SUCCESS FACTORS ENHANCING BUSINESS PERFORMANCE OF ENGINEERING PROCUREMENT CONSTRUCTION (EPC) INDUSTRIES

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    International Journal of Mechanical Engineering and Technology (IJMET), ISSN 0976

    6340(Print), ISSN 0976 6359(Online) Volume 4, Issue 1, January - February (2013) IAEME

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    SUCCESS FACTORS ENHANCING BUSINESS PERFORMANCE OF

    ENGINEERING PROCUREMENT CONSTRUCTION (EPC)

    INDUSTRIES

    M.D.Nadar1,

    Dr. D.N.Raut2,

    Dr. B.E.Narkhede3

    and Dr.S.K.Mahajan4

    1Research scholar- Production Engineering

    2Dean Administration-VJTI, Mumbai

    3HOD- Production Engineering Department, VJTI, Mumbai

    4Director- DTE, Government of Maharastra, Mumbai

    Email: [email protected], [email protected]

    2,[email protected]

    3

    ABSTRACT

    Engineering procurement construction projects play an important role in national

    economic development. India, which contributed approximately 8.5% to the total of Indias

    GDP. Project schedule slips, budget overruns, compromised quality, resulting claims and

    counter-claims problems have plagued the industry. The reasons for poor project

    performances abound. Previous researches have dealt much with the problems of project risk

    and uncertainty, variations in project outcomes, work fragmentation, complex relationships

    among stakeholders and activities, and excessive phase overlaps in general. In this paper

    dealt with EPC industries project success factors

    Construction projects are implementing different phases., viz., conception phase,

    definition phase, planning phase, scheduling phase, controlling phase and termination phase

    Various factors affect construction projects performance and success of projects i.e.,

    completion periods of projects , project budget and better service to owners of project. The

    objective of this paper studying success factors variables, project functions, project activities,of project team members, project team members skills, attitude, experience, project tools,

    methods of project implementation enhancing the business performance of engineering

    procurement construction industries. Construction projects completion times are in line with

    owners requirements, and identifying gap reduction factors between project budget and

    project cost and improving business performance enhancing factors for construction project

    industries. To collect data, to record the collected data in tabular format, to analyze the

    recorded data by using statistical procedure and interpret ate success factors plays role in the

    EPC industry business operations.

    INTERNATIONAL JOURNAL OF MECHANICAL ENGINEERINGAND TECHNOLOGY (IJMET)

    ISSN 0976 6340 (Print)ISSN 0976 6359 (Online)

    Volume 4 Issue 1 January- February (2013), pp. 30-43 IAEME: www.iaeme.com/ijmet.aspJournal Impact Factor (2012): 3.8071 (Calculated by GISI)

    www.jifactor.com

    IJMET I A E M E

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    Keywords: project team, project planning, project manager, project packages, project

    activities, project schedule slips, project budget overrun, project cost

    1. INTRODUCTION

    The purpose of this paper is studying to overcome construction projects complexities

    problems through successful factors of projects functions from conception phase to

    termination phase [1] (functions starts from conception phase, definition phase, planning

    phase, scheduling phase, implementation phase, monitoring and controlling phase and

    termination phases). Identifying complex functions with various variables to enhance

    complex function performance in construction projects operations [7]. Success factors to

    optimize the complexities of construction projects. Exhausted literature survey and EPC

    industry site visits are used to design and to develop the questionnaire. The questionnaire

    circulates amongst engineering procurement construction industries, Consultant, owners,

    Construction management CEO, programme managers, project managers around 500

    numbers questionnaires are mailed, personally submitted with request, and received43numbers. Questionnaires The questionnaire contents five parts viz., part-A(Company

    information), part-B(Measuring project success), part-C(Factors affecting project success),

    part-D(Use of computer packages for project management) and part-E(Project delay).

    Questionnaires analysis gives various functions complexities in execution of construction

    projects and corresponding variables (task, resources, time, and precedence) favors for

    success of functions and affecting success of construction projects execution.

    2. RESEARCH METHODOLOGY

    To interview senior management of contractor, Construction management, consultantand owner of the project, EPC industry project head and visit to meet construction

    project site head interact and to collect the research related data and information To collect research related data and information of EPC industry through literature

    survey of referred research problems related national and international journals

    To design and to develop questionnaire with five parts of questionnaire part-A(Company information), part-B(Measuring project success), part-C(Factors

    affecting project success), part-D(Use of computer packages for project management)

    and part-E(Project delay).

    Data and information of EPC industries related business operations problemscollected through questionnaires.

