The Effects of Economic Development on Project Management in Developing Countries

Transcription

1 The Effects of Economic Development on Project Management in Developing Countries M KURUOGLU and E ERGEN Department of Construction Management, Faculty of Civil Engineering,VWDQEXO7HFKQLFDO8QLYHUVLW\0DVODNøVWDQEXO7XUNH\ mkuruoglu@srv.ins.itu.edu.tr eergen@srv.ins.itu.edu.tr Abstract Developing societies do not approach problems in the same way as developed societies. So the problems like population explosion, socio-economic imbalance, unemployment, inequality of income distribution, inadequacy in savings and investments and unbalanced budget cause another significant problem called inflation. This paper reports the results of two researches on project management. One of them is on planning system and problem in Turkey and the other is on CPM that was done in 1980 and it has been repeated in 1998 for general conditions of project management system in Turkey. The effect of differences between developed and developing societies on the project management are discussed and main problems of construction industry, its influenced fields and resources (or reasons) are shown in this paper. Keywords: Project management, planning problem, developed and developing societies, effect of culture, CPM. INTRODUCTION In national economy, various sectors provide different goods and services. As the agriculture sector provides agricultural products and the education sector provides educational services, the construction sector provides constructions in co-operation with public control and management systems, financial organisations etc. In national economy, constructions required by all kinds of investments have caused a great demand in construction sector. Furthermore, direct or indirect inputs (such as cement) and outputs (such as furniture and furnishings) of the construction sector affect the related sectors and sub-sectors. For example, in Europe s development period (1953), it s observed that the value added portion in construction sector was 54% and it reached to 73% when the mentioned inputs and outputs are included. It s obvious that the construction sector is the most effective sector for national politics of economy especially for the employment, income distribution and conjecture. Besides, in the mentioned period, the ratio of the investments in construction sector to whole investments is about 50-60%. Thus, it s true that not only the construction sector gives form to the economy, but also it determines the productivity of investments and accordingly the rate of development by means of cost. (Sorguç, 1994). Project is a process that is only complete when the owner is convinced that all that was imagined at the very beginning has come true. This process has many parties (owner, contractor, architect, engineer) and phases (feasibility, design, bidding, construction etc.). However, construction projects are specific and unique and do not repeat themselves. In the last five decades a technology that satisfies the special demands of the

2 construction has been developed on a scientific basis. This technology is based on the use of labour, machinery, materials and income-expenditure in an efficient way and to limit the external effects in order to realise the project in optimum time and with minimum cost. This concept called project management, presents a key to solve the specific problems in this sector. Selection of a technology, management of time, cost, quality, risk, work safety, communication (correspondence, documents and archive) and personnel are the components of the project management which assumes money, time, resource and human as variable parameters (Kuruoglu and Sorguc, 2000). In today s world, because of the increase in dimensions and complexity in construction projects, teamwork and interdisciplinary contributions is a must in project management. The manager should steer right persons towards right positions in a right way in accordance with the work analysis and obligations defined. Moreover, he should be successful in quality, cost and time management. Because of these obligations the manager becomes the key person in project management. General conditions of project management system in Turkey The key of the success in Project Management highly depends on planning efforts. Thus planning department should be given great importance. On this point of view, the research has been carried out in planning departments, assuming that data flow to decision makers is performed by these departments. In leading Turkish firms that contributes 70% of the income of the construction sector, the authorised persons in planning departments have been interviewed. Interviews are reinforced by a number of loosely structured open (or unrestricted ) questions related to the topics determined. Questionnaires couldn t be used as a method of research because information about project management is considered to be private data in construction firms in Turkey. The interviews lasted two hours on average (Kuruoglu, 1999). The main topics of the interview are given below: Why planning is needed Which methods and tools are used for planning How the data is collected from the site Which types of reports are prepared What kind of an analysis system is used for determining man/hour and man/power values What kind of a system is used for deliverance of the reports How is the historical data is analysed and stored What kind of problems are observed How often the work schedule is updated. All the responders answered these questions in the interviews. All the answers are listed below and this list reveals the general condition of Turkish planning system in construction. The majority of the firms have recently established a planning department. Planning has become more important for the technical personnel and managers. In planning departments civil engineers and architects usually work with people who have no education in construction (like industry engineers). However, the contractor firms who are serious in planning prefer the engineers having Master of Science degree in Construction Management. Planning process is usually carried out in site offices and training and supervision is performed by the headquarters. Planning departments are established upon the demand of middle managers with the permission of decision makers. Middle managers demand to have a planning department to be able to organize and co-ordinate the work properly and the decision makers want it to monitor the cash flow and work progress (percentage of completion). The contractors who work abroad require a planning department in order to compete with foreign construction firms and to provide the demanded quality. The main goal in planning is to complete the construction in due time with minimum cost.

