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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

PSZ 19:16 (Pind. 1/97)

UNIVERSITI TEKNOLOGI MALAYSIA

BORANG PENGESAHAN STATUS TESIS ♦

JUDUL: THE FRAMEWORK FOR MINIMIZING

CONSTRUCTION TIME AND COST OVERRUNS IN

PADANG AND PEKANBARU, INDONESIA

SESI PENGAJIAN : 2006 / 2007

Saya HARISAWENI (HURUF BESAR)

mengaku membenarkan tesis (PSM/Sarjana/Doktor Falsafah)* ini disimpan di Perpustakaan

Universiti Teknologi Malaysia dengan syarat-syarat kegunaan seperti berikut : 1. Tesis adalah hakmilik Universiti Teknologi Malaysia. 2. Perpustakaan Universiti Teknologi Malaysia dibenarkan membuat salinan untuk tujuan

pengajian sahaja. 3. Perpustakaan dibenarkan membuat salinan tesis ini sebagai bahan pertukaran antara

institusi pengajian tinggi. 4. **Sila tandakan ( √ )

SULIT (Mengandungi maklumat yang berdarjah keselamatan

atau kepentingan Malaysia seperti yang termaktub di dalam AKTA RAHSIA RASMI 1972)

TERHAD (Mengandungi maklumat TERHAD yang telah

ditentukan oleh Organisasi/badan di mana penyelidikan dijalankan)

TIDAK TERHAD

Disahkan oleh

(TANDATANGAN PENULIS) (TANDATANGAN PENYELIA)

Alamat Tetap: Jl. Rd. Saleh gg. Cimpago No. 12

Padang – Sumatera Barat PM. Dr. Rosli Abdul Rashid

Indonesia 25115 Nama Penyelia

Tarikh : Januari 2007 Tarikh : Januari 2007

CATATAN : * Potong yang tidak berkenaan. ** Jika tesis ini SULIT atau TERHAD, sila lampirkan surat daripada pihak berkuasa/organisasi

berkenaan dengan menyatakan sekali sebab dan tempoh tesis ini perlu dikelaskan sebagai SULIT atau TERHAD.

♦ Tesis dimaksudkan sebagai tesis bagi Ijazah Doktor Falsafah dan Sarjana secara penyelidikan, atau disertasi bagi pengajian secara kerja kursus dan penyelidikan, atau Laporan Projek Sarjana Muda (PSM).

√

“We hereby declare that we have read this thesis and in our opinion

this thesis is sufficient in terms of scope and quality for the award of

the degree of Master of Science (Quantity Surveying)”

Signature :

Name of supervisor I : PM. Dr. Rosli Abdul Rashid

Date :

Signature :

Name of supervisor II : PM. Dr. Razali Adul Hamid

Date :

Signature :

Name of supervisor II : PM. Dr. Kherun Nita Bt. Ali

Date :

I declare that this thesis entitled, “The Framework for Minimizing Construction Time

and Cost Overruns in Padang and Pekanbaru, Indonesia” is the result of my own

research except as cited in references. The thesis has not been accepted for any

degree and is not concurrently submitted in candidature of any other degree.

Signature : …………………..

Name : Harisaweni

Date : … 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 bertingkat-tingkat 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 TITLE

DECLARATION

DEDICATION

ACKNOWLEDGEMENT

ABSTRACT

ABSTRAK

TABLE OF CONTENTS

LIST OF TABLES

LIST OF FIGURES

GLOSSARY

LIST OF APPENDICES

1 INTRODUCTION

1.1 Background of the Study

1.2 Statement of Issues

1.3 Previous Research

1.4 Objectives of Research

1.5 Research Scope

1.6 Thesis Organization

PAGE

ii

iii

iv

v

vi

vii

xi

xiv

xv

xvi

1

3

6

8

9

10

viii

2 INDONESIAN CONSTRUCTION INDUSTRY

2.1 Introduction

2.2 The Indonesian Demography and Economy

2.2.1 The Indonesian Construction Industry

2.2.2 Construction Industry Performance in Padang

and Pekanbaru

2.2.3 The Structure of Indonesian Construction

Industry

2.2.4 Performance of construction projects in

Indonesian

3 PROJECT TIME AND COST MANAGEMENT

3.1 Introduction

3.2 Project Time and Cost Management

3.2.1 Project Time

3.2.2 Project Cost

3.2.3 Problems Associated with Project Time and

Cost

3.2.4 The Definition of Project Time and Cost

Management

3.2.5 Project Management Objectives

3.3 Implication of Time and Cost Overrun

3.4 Causes of Project Time and Cost Overrun

4 PROJECT TIME AND COST MANAGEMENT

FRAMEWORK

4.1 Introduction

4.2 Definition of Framework

4.3 The purpose of Framework

12

12

13

18

21

27

34

34

34

35

36

37

38

43

44

44

51

51

51

52

12

ix

i. ii. Cost Overrun

5.2.4 Proposed Framework Design in The Questionnair 113

5.2.5 Summary of the Data Analysis 115

5.3 Discussions of Framework Development 117

5.4 Summary 128

CHAPTER 6 CONCLUTIONS AND RECOMMENDATIONS 130

6.1 Conclusions 130

6.2 Recommendations 133

REFERENCES 135

BIBLIOGRAPHY 147

APPENDICES 150

6.2.3.1 Consultant’s Perspectives 110

i. Time Overrun 110

ii. Cost Overrun 111

4.4 Project Time and Cost Management Framework

4.4.1 Time and Cost Management in Context of

Project Management

4.4.2 Framework for Time and Cost Management

4.4.3 Proposed Framework for Management Process

5 RESEARCH METHODOLOGY

5.1 Introduction

5.2 Research Process

5.3 Data Collection

6 THE MAJOR CAUSES OF TIME AND COST

OVERRUN

6.1 Introduction

6.2 The Major Causes of Project Time and Cost Overrun

in Padang and Pekanbaru

6.2.1 Contractors Perspectives

6.2.2 Consultants Perspectives

6.2.3 Combination of the Two Perspectives

6.3 Conclusions

7 TIME AND COST MANAGEMENT: A

COMPARISON BETWEEN THE CURRENT

PRACTICE AND THE “THEORETICAL

FRAMEWORK”

7.1 Introduction

7.2 The Comparison between Time and Cost Management

as Currently Practiced against the Theoretical

Framework

53

53

60

71

79

79

79

81

100

100

100

101

103

106

109

110

110

110

x7.3 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 Conclusion 137

8 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. Title Page

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

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

2.2 Value of Construction Works in Indonesia According to the Type of

Construction (billion rupiahs) from 2000 to 2004

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

Indonesian Construction Industry since 2000 to 2004

2.4 Total Number of Companies Register under LPJK, GAPEKSINDO

and INKINDO by Province.

