Weakness in specific areas
In mid-December 2022, the press simultaneously published information that Vietnam Airports Corporation - ACV canceled the bidding package 5.10 - the package with the largest value (more than 35,200 billion VND) among all bidding packages of the Long Thanh airport passenger terminal project phase 1. The reason was that the bidding documents did not meet the requirements on implementation experience.
This difficult decision was made after two extensions of the bid closing date. By the time the bid closing date came, only one joint venture had submitted a bid.
In a subsequent report to the Government , Mr. Nguyen Quoc Hiep, Chairman of the Vietnam Association of Construction Contractors, stated that the 33-month construction period made foreign contractors hesitant. Because, when expanding Noi Bai Airport, the construction period also took 36 months, while the workload was only 1/3 compared to Long Thanh.
Besides, the experience and financial capacity of Vietnamese contractors are also limited, leading to the need for joint ventures.
Looking at the only consortium that submitted documents (Conteccons - Vinaconex - Centra - Phuc Hung Holdings - REE - Hoa Binh - HAWEE), it can be seen that the participating units are mostly civil contractors. Familiar faces in the field of transport infrastructure construction are absent.
According to Mr. Le Quyet Tien, Director of the Department of Construction Investment Management ( Ministry of Transport ), domestic transport contractors currently have limited capacity and experience in some specific fields such as: Construction of special items of airports, metro tunnels, cable-stayed cable tensioning; Production, fabrication and construction of high-strength steel structures...
Limited financial resources
Associate Professor, Dr. Tong Tran Tung, former advisor to the Minister of Transport, said that Vietnamese traffic construction contractors currently have enough management, engineers, skilled workers, construction equipment, and quality control to undertake most types of domestic traffic projects and foreign bids, especially bridge - tunnel - road construction. However, the biggest challenge for contractors to "reach the big sea" is brand and financial resources to meet the criteria of the bidding documents.
The results of the review of Vietnamese contractors' capacity (stated in the report of the Ministry of Transport sent to the Prime Minister in September 2022 to serve the study of dividing bidding packages and selecting contractors for the construction of the North-South Expressway in the 2021-2025 period) show that in the past 10 years, about 48 contractors have participated in the construction of traffic works of level II or higher and have a contract value of VND 350 billion or more.
Of which, 18 contractors participated in construction with contract values from 350-500 billion VND, 16 contractors participated in construction with contract values from 500-1,000 billion VND; 7 contractors participated in construction with contract values from 1,000-1,500 billion VND; 7 contractors participated in construction with contract values from 1,500 billion VND or more.
Regarding supervision consultants, in the past 5 years, about 27 consultants have participated in supervising the construction of traffic works of level II or higher with contract value from 2 billion VND. Of which, 7 consultants have participated in contracts from 2-5 billion VND, 7 consultants have participated in contracts from 5-10 billion VND; 8 consultants have participated in contracts from 10-20 billion VND; 3 consultants have participated in contracts from 20-30 billion VND; 2 consultants have participated in contracts over 30 billion VND.
Contractor Cienco4 Group constructing the North-South Expressway, Nghi Son - Dien Chau section (taken in November 2022). Photo: Ta Hai.
With the above capacity, considering the North-South expressway project in the East phase 2021-2025, the total investment of component projects is worth about 7,643-20,500 billion VND.
Of which, the construction and installation costs to select contractors are approximately VND 5,932-15,131 billion (including grade I road works, road tunnel works and road bridges from grade III and above).
In the case of dividing bidding packages with a scale of 5,000-15,000 billion VND, in the last 5 years, only one contractor has performed a construction contract with a value of 3,642 billion VND, with sufficient capacity to perform bidding packages with a construction value of about 7,284 billion VND.
In the case of expansion in the last 10 years, only one contractor has performed a construction contract worth 5,715 billion VND, with sufficient capacity to perform a construction package worth about 11,430 billion VND.
Contractor Vinaconex constructing the North-South Expressway, Vinh Hao - Phan Thiet section (taken in April 2023). Photo: Ta Hai.
The remaining surveyed contractors do not have the capacity to implement bid packages with a scale of VND5,000-15,000 billion as independent contractors, but must form a consortium (a consortium of about 5-10 contractors) to meet the minimum requirements to participate in the bid package.
On the other hand, corresponding to the construction package value of 5,000-15,000 billion VND, the supervision consultancy package will be worth about 40-60 billion VND. The number of supervision consultancy contractors meeting the package is also not much.
Implementing the Prime Minister's direction on not dividing the bidding packages and ensuring optimal synchronization, the final plan proposed is that the 729km expressway project is divided into 12 component projects with 25 bidding packages. Of which, the lowest bid package is over 3,000 billion VND, the highest bid package is nearly 8,000 billion VND.
From the above evidence, it can be seen that the capacity of Vietnamese transport contractors still needs to be cultivated through many new projects with increasingly large bidding packages so that they can compete in the international arena.