3 Time planning is performed properly in all the firms that are included in the research but cost and resource planning are not. Planning department obtains data through speech, writing or network from the personnel who are responsible for the site work. These data that are mostly related to the percentage of completion are used in time planning. For planning usually a computer program called Primavera Project Planner is used. The site experience is necessary for determination of the duration and relations of the items and this information is provided by either planning engineers or technical staff. The persons who are working in planning department have either one or two years site experience or none. The firms do not trust in the analysis of the Ministry of Public Works and they try having their own. In labour planning approach of manpower is used. Some firms use a program called MS-Excel if only work schedule is necessary for them. Work schedule is updated monthly, weekly and daily and usually monthly activity report is delivered to the related technical department at site. The results are also delivered to decision makers. The diversions from projected values are mostly caused by incorrect values of manpower, trouble in resource and cash flow and weather conditions. PROBLEMS IN PLANNING DEPARTMENTS The problems observed in planning departments are listed below: Data transferred to the planning departments is insufficient. The engineers responsible for site have negative approach to planning. Planning department deals with the work other than its own. There is none or insufficient database based on past experiences. In Turkey the number of issues about planning are insufficient. There are insufficient number of people who have their education about planning system and tools. The planning staff doesn t have enough knowledge in human behaviour and organization. Since the reports prepared by the planning departments aren t taken into consideration seriously, the planning staff lacks motivation. In Turkish construction sector planning only means time planning. TIME PLANNING SYSTEM CONDITIONS OF TURKEY Another research that is about CPM was done in 1983 (Arditi and Koseoglu, 1983) and repeated in A survey with 28 questions is carried out. It covered 90 construction firms that are the members of the Chamber of Turkish Contractors. The responders are experienced firms that characterise Turkish Construction Sector. 19% of them have been working in construction sector for years, 68% of them have been working more than 20 years. 60% of the firms had over 100 technical and administrative employees, 27% of them employed between 50 and 100 technical and administrative persons. The results of the survey carried out in 1998 show that CPM is used by most of the firms (69%) that filled in the questionnaire. It s observed that the very first reason for not using CPM is the lack of technical information. Another reason is declared as the technique not being convenient to the process of construction. In this context, it has been proved that the common belief that CPM s not having any benefits in application is not a reason for not using CPM. The respondents declared that their reasons for using CPM are respectively, high expectance in an increase in project performance, demand of the owner and the complexity of the project. Not well-defined projects and insufficient data transfer to planning department are the most important factors that make it difficult to use CPM. Half of the respondents stated that communication problem between planning department and

4 site personnel, and the lack of site experience among planning engineers are the most significant problems in CPM applications. It s also declared that in order to increase the performance of the technique, first of all application project should be available and consequently the duration of the activities should be properly determined. It is stated that the most important benefits of the updates are the chance of comparison between the planned and the actual progress, and monitoring the effects of the delays. Another important finding is that although the expectations in using CPM are high, the percentage of the realization of the expectations is much lower. The majority of the respondents (90%) have expected a decrease in project cost but the percentage of the realization of this expectation is only 32% and this result points out that the technique is inadequate in meeting the expectations. Some significant results are observed when the results of 1998 are compared with those of First of all, since CPM has become very common, it improved the communications in firms and this benefit has become more important. Similarly only time planning was emphasized initially, but then the benefits of performing both time and cost management have become more important. Another significant result of the comparison is the great increase in the realization of the expectations about the benefits of the technique. Besides 90% of the firms not using the CPM technique stated that they are planning to use it in the future and this statement points out that CPM will be commonly used (Birgonul and Ozdogan, 2000). EFFECT OF CULTURE ON PROJECT MANAGEMENT Culture is the way of life especially general customs and beliefs of a particular group of people of a particular time. In other words it is the way of thinking and behaving. Culture is important to determine and analyse the ways of perception, evaluation and application of techniques and technology in the society. Developing societies do not approach problems in the same way as developed societies because of the great role of culture. So the problems like population explosion, socio-economic imbalance, unemployment, inequality of income distribution, inadequacy in savings and investments and unbalanced budget cause another significant problem called inflation. The same state of disorder is observed in construction sector. Public tenders are awarded regarding pecuniary or political reasons and the regulations are frequently modified to facilitate this. But it s only a loss of time and the people have to pay the results. The basic qualities of developed and developing societies are given at table 1.1. But it s important that these qualities vary according to people and different combinations might be formed. This subject has a great importance in multi-cultural Turkish society. Table 1.1 shows a comparison of developed and developing societies with respect to each other. Left side of table shows developed societies with headers and sub headers. Table 1.2. shows main problems of construction industry, its influenced fields and resources (or reasons) shown in Table 1.1. First column of table is problem area, second column defines the influenced fields (Q: quality, P: project, T: time) and last column shows the headline number of table 1.1. For example, the problem of Continuous Inflation Insanity affects the Project and Quality, The resources (or reasons) of this are 1; 3; 5.3. It means that 1.DOGMATIC AND EMOTIONAL, 2. PROCEDURE (PRESTIGE=LABEL) ORIENTED, 5-$*5ø&8/785$/62&,(7<(3. Unbalanced Budget and Poor Economy) is from Table 1.1