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

Organization Registered and the Qualification

2.6 Response rate of project completed on time and within budget

2.7 Response rate of project completed

2.8 Some Example of projects with time and cost overrun problems in

Indonesian Construction Projects (Padang)

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)

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).

3.1 Comparative ranking of problems that cause time and cost overruns

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

3.2 Case studies of the common causes of time and cost overrun

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

14

16

17

24

25

28

28

30

31

32

46

49

50

xii

4.1 The various practices to reduce project time and cost overrun

problems

4.2 The perspectives about several frameworks from several researchers.

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

Organization Registered and the Qualification.

5.2 Number of questionnaires distributed

5.3 Sample of pilot study questions

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

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

problems (extracted from table 5.2)

5.5 Number of questionnaires distributed

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

problems – contractor’s perspectives

6.2 Time and cost overrun major causes and it activity categories based

on the importance scale – contractor’s perspectives

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

values – contractor’s perspectives

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

problems – consultant’s perspectives

6.5 Time and cost overrun major causes and it activity categories based

on the importance scale – consultant’s perspectives


values – consultant’s perspectives

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

perceived by contractors and consultants


values as perceived by contractors and consultants

7.1 The current practices of time management by the contractors –

in consultant’s perspective

7.2 The current practice of time management by the contractors based on

the frequency occurrence scale – consultant’s perspective

59

74

84

85

87

89

90

93

101

102

103

104

105

105

107

108

117

118

xiii

7.3 The current practices of time management by the contractors –

– Contractor’s own perspectives 119

7.4 The current practice of time management by the contractors based

on the frequency occurrence scale – Contractor’s own perspectives 119

7.5 Mean values and the “average” for the current practices in time

management by the contractors as perceived by contractors and

consultants 121

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 122

7.7 The current practices of time management by the contractors based

on the frequency occurrence scale as perceived by the contractors

and consultants 123

7.8 The current practices of cost management by the contractors –

in consultant’s perspective 125

7.9 The current practice of cost management by the contractors based

on the frequency occurrence scale – consultant’s perspective 125

7.10 The current practices of cost management by the contractors –

– Contractor’s own perspectives 126

7.11 he current practice of cost management by the contractors based

on the frequency occurrence scale – Contractor’s own perspectives 127

7.12 Mean values and the “average” for the current practices in time

management by the contractors as perceived by contractors and

consultants 128

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 128

7.14 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 Title Page

1

2.1 The percentage of the growth of the Indonesian construction sectors

(%) based on the GDP value

2.2 Several landmark construction projects in Pekanbaru

2.3 Several landmark construction projects in Padang

4.1 Basic construction project management philosophy (Ritz, 1994)

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

2000)

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

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

McCaffer, 1988)

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

1992)

4.6 The proposed framework for survey which developed based on the

theory and the practices

5.1 The research stages

7.1 The proposed framework for survey (it was included in the

questionnaire) which developed based on the theory and the practices

7.2 The survey results about the proposed framework

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

7.4 The Detail of the developed framework for Construction Project in

Padang and Pekanbaru

15

19

21

60

63

65

66

69

77

80

112

114

132

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 high-

rise 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 1997-

2004 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 1997 1998 1999 2000 2001 2002 2003 2004

1. Agriculture, livestock, forestry & fishery

Percentage of growth (%)

2. Mining and quarrying


3. Manufacturing industry


4. Electricity, gas and water supply


5. construction


6. Trade, hotel and restaurant


7. Transport and communication


8. Financial, ownership and business services


9. Services


101, 009.4

16.09

55, 561.7

8.85

168, 178.0

26.79

7, 832.4

1.25

46, 678.8

7.44

99, 581.9

15.86

38, 530.9

6.14

54, 360.3

8.66

55, 962.0

8.92

172, 827.6

18.08

120, 328.6

12.59

238, 897.0

25.00

11,283.1

1.18

61, 761.6

6.46

146, 740.1

15.35

51, 937.2

5.43

69, 891.7

7.31

82, 086.8

8.59

216, 913.6

19.54

109,974.1

9.91

287, 702.6

25.92

13, 429.0

1.21

74, 496.4

6.71

176, 663.7

15.92

55, 189.6

4.97

70, 641.8

6.36

104, 968.7

9.46

218, 397.6

16.92

166, 563.1

12.91

336, 053.2

26.04

15, 072.4

1.17

92, 175.9

7.14

196, 049.5

15.19

64, 550.1

5.00

80, 047.2

6.20

121, 775.3

9.43

263, 327.9

15.63

182, 007.8

10.81

506,319.6

30.07

10, 854.8

0.64

89, 298.9

5.30

267, 656.1

15.90

77, 187.6

4.59

135, 369.8

8.02

152, 258.0

9.04

298, 876.8

16.04

161, 023.8

8.64

553, 746.6

29.73

15, 392

0.83

101, 573.5

5.45

314, 646.7

16.87

97, 970.3

5.26

154, 442.2

8.29

165, 602.8

8.89

325, 653.7

15.93

169, 535.6

8.28

590, 051.3

28.83

19, 540.9

0.95

112, 571.3

5.50

337, 840.5

16.55

118, 267.3

5.77

174, 323.6

8.51

198, 069.3

9.68

354, 435.3

15.38

196,892.4

8.55

652, 729.5

28.34

22, 855.4

0.99

134, 388.1

5.84

372, 340

16.19

140, 604.2

6.09

194, 542.2

8.44

234, 244.4

10.18

627, 695.5

100 %

955, 753.5

100 %

1, 109, 979.5

100 %

1, 290,684.2

100 %

1,684,280.5

100 %

1,863,274.7

100 %

2,045,853.5

100 %

2,303,031.5

100 %

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 (%)

