FINAL EXAM

INTERNATIONAL PROJECT MANAGEMENT

Nghi Son Oil Refinery and Petrochemical Project

Lecturer: Nguyen Phu Hung

Class: INE 3009 05

Prepared bygroup 6:

1. Trịnh Thị Lan – 19071393

2. Nguyễn Phương Thảo – 20070053
3. Nguyễn Ngọc Ánh - 19071310

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TABLE OF CONTENTS

1. INTRODUCTION OF THE PROJECT ......................................................................................... 3

1.1. Context leading to the project ............................................................................................. 3

1.1.1 Background of the project....................................................................................................... 3
1.1.2 Business context analysis ........................................................................................................ 4
1.1.2.1. Political Aspect................................................................................................................. 4
1.1.2.2. Economic Aspect.............................................................................................................. 4
1.1.2.3. Social Aspect .................................................................................................................... 4
1.1.2.4. Technological Aspect ....................................................................................................... 4
1.1.2.5. Environment Aspect ........................................................................................................ 5
1.1.2.6. Legal Aspect ..................................................................................................................... 5

1.3. Scopes of Project ................................................................................................................ 5

1.4 Stakeholders Management .................................................................................................. 7

2. PROJECT MANAGEMENT ...................................................................................................... 12

2.1 Challenges facing the project  ............................................................................................. 12

2.2 Defined tasks of project ...................................................................................................... 12

2.3 Define the deliveries of the project ..................................................................................... 14

2.4 Define WBS of tasks and their deliverables ......................................................................... 14

2.5 Time Management: define the project calendar .................................................................. 19

2.5.1 Estimate the time required for each task, the inter-relationship among tasks (SS, FS and so
on). Remember to take p, ml, o estimations) ................................................................................ 19
2.5.2 Estimate total project duration ............................................................................................. 20

2.6 Project cost management ................................................................................................... 20

2.6.1 Indicators reflecting the cost management performance of the project ............................. 20
2.6.2 Estimate cost associated with each task (Explain your estimation) ..................................... 21
2.6.3 How do you manage costs in the case of your project ......................................................... 23

2.7 Risk Management ............................................................................................................... 24

2.7.1 Risk Identification .................................................................................................................. 24
2.7.2 Evaluate the risk of the project ............................................................................................. 24
2.7.3 The Project Risk Map ............................................................................................................. 30
2.7.4 Discuss economic scenarios that may affect the sustainability of the project ..................... 30

3. RECOMMENDATIONS AND CONCLUSIONS ............................................................................ 31

REFERENCES ............................................................................................................................. 32
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CONTRIBUTION RATE ............................................................................................................... 32

Nghi Son Oil Refinery and Petrochemical Project

1. Introduction of the Project

1.1. Context leading to the project

● Owner: Nghi Son Refining and Petrochemical Co., Ltd

● Partners: Vietnam National Oil and Gas Group (Vietnam), Idenmitsu Kosan Company and
Mitsui Chemical Company (Japan), Kuwait Petroleum Corporation (Kuwait)

Seizing the opportunity from the opening of the world economy, Nghi Son Refinery and
Petrochemical Project was born under the investment of Vietnam Oil and Gas Group
(PetroVietnam), Kuwait Petroleum Europe B.V. (KPE), Japan ldemitsu Kosan Company, Japan Mitsui
Chemical Company to contribute to national energy security, especially

especially for petroleum products. The project was born in the context of increasing demand for
petrochemical products. The project is strategically important because the Vietnamese government
wishes for industrialization and modernization of the country, self-sufficient in oil filter products and
secure energy supplies. This will also be the largest foreign direct investment (FDI) project in
Vietnam. The success of the project will be one of the important factors in attracting more foreign
investment out of Vietnam, especially foreign investors.

1.1.1 Background of the project

Objectives
The project's goal is to meet about 40% of the country's petroleum consumption demand, promote
the development of local industries, and contribute to ensuring national energy security.
Vision

The project has a vision to become Asia's Most Admired and Leading Acting Refinery and
Petrochemical Complex. The project aims to be recognized as a world-class competitor in the global
energy market, contributing to Vietnam's sustainable growth.

Mission

▪ In line with its mission, the project strives to build the prosperity of society by serving and
delighting its customers and businesses with a wide range of oil and chemical products and
services.
▪ The project conducts business in an optimal manner that is safe, environmentally friendly,
sustainable and economic (Nghi Son Refinery and Petrochemiscal LLC, 2018).