5 Table 1.1: Comparison of Characteristics of Culture in Developed and Developing Societies [Sorguc,(1994)] DEVELOPED SOCIETY DEVELOPING SOCIETY 1- RATIONALIST 1- DOGMATIC AND EMOTIONAL Determinist Fatalist Asks questions Obedient Objective (Coherent) Subjective (incoherent) Concepts are clear Concepts are recondite (What is meant should be questioned) 2- INDIVIDUALIST 2- OPPRESSES THE INDIVIDUAL Individualist and humanist Happy with Hierarchy Criticizes everything Against Criticism Competitive Looks for harmony Self-Confident Fearful and has inferiority complex Autocratic and Central Administration is Democratic and Local Administration is preferred preferred Personal benefits are assumed as common Common interests are important benefits Social Organizations are active Not enough Social Organizations 3- TASK (RESULT) ORIENTED 3-PROCEDURE (PRESTIGE=LABEL) ORIENTED Production Oriented: (Meritocracy, Team Work) Speculative Realistic Goals and Planned Life (Discipline). Imaginary Goals (Unplanned Daily Life) and disorder is dominant. 4- WANTS TO LIVE THE LIFE COMPLETELY4- WANTS TO LIVE THE LIFE AFTER (PANTA REI) DEATH(tomorrow means life after death) Entrepreneurial; evaluate business opportunities. Not entrepreneurial Productivity is important Productivity or time loss are not important Creative Fundamentalist and Conservative Active; wants to orientate events. Passive; orientated by events. 5- DEVELOPED IN INDUSTRY AND ECONOMY 5- AGRICULTURAL SOCIETY Oriented by Standards and Rules. Double Standards is common. Has Trustworthy Statistics Statistics are insufficient Conscious About Economy and Budget. Unbalanced Budget and Poor Economy. Contemporary education and research is aimed. Not a contemporary education. Table 1.2: Problems and Their Resources in Construction Industry PROBLEMS Influenced Resource Fields (Table 1.1) Continuous Inflation Insanity P, Q 1; 3; 5.3 Fluctuation in construction sector Q 3.1; 3.2 No construction Oriented Commerce Politics Q 1.1; 3.1; 4.1 (Award, Payment System-Credit System) 5.3 (Public Improvement) Regulations under practice P, Q 5.1; 1.4; 2.5; are not proper for the goals. 2.6; 3; 4.2; 4.4 There is no social politics for Construction Q 2.6; 4.2 Building plot speculation is dominant. P 1.1; 3.2 There is no precaution and effort to decrease P, Q 5.1; 1.4; 1.4; material prices. 5.4 Efficient Quality Control and Insurance System Q, P 5.1; 1.1 does not exist. Inefficient planning and application on site P, T 3.2; 1.1 Education and Encouragement is not sufficient. Q,P,T 5.4; 1.1