0

1

2

3

4

5

6

7

8

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

- Non-residential

- Electrical installation

- Water supply installation

- Sanitary installation

- Foundation

- Sound system, AC, lift, etc

- Water supply network

- Gas pipe installation

- Electricity network

- Road & bridge works

- Irrigation/ drainage

- Electric power supply

- Construction or improvement of

airport, harbor, bus station, etc

- Other construction works

- Total of value

1,232,932

4,300,840

1,062,649

126,065

33,542

30,332

30,410

283,327

105,469

358,868

6,397,989

2,019,787

30,314

210,706

721,397

16,944,628

1,412,543

4,614,605

1,227,349

142,327

34,623

23,489

46,158

162,447

46,550

292,507

6,185,981

1,372,300

109,487

175,675

3,240,289

19,086,328

1,595,983

5,129,961

1,427,610

160,843

41,455

26,249

51,654

205,467

106,400

349,616

7,001,463

1,558,438

130,597

716,799

3,674,823

22,177,359

1,372,103

4,547,594

1,167,857

153,374

37,100

22,839

41,807

183,499

86,656

313,834

6,547,822

1,427,471

107,473

694,054

3,450,716

20,154,199

1,695,054

5,503,004

1,443,168

194,151

45,675

24,855

56,771

197,478

120,923

359,596

7,827,454

1,536,090

238,306

870,267

4,228,121

24,340,912

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 Year

Sumatera Island

- Nanggroe Aceh Darussalam

- North Sumatera

- West Sumatera

- Riau

- Jambi

- South Sumatera

- Bengkulu

- Lampung

- Kepulauan Bangka Belitung

Java Island

- DKI Jakarta

- West Java

- Central Java

- DI Yogyakarta

- East Java

- Banten

- Bali -Bali Island

- West Nusa Tenggara -Lombok Island

- East Nusa Tenggara -Timor island

Kalimantan Island

- West Kalimantan

- Central Kalimantan

- South Kalimantan

- East Kalimantan

Sulawesi Island

- North Sulawesi

- Central Sulawesi

- South Sulawesi

- South East Sulawesi

- Gorontalo

- Maluku -Maluku’s Island

- North Maluku -Halmahera Island

- Papua -Irian Jaya Island

Total of value

2000

328,361

438,030

345,371

475,346

101,042

529,770

147,476

127,321

103,469

3,070,608

1,722,946

1,305,114

142,129

1,974,964

309,789

401,890

635,778

566,446

303,226

539,353

228,132

911,673

240,215

176,116

853,839

143,780

21,371

64,688

45,739

690,646

16,944,628

2001

371,310

515,255

397,937

529,060

121,837

620,572

153,153

136,272

113,486

3,303,698

2,007,558

1,469,297

168,861

2,109,459

366,871

464,625

733,752

643,540

348,832

584,055

241,455

1,135,488

254,938

213,558

986,952

168,635

24,254

69,474

50,389

781,754

19,086,328

2002

419,878

996,107

458,503

596,692

146,910

729,811

159,050

153,555

148,913

3,554,482

2,338,805

1,654,135

202,763

2,253,113

434,401

556,326

846,822

731,380

401,980

658,815

255,864

1,459,066

269,596

263,601

1,243,376

195,616

27,407

72,254

56,839

891,299

22,177,359

2003

446,492

993,748

469,008

598,112

144,242

648,999

124,254

137,078

142,725

2,958,110

1,828,482

1,563,100

182,674

2,293,341

420,883

473,089

928,797

692,990

404,482

780,333

236,803

1,119,456

213,946

229,965

1,189,102

199,458

31,864

70,263

55,273

837,131

20,154,199

2004

494,865

1,360,81

520,171

668,544

163,154

856,580

165,174

168,690

160,206

3,824,321

2,724,825

1,665,517

242,161

2,411,107

468,188

654,648

1,054,180

743,834

446,141

883,104

270,946

1,230,348

285,628

254,443

1,336,575

222,894

36,404

72,257

58,998

896,085

24,340,912

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


construction projects valued between 200 million and1 billion rupiahs.

• B or big qualification


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


construction projects valued more than 1 billion but less than 10 billion

rupiahs.

• B or big qualification


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.

Source: Construction Development Board Data, (LPJK, 2003)

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.

No LPJKD LPJK GAPEKSINDO INKINDO JUMLAH1 Nangroe Aceh Darussalam 1344 318 205 18672 Sumatera Utara 792 84 101 9773 Sumatera Barat 518 110 184 8124 Riau 646 217 197 10605 Jambi 385 25 56 4666 Sumatera Selatan 464 107 0 5717 Bengkulu 312 0 49 3618 Lampung 122 350 74 5469 Daerah Khusus Ibukota Jakarta 3786 24 364 4174

10 Jawa Barat 522 33 201 75611 Jawa Tengah 2031 335 85 245112 Daerah Istimewa Jogyakarta 1662 0 73 173513 Jawa Timur 4797 127 276 520014 Kalimantan Barat 946 225 75 124615 Kalimantan Tengah 1204 12 58 127416 Kalimantan Selatan 1080 81 0 116117 Kalimantan Timur 2508 285 20 281318 Sulawesi Utara 765 0 46 81119 Sulawesi Tengah 1443 0 124 156720 Sulawesi Selatan 2500 650 0 315021 Sulawesi Tenggara 340 126 57 52322 Bali 670 0 130 80023 Nusa Tenggara Barat 267 228 59 55424 Nusa Tenggara Timur 1551 380 79 201025 Maluku 0 54 0 5426 Maluku Utara 0 85 11 9627 Banten 1156 23 41 122028 Gorontalo 422 87 2 51129 Bangka Belitung 446 106 0 55230 Papua 0 0 0 0

Total 32679 4072 2567 39318

25

Table 2.5 Total Numbers of Big, Medium and Small Companies based on The


Areas & Company LPJK

(Both)

GAPEKSINDO

(Contractor)

INKINDO

(Consultant)

Pekanbaru:

- K (Small)

- M (Medium)

- B (Big)

144

83

5

40

31

3

47

10

7

Padang

- K (Small)

- M (Medium)

- B (Big)

132

29

16

53

6

2

37

13

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 Time

Status completed % Completed Status completed % Completed

- Within the budget

- Less than the budget

- Exceeded the budget

30

34

36

- Within the schedule

- Ahead of the schedule

- Behind the schedule

47

15

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 SCHEDULLE TAHUN ANGGARAN 2003

NO NAMA PAKET

PROYEK APBN (Rp) LOAN (Rp)

TOTAL (Rp) NILAI KONTRAK No.

