly double in value over the next five years (BBC News, 2012b).

2.3 Construction Project Management

The construction project management concept emerged in the literature of construction in the mid 1970s and today it is considered as one of the key practices to prevent construction projects from time and cost overruns. The construction project management allows construction parties to plan, coordinate, and control entire project activities in a systematic and organised manner in order to accomplish the projects on time and within the estimated budget (Walker, 2007). This can lead to fulfilling the requirements of the client in producing financial and quality-wise feasible project.

2.3.1 The Construction Project Lifecycle

A construction project is considered to be unproductive if it is failed to produce a quality physical product that does not meet the requirements of the client. The completion process of any construction project requires four essential steps such as project initiation, project planning, project execution, and project closure (Westland, 2007) as shown in the diagram of Project Lifecycle (PLC) in figure 2.2.

Figure 2.2: The Project Life Cycle

illustration not visible in this excerpt

Source: Westland (2007, p. 4)

Project initiation phase refers to some significant activities including defining project scope, problem identification, finding alternate solutions, and feasibility study. In the project planning phase, several plans such as resource plan, financial plan, quality plan, risk plan, communication plan, procurement plan, and timeframes are set to achieve project’s core aim. Project execution phase mainly refers to the implementation of plans devised at the planning stage; and finally, project closure involves terminating all project activities and handing over project deliverables to the client (Westland, 2007).

2.3.2 The General Construction Process

In the opinion of Walker (1996, 2007), the construction process is an open system which is composed of different resources and activities necessary to complete the project. The resources are the inputs to the construction process and typically include land, labour, capital, materials, and equipment. The construction process is carried out by a dedicated team of professionals who transforms the inputs to desired outputs. This transformation process is greatly influenced by the environment of the construction project. An open system of construction process described by Walker (1996, 2007) is depicted in figure 2.3.

Figure 2.3: The Construction Process

Source: Walker (1996, p. 84)

The model of Walker (1996) is closely related to the descriptive model of Mohieldin (1989). According to Mohieldin (ibid) descriptive model, condition and resources are the two inherent inputs in a construction process. The input resources are same as described by the Walker (1996) such as land, labour, capital, materials, equipment, and the external environment or the criteria as laid down for the construction. The output of the model indicates required physical product in the form of the building as shown in figure 2.4.

Figure 2.4: Descriptive Model of Mohieldin

illustration not visible in this excerpt

Source: Mohieldin (1989)

2.4 Causes of Time/Cost Overruns in Construction Industry

The causes of time/cost overruns vary from country-to-country due to several technological, environmental, and topographical factors. Shebob et al. (2012) conducted a comparative study to investigate the core factors causing cost/time overruns in the UK and Pakistan. According to them, ‘contractor-related factors’ followed by ‘client-related factors’ are the most influencing factors causing delays in both construction industries. In explaining contractor-related factors from Pakistan point of view, they ranked ‘inadequate PM practices’ and ‘lack of appropriate equipment’ as two foremost factors causing time/cost overruns. From the UK perspective, their study uncovers the fact that many cost/time overruns are occurring because contractor firms employ ‘inadequate planning tools’.

2.4.1 Pakistani Perspective

The study of Abubaker et al. (2008) addresses the causes of delay in the Pakistani construction industry. The survey study discloses that design-related, client-related, contractor-related, and project management related factors are the prominent issues causing time/cost overruns. Similarly, Tumi et al. (2009) in their study identified and ranked 43 factors influencing construction projects in the Zentan city in Pakistan. They claim that most of the issues occurred due to lack of PM practices. They ranked project management related issues at the top of the list followed by improper planning, lack of effective communication, design errors, and supply chain management problems. They strongly emphasised the need of employing appropriate PM practices particularly risk management to avoid cost/time overruns in the industry.

Another study in Pakistani perspective was conducted by Memon et al. (2011) to explore the causative factors leading to construction costs and time overruns. They identified total 78 factors from the literature and asked survey respondents to rank each factor according to their knowledge and experiences. The survey results reveal that most of the problems occurred due to either lack of PM practices or lack of project planning activities at design stage. The research study also concludes that the project manager and other top management personnel are reluctant to play their roles in adopting appropriate PM practices and planning tools.

2.4.2 UK Perspective

In 1985, Sullivan and Harris conducted their study to investigate major factors leading to unanticipated cost and time overruns in large construction projects. They surveyed only civil contractors, consultants, and clients. It was found that contractor-related factors followed by client-related factors were the prominent causes of concurrent construction delays. Later on the survey study of Jackson (2002) explores project cost overrun in the UK construction industry. Their survey findings reveal consultant related factors and then project planning and project management related issues are major factors causing cost overrun in the UK construction industry.

Cannon (2008) highlights the cost/time overrun issues that UK construction industry faced in the past two decades and also addresses challenges ahead. His survey study reveals that contractor and consultant related issues are critical in the UK construction industry and due to these reasons client organisations faced many health and safety issues, insolvency, and legitimacy problems.

Falqi (2004) conducted his comparative study to address delays in construction project completion. They categorise more than 70 cost/time overrun factors into five significant categories such as contract related factors, consultant related factors, client related factors, project management related factors, other factors. Their study reveals that contractor related factors followed by consultant related factors are the core reasons for delays in the UK construction industry.

2.5 Project Management Practices in Construction Projects

A number of experts and writers (e.g. Gould, 1999; Potts, 2010; Cheng et al., 2012) describe best project management practices in the context of construction projects. The organisations worldwide implementing these practices reported high profits, quality results, high client and employee satisfaction, improved safety, and minimised environmental effects. These practices are explained in the following subsections.