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1.1.2 Business context analysis
1.1.2.1. Political Aspect
▪ Stable political situation, Vietnam continues to attract foreign direct investment.
▪ This oil and gas complex project is a link connecting the friendship between Vietnam and
partner countries, especially Kuwait, the main supplier of oil and technology. While the fact
that the oil industry has a great influence on politics, Vietnam has been proactive in oil
production to avoid being dependent on other countries, the big lesson is that Europe was
safe at that time, energy security is threatened by Russia.
1.1.2.2. Economic Aspect
▪ With strong purchasing power and demand, creating a strong and fast engine for economic
growth, Vietnam is forecast to achieve a GDP growth of more than 8% this year. This is a rare
high in the context that 2022 is a particularly difficult year not only for Vietnam but also
globally.
▪ This growth is due to the strong increase in purchasing power after the COVID-19 pandemic,
as well as the strength of the Vietnamese economy, especially in terms of stability. socio-
political stability, macroeconomic policy stability, economic policy, investment policy,
openness, and integration with the world economy. The internal dynamics of the
Vietnamese economy are relatively balanced, and relatively strong: the demand of the
people, the strength of enterprises, the attraction of foreign investment, and the ability of
Vietnam’s competition to Free Trade Agreements help to open up new markets for Vietnam.
Since the beginning of this year, Vietnam has been successful in maintaining a high economic
growth rate with high economic growth. The inflation rate is low, around 3%, lower than
other Asian countries such as Japan, Indonesia, Korea, and many European countries, which
are already approaching an inflation rate above 10%.
▪ However, it is difficult for Vietnam to maintain a high growth rate, in the context that the
global economy is forecasted to remain difficult for many months to come.
1.1.2.3. Social Aspect
▪ Currently, with the increasing demand for industrial and consumer products derived from
oil and gas, it is urgent to accelerate the implementation of petrochemical projects in
Vietnam. According to a study by the Vietnam Petroleum Institute, Vietnam's consumption
of petrochemical products is only one-fifth of that of the world (about 10 million tons in
2035), of which polyethylene (PE), polypropylene (PP) and polypropylene (PP), polyvinyl
chloride (PVC), and polyethylene terephthalate (PET) are the products with the largest
consumption. In general, opportunities and room for petrochemical production
development in Vietnam are very promising. In the context of the current open fuel market,
the construction of new refineries and petrochemical complexes requires careful
consideration, deep processing, and modern technology, especially taking into account the
development trend of the worldwide petrochemical industry. To develop the fields of
production of pharmaceuticals, cosmetics, detergents, etc. it is necessary to cooperate and
provide starting materials from the petrochemical industry.
1.1.2.4. Technological Aspect
▪ Vietnam in the future is also not out of the world trend with the combination of refining and
petrochemical in one factory to increase profits with the trend of gradually increasing the
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 direction of producing petrochemical products. Existing petrochemical refineries such as
Dung Quat, Nghi Son, and Long Son... can process low-quality crude oils at cheaper prices
into cleaner oil refining products and cause less environmental pollution; In addition to
gasoline, there will be more types of asphalt, lubricants, sulfur and many new types of
intermediate and finished petrochemical products.
▪ The technologies applied to the Factory are the most advanced and modern technologies
today, including the Ammonia production technology of Haldor Topsoe SA (Denmark); urea
production technology of SAIPEM (Italy); pelletizing technology of Toyo Engineering Corp
(Japan). Most of the main, important equipment comes from the EU/G7.
1.1.2.5. Environment Aspect
▪ The primary problem Vietnam is now facing on a national level is degradation of the
environment. Insufficient access to clean water, waste water, air pollution, and solid waste
are all examples of this. These problems not only impact Vietnam, but also its neighboring
nations, as well as its population and urbanization. Lack of access to clean water is one of
Vietnam's problems with water. Another problem with water is that some regions of the
nation flood since there isn't a strong drainage and sewage infrastructure to clean waste
water. Only around 70% of the concerns are helped and covered by the two systems
surrounding these issues. The construction of the refinery also partly affected the water and
air resources.
1.1.2.6. Legal Aspect
▪ Viet Nam's establishment of the Nghi Son petrochemical complex project is completely legal
for the legal system in the world in general as well as the laws of the capital contributing
countries in particular.
▪ Since its establishment until now, Nghi Son Refinery and Petrochemical Plant has operated
relatively stably, but in the first quarter of 2022, the plant violated contract regulations and
arbitrarily canceled the import of 2 crude oil shipments, leading to Risk of plant shutdown.

1.3. Scopes of Project

Definition: Nghi Son Oil Refinery is a petrochemical refinery project being implemented in Nghi Son
economic zone, Thanh Hoa. The factory's products include liquefied petroleum gas (LPG), gasoline,
diesel, kerosene/aircraft fuel... mainly used for domestic market and foreign export.

Time: 2018 - now

Location: Thanh Hoa Province, Vietnam.

Nghi Son economic zone, Thanh Hoa is one of the key coastal economic zones and a key position for
national oil and gas

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 Figure 1: Scope of project

Table 1: Scope of project

Construction location Construction time Project scale Construction cost

Nghi Son economic 2018 - now 504ha 9 billion USD

zone, Thanh Hoa

Function Response demand of petroleum gas

(LPG), gasoline, diesel,
kerosene/aircraft fuel, etc for
domestic market and export to
foreign market

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Scope of The total is 504ha 394 ha of the factory site
construction in phase 1 (including the
factory area, port area
and oil pipeline area),
110 ha planned for the
phase of capacity
expansion to 20 million
tons/year.