KONTRAK TGL. KONTRAK ADDENDUM

VOLUME PJG. EFF

PJG.FUNGS SPMK

JAN FEB MAR APR MEI JUN JUL AGST

KONTRAKTOR KONSULTAN

1 2 3 4 5 (3+4) 6 7 8 9 10 11 12 13 14 15 16 17 18 20 Paket Proyek :

1,463,086,000.00 4.00 KM Renc 0.00 0.00 0.00 0.00 0.00 21.96 28.68 76.28 01/PKK/W.03-

Bb.03.23.01/2003 4.00 KM Real 0.00 0.00 0.00 0.00 0.00 5.00 30.12 61.76 6-Jun-2003

Fisik

Dev 0.00 0.00 0.00 0.00 0.00 16.96 1.44 14.52 ADD 1,499,086,000,00 Renc 0.00 0.00 0.00 0.00 0.00 20.00 41.00 75.00

Real 0.00 0.00 0.00 0.00 0.00 29.50 33.93 33.93

1

pembangunan jalan indrapura - Tapan dan Silaut 1,500,000,000.00

1,500,000,000.00

6-Jun-2003

Keu Dev 0.00 0.00 0.00 0.00 0.00 9.50 7.07 41.07

PT. RAVE KARYA

MANDIRI PT. SARANA

MULTI DAYA

Pengawasan Supervisi Konstruksi :

98,969,750.00 Renc 20.00 40.00 60.00 KU.08.08/P3JJ-SB/SPK-V05 Real 7.00 27.89 46.48

13 Mei 2003

Fisik

Dev 13.00 12.11 13.52 Renc 20.00 40.00 60.00 Real 22.18 27.89 27.89

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

120,450,000.00

120,450,000.00

4.10 KM

Keu

Dev 2.18 12.11 32.11

PT. RIKA PERKASA PRATAMA


13 Mei 2003

Fisik

Dev 13.00 12.36 13.85 Renc 20.00 40.00 60.00 Real 21.92 27.64 27.64


134,900,000.00

134,900,000.00

4.20 KM

Keu

Dev 1.92 12.36 32.36

CV. INDO SARANA ENG


13 Mei 2003

Fisik

Dev 11.12 12.73 16.54 Renc 20.00 40.00 60.00 Real 18.87 27.27 27.27

2


265,000,000.00

265,000,000.00

8,50 KM

Keu

Dev 1.13 12.73 32.73

PT. SARANA MULTI DAYA

30

31

Overall, cost overruns were found to be more common than delays on high-

rise 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 Importance Frequency Severity

Of delays Index Rank Index Rank Index Rank

Unpredictable Weather 0.60 11 0.39 11 0.24 11

Conditions

Inaccuracy of material 0.88 3 0.56 7 0.51 5

Estimate

Inaccurate Prediction 0.80 5 0.60 5 0.49 6

Craftsmen production

Inaccurate Prediction 0.69 9 0.43 10 0.33 10

Equipment

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

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

conditions

Material cost increased 0.78 2 0.68 1 0.54 1

by inflation

Inaccurate quantity 0.80 1 0.63 2 0.49 2

take-off

Labor cost increased 0.71 3 0.52 3 0.37 3

due to environment restriction

Lack of experience 0.65 4 0.46 4 0.35 4

of project location


of project type


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?

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.

33

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:

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

in developing time estimates.

Find a similar task in a completed project plan to see how long it took to get

done. This is called an analogous estimate.

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:

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

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:

Activity definition – identifying the specific activities that must be performed

to produce the various project deliverables.

Activity sequencing – identifying and documenting interactivity

dependencies.

Activity duration estimating – estimating the number of works periods which

will be needed to complete individual activities

Schedule development – analyzing activity sequences, activity durations, and

resources requirements to create the project schedule.

Schedule control – controlling changes to the project schedule.

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

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).

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).

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:

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.

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

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

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 Shammas-Tomma 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

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 economiconditions

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

2

3

4

5

6

7

8

9

10

11

Unpredictable weather conditions

Inaccuracy of material estimates

Inaccurate prediction of equipments

Material shortage

Equipment shortage

Poor labour productivity

Material cost increased by inflation

Labour cost increased due to environment restriction

Added work/ design changes during construction

Natural condition factors

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-the-board 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.

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.

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.

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.

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

Plan Organize Control

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

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):

Establish Operational

Measure & Report progress

Compare Actual Achievement with Planned

Determine effect on Completion Date

Plan & Implement Corrective Action

Update Operational Schedule

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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.

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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:

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:

Identification of Deviation

Analysis Causes of Deviation

Comparison of Actual Against

Program of Corrective

Action

Implementation of Correction

Desired Performance

Measurement of Actual

Actual Performance

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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.

CONTROL

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

1988)

A. PLAN 1. Establish a

schedule 2. Establish a budget

B. EXECUTE Implement in accordance

with the budget & schedule

C. MONITOR 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?

E. TAKE REMEDIAL ACTION

1. Modify plan 2. Supervise more effectively 3. Increase skill 4. Use more efficient plant 5. Submit claims

F. UPDATE HISTORICAL DATA FOR FUTURE

• Estimating • Accounting • Justification & qualification of

claims

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According to PMBOK guide books (1996), there are several output by doing

time controlling, they are as follow:

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.

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.

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:

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.

Budget Updates.

Budget updates are changes to an approved cost baseline.

Corrective Action.

Corrective action is anything done to bring expected future project time

schedule performance into line with the project plan.

Estimate at completion.

It is forecast of total project costs based on project performance.