    To record data and information from the collected questionnaires in the excel sheetand in the tabular format. Statistical tools are using to analyze the data and

    information.

    To observe and compare the business operations of EPC industries research relateddifferent problems and various characteristics of business operational activities,

    various operational factors to enhance the business performance activities and

    characteristics of operational variables [7]. To conclude the variables and factors are

    involves in success of EPC industries business operations.

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    3. QUESTIONNAIRE DESIGN

    This paper addresses studying and identifying the factors to stream line the input

    variables (resources, planning, scheduling) and driving factors to controlling (monitoring,updating) business operations of EPC industries. The questionnaire design and framework

    based on rigorous survey of EPC industry business operations related research journals of

    national, international literatures. And continuously visiting the site of EPC industry

    project execution and contact project site head for collect data and information related

    research variables and factors. The questionnaire consists of the following data and

    information collecting tools (questions). The questions divided in to five parts. part-

    A(Company information), part-B(Measuring project success), part-C(Factors affecting

    project success), part-D(Use of computer packages for project management) and part-

    E(Project delay).

    3.1 Questionnaire Company information

    Questionnaire contents companys information are companys name, location of businessoperation, capacity of business operation in terms of manpower, turnover yearly, project

    size in terms of project cost, project duration and manpower involves in the executed

    project.

    3.2. Questionnaire Measuring project success factorsThe executed project details includes project site, project details like type of the project i.e.,

    mechanical, electrical, plumbing, HVAC, civil etc., technical capacity, type of the operational

    functions i.e., design, supply, installation, testing and commissioning, and project cost,

    projected executed time duration planned and actual, project success factors activities in

    tactical management planning like design planning, project site execution planning,

    manpower planning and material, machines and equipments [13] delivery planning to site

    daily, weekly and monthly, safety, security and housekeeping planning, project selection,material handling planning, risk mitigation etc., what are methods are using to drive the

    success factors.

    3.3. Success factors importance in project executionVarious factors are measuring relatively in the project execution monitoring phase, well

    defined tasks, responsibilities, reporting hierarchy organizations, project frequent feedback,

    well defined control procedures, use of management tools like PERT/CPM, use contingency

    plans, absence of lengthy procedures and absence of legal hurdles. The scales are defined

    relatively in between (1-7) 7 is most important and 1 is least important. Construction project

    success are defined different ways in questionnaire like project completion with in planned

    schedule, planned budget and minor delay[17], minor escalated budget, delivered

    construction project meets clients quality, technical specification, functional envisaged by

    the client, project benefits meets clients satisfaction, commercially profitable to client, meets

    clients objective of their business. The scales are defined relatively in between (1-5) 1 is

    most important and 5 is least important. Precautionary measures to optimize the success

    factors are defining the following questions and scales are defined relatively in between (1-5)

    1 is most important and 5 is least important. The questions are error free estimation of

    project completion time and project cost, composition of project team, choice of project

    leader, adequate of project funding, minimal start up difficulties, public support, project

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    progress monitoring and control techniques. Attributes of project organizations are plays

    roles in construction project success. The questions are defines the follows co-ordination

    among the major functions, informal structure, funding support and resources allocation,

    stability of policies and well defined reporting hierarchy and scales are defined relatively inbetween (1-5) 1 is most important and 5 is least important. Construction project success is

    defined in the questions of qualities of project team and project manager size of the team,

    team spirit, job knowledge, willingness to learn, cost conscious, commitment to other projects

    and commitment to project dead line and administrative authority, technical competence,

    leadership style, timely decision making skills, communication skills, attitude and

    commitment , clarity of purpose, unbiased, involvement in details and scales are defined

    relatively in between (1-5) 1 is most important and 5 is least important. Construction projects

    success further consider the client attributes and projects characteristics. The following

    factors are given below in the questionnaire frequent interaction with project team, fast

    response to project team queries, prompt payment of bills, co-ordination with project

    team[11], commitment with project team [3,4,5,11,12], incentives for successful completion,

    good rapport with organization etc., and size of the project, manpower requirement, technicalcomplexities of project, technical skills requirements, Stringent quality / tolerance

    specifications, frequent changes to design requirements and special requirements of materials

    and equipments and scales are defined relatively in between (1-5) 1 is most important and 5 is

    least important. External factors are deviating the construction project success state and

    these factors are presented in the questionnaire non availability of materials in time, non-

    availability of technical personnel, co-ordination with multiple agencies [14, 15], unexpected

    ground conditions, price escalations, changes government policies, legal disputes,

    discrepancies in contract documents, bad weather and mistakes and repetitions of activities

    and scales are defined relatively in between (1-5) 1 is most important and 5 is least important.

