A written reflection on Risk, value and supply chain management in construction industry

ICP814 Design Process and Construction Management Project Management M E T H O D O L O G Y i n

construction industry

t 01 Risk in any project is a choice rather that fate.

02 LEARN OPTIMIZING THE VALUE OF THE PROJECT

03 A-look at COVID-19 impacts on supply chain management

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Author & editor Ar. Farhana binti Mohammed Isa B.Sc. Arch (IIUM), B. Arch (UM) info.farhanaisarchitect@gmail.com Official address Faculty of Architecture, Planning And Surveying, Universiti Teknologi MARA (UiTM), 40450 Shah Alam, Selangor (+6) 017-3117086

https://www.linkedin.com/in/farhana-isa/

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Project Management Methodology in Construction Industry

01

contents ISSUE 01|2020

05 welcome note 07 introduction chapter 01 Risk in any project is a choice rather that fate 10 Introduction 11 Relationship Between Risk Management and Corporate Governance 11 Risk identification Context Setting

02

12 Risk Assessment Process 12 How to treat the Risks 13 Conclusion chapter 02 Learn optimizing the value of the project 16 Introduction 17 Flow of conducting VM/VE in construction or project 17 Key factors of VE's significant and concerned: 17 When VM is carried out?

17 What are VM processes?

17 What are 5 importance options i.e elements of VM/VE?

03

chapter 03 A-look at COVID-19 impacts on supply chain management (SCM) 20 Supply chain management role in construction 20 Critical Success Factors (CSF) in SCM 21 The impact and challenges of movement control order (MCO) during COVID-19 outbreak to construction industry supply chain 21 Creating a supply chain for tomorrow 23 Way forward & conclusion 27 List of references

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Project Management Methodology in Construction Industry

welcome

Nice to meet you!

Salam and Hi everyone!

I'm Ar. Farhana Mohammed Isa (Student ID Number 2019658866) currently pursuing Master degree of Integrated Construction Project Management at Universiti Teknologi MARA (UiTM). Currently, working as an Architect for government of Malaysia serving Division of Sustainable development expertise, (Bahagian Kepakaran Pembangunan Lestari), Cawangan Arkitek, JKR, Ministry of Works since 2018.

Previously, I had a 7 years experience in private sector as PMT and Architect in the construction industry.

The COVID-19 outbreak has affected people and organizations globally. Looking back to the most difficult time, I take this oppurtunity to reflects on its impact on the construction industry especially in Malaysia and the outlook for the rest of the year and beyond. This e-book shall demonstrate my understanding towards risk management, value management and supply chain management subjects in relations with current issues.

A deepest appreciation to Ts Dr Shaza Rina Sahamir, the subject supervisor of ICP814 Design Process and Construction Management for your precious knowledge and effort teaching us via online method during this Covid-19 outbreak. This shall remains a bittersweet history in our education.

Hope everyone who read this have a good day ahead! Nice to meet you! #stayathome #kitajagakita #kitamestimenang www.issuu.com/farhanaisa

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Project Management Methodology in Construction Industry

introduction A project management methodology is essentially a set of gui di ng principles and processes for managing a project. Without a doubt, a properly defined and strictly followed methodology for managing a project provides a firm guarantee that the job will be done on time, under budget and as per client specification.

The term “project management methodology” was first defined in the early 1960s when various business organizations began to look for effective ways that could simplify the realization of business benefits and organize the work into a structured and unique entity (which was called “project” later on). Communication and collaboration were the key criteria for establishing productive work relationships between the teams and departments within one and the same organization.

Since that time, the term has been changed and modified many times, new definitions have been created, new elements and functions have been added. Today we consider a project management methodology as a set of broad principles and rules to manage a specific project that has a definite beginning and end.

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Project Management Methodology is a strictly defined combination of logically related practices, methods and processes that determine how best to plan, develop, control and deliver a project throughout the continuous implementation process until successful completion and termination. It is a scientificallyproven, systematic and disciplined approach to project design, execution and completion.