Coverage Nghi Son economic zone, Thanh Hoa

- one of the key coastal economic
zones and a key position for national
oil and gas

Secondary Contribute to the growth of Thanh Increase budget revenue Create more jobs
function Hoa Province and Vietnam's and international for the labor
economy, raise foreign direct development market
investment (FDI) for Vietnam cooperation

1.4 Stakeholders Management

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 Table 2: Stakeholders management

Stakeholder Benefits in the project Rights Obligations Issues of concerns/ Risks/ Conflict with Measure of risk
Challenges the project management
Government Contradictions As the host
- Contributing to - Control all of • Commitment to - The contributed capital
national energy the project preferential of the Vietnamese between the country, PVN has
security import tax on oil representative only commitments fully fulfilled its
- Can
refining accounts for 25.1%, not of the Free obligations as
- Creating basic enable/discont
products having enough power to Trade committed and
conditions for the inue the
decide on important Agreement has continuously
post-refining and project • Compensation
service industries to for site clearance issues of the factory. (FTA) and made many
develop for the total - PSRP's financial Nghi Son's documents and
project is about difficulties stem from the commitment comments to
- Increase budget
80 million USD inadequacy of foreign-
revenue when the tax promote project
run governance
- Creating many jobs reduction progress,
- The amount of
and making great roadmap improve
additional damage to the
contributions to management
national budget is
economic and social and governance
thousands of billions of
growth, contributing
VND, even tens of to increase
to national energy
thousands of billions of efficiency.
security.
VND when applying the performance
10% tax rate of corporate results of NSRP
income tax for the life of
the project.

Vietnam None
Gain more - Formulate - Organize the Risk of capital loss Must be able to
Investment
Owner (Petro) reputation, trust and and manage implementation of - Pollution issues understand and
support of the State projects when monitoring and predict the
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Stakeholder Benefits in the project Rights Obligations Issues of concerns/ Risks/ Conflict with Measure of risk
Challenges the project management
in the next key fully qualified evaluation of programs - Lack of goods to supply possible risks of
projects as prescribed and projects according to market the project in
by law; to regulations order to use
- Earn a lot of profit, - Lack of resources
appropriate
have a direct supply - Select and - Develop a framework
quantitative
of gasoline sign contracts for monitoring and
methods:
with evaluating the project
analysis of the
consulting before starting the
angle of use
contractors to project
capacity, selling
formulate and - Set up an internal price of
manage their information system, products, etc.
projects; to collect and store full
request products, project
information, data,
relevant operation time
records, documents,
agencies, to control risks.
books, documents of
organizations the project, reports of
and units to contractors, changes in
provide policy policies, laws of
information the State, regulations of
and the sponsor related to
documents on the management of
project project implementation
formulation
and - Timely report to the
management; superior management
agency to handle
To organize problems, arising
the beyond their authority
management
and - Prepare project
formulation of monitoring and

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Stakeholder Benefits in the project Rights Obligations Issues of concerns/ Risks/ Conflict with Measure of risk
Challenges the project management
a project or to evaluation reports
decide on the according to
establishment regulations;
or dissolution - Fully, timely and
of a accurately update
construction information reported
investment into the information
project system on investment
management monitoring and
board with a evaluation.
project
according to
its
competence.
- Other rights
as provided for
by law.

Foreign Consultant fees Evaluate, Provide advice, direction Risk of capital loss None Predict the
investors: manage and for the engineers, workers possible risks of
Idenmitsu control during the project. the project
Kosan Company projects like
and Mitsui
Vietnamese
Chemical
investors
Company
(Japan), Kuwait
Petroleum
Corporation
(Kuwait)
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Stakeholder Benefits in the project Rights Obligations Issues of concerns/ Risks/ Conflict with Measure of risk
Challenges the project management
Gain more reputation None Work in
Project - Decide the - Provide a detailed - This is a very large
for experience, track accordance with
management, record in project plan, time and project construction project (national project) the process,
management, progress of the plan. involving many people, strictly control the
leader and
construction and project so it is necessary to input and output
- Receive, answer and
staff planning, especially in construction ensure the safety needs of the project.
answer questions from
national projects. in construction.
- Allocating owners
resources and - Pressure to meet
project requirements
project progress and efficiency
performance - Meet the investor's from the government
plan and progress on and investors
the project.
- Planning based on the
requirements of the
project owner (budget,
resources, schedule)

Work in Received Require Handing over the Some households None Negotiate
accordance compensation compensation compensated land area disagree with the separately with
with the according to the to the state compensation level of each household
process, state price the state those
strictly control households that
the input and do not agree to
output of the participate in
project. compensation,
additional
compensation
according to the
agreement