    3.4. Computer packages tool role in construction project success

    Construction Project Company uses computer packages factors (computer hardware,software, internet facility, E-mail facility, fund transfer, telephone facility etc.,) involves in

    successful project execution process. How far computer packages tool contribution to

    construction project success defined the questions and scales are defined relatively in

    between (1-5) 1 is most important and 5 is least important. Planning, scheduling, resource

    allocations, resource histograms, budgeting, cash flow, crashing, report generation, project

    budgeting, project updating, project change management, on-line project status, planning for

    remaining work, earned value analysis, multi-project planning, multi-project resource

    sharing, contractors monitoring, bill of materials, materials tracking and management,

    transportation and distribution, risk mitigation, supply chain management, warehouse and

    stores management functions, accounting, bill payment, bill collection, shift-wise planning,

    integrated equipment maintenance, integrated shop floor planning, integrated quality

    planning and control, information communication / transfer [2,12] and Email / EDI support

    3.5. Project Delay factors:

    Construction project delay [17] causes are based on managerial degree of decision maker

    favors to owners, quality of owners project manager, expected profit rate, market

    standardization degree, strategic orientation, ability solve the design problems, risk control

    capability, resource utilization degree, the number of follow-up of projects, the proportion of

    educational and experience literacy of project team members.

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    4. QUESTIONNAIRE RESPONDENTS

    The questionnaire respondents are executives, contract management, consultant,

    architect, owners and contractors Project manager, program manager, Procurement manager,

    executives, projects of civil, HVAC, MEP etc.,

    Table 1

    Type of Industry Region Type

    Mumbai and Around

    the Mumbai

    Govt. Public Sector /

    Private/Partnership or

    Propietorship

    Typical duration of

    Projects in last FY

    Less than 6 months 7

    6-24 months 14

    24-36 months 24

    More than 36 months 7

    Total questionnaires are received from respondents are 52 Programme mangers and Project

    managers of contractors and construction management are 14 and 20 respectively out of 52

    respondents, Project managers of consultancy 10 out of 52 respondents, Contractor ChiefExecuting officer 4 out of 52 respondents and project owner of 4 out of 52 respondents. The

    respondents industries based on ownerships are Government, propertiership, public sector

    and private partnership.

    5. SURVEY RESEARCH FINDINGS

    Research finds variables for success of EPC industry operations are project success

    factors for Environments of monitoring of progress of project implementation, project

    success declaring environments, project enhancing factors, project implementing contractors,construction management and consultancy attributes, executing project managers qualities,

    project implementing team members qualities, attributes of qualities, complexities of

    projects, attributes of project owners and attributes of external factors.

    5.1. Research analysis of monitoring of project process methods

    Project progress implementation Monitoring climate involvement in project success is given

    below.

    Table 2

    Code Factors Success factors %

    C11 Well defined tasks and responsibilities 10.98%

    CI2 Well defined reporting hierarchy 11.98%

    C13 Well defined control procedures 13.48%C14 Frequent feedback 12.31%

    C15 PERT / CPM Techniques 11.15%

    C16 Computer based Techniques 10.98%

    C17 Use of contingency plans 10.98%

    CI8 Absence of lengthy procedure 9.32%

    C19 Absence of legal Hurdles 8.82%

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    Figure 1

    5.2. Research analysis of Environment of project success: Project success environment

    declaring factors are given below.

    Table 3Code Factors Success factors %

    C21 Project completed within planned due date

    or minor delay

    13.5%

    C22 Project completed within planned budget or

    minor escalation

    11.39%

    C23 Project meets technical /quality

    specification of the client

    6.33%

    C24 Project provides satisfactory benefit to the

    client (C24)

    18.74%

    C25 Project delivers the functionality envisaged

    by the client (C25)

    16.46%

    C26 Project achieves stated business objectives

    of the client (C26)

    16.46%

    C27 Project is commercially profitable for the

    client

    17.72%

    Figure 2

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    Project success environments are declared the factors from more important to least

    important are projects provide satisfactory benefits to clients to project meets technical /

    quality specification of the client

    5.3. Research analysis of Enhancing factors for project success in EPC industryEnhancing project success environment through the following factors are given below.

