Project management and international construction contract: an investigation into issues and challenges in indonesia




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Q SS C

Figure 7: P & LESS TQC as project constraints




5.2. Challenges in Indonesia


When project people in Indonesia have to consider new things that they are not used to, the most likely scenario will relate to managing change. Equality among project stakeholders, for example, has already been written in the new construction law of year 2000, but even four years later in 2004 many respondents still raised the issue of inequality they were encountering during this research. This indicates that there are challenges confronting project people to understand the issues before they enter the process of change. In particular, this sort of significant cultural change may also require a substantial period of time to allow a reasonable process. This is one of the consequences resulting from the introduction of the western concept of equality among project stakeholders.


Internationalization of the construction industry in Indonesia by using FIDIC, for instance, as a standard contract has brought several impacts for the project people as found in this research. It is, therefore, unavoidable to have those big gaps between the stakeholders in perceiving project management principles. Only by filling the gaps, one could expect that all project stakeholders will start to work together more effectively and efficiently by establishing project coalition or project partnering. This sort of concept has been suggested by numerous scholars, such as Black (2000), Berggren (2001), Payne & Carlton (2002), Ng et al (2002), Naoum (2003), Thamhain (2004) and also Cova & Salle (2005).


To overcome the challenges during the process of change, all project stakeholders must be involved. This can not be considered as an easy task because there are many different institutions taking part in the construction industry. Unlike the process of managing change in one specific location, there will be more complicated issues confronting the project stakeholders in resolving the challenges even just for the matter of equality as per the above example. Again here, leadership plays an extremely crucial role. This research suggests that the project owners must take leadership, not only because of the other scholar’s view but mainly due to the culture specific of Indonesia in perceiving the status of owners.


6. Concluding remarks


With reference to the above discussions, the following critical emerging issues have been discovered from this research in Indonesia. The interactions between local traditions and international concepts tend to affect the project people’s perception about the technical as well as non-technical aspects of project management. Those issues are:


* People have not yet been fully considered as the centre of project management

* Structural relationships come into play in the implementation of projects

* Project stakeholders’ perception on leadership also varies significantly

* Ethical issues appear to be critical between project stakeholders

* The stakeholders are affected by social status amongst them

* FIDIC standard contract raises the issue of equality in project management


This research has attempted to extend the boundaries beyond the purely technical project elements of time, quality and cost. The results show that significant gaps in their perception exist between those people from different project stakeholder groups. It leads to the structural relationships between those stakeholder groups not only because of the nature of the project but also due to the two emerging issues of ethics and social status. In addition, this study suggests that researchers should take more serious considerations for the importance of studying projects as organizations and focusing on how they differ and behave.


Project management research has traditionally paid limited interest in the actual work and performance of the project manager and the project management unit. It is time for more thorough studies on the role, style and function of the project management unit. The ‘classical’ project management needs to be expanded to include the elements of people that significantly affect project performance and should be more clearly defined in order to find better solution in managing those projects.


This research challenges the quantitative, technical, outcome-based approach as unitary in nature. It presents a different view or paradigm that adds, as a central focus, the ‘people’ connection to time, quality and cost. It suggests that the importance of various aspects of people should also be taken into serious consideration in the evolution of project management, not only as a technical tool but more importantly as a field of knowledge required to solve organizational problems. For this very reason, this study supports the views of Urli and Urli (2000) that it is practical necessity that has brought specialists from different professions to develop a body of knowledge, the primary object of which was to improve the management of their projects. When operating in another culture, relational aspects become a central focus.


To sum up, those critical issues of people in project management entail numerous challenges for project management scholars to pay more attention to human resources issues. In this regard, culture specific matters should also be taken into consideration particularly when an international contract is used during the course of project implementation.


References


Baquero, P 2005, ‘Performance-Based Procurement: The Key to Effective Basic Services Provision in Developing Countries’, in Thai, KV, et al., Challenges in Public Procurement: An International Perspective, PrAcademics Press, Boca Raton, pp 365-380


Belout, Adnane.1998. Effects of human resource management on project effectiveness and success: toward a new conceptual framework. International Journal of Project Management, 16: 21-26.