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2. Project management

2.1 Challenges facing the project 

The first challenge of that project is the Russian-Ukrainian conflict that is happening in the
world. This war has led to an increase and the price of gasoline, fuel and fuel can skyrocket. High oil
prices increase logistics and transportation costs. From there, the cost of materials will increase, the
budget for the project will change, affecting the progress of the project. Recently, the price of
construction materials has increased, leading to higher project implementation costs.
The second challenge is the covid-19 pandemic which is having a significant impact on the
world economy. Besides the Russia-Ukraine conflict, after the pandemic, the world economy's
inflation was high, leading to many consequences. This is also one of the reasons for high raw
material prices, slow delivery of input materials for production and increased transportation costs.
Besides, the pandemic also affects labor productivity. Low labor productivity leads to higher costs
and longer completion times for activities and projects. Workplace policies should be in place to
protect worker safety.
In addition, this is a large project with the complexity of many suppliers and stakeholders,
investors and contractors from many countries. Conflicts with suppliers, investors and other
stakeholders are very likely. The main challenge is that it is difficult to agree on responsibilities and
decisions for the project, it is difficult for the parties to update the project progress, which easily
leads to conflicts.
Finally, there is the problem of inadequate risk management. It is the responsibility of the
project manager to recognize possible risks and devise strategies to minimize them. In addition to
applying protections against long-term risks, some short-term risks, such as fire, storm, and
subcontractor disputes. Therefore, the challenge of preparing contingency plans to mitigate any
potential concerns that could lead to budget shortfalls or project delays is enormous.

2.2 Defined tasks of project

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PROJECT TASKS
Nghi Son Oil Refinery and
PROJECT TITLE Petrochemical
PROJECT OWNER Petro Vietnam DATE 09/01/16

# TASK TITLE PHASE PRIORITY TASK OWNER START DATE DUE DATE DURATION STATUS

Very
1.1 Initiation Initiating 23/6/2011 25/12/2011 2 Done
important
Planning department
1.2 Identify the objectives Initiating Important 26/12/11 15/09/12 3 Done
Government
Planning department
1.3 Receive offers Initiating Important 01/01/12 01/04/14 9 Done
Government
Petro Vietnam,
Foreign investors:
Idenmitsu Kosan Company
Very
1.4 Sign contract Initiating and Mitsui Chemical 15/01/14 15/04/14 1 Done
important Company (Japan), Kuwait
Petroleum Corporation
(Kuwait)

Engineers
Planning and
2.1 Design & Engineering Urgent Construction design 17/05/14 20/01/15 3 Done
executing
Planning department
Apply for a factory building Planning and
2.2 Urgent Project manager 25/04/14 20/01/16 7 Done
permit executing
Planning and Project manager
2.3 Clearance Important 30/01/15 01/07/15 2 Done
executing Planning department
Planning department
Procurement of facilities and Planning and
2.4 Important Architects 22/01/16 24/04/17 5 In progress
equipment executing
Engineers
Planning and Very
2.5 Import raw materials (Oil, gas) Sales department 25/01/17 30/07/18 6 On hold
executing important
Monitoring
Engineers
3.1 Test production and Important 25/08/18 30/05/19 3 In progress
workers 13
controlling
Monitoring
3.2 Evaluation and Anytime Engineers 25/01/19 30/07/19 4 On hold
controlling
2.3 Define the deliveries of the project

Figure 2: Deliveries of the project

2.4 Define WBS of tasks and their deliverables

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 Table 3: WBS tasks
Phase WBS Tasks name Description Person in charge Sources
(People)

Initiating 1.1 Initiation

1.2 Identify the Macro objective: To proactively ensure the Planning department, 50
objectives supply of petroleum for Vietnam's domestic
market and for export. Government
Investor goal:
▪ Quality: Comply with technical and
quality requirements
▪ Time: completed within the time limit
allowed;
▪ Budget: The project is completed within
the approved budget;
▪ The project ensures labor safety and
environmental sanitation;
▪ Risk: Achieving risk management goals.

1.3 Receive offers Identify stakeholders including investors Planning department, 15

and partners who are advanced oil
processing countries in the world. Government
Include:
▪ Regarding stakeholder expectations
▪ Role in the project (Architect, technical
director of petrochemical refining,
project manager, etc).
▪ Type of contact and title of the parties
involved

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 Phase WBS Tasks name Description Person in charge Sources
(People)

▪ Draft rights, obligations and interests of

related parties
▪ Identify key project milestones
▪ Submit to Vietnamese government for
approval

1.4 Sign contract Building investor list and project management 50

Petro Vietnam,
Send the project contract to the partner and
schedule a time to design the factory. Foreign investors:
Idenmitsu Kosan
Company and Mitsui
Chemical Company
(Japan), Kuwait
Petroleum Corporation
(Kuwait)

Planning 2.1 Design & ▪ Create a Work Breakdown Structure Engineers, 40

and Engineering (WBS): Break down the WBS into
executing hierarchical activities. Planning department,
▪ Schedule management planning
▪ Identify activities and their sequence Construction design
▪ Estimate operational resources: time,
finance, personnel, etc.
▪ Plan time for activities
▪ The implementation phase includes
activities identified in the project
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Phase WBS Tasks name Description Person in charge Sources
(People)

management plan including: Managing

stakeholder expectations, coordinating
people with resources, performing
quality assurance for products
Petroleum.

2.2 Apply for a Send project plan and related documents to Project manager 1
factory provincial party committee and government
building permit including location, area, environment of factory.

2.3 Clearance Clearing households living in the area to be Project manager, 20

acquired to build a refinery and petrochemical
plant and provide compensation according to Planning department
the state's regulations for people or exploit
unspoiled areas to be ready for implementation
factory construction.