The purpose of project methodology is to allow for controlling the entire management pr ocess t hr ough effective decision making and problem solving, while ensuring the success of specific processes, approaches, techniques, methods and technologies. Typically, a methodology provides a skeleton for describing every step in depth, so that a project manager will know what to do in order to deliver and implement the work according to the schedule, budget and client specification.

Among the most popular PM methodologies are PMBOK® Guide, PRINCE2, Critical path method (CPM), Lean PM methodology , Six Si g m a , C r i t i c a l C h a i n P r o j e c t Management (CCPM) and SCRUM This e-book is the summarization activity of Risk Management (RM), Va l u e m a n a g e m e n t ( V M ) a n d Supply chain management (SCM) in PMBOK® Guide ISSUE 01|2020

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chapter 01 Risk in any project is a choice rather that fate 10 Introduction 11 Relationship Between Risk Management and Corporate Governance 11 Risk identification Context Setting 12 Risk Assessment Process 12 How to treat the Risks 13 Conclusion

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Risk in any project is a choice rather that fate.

Fire in Malaysia's EPF building caused by flammable cladding.(NST, Feb 13, 2018)

Risk management is a methodology which has become popular in a number of businesses including constructional acquaintances. Often companies establish a risk management procedure in their project planning and work for improving the performance and increase the profits by folds. By adopting risk management, savings potentials can be realized in construction projects. Risk is involved in every business and construction industry and there lies no exception in whatever way possible. Risk in terms of safety, economy and timely completion are the most important aspects for any project to be a successful one and be the best in the market. The integration of a risk management system in construction projects must be directed to the development of the project and must cover all areas, functions and processes of the project. In this, specific importance is attached to the risk in the personnel area especially for construction industry providing specific buildings, skill workers, professional which are very much essential for arket success and winning.

Introduction

The Sultan Mizan Zainal Abidin stadium roof collapse was due to design error and poor management. ( M. A. A. Sani, 2010)

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Risk in any project can be defined as negatively poised event affects the project objectives such as time and schedule, cost, quality of work. Risk management is the process of identifying the potential risk associated with risk and responding to those risks in order to avoid the project team from failure or halt state.

Project Management Methodology in Construction Industry

risk management Risk management is a process which can be deduced as the identification of risks assessment with qualitatively and quantitatively handle different types of risks, response with suitable method for handling risks, and control the risks by monitoring.

Risk in any project is a choice rather that fate. Construction risks have been the object of attention because of time and cost over-runs associated with the construction projects. Risk is present in all the activities in a project; it is only the amount which varies from one activity to another. (Y.K.Sahu & N. Dudhe, 2016). Risk management is the identification,assessment, and prioritization of risks. It is defined in ISO 31000 as the effect of uncertainty on objectives (whether positive or negative) followed by coordinated and economical application of resources to minimize, monitor, and control the probability and/or impact of unfortunate events or to maximize the realization of opportunities. www.issuu.com/farhanaisa

Relationship Between Risk Management and Corporate Governance.

Corporate governance is the framework of rules and practices by which a board of directors ensures the four principles of corporate governance which is a c c o u n t a b i l i t y, f a i r n e s s , responsibility and transparency in a company's relationship with its all stakeholders.

Risk-taking drives corporations to push ahead and make steep gains.

When risks pay off, profitability makes shareholders and stakeholders happy. Technology has created greater global interconnectivity, which is an asset for most businesses.

In other words, corporate performance is presumably reflected in the way the firm is managed as well as the efficacy of the firm’s governance structure (Gregory and Simms as cited in Haniffa, R., & Hudaib, M.). It stated that driven by the increasing complexity of doing business, risk management has become an important and integral part of the company’s internal control and governance in order to achieve its plans and objectives. (N. N. Akkas, 2017.

Risk identification Context Setting Risk identification is the first and perhaps the most important step in the risk management process, to identify the source and type of risks.

It includes the recognition of potential risk event conditions in the construction project and the clarification of risk responsibilities The PMBOK® Guide defines a project risk as “an uncertain event or condition that, if it occurs, has a positive or negative effect on at least one project objective”. There are many possible risks which could lead to the failure of the construction project, and through the project, it is very important what risk factors are acting simultaneously. As stated by Raz et al., too many project risks as undesirable events may cause construction project delays, excessive spending, unsatisfactory project results or even total failure.