Lesson Learned.

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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.

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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.

Gather Information on the Problem

Review Goals and Objectives

Establish Priorities

Review Status of Project

List Alternatives

Analyze Alternatives

Make Decisions and Revise the Plan

o Time o Cost o Performance

o Time o Cost o Performance

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• 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.

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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 Perspectives about his/ her framework 1. Ritz, (1994) - Figure 3.3

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.

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

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.

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

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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.

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Identification Things That Have

Related With Time & Cost

a. Identify: - Activities - Purchasing - Equipment - Others

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

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

- Team Works - Suitable/ Match With Planning

- Schedule - Activities - Cost/Account - Qualities - Document - Resource - Equipment

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

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

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

Analyze It

- Identification Problem - Some Correction

Analyze cause of Deviations

Planning of Corrective

Actions

Implementation of Corrective Actions

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

PLAN ORGANIZE CONTROL Compare Actual Achieving with

Planning

Identification Deviations/Problems Feedback Goals

Achievement

YES

Sub Activities

Major Activities

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.

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Stage 1

Figure 5.1 The research stages

a. Stage 1: preliminary research to find out:

Research rough idea.

b. Stage 2: Literature review

Determine research areas

Identify issues/ problems; which includes about:

Determine the types of data required

Determine the method/ technique of data collection

Determine the sample & its size

Determine the data analysis

methods

Preliminary Research

Literature Reviews

Identify issues/ problems Determine research areas

Stage 2

Stage 3 Research Design

Data Collection Stage 4

Data Analysis

Writing

Stage 5

Stage 6

Questionnaires Literature review findings

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- 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:

Determine types of data required

Determine the method/ technique of data collection

Determine the survey sample and its size

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.

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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


Areas & Company LPJK

(Both)

GAPEKSINDO

(Contractor)

INKINDO

(Consultant)

Pekanbaru:

- K (Small)

- M (Medium)

- B (Big)

144

83

5

40

31

3

47

10

7

Padang

- K (Small)

- M (Medium)

- B (Big)

132

29

16

53

6

2

37

13

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

Distributed Received (Number) (Number)

Pekanbaru Distributed Received (Number) (Number)

1. Consultant

- INKINDO

- LPJK

2. Contractor

- GAPEKSINDO

- LPJK

10

3

7

15

4

11

6

2

4

10

6

4

10

4

6

20

9

11

6

2

4

16

7

9

∑ 25 16 30 22

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 THE CAUSES

(1) Materials,

(2) Manpower,

(3) Equipment,

(4) Environment,

(5) Changes,

(6) Scheduling and controlling

techniques

- Shortages of materials

- Material changes

- Late delivery

- Damage, and poor quality manufacturing of materials

- Others : -

-

-

- Shortages of labour

- Labour skill

- Nationalities of labourers

- Others : -

-

-

- Equipment failure

- Shortages and late delivery of the equipment

- Low productivity or skill of operator of the equipment

- Others : -

-

-

- Climatic conditions

- Social and cultural impact

- Geological problems

- Others : -

-

-

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

- Others : -

-

-

- 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 THE CAUSES %

(1) Materials,

(2) Manpower,

(3) Equipment,

(4) Environment,

(5) Changes,

(6) Scheduling and

controlling techniques


- Material changes

- Late delivery


- Others : - Limited stocks

- Transportation problem in delivery

- Shortages of labour (lack of labour)

- Labour skill (limited)


- Others : -

- Equipment failure



- Others : - Lack of equipment

- Climatic conditions (weather)



- Others : - Site condition out of plan

- Location in the middle of public facility

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

owners

- Others : - Design changes

- Over estimation

- Delayed activities


- Poor management in project control


- Others : - Poor management

0 %

0 %

70 %

0 %

20 %

10 %

30 %

70 %

0 %

0 %

0 %

0 %

100 %

50 %

10 %

0 %

20 %

20 %

0 %

50 %

20 %

30 %

0 %

0 %

0 %

100 %

90

Table 5.5 Results of pilot study – The common causes of time and cost overrun

problems (extracted from table 5.4)

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.

ACTIVITY CATEGORIES THE CAUSES

(1) Materials,

(2) Manpower/ Labour,

(3) Equipment & management

(4) Environment,

(5) Changes,

- Late delivery

- Limited stocks

- Transportations problem in delivery

- Shortages of labour (lack of labour)

- Labour skill (limited)

- Over estimation

- Lack of equipment

- Delayed equipment activities

- Poor management

- Climatic conditions (weather)


- Site condition out of plan

- Location in the middle of public facility

- Design changes

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.

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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 ∑ fx

j = 1

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

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

X =

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:

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.

The assumptions are few and not very restrictive. The form of the distributions

needs to be known.

The data may be in ordinal form only.

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:

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

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 Medium/fairly occurrence Least/ Seldom occurrence

1 2 3 4 5 6 7

97

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 High occurrence Fairly occurrence Least occurrence None

1 2 3 4 5 6 7 8 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:

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


7 – 9 : Least occurrence; to indicate that the particular activities are seldom being


9 – 10 : Non-occurrence; to indicate that the particular activities are not carried out at

all by the contractors.

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


5 – 7 : Least occurrence; to indicate that the activities are seldom being carried out


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/ Important/ Fairly important/ Least important/ Very significant Significant Not too significant Not significant 1 2 3 4 5

6.2.1 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 The causes Mean Mean 1 Environment Site condition out of plan 4.3269 Social condition 2.1635 Location in the middle of public facilities 2.1635 2.8846 2 Equipment and Management Over estimation 4.6703 Lack of equipment 2.3352 Delayed activities 2.3352 Weather 4.6703 Poor management 2.3352 3.2692 3 Material Late in delivery 4.0055 Limited stocks 2.6703 Transportation problem in delivery 2.6703 3.1154 4 Manpower/ Labour Limited skilled labour 2.4615 Lack of labour 1.2308 1.8462 5 Changes Design changes 3.8846 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

Important Fairly important

Least important

Labour - Lack of labour

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

Changes - Design changes

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 The mean values 1. Lack of labour 2. Social condition 3. Location in the middle of public facilities 4. Lack of equipment 5. Delayed activities 6. Poor management 7. Limited skilled labour 8. Limited stocks 9. Transportation problem in delivery 10. Design changes 11. Late in delivery 12. Site condition out of plan 13. Over estimation 14. Weather

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

Causes Mean per-Activities

Mean Categories1 Environment Site condition out of plan 2.0667 Social condition 2.0667 Location in the middle of public facility - 2.0667 2 Equipment and Management Over estimation 1.3429 Lack of equipment 1.3429 Delayed activities 1.3429 Weather - Poor management 1.3429 1.3429 3 Material Late in delivery 1.1622 Limited stocks 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 Fairly

important Least

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

- -

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.