2.4 Procurement ▪ Identify equipment to purchase including Planning department, 15

of facilities and plant construction equipment,
equipments petrochemical refining equipment. Architects,
Define device selection criteria
▪ Issuing tender packages to potential Engineers
suppliers
▪ Make a list of qualified suppliers
▪ Organize contractor conference
▪ Meeting with stakeholders and making
purchase of equipment.

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 Phase WBS Tasks name Description Person in charge Sources
(People)

2.5 Import raw Fuel crude oil will be supplied directly from Sales department 30
materials (Oil, Kuwait for the project's needs by the Kuwaiti
gas) side.

Monitoring 3.1 Test Test production and use technical standards to Engineers, workers 12
and production evaluate the quality of petroleum products after
controlling processing.

3.2 Evaluation Evaluate finished products and plant Engineers 7

performance from which to make changes in
processing process, time, etc.

Closure 4.1 Complete and Debt settlement for suppliers of construction 4

settle each equipment and crude oil.
contract

4.2 Finalize all Carry out the remaining activities after the Planning department 10
activities petroleum preparation is approved by engineers
across all of and international standards
the process
groups

4.3 Project Re-introduce the overview of the project, 3

summary including Risks and Challenges, Project Timeline,
Rich Media

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 Figure 3: The deliverable-based WBS

2.5 Time Management: define the project calendar

2.5.1 Estimate the time required for each task, the inter-relationship among tasks (SS, FS and so
on). Remember to take p, ml, o estimations)

Figure 3: Time map

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2.5.2 Estimate total project duration
▪ Project time management includes the processes to manage timely completion of the
project. Our project schedule assigns a duration to the project activities and the activities
are sequenced in logical order.
▪ Columns from O to BA are bar chart (Gantt chart) displays the start and end quarters for
project activities anđ the overall project schedule, they also show logical task relationships
and indicate the task completion.
▪ Given below is an Activity in Node Diagram:

Figure 4: Note Diagram

▪ Float is the length of time an activity can be delayed without increasing the project
completion time. Where:
Float = LS - ES = LF – EF
For example, the float associated with activity C is LS - ES = 14 - 3 = 11 quarters.
The PERT approach for time is caculated by the fomula below:
𝐏𝐞𝐬𝐬𝐢𝐦𝐢𝐬𝐭𝐢𝐜 + 𝟒 ∗ 𝐌𝐨𝐬𝐭 𝐥𝐢𝐤𝐞𝐥𝐲 + 𝐎𝐩𝐭𝐢𝐦𝐢𝐬𝐭𝐢𝐜
𝟔
▪ Time in our project’s Time management is calculated on a quarterly basis, according to Figure
3, Evaluation (K) is the last task of Nghi Son petrochemical project with Earliest finish time
equal to Latest finish time equal to 26 quarters (EF = LF = 26). Therefore, the project lasts 26
quarters = 6.5 years.

2.6 Project cost management

2.6.1 Indicators reflecting the cost management performance of the project

Project cost management is the process of estimating, budgeting and controlling costs
throughout the
project life cycle, with the objective of keeping expenditures within the approved budget. For
a project to be called successful, it’s necessary that
✓ it delivers on the requirements and scope
✓ its execution quality is of a high standard
20
 ✓ it’s completed within schedule and
✓ it’s completed within budget.
There are different metrics for the kinds of costs incurred in a project, and it’s important to
substantiate them when relaying budgeting data to project stakeholders. These include:

▪ Fixed costs
The type of costs that are static and don’t fluctuate throughout a project’s lifecycle, such as
buying a one-time software license or a fixed tool subscription.
▪ Variable costs
These are the opposite of fixed costs and are dependent on how long your project runs.
Renting a

space for your project and travel expenses to meet the client will accumulate for as long as
the project goes on, and so are listed as ‘variable’.

▪ Direct costs
Direct costs are the type of expenses that are directly linked to the project budget. If you’ve
outsources some of your work to a contractor, they’ll put in a specific amount of time, which
is then billed for. Those salaries are then cited as direct costs.

▪ Indirect costs
Indirect costs go beyond the expenses associated with a particular project to include the price
of

maintaining the entire company. These overhead costs are the ones remaining after direct
costs have been computed, and are sometimes referred to as the ‘real’ costs of doing business
– like office supplies, internal coordination, overhead spent on essential admin, and client
communication. It’s vital to remember not all costs are created equal: most rely on good
timekeeping and team communication to ultimately avoid going over-budget.

▪ Cost Performance Index

CPI = EV / AC

The Cost Performance Index formula gives 3 results;

• CPI > 1: We are under budget. We are spending less than we earn.
• CPI < 1: We are over budget. We are spending more than we earn.
• CPI =1: We are on budget. We are proceeding as planned. If we proceed with this ratio
we will complete the project on time.