Tah and Carr categorized risks into two groups in accordance with the nature of the risks, i.e. external and internal risks.To conclude, there are two type of risk in construction industry which are financial risks and non-financial risks.

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Risk Assessment Process

Risk Matrix (5 X 5)

Define objectives Identify Risk Scheme/ causes Determine Consequences Identify Controls Existing controls New controls Control Effectiveness

Residual Risk Rating

Very good Good Satisfactory Unsatisfactory • • Poor • •

Impact Likelihood Very High High Medium Low

Risk Treatment Options Avoid Minimise Accept Management Action Plans Monitor, Review & Report

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How we treat risks?

The strategies to manage risk include transferring the risk to another party, avoiding the risk, reducing the negative effect or probability of the risk, or accepting some or all of the potential or actual consequences of a particular risk.

1. Minimize risk - Minimizing the likelihood of the risk from happening and/or the severity of the loss after the risk occurs.

2. Accept risk - Informed decision to take a particular risk. Accepting the loss, or benefit of gain, from a risk when it occurs. Only applicable to Low Risk

3. Transfer risk (Sharing) -Form of risk treatment involving the agreed distribution of risk with other parties Sharing with another party the burden of loss or the benefit of gain, from a risk, and the measures to reduce a risk.

4. Avoid risk- Informed decision not to be involved in, or to withdraw from, an activity in order not to be exposed to a particular risk.

Involves taking steps to: i. Remove a threat /hazard, ii. Engage in alternative activity, or iii. Manage a specific exposure.

Project Management Methodology in Construction Industry

risk management

The construction industry has suffered a decline of 60% during the 2016-2018 period, the industry’s annual turnover has been declining from a peak of RM273 billion in 2016 to RM106 billion in 2018.

– Param Sivalingam, Former Project Director, MRT Serdang-Sungai Buloh Line –

Conclusion Construction projects can be extremely complex and fraught with uncertainty. Risk and uncertainty can potentially have damaging consequences for the construction projects. Therefore nowadays, the risk analysi s and m anagem ent continue to be a major feature of the project management of construction projects in an attempt to deal effectively with uncertainty and unexpected events and to achieve project success.

Construction companies that manage risk effectively and efficiently enjoy financial s a v i n g s , a n d g r e a t e r p r o d u c t i v i t y, improved success rates of new projects and better decision making.

The lack of experience makes it very difficult to change contractors’ attitude towards risk management. Nevertheless, the construction companies need to include risk as an integral part of their project management. In my view, the use of risk management in the construction companies is low to moderate, with little differences between the types, sizes and risk tolerance of the organizations, and experience and risk tolerance of the individual respondents.

Risk and uncertainty can potentially have damaging consequences for the construction projects.

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chapter 02

Learn optimizing the value of the project 16 Introduction 17 Flow of conducting VM/VE in construction or project 17 Key factors of VE's significant and concerned: 17 When VM is carried out?

17 What are VM processes?

17 What are 5 importance options i.e elements of VM/VE?

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LEARN OPTIMIZING THE VALUE OF THE PROJECT An important part of the value engineering planning process is the workshop.

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Value engineering has enormous benefits for developers.

Value management (VM) or commonly used as value engineering (VE) in construction industry. The multi-step process is an integral part of the design stage of new development and aimed at increasing value. Concentrating on the maximizing the project’s function while minimizing cost generates the greatest value for our clients. An important part of the value engineering planning process is the workshop.

Project Management Methodology in Construction Industry

value management Flow of conducting VM/VE in construction or project VM/VE exercise is to be carried out at any stage of the project from conceptual to construction stage. It is more beneficial to be carried out during design process so as to achieve optimal performance with respect to design (e.g. aesthetic, quality, functionality, sustainability and constructability) at an advantageous economic value.

Value management focuses on maximizing the functional value of a project and auditing all decisions determined by the client.

Key factors of VE's significant and concerned: o Identifying functions o Establishing value for money o Meeting the required performance at lowest cost o Engineering system analysis.