– consultant’s perspectives

The causes of time & cost overrun The mean values 1. Late in delivery 2. Limited stocks 3. Transportation problem in delivery 4. Design changes 5. Over estimation 6. Lack of equipment 7. Delayed activities 8. Poor management 9. Lack of labour 10. Social condition 11. Site condition out of plan 12. Location in the middle of public facility 13. Weather 14. Limited skilled labour

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

Consultant

“Average”

Factors Categories

Mean Mean

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 - - Equipment and management 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 Material 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 Manpower/ Labour Limited skilled labour 2.4615 - - Lack of labour 1.2308 1.3750 1.3029 Additional works Design changes 3.8846 1.2727 2.5787

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


as perceived by contractors and consultants

Causes categories “Average” Mean 1. Lack of labour 2. Lack of equipment 3. Delayed activities 4. Poor management 5. Limited stocks 6. Transportation problem in delivery 7. Social condition 8. Design changes 9. Late in delivery 10. Over estimation 11. Location condition out of estimated 12. Location in the middle of public facility 13. Weather 14. Limited skilled labour

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:

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• 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


Feedback Goals Achievement

Sub Activities

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




Organize: - Team Works - Suitable/ Match with planning




Check through the report:

- Schedule Activities - Equipment - Work progress - Change Order/Work - Accounting

Analyze It



Actions



Planning

Identification Deviation/ Problems

Identification things that have related

with time and cost management

Major Activities

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.



Sub Activities

Major Activities




Organize: - Team Works - Suitable/ Match

With Planning




Check through the report:


Analyze It

Analyze cause of

Deviations


Actions



planning Identification

Deviations/Problems

Fig. 7.2 The survey results about the proposed framework

Identification things that have related

with time and cost management

114

Group of activities that have not been implemented in comprehensive manner by

the contractors according to both of respondents (contractors and consultants)

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 High occurrence Fairly occurrence Least occurrence None

1 2 3 4 5 6 7 8 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 –


No. Factors Mean value

1 Determine activity strategy/ work program 8.6667

2 Plan & control work time 6.8333

3 Determine the causes of delay 5.1667 4 Analyze the causes of delay 4.8333 5 Plan the solution to overcome the delay 4.1667 6 Make sure all of the activities are appropriate with the time schedule 5.1667 7 Analyze all of the work is appropriated with the time schedule 4.6667 8 Coordinate planning, scheduling and projecting progress in regular time 5.25 9 Coordinate the people involved, to reschedule the schedule of project field 4.25 10 Keep to the time schedule 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

occurrence

High occurrence Fairly occurrence Least occurrence None

- - Plan the solution to

overcome the delay

- Coordinate the people

involved, to reschedule the

schedule of project field

- Analyze all of the work is

appropriated with the time

schedule

- Analyze the causes of

delay

- Determine the causes of

delay

- Make sure all of the

activities are appropriate

with the time schedule

- Coordinate planning,

scheduling and projecting

progress in regular time

- Keep to the time schedule

- Plan & control work time

Determine activity

strategy/ work

program

-

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 non-

occurrence 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.

2.

3.

4.

5.

6.

7.

8.

9.

10.

Determine activity strategy/ work program

Plan & control work time

Determine the causes of delay

Analyze the causes of delay

Plan the solution to overcome the delay

Make sure all of the activities appropriate with the time schedule

Analyze all of the work has appropriated with the time schedule

Coordinate planning, scheduling and projecting progress in regular time

Coordinate the people involved and to reschedule the project site

Keep to the time schedule

4.4333

3.4167

2.5833

2.4167

2.0833

2.5833

2.3333

2.625

2.125

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 High occurrence Fairly

occurrence

Least

occurrence

None

- Plan the solution to overcome the delay

- Coordinate the people involved, to

reschedule the schedule of project

- Analyze all of the work is appropriated

with the time schedule

- Analyze the causes of delay

- Determine the causes of delay

- Make sure all of the activities are

appropriate with the time schedule

- Coordinate planning, scheduling and

projecting progress in regular time

- Keep to the time

schedule

- Plan & control work

time

- Determine activity

strategy/ work

program

- - -

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

Factors

Contractor

Mean

Values

Consultant

Mean

Values

Mean

“Average”

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

To keep to the time schedule

3.0 6.0 4.5

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

occurrence

High occurrence Fairly occurrence Least

occurrence

None

- - To plan the solution to overcome the

delay

- To coordinate the people involved and

to reschedule the project performance

- To analyze all the work is

appropriated with the time schedule

- To analyze the causes of delay

- To determine activity strategy/ work

program

- To make sure all the activities


- To coordinate planning, scheduling

and projecting progress in regular

time

- To keep to the time schedule

- To plan & control

work time

- To determine activity

strategy/ work

program

- -

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 Medium/fairly occurrence Least/ Seldom occurrence

1 2 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 –


No Factors Mean

Value

1.

2.

3.

4.

5.

6.

7.

Controlling project budget

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

a problem

Analyze project finance

Make sure the financial budget is appropriate with the cost estimated

Analyze the activity that always suffers due to cost overrun

Find the alternative solutions to overcome the cost overrun

Determine the potential activities to reduce the cost overrun risks

3.9167

4.4167

4.25

3.75

4.0

3.5833

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

occurrence

Fairly occurrence Least 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


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.

2.

3.

4.

5.

6.

7.