2.6.2 Estimate cost associated with each task (Explain your estimation)

Table 4: Cost estimated

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 Item description Unit Quantity Rate Amount ($)
Substructure
Concrete casting
Plain cement concrete 𝑚3 400 299 119,600
Pile caps 𝑚3 800 299 239,200
Tie beams 3 1,000 299 299,000
𝑚
Neck columns 𝑚3 100 299 29,900
Ground beams 𝑚3 700 299 209,300
Slab on grade 𝑚3 800 299 239,200
External steps 𝑚3 100 299 29,900
Steel reinforcement
Pile caps kg 64,000 4.8 305,280
Tie beams kg 125,000 4.8 596,250
Neck columns kg 15,000 4.8 71,550
Ground beams kg 84,000 4.8 400,680
Slab on grade kg 52,000 4.8 248,040
External steps kg 70,000 4.8 333,900
Form work
Plain cement concrete 𝑚2 200 36.8 7,360
2 1,600 36.8 58,880
Pile caps 𝑚
Tie beams 𝑚2 4,650 36.8 171,120
Neck columns 𝑚2 650 36.8 23,920
Ground beams 4,000 36.8 147,200
Slab on grade 𝑚22
𝑚 - 36.8 -
External steps 𝑚2 300 36.8 11,040

Superstructure
Concrete casting 𝑚3
Columns 𝑚3 250 299 74,750
Beams 300 299 89,700
Slabs 𝑚3 950 299 284,050
𝑚3
Parapets 400 299 119,600
Steel reinforcement
Columns kg 45,000 4.8 214,650
Beams kg 37,500 4.8 178,875
Slabs kg 9,000 4.8 42,930
Parapets kg 8,000 4.8 38,160
Form work
Columns 𝑚2 58,000 36.8 2,134,400
Beams 64,000 36.8 2,355,200
Slabs 𝑚2 7,000 36.8 257,600
Parapets 𝑚2 8,000 36.8 294,400

Total amount 9,625,635

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 ▪ Our Bill of Quantities has some substructure works and some superstructure works. Inorrder
to estimate the cost we need to find the Rate column. In this task, Rate has 4 categories:
materials, equipment, manpower, subconstractor.
▪ The rate given is a cost per unit. This applies when a quantity can’t be measured now.

2.6.3 How do you manage costs in the case of your project

To manage costs, we use four steps in project cost management:

Step 1: Project Resource Planning

▪ Resource planning is the process of determining the resources needed to carry out and
complete a project. People (including employees and contractors) and equipment are
examples of resources (such as infrastructure, large construction vehicles and other
specialized equipment in limited supply).
▪ Prior to starting any actual work on a project, resource planning is carried out.
▪ Project managers must first have the work-breakdown structure (WBS) prepared before
beginning. They must examine each subtask in the WBS and determine how many people,
what kind of abilities, and what kind of tools or materials are needed to complete the task.
▪ Project managers may develop an accurate and comprehensive inventory of all resources by
using this task-level technique, which is then used as an input into the subsequent stage of
estimating costs.
Step 2: Cost Estimation
▪ Calculating the expenses of all the resources needed to complete the project is the process
of cost estimating. We require the following details to do cost calculations:

✓ Requirements for resources (output from the previous step)

✓ Each resource's cost (e.g., staffing cost per hour, vendor hiring costs, server
procurement costs, material rates per unit, etc.)
✓ Length of time each resource is needed
✓ A list of suppositions
✓ Potential dangers
✓ Earlier project expenses and, if applicable, industry standards
✓ Information about the company's financial standing and reporting systems.

Step 3: Cost Budgeting

▪ Cost budgeting may be seen as a component of estimation or as a distinct procedure all on
its own.
▪ An opportunity to determine how much funding needs to be released for project phases
later on is provided by the performance evaluation of the project.
▪ The funding of organizations is frequently based on anticipated future cash flows. The
project manager must create goals based on the limited financial resources available during
the early stages.

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 Step 4: Cost Control
▪ The process of assessing cost variations from the baseline and taking appropriate action is
known as cost control. Timely and accurate reporting are just as important as measuring costs
in this process.
▪ The cost management strategy is a crucial component of the cost baseline when it comes to
cost control. This plan includes information on things like the threshold for deviations, how
project performance will be monitored, etc.
▪ In addition, to manage project costs, we need to note the following two things:
✓ When Project Estimates are generated from Project Quotations, only Simple Estimates can
be performed for Price Assignment items. Marking percentages can be applied to the rates
of these items. However, the total amount will not be affected.
✓ When the Project is created in GrowSmart after confirmation by the customer, the quantity
in the BOQ becomes mandatory. Update the quantity as necessary and save the Project. The
count will be updated in the automatically generated 'Draft' estimate.

2.7 Risk Management

2.7.1 Risk Identification

For refinery and petrochemical project, there are four baseline types of risk:
▪ Operation: supply chain, sudden stop working, damaged machinery and equipment,
overloaded, slow speed.
▪ Financial: cost over run, material cost increase, disbursement schedule, forex, interest
rate.
▪ Investment: compensation for displaced residents, change policy, land clearing.
▪ Force majeure: rain, flood, fire, infaction disease.

