PROJECT MANAGEMENT AND INTERNATIONAL CONSTRUCTION CONTRACT: AN INVESTIGATION INTO ISSUES AND CHALLENGES IN INDONESIA

DOCTORAL COLLOQUIUM-EURAM 2006 OSLO- MAY 2006 ARIES FIRMAN CURTIN UNIVERSITY OF TECHNOLOGY PERTH- WESTERN AUSTRALIA

INTRODUCTION

PROJECT MANAGEMENT (PM) HAS A TRADITION OF CONSIDERING SUCCESS THROUGH THE LENS OF THREE SUBSTANTIVE MECHANISMS TIME THESE ARE: TIME, QUALITY AND COST PM IN THE WEST: RATIONALES AND METHODS INDONESIAN:TYPICALLY IN RELATIONAL WAY

COST

Many infrastructure projects in Indonesia are supported by international agencies: IMF, WORLD BANK, ADB, JBIC etc. Most of the projects use the standard condition of contract prepared by FIDIC ( Federation International Des Ingenieurs Conceils) which is the International Federation of Consulting Engineers based in Lausanne (Switzerland) The infrastructure projects typically consist of three primary stakeholder groups. These are: Owners (or Employers or Clients) O Designers (or Consultants or Engineers) D Contractors (or Suppliers or Vendors) C

NEW CONCEPT IN PROJECT MANGEMENT

PEOPLE was added as a central focus in connection to time, quality and cost (Kliem et al, 1997)
Time

PEOPLE

Quality

COST

DATA COLLECTION & DATA ANALYSIS

This study utilised in-depth interviewing to allow the respondents to express their perceptions with regard to the value of time, quality and cost by using their own words The first questions were structured, but the second part of the interview was less structured. This include critical incidents technique by asking the respondents about their best and worst experiences in practising project management principles. In-Vivo coding was used in this research Core categories were tentative at first and then confirmed Theoretical sampling was conducted during data collection phase 1 This was followed by phase 2 involving the experts Efforts have been taken by the researcher to refer to the rigor issues of bracketing as well as keeping in mind the strengths and weaknesses of interviewing

FINDINGS
The results from the content analysis are grouped into six categories of: the value of time, the value of quality, the value of cost, about the other stakeholders, FIDIC, and leadership Each category carries several sub categories developed during data analysis. The data within the different codes from owners, designers and contractors were then compared in tables In each table, a gap analysis was conducted to investigate similarities and differences between the codes of each stakeholder group. Identification of gaps led to a model showing the relationship between the stakeholders for each of those specific categories As a result, a matrix of gap analysis has been produced, with each model showing the connection of the three stakeholder group members in terms of their perceptions: time, quality and cost.

MATRIX OF GAP ANALYSIS: TOTAL NUMBER OF GAPS AND MAJOR QUOTATIONS FROM THE RESPONDENTS

Model
O

Owners (O)
3 - Time is of their concern because if it can be faster, they can get good names in front of their superior 7 - Speaking about quality, generally we are the same. In fact, the consultants should defend the owners interests 4 - In term of cost, owners do not have so much concern to reduce it
C

Designers (D)
6 - What they sell is man-hours. So, their perspective is totally different

Contractors (C)
3 -Contractors tend to complete the works at the earliest time. In term of time, contractors will strive for being on time 5 - The contractors tend to be a sort of brokerage as they are not so stringent in controlling the quality

Time D C

Quality

7 -So, they use specialists based on previous projects for their convenience in term of quality

D
O Cost

10 - Owners do not have so much concern about how much should the optimum cost be

11 - Owners do not have so much concern as the money is not coming from the officers pocket

MATRIX OF GAP ANALYSIS IN THE CONTEXT OF FIDIC: MODELS AND MAJOR CODE IN EACH STAKEHODER GROUP
Model
O

Owner (O)

Designer (D)

Contractors (C)

Time D O C

Delay

Delay

Strict

Quality

Quality control
C

High Quality

Strict/stringent

Cost

Change order
C

Change order

Claim

FINDINGS (CONTINUED): LEADERSHIP

O

Leadership

As a result of the gap analysis, on the topic of leadership, a stronger connection exists between designers and contractors than between designers and owners, or contractors and owners

KEY EMERGING FINDINGS

Aside from those findings explained earlier as directed by the research objectives, the content analysis also raised two emergent findings from the respondents The first was ethics which was raised by several members of each stakeholder group either by making reference to their own internal practices or by pointing at the practices of members of the other groups The second was social status between different stakeholder groups

DISCUSSION
Structural relationships come into play in the project implementation Interestingly, strong connections only exist in different aspects of project management: time, quality and cost For each aspect, there is only one strong connection, not two or three as suggested by literature Ethical issues appear to be critical between project stakeholder groups The stakeholders are affected by social status The FIDIC contract raises the issue of equality in project management applications in Indonesia

DISCUSSION (continued)
This research shows that the triple constraints are unlikely to be perceived similarly to the original concept Modifications are, therefore, inevitable for projects where the perceptions of project personnel requires attention Leadership (L), ethics (E) and social status (SS) should be added to the triple constraints
T

L P

SS

P & LESS TQC as project constraints

CHALLENGES
Inequalities between project stakeholders still exist in Indonesia though current law issued in the year 2000 promoted equality Indonesian culture of consultation and consensus are confronted with the question of collusion between project stakeholders Feudalism and paternalism could become the major challenges in the application of participative leadership Contractual dispute settlement suggested in FIDIC was likely to affect long term relationship between the stakeholder groups Harmonious relationship between project stakeholders should not just be based on the perceived value of time, quality and cost. It should also include human elements such as leadership, ethics and social status