When VM is carried out?

A) Design Value Management Held during the design phase of the project, the value engineering workshop involves the project team who reviews the proposed project, performs a functional analysis of the facility, obtains the owner’s definition of value, defines key criteria for the project, and offers alternative solutions for the project. www.issuu.com/farhanaisa

Takes place after a design has commenced, ideally at a stage when the design intent is clearly documented but not too late to change as a result of the VM process.

B) Strategic Value Management Takes place at the beginning of a project.

What are VM processes?

In VM value should be able to be measured.VM enables the comparison of a number of alternatives or analysis of a chosen option to achieve the best balance of all factors. VM is a structured and analytical process. It is a systematic group effort via a workshop to achieve required function for the lowest cost, without sacrificing user required performance and quality. It i s a st r uct ur ed pr ocess w h i c h involves five phase job plan: o Information o (Function) Analysis o Creativity o Judgement o Development What are 5 importance options i.e elements of VM/VE? o design option o material option o contract option o construction option o schedule option In the light of the above, the methodology of VM is a technique that brings additional gain to a project. When adopted at the right time while ensuring continuous interventions throughout the project life cycle through pre-determined stages, it delivers value for money while attaining additional intangible benefits (Y. Tohooloo, 2017).

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chapter 03

A-look at COVID-19 impacts on supply chain management (SCM) 20 Supply chain management role in construction 20 Critical Success Factors (CSF) in SCM 21 The impact and challenges of movement control order (MCO) during COVID-19 outbreak to construction industry supply chain 21 Creating a supply chain for tomorrow

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supply chain management Thirdly, the SCM role is focussing on transferring activities from the site to earlier stage of the supply chain which may be initiated by suppliers and contractors. The rationale is to eliminate inferior conditions at site and to achieve wider concurrence between activities.

The forth role is focusing on integration management and improvement of the supply chain and the site production which may initiated by Clients, Contractors and suppliers. Ultimately, all four role is to reduce cost and time to the overall supply chain and construction itself.

(Vrijhoef and Kosksela, 2000)

areas or activities that should receive constant and careful attention fr om management - Rockart, J. F., Harvard Business Review (1974)

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Supply chain management role in construction

Critical Success Factors (CSF) in SCM

The first main role of SCM which the best implemented by the Main Contractor is to focus on the impact of the SCM on site activities. The goal is to reduce cost and durations of site activities. In this case, the primary consideration is to ensure dependable material and labour flows to the site to avoid distruptions of the workflow. This

CSF is SCM define as ‘areas or activities that should r ecei ve constant and careful attention from management’ . It is how to determine the most critical pieces of i nf o r m a t i o n f r o m t h e s h e e r number of reports that are vital to the organization’s current operating activities and for its future success

Secondly, the role of SCM is to focus on the supply chain itself, by reducing the costs especially those related to logistics, lead-time and inventory. This best adopted by suppliers.

To conclude, CSFs in SCM are the top management commitment; consultant skills; schedule reliability; budget reliability; implementation team skills and compatibility with legacy system.

Project Management Methodology in Construction Industry

The impact and challenges of movement control order (MCO) during COVID-19 outbreak to construction industry supply chain.

According to a statistic reported in the media on the topic ‘Construction industry’s dilemma – Covid-19‘, the impact of the movement control order (MCO) and the pandemic would be immense to contractors.

According to his report, it would be more severe as only contractors registered as G1-G4 with CIDB (Construction Industry Development Board) are allowed to resume works on-site, whereas contractors from G5-G7 are precluded from this exemption.

As a result, a total of 17,000 companies would be affected, and these companies are the key drivers of the construction industry. They represent a majority of the personnel and labour workforce amounting to a total of 850,000 workers in the construction industry, based on 2018 statistics from CIDB. Post-MCO, it’s likely that some of the foreign workers may decide to return to their home country out of fear and uncertainties. Since then, eventhough all classes of contractors are allowed to resume construction work at site subject to approval, but by then the damage is done. www.issuu.com/farhanaisa

Amidst the need to comply with the onerous health and safety requirements, fear and anxiety of infection, elements of uncertainty and the reduction of foreign workers; the morale of the workers would have taken a heavy hit and their productivity disrupted in the process.