2.7.2 Evaluate the risk of the project

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 Table 5: Risks of the project
Risk Risk Name Risk Description Risk Probability Impact Solution
Code Category

O1 Supply chain - Supplier breaches the Operation 2 - Stage the 4 - Planning, negotiating with
contract, delivery is not on construction process suppliers, giving heavy penalties
time specified, delivery is of the project in the contract if violated
missing - Making the project - Having a strict operation and
- Supply chain disruption, may have to prolong supply chain management
shortage/over supply of the construction process
inventory time

O2 Sudden stop The project suddenly had 1 - Extend the 4 - Scenario of risks that easily lead
working to stop construction for progress of the to project stoppage in order to
many reasons project have timely plans
- There may be - When the project stops
additional costs if suddenly, it is necessary to work
the project is with stakeholders and come up
prolonged with a solution as soon as
possible the project will return to
normal.

O3 Damaged Sudden machinery 1 - Take an extra cost 2 - Have a suitable machine

machinery breakdown, climatic to repair or buy a maintenance method.
and conditions, improper new machine. - Specific instructions for workers
equipment operation cause wear and - Project delay. before and during construction.
tear of machinery,
especially in Vietnam, the

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 Risk Risk Name Risk Description Risk Probability Impact Solution
Code Category

environment is humid all

year round.

O4 Overloaded Production cannot meet 1 - Does not meet the 4 - Thoroughly evaluate the project
all demand requirements of the and the goals to be achieved
project through each phase to match the
- The project is not available resources
effective - Consider supporting
- Reduce stakeholders when the project is
productivity and in a rush stage
quality of work,
wear down
employees' strength.

O5 Slow speed The delay in time from the 3 - Delayed 4 - Plan the phases of the project,
originally scheduled time completion of the anticipate risks to have a timely
project plan to solve, without delaying
- Bear more costs the project's progress.
incurred

F1 Cost over run The cost exceeded the Financial 3 - The project's 4 - Having a suitable cost
estimate investment budget management plan, preventing
deficit incidents and arising costs
- Lack of costs to
implement the

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 Risk Risk Name Risk Description Risk Probability Impact Solution
Code Category

project, the risk of

project delays and
shutdowns

F2 Material cost Raw material costs 3 - Additional costs of 5 - Have a plan to control input
increase increase beyond plan the project material costs with the contractor
- Disrupt the project to ensure the lowest cost increase

F3 Disbursemen Disbursement progress is 3 - Lack of investment 4 - Have a full plan on investment

t schedule slower than expected costs to implement costs, resources, and time to
the project complete the project
- Prepare the procedures for
disbursement carefully, in
accordance with the
requirements

F4 Forex State foreign exchange 1 - Low foreign 1 Anticipate the foreign exchange
reserves are low exchange reserves risk to come up with the
affect the exchange appropriate price balance cost
rate, especially
projects with foreign
direct investment

F5 Interest Rate Loan interest rates for the 1 - Borrowing costs, 2 Have a backup plan when interest
project project operating rate increases, build a suitable

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 Risk Risk Name Risk Description Risk Probability Impact Solution
Code Category

costs financial plan, take short-term

loans

I1 Compensatio Compensation for people Investment 3 Delayed start of the 4 Negotiate and offer reasonable
n for who have to move to get project, impact on and satisfactory compensation
displaced land for the project budget of project
resident

I2 Change The change in policies for 1 Change the project 3 Have a plan to promptly support
policy project investment such as orientation plan when the policy changes
taxes, construction
incentives...

I3 Land clearing Land clearing to be able to 2 Delayed start of the 4 Plan to deploy site clearance early
get the project area that project to have time to solve related
may be interrupted due to problems
people's refusal to move,
inadequate
compensation,...

FM1 Rain Because the project is Force 3 - Rain water 5 - Have a plan to protect
primarily carried out Majeures damages the machinery carefully
outside, adverse weather machine - Compensating for bad weather
conditions such as rain - Slow project time
have a significant impact progress
on its completion.

FM2 Infaction Workers may contract 3 Widespread spread, 5 There is an appropriate isolation

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 Risk Risk Name Risk Description Risk Probability Impact Solution
Code Category

disease infectious diseases and lack of human and labor allocation scenario
may not be able to resources to serve when the epidemic occurs
continue working the project

FM3 Flood The storm caused high 3 - Damage to 5 - Plan to protect machinery
winds, rain, floods,... could machinery carefully
not continue to carry out - Material damage - Compensating for bad weather
the project construction - Construction time
interruption

FM4 Fire The project to build an oil 3 Destroying 5 Comply with regulations on fire
refinery should have a lot construction results and explosion prevention,
of materials that are of the project, regularly check and monitor,
prone to fire and causing damage to ensure no violations
explosion people and property