Open up opportunities, increase inner strength
Although the capacity to undertake large-scale construction projects is still modest compared to foreign contractors, with a positive perspective, Director of the Department of Construction Investment Management Le Quyet Tien said that in recent years, the force of traffic contractors has developed remarkably after participating in the construction of large traffic projects of the Ministry of Transport and localities.
If in 2014, the consortium of Vietnamese transport contractors only participated in the construction of bid packages worth 150-250 billion VND in the project to upgrade and renovate National Highway 1, the North-South Expressway project in the 2017-2020 period with bid package values ranging from 1,000-3,000 billion VND, now the consortium of contractors can undertake bid packages 2-3 times larger, from 3,000-8,000 billion VND.
Workers of Deo Ca Group construct Truong Vinh tunnel, part of the North-South expressway project, Nghi Son - Dien Chau section (taken at the end of May 2022). Photo: Ta Hai.
According to Mr. Tien, there is still a great opportunity for contractors to improve their capacity. Following the 1,729km of expressways that have been put into operation (as of July 2023), 6 important national projects have been started (North-South Expressway phase 2021-2025; Bien Hoa - Vung Tau Expressway; Chau Doc - Can Tho - Soc Trang Expressway; Khanh Hoa - Buon Ma Thuot Expressway; Ho Chi Minh City Ring Road 3; Hanoi Capital Ring Road 4), the Ministry of Transport has also directed investors to proactively carry out investment preparation work for projects under the medium-term public investment plan 2021-2025.
By the end of July 2023, 60/64 projects had been approved for investment policy, 43/60 projects had been approved for investment. The remaining projects are being actively completed by competent authorities for procedures to approve investment policy and investment in 2023.
"According to the plan, in the coming time, 32 projects in 5 transport sectors (road, railway, waterway, aviation, maritime) in the 2021-2025 medium-term public investment plan will continue to be started, including: 22 road projects; 2 railway projects; 2 maritime projects; 4 inland waterway projects and 2 aviation projects," shared the leader of the Department of Construction Investment Management (Ministry of Transport).
Building support mechanisms
With nearly 40 years of experience in the transport industry, Mr. Pham Huu Son, General Director of Transport Design Consulting Corporation (TEDI), affirmed that the progress and working attitude of Vietnamese transport contractors today are not something that any contractor in the world can achieve.
However, to be competitive enough to participate in large-scale international bidding packages, Vietnamese contractors, including traffic consulting contractors, really need the State's support policies in technology transfer.
In other words, the authorities need to study a mechanism so that Vietnamese engineers have the opportunity to learn and proactively receive new construction technology from advanced countries, not just receiving technology through ODA projects as at present.
After the expressway, the high-speed urban railway will be invested in. To implement this project, the first resource is still human, from design, management, construction, operation, maintenance, inspection. But we almost do not have this force.
Currently, enterprises are still gradually training and improving the qualifications of engineers and workers. However, with limited resources, without support policies from the State, the labor force in the transportation sector of Vietnam will find it difficult to accelerate, to stay ahead of new technologies and new trends to compete with foreign contractors.
Sharing the same view, Associate Professor, Dr. Tong Tran Tung said that in order for Vietnamese construction contractors to continue to develop in both quality and quantity, to meet the increasing volume of work, and to gradually reach out to regional and international markets, high-quality human resources are the biggest problem.
The long-term solution lies in recruitment, training and promoting research and development. To do so, the current application of standards and unit prices needs to be changed to be closer to reality instead of being applied mechanically and bureaucratically as it is now.
With an open perspective, Associate Professor Dr. Tran Chung, Chairman of the Vietnam Road Traffic Construction Investors Association, said that the criteria for selecting contractors, first of all for domestic traffic projects, also need to be researched in a more innovative direction to expand opportunities to participate in large-scale bidding packages and accumulate capacity.
Instead of evaluating bids based on past performance, bids can be evaluated based on the contractor's plan: What is the construction organization plan? What is the progress roadmap? Which items must use subcontractors? Which techniques must hire international experts? Who is the administrator, who is the project manager? What technology and equipment will be applied? How to assess and identify risks to limit cost increases and prolong progress?
"Along with the selected plan will be regulations on responsibility and handling of violations of the contract," Mr. Chung said, adding that to be successful, the investor must hire the best and most experienced independent supervision consultant. They will be the ones to control the entire implementation of the contractor's commitments, from human resources to equipment and machinery brought into the project, in order to make timely recommendations for correction and replacement.
According to the Road Network Planning for the 2021-2030 period, with a vision to 2050 and orientation to 2050, the capital demand for road network investment by 2030 is about 900,000 billion VND, mobilized from the State budget, non-budgetary capital and other legal capital sources.
Source: https://www.baogiaothong.vn/nha-thau-viet-va-hoai-bao-vuon-tam-the-gioi-192231008170826974.htm
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