August, 01 2012 09:14:13

Use of contractors impacts efficiency of building projects

Viet Nam Association of Construction Contractors (VACC) general secretary Duong Van Can spoke to Thoi Bao Kinh Te Viet Nam (Viet Nam Economic Times) about overuse of contractors.

How do you evaluate the impact of the appointment of contractors on the efficiency of construction projects?

The Law on Bidding clearly regulates what types of projects can appoint contractors and which projects must go through the tender process to select the most appropriate bids from contractors.

In fact, the appointment of contractors occurs in many civil projects such as work on building roads, monuments, eco-tourism sites and head offices for provincial People's Committees.

The situation is common in many localities and ministries. The Government's inspectors recently announced a series of violations in appointment of contractors in Ninh Binh, Nghe An, Phu Tho and Hung Yen provinces and the Ministry of Transport.

Appointment of contractors are more common to bidding invitations as this serves the personal interest of some groups. Some contractors could not win contracts for projects if they had to compete through the tender process due to their limited capacity.

Many people blamed corruption in this system on loose regulations. What is your opinion?

It is true that the situation is partly a result of the loose regulations and also some groups exploiting the process for their own interests.

Contract winners are often those who have influence and a good relationship with local authorities.

This steals opportunities away from other contractors who are suited to do the job. Meanwhile, unsuitable contractors may be appointed, which wastes money and slows the progress of construction projects while also sometimes resulting in poor quality work and public discontent.

How can the situation be improved?

The appointment of contractors must be put under tight supervision to ensure compliance with the laws and prevent violations.

Also, the appointment of contractors must be publicised to enhance public supervision of the process and transparency among contractors.

How do you evaluate the capacity of Vietnamese contractors?

I see huge improvements in capacity, financing, technologies, engineering and human resources after 26 years of doi moi (renewal).

This is proof of the success of many engineering, procurement and construction (EPC) contracts. (Under an EPC contract, the contractor is in charge of design work, procures the necessary materials and builds the project, either directly or by subcontracting part of the work).

However, some projects are too sophisticated for Vietnamese contractors to implement. Dung Quat Oil Refinery is an example. Those projects require a high level of capacity and advanced technologies and techniques that Vietnamese contractors have not mastered fully but are still learning from foreign investors.

Why do foreign contractors still win over domestic ones?

The main contractors of official development assistance (ODA) projects are often from the countries which provide the ODA loans to Viet Nam. This is a condition often regulated in the ODA loan agreement.

Another important reason is that Vietnamese contractors are often short of capital. Meanwhile, the interest rate on loans is high, causing a lot of difficulties for domestic construction investors. — VNS

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