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2.7.3 The Project Risk Map

Figure 5: Risk map

2.7.4 Discuss economic scenarios that may affect the sustainability of the project
▪ Most likely case:
Inflation in the US and the European Union has increased significantly, with US CPI
exceeding 7.5% for the sixth consecutive month and eurozone CPI reaching a new high of
10.7%. Over the past year, due to the impact of too low global liquidity, supply chain
bottlenecks and instability in Ukraine, global inflation has continued to soar. In addition, the
war in Russia-Ukraine also affected the soaring gasoline prices, crude oil supplies and scarce
fuels. The increase in gasoline price by about 60% not only causes the price of construction
materials to increase, but the fuel cost for each construction machine shift on construction
sites is also very high.. When the price of raw materials is very high, the contractor is forced
to accept the cost incurred. However, the most likely scenario at present is that the Nghi Son
project will continue to be built, but the project may be delayed due to foreign investment,
the costs incurred need time to calculate and give solutions.
▪ Pestimic case:
According to the International Monetary Fund (IMF), with inflation rising in the US and
Europe, global inflation is forecast to peak around 7.7%. The world financial and currency
markets continue to be in a state of risk and uncertainty. The unresolved conflict in Ukraine
will affect gasoline prices, logistics costs, import prices of raw materials and fuel...
So, the current most pessimistic scenario is that the project may be delayed for a long
time or stop working. The price of construction materials increased sharply according to the
price of gasoline as well as being affected by the tension between Russia and Ukraine, which
had a direct impact on the construction cost. If the price increase is not controlled, the more
losses are made, the project may have to accept a long delay or stop construction, because
the contractor may have to bear a lot of pressure on operating costs. construction machinery
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equipment, the project is over-capitalized, exceeds the approved total investment and
estimate, and is behind schedule... Besides, when the project is stopped for a long time, it is
necessary to bear more including repair costs, machine depreciation, etc.
▪ Optimistic case
In addition to the unfavorable cases, we can consider the more optimistic case. Currently,
Vietnam's economy is on the way to development and recovery. Especially for investors in
the Nghi Son oil refinery project, the Government of Vietnam has offered preferential
policies, facilitating the project construction and operation of the plants after completion
such as: preferential tax rate of 10% for 15 years, tax exemption for 4 years and 50%
reduction of payable tax for the next 9 years. Exemption from import tax on goods to create
fixed assets, specialized means of transport in the technological chain serving investment
projects, means of transporting workers, etc. This helps to attract investors. especially
foreign direct investment to invest in the project. Besides, with the help of large corporations
from Japan and Kuwait, the project will be able to cover the costs even if the price of raw
materials is high. Thanks to that, the project was completed on time and without any
problems.

3. Recommendations and Conclusions

RECOMMENDATION & CONCLUSION
There are countless management issues when it comes to developing a project,
however, if we choose an issue that we consider the most important and essential, it is
probably a matter of cost and budget. Because those are issues related to money and capital
management, when going into a project, the first thing that project makers or stakeholders
are interested in is the potential profit from that project. Because of that, to be able to
optimize profit margin, the project developer first needs to optimize the cost as well as the
budget. Therefore, we will give some views on the role of cost and budget management in a
project, the factors that can affect cost and budget, as well as give opinions on how Project
managers can optimize their costs and budgets.
Here are a few ways on how to manage costs:
● Allocating resources competently in the project initiation phase
Identifying and assigning the right resources in the project initiation phase helps to
carry out the projects within time and on budget. It also helps to avoid under-allocating or
over-allocating skilled resources to different project tasks. Assigning unskilled resources will
cause delivery delays and degrade quality. On the other hand, if a resource manager over-
allocates skilled resources, their high costs will cause budget overdrafts.
● Track forecasted spending vs actual spending to control project costs Resource
management software monitors key project financial metrics such as costs, revenue,
margins, and overheads. Tracking project finances helps to avoid going over budget. Project

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 managers can control costs by periodically tracking and comparing actual spending against
estimated budgets. If there is a discrepancy, the necessary corrective measures can reduce
the risk of the project ahead of time.
● Increase productivity with a job rotation strategy
Resource managers can boost employee productivity by implementing a job rotation
strategy. Exposing employees to different project tasks gives them many skills-building
opportunities. It also encourages employees to build multiple secondary skills beyond their
primary skill set. These secondary skills also improve solvency in the event that there are no
available quests that match their primary competence.
In a project, there are many areas that need to be managed in order for the project
to be completed on time and to the assigned target. Good cost management will help the
company save costs, and help speed up the project schedule. When the project is successful,
people's lives will be improved and more customers will be attracted.

References
Avlijaš, G. (2019). Examining the value of Monte Carlo simulation for project time
management. Management: Journal of Sustainable Business and Management Solutions in Emerging
Economies, 24(1), 11-23.

Ji, Q., & Chen, W. (2020, October). The application of BIM technology in the cost management of the whole
process of construction projects. In Journal of Physics: Conference Series (Vol. 1648, No. 3, p. 032016). IOP
Publishing.

Nghi Son Refinery and Petrochemiscal LLC. (2018). Retrieved January 5, 2023 from https://nsrp.vn/
Oladimeji, O. (2021). Evaluation of Unit Rates Bids of Common Building Items. Journal of Engineering,
Project & Production Management, 11(2).

Tang, D., & Liu, K. (2022). Exploring the Application of BIM Technology in the Whole Process of
Construction Cost Management with Computational Intelligence. Computational Intelligence & Neuroscience.

Tembo, C. K., Muleya, F., & Kanyemba, A. (2022). An appraisal of cost management techniques used in the
construction industry. International Journal of Construction Management, 1-9.

Contribution rate

32
No Student name and ID Contribution

1 Trịnh Thị Lan - 19071393 33.33 %

Nguyễn Phương Thảo – 20070053

2 33.33 %

Nguyễn Ngọc Ánh - 19071310

3 33.33 %

Total 100%

33