Furthermore, there is a risk that the supply chain disruption may not be re-established in the short term – such as the suppliers of key building materials, equipment rentals and imported items. These statistics and predicaments alone would suggest the construction industry would indeed need more than a helping hand from the government.

It is possible to streamline processes and to project systems that are able to predictable events, not black swans.

(M. Palumbo, 2020)

creating a supply chain for tomorrow.

The evolution of supply chain and logistics, and the impact that Covid19 is having on the construction industry can be transformed by driving innovations and calibrate with technology. Such as, cloud computing and advanced radiofrequency identification (RFID).

As a result of coronavirus, it's become clear how important it is to have reliable digital systems that show us the reality of the whole supply chain. In the future, customers (contractors, developers, consultants, operators, and more) who are involved in the supply chain processess will be interested in having full visibility on the distribution processess.

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Looking ahead

When the pandemic ends, construction companies will face a new world. The marketplace will change, as some national governments will be eager to invest in infrastructure to jumpstart their recovery, and others may face new resource limitations.

Portfolios will also change, with both public- and private-sector project owners placing a new emphasis on sustainability and resilience.

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Cities will need to serve more residents who work from home — leading to greater investments in telecom and smart city initiatives.

Among the many potential privatesector shifts on the horizon, commercial real estate may undergo a prolonged downturn, while the growth of data centres may accelerate further.

The competitive landscape will change too, as stronger players acquire weaker ones, and still others emerge from bankruptcy with clean balance sheets and a ravenous appetite for projects.

It’s a formula for continued uncertainty: company’s client base, competitors and project book may differ dramatically from their preCOVID reality, but it’s impossible to foresee exactly how. Yet companies that emerge from this crisis with solid finances, a resilient supply chain, skilled workers and the capacity to gather and analyse the data that decision-makers need, will be wellpl aced t o pi vot and sei ze new opportunities. Those organisations will be market leaders no matter how the post-COVID world evolves.

Project Management Methodology in Construction Industry

conclusion and way forward

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4 Overall, the project management methodology of risk management, supply chain management and value management are to fullfill client's goal and objectives in a particular project. The methodology identifies and clarifies what project performance that we shall focusing at, and what things must do rather that what it is solely. www.issuu.com/farhanaisa

legend 1. Seri Wawasan Bridge, Putrajaya.

2. Perdana Putra, the Malaysian Prime Minister's Office, Putrajaya.

3. Putrajaya International Convention Centre 4. Presint 8's Lake , Putrajaya

Without proper tools and project management methodology, both cannot work efficiently. We must keep upgrading and learning , because the worlds need innovators and problem solvers, to face the complexity of construction projects and transforming the status quo.

Risk management system, Supply chain management and Value Management system are there for us to use and tailor-made to suit our projects. iIt is NOW up to us, project manager in an organizations to well verse on it, use it and deliver it up to the quality of product and / or services of all levels of management plus taking care of our environment. Its show that our project management maturity in accessing and analysing different pr ocesses and d e a l i n g w i t h organizations capabilities.

Customers / clients/ operators / end-user will deem that the quality of the product or service superior only if it meets their expectation (go above and beyond normal procedures, delivery dates, lead times, and other standards to maintain quality) every time. More importantly, this performance needs to exceed that of competitors, leading to customer satisfaction, the perception of receiving value for the money expended, customer loyalty, and future work. Saving the environment is an added value to the customer when it eventually saving their cost of overall development and added point to their marketing strategy, but no one will agree to compromise the safety and health.

As project manager, we must ensure our project is sustainable to save our ecology. During the time of managing the instruction, we only order correct amount, evaluate the technical specifications and product selected, and no wastage on materials. Proper care of the materials delivered and supply chain invertory check, how to manage the risk and value of the project.