    Table 4

    Code Factors Success factors

    %

    C31 Accurate initial estimates (Cost and time). 14.2%

    C32 Composition of project team. 18.0%

    C33 Choice of project leader. 12.1%

    C34 Adequate funding to completion. 18.4%

    C35 Progress monitoring and control techniques. 16.7%

    C36 Minimal start-up difficulties 13.0%

    C37 Public support for the project 7.5%

    Project enhancing factors are ensuring the success of project implementation viz., adequate

    funding for completion, composition of project team and project monitoring and control

    techniques.

    Figure 3

    5.4. Research analysis of project implementing operational factors of contractors,

    construction management organizations and consultancy organizations characteristics

    influencing the project success. The following factors are influencing the success of the

    project implementation in EPC industries.

    Table 5

    Code Factors Success factors %C41 Informal structure. 12.3%

    C42 Funding support. 18.2%

    C43 Allocation of resources. 14.5%

    C44 Stability of policies. 19.5%

    C45 Co-ordination among major functions. 16.4%

    C46 Well defined reporting hierarchy. 19.1%

    Policy remains same for all project owners encourages the success of project implementation

    like the quoting project price, method of project operational policies, project team

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    motivational scheme, well defined organization hierarchy etc., funding support of stake

    holders, contractors and vendors allocation of resources are make success of project

    implementation, co-ordination amongst project implementation team in multi major functions

    like HVAC, Civil, plumbing, Electrical, Building Management Systems (BMS)etc.,

    Figure 4

    project implementation viz., stability of organizational polices, well defined reporting

    hierarchy, adequate funding for completion of project, co-ordination amongst contractor,

    construction management and consultancy operational functions of project implementation,

    allocation and available of resources on time of activities execution and project execution to

    take place as team and follows as informal structure in the project implementation.

    5.5. Research analysis of qualities of project manager characteristics is influencing the

    project success. The project manager characteristics are influencing the project success in the

    project execution are listed in the following success factors table.

    Table 6

    Code Factors Success factors %

    C51 Technical competence. 20.00%C52 Administrative authority. 6.27%

    C53 Leadership style. 9.02%

    C54 Clarity of purpose. 11.37%

    C55 Timely decision making. 15.69%

    C56 Communication skills. 16.08%

    C57 Attitude and commitment. 11.76%

    C58 Involvement in details 9.80%

    Project manager plays crucial role in the success of project implementation of construction

    industries operations. Technical competence characteristics of project manager are given the

    below. Technical qualification, technical skills and technical experience are contributing in

    the success of project implementation. Project manager communication characteristic reducesthe hierarchical communicational gaps own organizations, communication process in the

    construction execution are existing amongst construction management, project owner and

    consultancy. Project manager plays role as information receiver and distributor. Project

    manager timely decision making characteristic, attitude and commitment, clarity of purpose

    factors are important in the project implementation success.

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    Figure 5

    5.6. Research analysis ofqualities of project team characteristics is influencing the project

    success. The project team characteristics are influencing the project success in the projectexecution are listed in the following success factors table.

    Table 7

    Code Factors Success factors %

    C61 Small size of the team. 6.56%

    C62 Job Knowledge. 16.39%

    C63 Team Spirit. 14.34%

    C64 Willingness to learn 19.26%

    C65 Cost Consciousness 15.57%

    C66 Commitment deadlines 19.26%

    C67 Absence of commitments to other projects. 8.61%

    Figure 6

    Project team efforts are required to develop willingness to learn, commitment to deadline.

    These efforts are lead to major project success contribution. Job knowledge, cost

    consciousness and team work factors plays in the project success.

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    5.7. Research analysis ofqualities of project owner characteristics is influencing the project

    success. The project owner plays major role in the success of the project implementation. The

    project owner characteristics are listed in the following success factors table.

    Table 8Code Factors Success factors %

    C71 Frequent interaction with project team. 13.21%

    C72 Fast response to queries 15.47%

    C73 Clarity of purpose 15.09%

    C74 Good rapport with project organization. 10.57%

    C75 Commitment to the project. 13.58%

    C76 Prompt payment of bills. 13.21%

    C77 Incentives for successful project completion 7.92%

    C78 Co-ordination with project Team 10.94%

    Project owner roles are important in the project execution success fast response to queries of

    consultant, contractors, construction management reduce the delay of project activities, the

    project product purpose clarity are required to be known by the client, frequent interaction

    with project team, commitment to the project and prompt payment of bills enhance the

    project success.

    Figure 7

    5.8. Research analysis of project complexities is resisting the project success. The project

    complexities plays major role in the success of the project implementation. The project

    complexities characteristics are listed in the following success factors table.