6 Another example, the problem of There is no social politics for Construction affects Quality, The resources (or reasons) of this are 2.6; 4.2. It means that, 2- OPPRESSES THE INDIVIDUAL (6.Personal benefits are assumed as common benefits), 4- WANTS TO LIVE THE LIFE AFTER DEATH (Productivity or time loss are not important) is from Table 1.1 Table 1.3: Effects of the characteristics of culture on fields in project management INFLUENCED FIELDS IN PROJECT CHARACTERISTICS OF A DEVELOPING SOCIETY MANAGEMENT 1- DOGMATIC AND EMOTIONAL Fatalist PM, CM, TM PM, CM, TM, QM, CA, IM, Subjective (incoherent) SSM Concepts are recondite PM, CM, TM, QM, CA, IM, SSM (What is meant should be questioned) 2- OPPRESSES THE INDIVIDUAL Happy with Hierarchy (Authority is given.) PM, IM Against Criticism CM, TM, QM, CA, IM, SSM Looks for harmony PM, CA, IM, SSM Fearful and has inferiority complex PM, QM, IM, SSM Autocratic and Central Administration is preferred PM Personal benefits are assumed as common benefits PM, QM, IM 3- PROCEDURE (PRESTIGE=LABEL) ORIENTED (FORMALIST) Speculative PM, CM, TM, QM Imaginary Goals (Unplanned Daily Life) and PM, CM, TM, CA, IM, SSM disorder is dominant. 4- WANTS TO LIVE THE NEXT WORLD (TOMORROW MEANS THE NEXT WORLD) Productivity or time loss are not important PM, CM, TM, QM, CA, IM, SSM Fundamentalist and Conservative PM, CM, TM, QM, CA, IM, SSM Passive; orientated by events. PM, CM, TM, QM, CA, IM, SSM 5- AGRICULTURAL SOCIETY Double Standards is common. PM, CM, TM, QM, CA, IM, SSM Unbalanced Budget and Poor Economy. CM, TM, QM, CA, IM, SSM Table 1.3. shows that effects of the characteristics of culture on fields in project management. First column of table is developing society properties and second column is an influenced field in project management. PM: Project Management, TM: Time Management, CM: Cost Management, QM: Quality Management, CA: Contract Administration, IM: Information Management, SSM: Site Safety Management are shown in this table. For example if culture has a speculative (Table 1.3, 3. Procedure oriented) characteristic this will affect the efficiency of cost management, time management and also project management. CONCLUSION AND RECOMMENDATIONS In this context, effective saving and investments should be the main goals of the politics of economy. In other words, rational politics of economy should steer towards a balanced (socio-economic) and continuous growth that helps the society to adapt to modern requirement.

7 The contracts and bidding system can only be effective when prepared by the co-ordination of democratic representatives of the contractors, public organisations (owner) and authorised science organisations. But this kind of teamwork cannot be easily accomplished in a developing society. The subjects which have problems that haven t been solved yet, are listed below: Tax and price appreciation, regional planning Social politics (not being suitable for construction works) System of quality control and auto-control Bidding system (bidding without complete design) Application of regulations and building permits Feasibility analysis. The main characteristics of two extreme cultures are given in Table 1.1. Also examples explaining the table are given. The effect of culture on typical problems of construction sector is given in Table 1.2. The effect of culture on project management is given in Table 1.3. The main characteristics of culture should be taken into consideration before developing or applying any technical systems in developing countries. It s suggested to determine the characteristics of the culture and its possible effects before developing a system. By this way the reasons of the problems observed in application of a technology in developing countries can be explained. Regarding the mentioned effects of culture, the solutions to the mentioned problems is suggested below: Proposed solutions to these problems are listed below: [Sorguc, (1994)]. Simplification of work (by using standard construction materials) Appropriate machinery and equipment Macro and micro planning Appropriate education and premium system Economical analysis of site planning. REFERENCES 1. Arditi, D. and Koseoglu, H. (1983), Factors affecting success in network applications in a developing country, Construction Management Economics, Vol.1, No.1, pp Birgonul, M T and Ozdogan, I D (2000), Critical path method in Turkish construction sector and problems observed, Proceeding of the 2 nd Conference of Construction Management, Turkey, June 15-17, pp.31-42, in Turkish. 3. Kuruoglu, M (1999), Project management automation for construction owners, Ph.D. Thesis, Science and Technology Inst. Of ITU, Istanbul/Turkey, in Turkish. 4. Kuruoglu, M and Sorguç, V D (2000), A suggestion of reorganization of planning department for Turkish construction firms, Proceeding of the 2 nd Conference of Construction Management, Turkey, June 15-17, pp.31-42, in Turkish. 5. Sorguç, V D, (1994) Main problem of construction sector is human, Turkish Engineering News, Vol 7, pp , in Turkish.