2.5.1 Procurement

Procurement is a procedure of ascertaining a suitable method for monitoring and controlling a construction project and choosing the best people to devise, deliver, and operate required activities (Edum-Fotwe and McCaffer, 2001). Today, lump sum contracts and lowest price tendering are the common methods for the selection of contractors and sub-contractors. But latest procurement methods stress the need for choosing best organisations that can work well in a collaborative environment, and also they understand and exercise the principles of ‘Partnering’ (ibid). Several procurement methods include: traditional/ conventional, design and build, construction management, and integrated.

The procurement is the key problem in the construction industry of Pakistan as the construction parties use conventional procurement methods based on lowest bidding policy. El-Hasia (2005) found that procurement policy in Pakistani construction industry is inadequate and lacks in clarity in defining goals. He further explains that the procurement policy restricts public construction parties to adopt new or innovative procurement methods that are more beneficial in terms of achieving client’s objectives. As a result, the construction projects are cost and time overrun.

In contrast to Pakistan, UK construction industry is popular in using new methods of procurement. UK construction parties choose a procurement method for their projects on the basis of contractual agreements in accordance with the client’s resources, policies, and organisational structure. But the latest survey of Civil Engineering Contractors Association (CECA) consisting of nearly 300 construction firms reveals that bureaucratic and delayed procurement processes are damaging the UK construction industry (Reynolds, 2012).

2.5.2 Partnering

Partnering refers to establishing a system that encourages collaborative working approach during different construction phases (Chan et al, 2006). This means that partnering is a different but traditional approach in the construction context where all the parties work together to assist client in order to achieve project’s underlying objectives. Figure 2.5 shows three essential features of partnering described by Bennett and Jayes (1995).

Figure 2.5: Features of Partnering

illustration not visible in this excerpt

Source: Bennett and Jayes (1995, p. 84)

Pakistani construction industry encourages collaborative working approach with local and foreign companies (Ngan, 2007). Several foreign experts and companies are working on major construction projects in Pakistan but in fact, the regulatory environment is restricted for all foreign partners (Porter and Yergin, 2006). For instance, foreign partners cannot participate in bidding, procurement, and tendering processes. Also, foreign firms cannot work as main contractors for both commercial and residential construction projects. However, local firms often act as key contractors and work with foreign sub-contractors on major construction projects due to their new knowledge, expertise, and latest specialised equipment (ibid).

In contrast to Pakistan, the judicial consideration of partnering in the UK is limited (Begg, 2003) as most of the private and public firms prefer to work own their own, or like to work with local partners as they find themselves compatible in team working environment. Also, the working methods/techniques of local partners are almost similar. A comprehensive report of Egan (1998) emphasised the need of partnering and establishing long-term relationships with foreign partners in order to learn new and effective ways to enhance the performance of the UK construction sector.

2.5.3 Risk Management

Risk management in the construction context refers to a process of managing a construction project in a way to identify and assess probable risks associated with the project and then finding a solution to mitigate the adverse impacts of those risks (Garlick, 2007). A general risk management process for managing construction risks is depicted in figure 2.6.

Figure 2.6: Risk Management Process

illustration not visible in this excerpt

Source: Madill (1999, p. 8)

In managing risks, risk identification is a significant and major part which usually commences with discovering and categorising various risks related to the project. Hillson (2009) highlights the importance of identifying risks prior to initiating a construction project. Tools that can be used for risk identification include: checklist, interviews, surveys, flowcharts, SWOT analysis, assumption analysis, Delphi analysis, and diagramming method. The risk assessment stage refers to analyse significant risks either qualitatively or quantitatively. A typical risk register is composed of risk categories, risk description, risk likelihood, and risk consequence (Hillson, 2009). In addition, the risk register may also help analyst to formulate a formal risk response strategy to treat risks at the next stage. But it is important to constantly update the risk register throughout the pre-construction and construction phases (Garlick, 2007).

After successfully identifying, assessing, and evaluating probable risks, an analyst needs to develop and implement suitable risk response strategy to treat risks. The risks can be treated in four ways: risk avoidance, risk retention, risk share/transfer, or risk reduction (Panthi et al, 2007). Figure 2.7 presents a risk matrix which shows common construction risks and treatment strategies.

Figure 2.7: Risk Matrix

illustration not visible in this excerpt

Source: Panthi et al. (2007)

The survey study of Tumi et al (2009) reveals that risk management practices in Pakistan in managing construction risks particularly delays are not standardised. They also found that Pakistani construction parties employ no or inadequate tools and techniques to identify and analyse construction risks and as a result they face concurrent delays. In a comparative study of delay factors in UK and Pakistani construction sectors, Shebob et al (2012) concluded that most of the main contractors in Pakistani construction industry do not adopt any formal risk management process and techniques but in contrast, UK and other foreign sub-contractors working in Pakistan follow proper risk management tools and techniques.

[...]

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Details

Title
The role of project management practices in avoiding time and cost overruns
Subtitle
The construction sector in Pakistan and the UK
College
University of Huddersfield
Course
Msc. Business Project Management
Author
Year
2013
Pages
93
Catalog Number
V317978
ISBN (eBook)
9783668186842
ISBN (Book)
9783668186859
File size
1352 KB
Language
English
Tags
project management, time overrun, cost overrun, Pakistan, UK, construction sector
Quote paper
Muhammad Sajid Saeed (Author), 2013, The role of project management practices in avoiding time and cost overruns, Munich, GRIN Verlag, https://www.grin.com/document/317978

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