Controlling project budget

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

a problem

Analyze project finance

Make sure the financial budget is appropriate with the cost estimated

Analyze the activity that always suffers due to cost overrun

Find the alternative solutions to overcome the cost overrun

Determine the potential activities to reduce the cost overrun risks

4.3515

3.606

4.6235

3.02

3.903

3.067

3.365

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

occurrence

Fairly occurrence Least

occurrence

- - Make sure the financial budget is appropriate with the cost estimated

- Find the alternative solutions to overcome the cost overrun


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

problem




-

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

Consultant Mean Values Mean “Average”

1. Controlling project budget

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

3. Analyze project finance

4. Make sure the financial budget

appropriate with the cost estimated

5. Analyze the activity that always

suffers due to cost overrun

6. Find the alternative solutions to overcome the cost overrun

7. Determine the potential activities

to reduce the cost overrun risks

4.3515

3.606

4.6235

3.02

3.903

3.067

3.365

3.9167

4.4167

4.25

3.75

4.0

3.5833

4.0833

4.1341

4.0114

4.4368

3.3850

3.9515

3.3252

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 Mean Values “Average”

1. Find the alternative solutions to overcome the cost overrun

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

occurrence

Fairly occurrence Least

occurrence

- - Make sure the financial budget is appropriate with the cost estimated

- Find the alternative solutions to overcome the cost overrun


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

problem




-

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

Goals Achievement




Organize: - Team Works - Suitable/ Match

With Planning




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

Analyze It


ORGANIZE CONTROL Compare Actual Achieving with

Planning

Feedback

Sub Activities

PLAN

Analyze cause of

Deviations

Plan of the Corrective

Actions


Identification Deviations/Problems

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

Major Activities

Describe clearly in Figure 7.4 below

Identification things that have related with

time and cost management

132

132

Plan of the Corrective

Actions


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



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

Construction activities

Preparation activities

Additional works

Material stocks activities

Labour

b. What are the causes?

- The things that exceeded the estimated

- Lack of equipment - Delayed activities - Weather - Poor management

- Condition out of estimated

- Social condition - Location in the middle of

public facility

- Changes design

- Late in delivery - Limited stocks - Transportation problem

in delivery

- Limited skilled labour - Lack of labour

Time Overrun: - To make sure all of the activities


- 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

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.

KONTRAKTOR 1 2 3 4 5

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



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


KONSULTAN

1 2 3 4 5

1 PT. YODYA KARYA - M - 2 CV. ASYIDAH CONSULTANT Jl. Cemara No.59 Pekanbaru M - 3 CV. KARYA CONSULTAN Jl. Melur 50, Pekanbaru M -

4 CV. KUSNAN ENGINEERING Jl. Riau 24, Pekanbaru M -

163

LIST KONSULTAN PROYEK DI PEKANBARU 2002/ 2003

(LPJK)

TA 2002/ 2003


KONSULTAN 1 2 3 4 5

1 PT MEGA STRUKTURINDO CONSULTANT - M -

2 CV MISI KEMAJUAN RIAU - M -

3 MASSA SARANA KOTA CONSULTANT ENGINEERING - M -

4 MULTI KHARISMA KONSULTAN - M -

5 CV PERSADA NUSANTARA CONSULTANT - M -

6 CV TRACE ENG. CONS - M - 7 BINA RIAU JAYA - B - 8 PT SHRIKURNIA - M -

9 NUANSA CIPTA SELARAS CONSULTANT ENGINEERING - M -

10 PIRAMID RIAU PERKASA - B - 11 SINAR ARENGKA SETIA MAJU - B -

164

LIST KONTRAKTOR PROYEK DI PADANG 2002/ 2003

(GAPEKSINDO)

TA

2002/ 2003


KONTRAKTOR

1 2 3 4 5

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 Jl.Ahmad Yani 15 Padang B -

9 PT. WASKITA KARYA - B -

10 PT. PERENCANA&PERANCANG PEMBANGUNAN - M -

11 PT. JASA KONSTRUKSI&ARSITEK JL.Jakarta 5 Ulak karang Padang M -

165

LIST KONTRAKTOR PROYEK DI PADANG 2002/ 2003

(LPJK)

TA 2002/ 2003



1 PT KONCO KARYA - M -

2 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 -

166

LIST KONSULTAN PROYEK DI PADANG 2002/ 2003

(INKINDO)

TA

2002/ 2003


KONSULTAN

1 2 3 4 5

1 SARANA CONSULTANT PK - B - 2 SARANA ENGINEERING JL. Sumba Blok M. No.7 Pdg M -

3 RISKA ENGINEERING CONSULTANT - M -

167

LIST KONSULTAN PROYEK DI PADANG 2002/ 2003

(LPJK)

TA 2002/ 2003


KONSULTAN 1 2 3 4 5

1 PT AMARSIDI ENGINEERING CONSULTANT - M -

2 PT IGASAR - B - 3 CV HASTA KARYA - M -

4 PT KONSULINDO PRIMAKARYA ABADI - 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 -

12 PT REKACIPTA KONSULINDO PRIMA - M -

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 Jenis Perusahaan : Kontraktor/ Konsultan Kind of Company : Contractor/ Consultant 1.2 Klasifikasi (Classification) : B/ M/ K (Big/ Medium/ Small) 1.3 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 THE CAUSES

(1) Materials,

(2) Manpower/ Labour,

(3) Equipment,

(4) Environment,

(5) Changes,

(6) Scheduling and controlling

techniques


- Material changes

- Late delivery


- Others : -

-

-

- Shortages of labour

- Labour skill


- Others : -

-

-

- Equipment failure



- Others : -

-

-

- Climatic conditions



- Others : -

-

-

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

- Others : -

-

-


- Lack of management expertise in project control


- 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








Check through the Report:


Analyze It




Actions



CONTROL Compare Actual Achieving with

Planning



YES

Sub Activities

Major Activities

PLAN ORGANIZE

Identification things that have related with time and cost overrun

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 Jenis Perusahaan : Kontraktor Kind of Company : Contractor 1.2 Klasifikasi (Classification) : B/ M/ K (Big/ Medium/ Small) 1.3 Jabatan : ٱ Manager proyek (Project manager) Position ٱ Arsitek/ Perencana (Architect) Pengawas utama (Main supervisor) ٱ Pengawas lapangan (Field supervisor) ٱ .………………………Lain – lain (nyatakan) ٱ 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