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list of references www.issuu.com/farhanaisa

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list of references H-L

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Holland & K.Alert (2020), A Look at COVID19 Impacts on the Construction Industry accessed from https://www.hklaw.com/ en/insights /publications/2020/05/a-look-atcovid19-impacts-on-the-construction-industry on 27th July 2020

M. Thunberg et.all (2017), Categorising onsite problems: A supply chain management perspective on construction projects retrieved f r o m https://www.researchgate.net/publication/312 264789_Categorising_onsite_problems_A_su pply_chain_management_perspective_on_co nstruction_projects on 27th July 2020M. S. A. Talib and A. A. A.Hamid (2014), Application of Critical Success Factors in Supply Chain Management, UTM

T. Alby (2020), Value Engineering, accessed from https://projectm a n a g e m e n t knowledge.com/definitions/v/valueengineering/on 27th July 2020

J. Chan (2020), The impact of COVID-19 on Construction Industry in China,accessed from https://www.arcadis.com/en/asia/ourperspectives/articles/the-impact-of-covid19-onconstruction-industry-in-china/ on 27th July N. J. Price (2018), Relationship Between 2020 Risk Management and Corporate J. F. Rockart (1979) , “Chief Executive G o v e r n a n c e r e t r i v e d f r o m Define Their Own Data Needs� Harvard h t t p s : / / i n s i g h t s . d i l i g e n t . c o m / r i s k Business Review, Vol. March-April, pp. 81-93 o v e r s i g h t / r e l a t i o n s h i p - b e t w e e n - r i s k management-and-corporate-governance on J. Verhoven (2020), Global Supply Chain 27th July 2020 May-June 2020 , Issue 70, signature media, D u b a i , U A E a c c e s s e d f r o m N. N. Akkas, (2017), The Influencing of https://issuu.com/globalsupplychain/docs/all_p Corporate Governance in The Construction ages_gsc_may_june_2020_2 on 27th July I n d u s t r y r e t r i e v e d f r o m https://www.researchgate.net/publication/315 2020 830473_THE_INFLUENCING_OF_CORPOR L. Watson (2017), What caused the Grenfell ATE_GOVERNANCE_IN_THE_CONSTRUC Tower fire: all the theories, accessed from TION_INDUSTRY/link/58e9e980458515e https://www.telegraph.co.uk/news/0/what- 30dccef15/download on 27th July 2020 caused-grenfell-tower-fire-all-the-theories/ on N. Banaitiene (2012), Risk Management| 27th July 2020 Current Issues and Challenges retrieved from https://www.intechopen.com/books/riskmanagement-current-issues-andchallenges/risk-management inconstructionprojects on 27th July 2020

The Star, (2020) Good supply chain crucial for recovery from Covid-19 impact a c c e s s e d f r o m https://www.thestar.com.my/business/busi ness-news/2020/04/08/good-supplychain-crucial-for-recovery-from-covid-19impact on 27th July 2020 R. M. Nordin, (2020) Lecture Note on S u p p ly C h a in M a n a g e m e n t , V a l u e Management and Risk Management, UiTM Y.K.Sahu & N . D u d h e , ( 2 0 1 6 ) , 2 3 Analysis of Risk Management in Construction Industries retrieved from https://issuu.com/ijste/docs/ijstev3i30 on 27th July 2020 Y.Tohooloo (2017), Value Management in CO n s t r u c t io n : T h e P r o c e s s a n d Benefits retrieved from https://www.linkedin.com/pulse/valuemanagement-construction-processbenefits-yashwant-tohooloo/ on 27th July 2020

P. Trust ( 2020), The Core Principles Of Good Corporate Governance retrieved from h t t p s : / / w w w . p e a r s e trust.ie/blog/bid/108866/the-core-principlesof-good-corporate-governance on 27th July 2020

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Author & editor Ar. Farhana binti Mohammed Isa B.Sc. Arch (IIUM), B. Arch (UM) info.farhanaisarchitect@gmail.com Official address Faculty of Architecture, Planning And Surveying, Universiti Teknologi MARA (UiTM), 40450 Shah Alam, Selangor (+6) 017-3117086

https://www.linkedin.com/in/farhana-isa/

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Project Management Methodology in Construction Industry