    Table 9

    Code Factors Success factors %

    C81 Large size of the project. 5.33%C82 Large manpower requirement. 10.66%

    C83 Non-similarity to previous projects 14.34%

    C84 Technical complexity of the project. 15.98%

    C85 Stringent quality / tolerance specifications 17.62%

    C86 Special technical skill requirements. 11.89%

    C87 Frequent changes to original design specifications. 11.48%

    C88 Special material / equipment requirements. 12.70%

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    Project complexities are resisting the project execution success are ranking in the table-9.

    Large size of the project increase the complexity of project characteristic resisting the success

    of the project execution, consequently large manpower requirements increase the difficulties

    and complexity of managing project execution it may lead to affect project success inconstruction industry. Similarly the ranking of project success resisting factors are technical

    skills requirements, frequent changes of original design specifications, special materials and

    equipments requirements, non-similarities of previous projects, technical complexity of

    projects and Stringent quality / tolerances specifications resisting the project

    Figure 8

    5.9. Research analysis of project External factors resisting the project success. External

    factors plays major role in the success of the project implementation. External factors

    characteristics are listed in the following success factors table.

    Table 10Code Factors Success factors %

    C91 Non availability of materials in time 12.64%

    C92 Non-availability of technical personnel 13.75%

    C93 Coordination with multiple agencies 13.01%

    C94 Unexpected ground conditions 10.08%

    C95 Price escalations. 9.67%

    C96 Changes in Government policies. 8.18%

    C97 Legal disputes 9.67%

    C98 Discrepancies in contract documents. 5.95%

    C99 Mistakes and repetitions of activities. 9.67%

    C910 Bad weather. 6.69%

    External factors ranking are described the descending order in the success point of view.

    Discrepancies in contract documents resisting the project progress and lead to delay in the

    project completion, Bad weather, changes in government polices, price escalations, legal

    disputes, mistakes and repetitions of activities are lead significantly to hurdle the project

    progress, unexpected ground conditions may lead to disturb the project considerable

    progress. Finally the following factors non availability of materials in time, co ordination of

    multiple agencies and non availability of technical personnel.

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    Figure 9

    6. SUMMARY OF RESEARCH ANALYSIS AND PROJECT SUCCESS IN EPC

    INDUSTRY

    Projects are successfully implemented when controlling the following factors areoperational systems of contractors, consultants and construction management most important

    to enhance the EPC industry business success External factors resisting the project success.

    External factors plays major role in the success of the project implementation. External

    factors characteristics are listed in the following success factors table.

    Table 11

    Code Factors Success factors %

    C1 Project monitoring methods 11.4%

    C2 Project success environment 11.4%

    C3 Project success enhancing factors 11.4%

    C4 Operational systems of contractor,

    consultant and construction management

    12.5%

    C5 Qualities project manager 10.8%

    C6 Qualities project team 11.8%

    C7 Client characteristics 11.1%

    C8 Project complexities 10.4%

    C9 External factors 9.1%

    Figure-10

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    7.CONCLUSION

    This paper reports the findings of an Action Research based investigation, which was

    concerned with determining whether best practice used in other EPC industries to facilitate

    the success of construction business process. The ranking of success factors gives ideas to

    implement the EPC industries project follows the guide lines to success of the project in the

    form of cost, time and quality development. The results of this research suggest that: The

    operational methods of contractor, consultant and Construction management is to be

    improved. Theses all success factor related to quality of project operational systems.

    Contractor, subcontractors, construction management and consultant the quality success

    factors are considered the following sequences. The qualities of project team, project

    monitoring methods, project success environment, project success enhancing factors, client

    characteristics, project manager attributes. Project complexities and external factors are to

    limit the success of project implementation.

    EPC industry success factors are implementing methodology to be developed is scope of this

    paper. Like subcontractor rating, vendor selection, supplier certification, project teamtraining, project manager qualities training program, Design and development of

    constructional process operational systems in construction activities

    8.ACKNOWLEDGMENT

    We express our sincere thanks to our institute management of VJTI for allowing us

    work on construction management, we extend our sincere thanks to Dr.L.Ganapathy

    (Professor in NITIE-Mumbai) give us proper guidance to search the construction industry

    problems, our thanks to Shri. Dharmaraj, Adhithya Erode. who give us vision, mission and

    financial support for this research work and also make me to develop this paper we extend

    our sincere thanks to Dr. K.M.Vasudevan pillai and Dr.R.I.K.Moorthy, CEO and Principal

    Pillai Institute of Information Technology New Panvel , for giving us continuous motivationand time to complete this research work paper publication and last but not least our thanks

    to our family members for giving us patience to complete the paper publication.

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