Berggren, Christian, Soderlund, Jonas & Anderson, Christian. 2001. Clients, Contractors, and Consultants: the consequences of organizational fragmentation in contemporary project environments. Project Management Journal, 32 (September): 39-48


Black, Carolynn, Akintoye, Akintola, Fitzgerald, Eamon. 2000. An analysis of success factors and benefits of partnering in construction. International Journal of Project Management 18: 423-434


Bunni, NG 1997. The FIDIC Form of Contract. London: Blackwell Science Ltd.


Cova, Bernard & Salle, Robert. 2005. Six key points to merge project marketing into project management. International Journal of Project Management 23:354-359


Denzin Norman K. & Lincoln Yvonna S. 2000. Introduction: The Discipline and Practice of Qualitative Research , in Denzin, NK & Lincoln, YS (eds.), Handbook of Qualitative Research, Thousand Oaks, CA: Sage Publications.


Drake, Christine. 1989. National Integration in Indonesia- Patterns and Policies. Honolulu: University of Hawaii Press.


FIDIC, 1992, ‘The Condition of Contract for Works of Civil Engineering Construction’, Lausanne


Frame, J. Davidson. 2002, ‘The New Project Management’, 2nd Ed. New York: Jossey-Bass.


Genton, PM & Schwab, YA 2000, ‘The role of the Engineer in Disputes Related More Specifically to Industrial Projects’, Journal of International Arbitration, vol.17, no.4, p.1


Kendra, Korin & Taplin, Laura J. 2005. Project Success: A Cultural Framework. Project Management Journal 35(April): 30-45


Kliem Ralph L., Ludin Irwin S., & Robertson, Ken L.1997. Project Management Methodology: A Practical Guide for the Next Millennium, New York: Marcel Decker, Inc.


Moran D. 2000, Introduction to Phenomenology, London


Naoum, S. 2003. An overview into the concept of partnering’, International Journal of Project Management 21: 71-76


Ng, ST, Rose, TM, Mak, M & Chen, SE 2002. Problematic Issues Associated with Project Partnering- the Contractor Perspective. International Journal of Project Management 20: 437-449


OECF 1999. The Overseas Economic Cooperation Fund, Annual Report 1999. Tokyo


Payne, SL & Calton, JM 2002. Towards a managerial practice of stakeholder engagement: developing multi-stakeholder learning dialogues, in Andriof, J, Waddock, S, Husted B, Rahman SS (eds.), Unfolding Stakeholder Thinking- Theory, Responsibility and Engagement. Sheffield: Greenleaf Publisher


Pinto, Jeffrey K. & Prescott, John E. 1988. Variations in critical success factors over the stages in the project life cycle. Journal of Project Management .14: 5-18


Söderlund, Jonas. 2004. Building theories of project management: past research, questions for the future. International Journal of Project Management 22:183-191


Thamhain, Hans J. 2004. Team Leadership Effectiveness in Technology-Based Project Environment. Project Management Journal 35 (December): 35-46


The World Bank 2004. Indonesia, Averting an Infrastructure Crisis, A Framework for Policy and Action. East Asia and Pacific Region Infrastructure Department


Turner, JR & Simister, SJ 2001, ‘Project Contract Management and a Theory of Organization’, International Journal of Project Management, vol. 19, no. 8, pp. 457-464.


Urli, Bruno and Urli, Didier. 2000. Project Management in North America, Stability of the Concepts. Project Management Journal 31(September): 33-43


Van Niel, R 1979. Netherlands East Indies to Republic of Indonesia’, in Aveling, H (ed.), The Development of Indonesian Society. University of Queensland Press.


Whiteley, Alma 2000. Grounded Research: A Modified Grounded Theory for the Business Setting. Perth: Curtin University of Technology


Whiteley, Alma 2002. Rigor in Qualitative Research. Perth: Curtin University of Technology.


Whiteley, Alma & McCabe, Margaret. 2001. Sustainable Change: A case on the waterfront. Guildford Australia: Vineyard Publishing.


Whiteley, Alma & Whiteley, Jervis. 2005. The Familiarization Study in Qualitative Research: From Theory to Practice. Perth: Curtin University of Technology.


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