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



2. Apakah Metoda yang digunakan untuk mengatur waktu? What is the method that is used for managingtime?


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:


…… 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):




Perencanaan&pengontrolan waktu kerja (Planning&controlling work time)

178

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)



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


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



Menganalisa keuangan proyek (Analyzing project financial) Memastikan keuangan proyek sesuai dengan rencana anggaran biaya

(Making sure the financial budget appropriate with the cost estimated)



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













Analyze It




Actions



ORGANIZE CONTROL Compare Actual

Achieving with Planning


Achievement

YES

Sub Activities

PLAN

Major 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 Jenis Perusahaan : Konsultan Kind of Company : Consultant 1.2 Klasifikasi (Classification) : B/ M/ K (Big/ Medium/ Small) 1.3 Jabatan : ٱ Manager proyek (Project manager) Position ٱ Arsitek/ Perencana (Architect) Pengawas utama (Main supervisor) ٱ Pengawas lapangan (Field supervisor) ٱ .………………………Lain – lain (nyatakan) ٱ 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 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


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



2. Apakah Metoda yang digunakan untuk mengatur waktu? What is the method that is used for managing cost?


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 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:


…… 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):




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)



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


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. 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



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)



Menentukan aktivitas potensial untuk pengurangan kelebihan biaya (Determining the potential activities to reduce the cost overrun risks)

(ii) Silahkan jawab pertanyaan berikut ini berdasarkan pengalaman

perusahaan 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 dan sertakan alasannya! What is your opinion about framework at the last part is it appropriate to implement in your company? Gives your reason! ………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

5. 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













Analyze It




Actions



PLAN ORGANIZE CONTROL Compare Actual

Achieving with Planning


Achievement

YES

Sub Activities

Major 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 Total5 3 5 10 3 26 25 12 15 20 3 75 2.88465 5 10 4 2 26 25 20 30 8 2 85 3.26964 4 9 9 0 26 20 16 27 18 0 81 3.11543 3 0 1 19 26 15 12 0 2 19 48 1.84629 11 2 2 2 26 45 44 6 4 2 101 3.884626 26 26 26 26

Mean values for the each causeEnvironment 2.8846

Site condition out of plan 2 4.3269Social condition 1 2.1635Location in the middle of public facilities 1 2.1635

Equipment an Management 3.2692The things that over estimated 2 4.6703Lack of equipment 1 2.3352Delayed activities 2 4.6703Weather 1 2.3352Poor management 1 2.3352

Material Stocks Activities 3.1154Late in deliveries 3 4.0555Limited stocks 2 2.6703Transportation problems in deliveries 2 2.6703

Manpower/ Labour 1.8462Limited skilled labour 2 2.4615Lack of labour 1 1.2308

Changes 3.8846Design changes 5 3.8846

26

Mean values for major causes time and cost overruns according to consultants6 5 4 3 2 1 6 5 4 3 2 1 Total5 4 2 1 0 1 12 30 20 8 3 0 1 62 2.06672 2 2 2 3 5 12 12 10 8 6 6 5 47 1.34291 3 1 3 4 1 12 6 15 4 9 8 1 43 1.16222 1 2 4 2 3 12 12 5 8 12 4 3 44 1.37502 2 5 2 3 2 12 12 10 20 6 6 2 56 1.272712 12 12 12 12 12

Mean values for each causeEnvironment 2.0667

Site condition out of plan 1 2.0677Social condition 1 2.0667Location in the middle of public facilities -

Equipment and Management 1.3429The things that over estimated 1 1.3429Lack of equipment 1 1.3429Delayed activities - -Weather 1 1.3429Poor management 1 1.3429

Material Stocks Activities 1.1622Late in deliveries 1 1.1622Limited stocks 1 1.1622Transportation problems in deliveries 1 1.1622

Manpower/ Labour 1.3750Limited skilled labour - -Lack of labour 1 1.3750

Changes 1.2727Design changes 2 1.2727

12

Mean values for time management activities that get less attentionby contractor according to consultants10 9 8 7 6 5 4 3 2 1 1 2 3 4 5 6 7 8 9 10 Total8 1 1 0 0 1 0 0 1 0 12 80 9 8 0 0 5 0 0 2 0 104 8.66670 3 3 2 2 0 1 0 0 1 12 0 27 24 14 12 0 4 0 0 1 82 6.83331 0 2 1 1 2 2 1 0 2 12 10 0 16 7 6 10 8 3 0 2 62 5.16670 0 0 4 2 1 1 1 3 0 12 0 0 0 28 12 5 4 3 6 0 58 4.83330 0 1 0 3 1 2 2 2 1 12 0 0 8 0 18 5 8 6 4 1 50 4.16670 1 0 1 2 4 2 2 0 0 12 0 9 0 7 12 20 8 6 0 0 62 5.16671 0 1 1 0 2 4 1 0 2 12 10 0 8 7 0 10 16 3 0 2 56 4.66671 2 1 0 2 0 0 3 3 0 12 10 18 8 0 12 0 0 9 6 0 63 5.25001 0 3 0 0 1 0 1 3 3 12 10 0 24 0 0 5 0 3 6 3 51 4.25000 5 0 3 0 0 0 1 0 3 12 0 45 0 21 0 0 0 3 0 3 72 6.0000

12 12 12 12 12 12 12 12 12 12

Mean values for cost management activities that get less attention by contractor according to consultants7 6 5 4 3 2 1 1 2 3 4 5 6 7 Total4 1 0 1 0 3 3 12 28 6 0 4 0 6 3 47 3.91672 3 2 1 1 1 2 12 14 18 10 4 3 2 2 53 4.41670 3 3 2 2 2 0 12 0 18 15 8 6 4 0 51 4.25001 1 1 4 3 0 2 12 7 6 5 16 9 0 2 45 3.75002 1 2 0 5 1 1 12 14 6 10 0 15 2 1 48 4.00000 2 2 3 0 4 1 12 0 12 10 12 0 8 1 43 3.58333 1 2 1 1 1 3 12 21 6 10 4 3 2 3 49 4.083312 12 12 12 12 12 12

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