An Investigation Into the Major Factors Affecting Project Completion of Upgrading the Infrastructure System in Vietnam
Rationale: The purpose of this paper is to analyse some causes constraining the construction process in Vietnam in recent times, and therefore, to recommend a number of solutions.
1. Introduction
1.1. Background Since economic reformation in the mid 1980s, Vietnam has made efforts to develop market economy, and therefore, this country has achieved many significant goals, especially in the industrial and service sectors. Besides these successes, it cannot be denied that the construction industry has played an important role by contributing a large proportion in the national economy. The General Statistics Office of Vietnam (2007), for instance, showed that capital invested into construction was approximately 21,136 billion VND (1 $US = 16,132 VND), with an improvement of 30% compared with the previous year’s statistics. Moreover, in the same period, the Vietnam Government spent 107,440 billion VND on fundamental construction, accounting for 26.9% of budget. Concurrently, the Vietnam Government also determined developing the infrastructure system, the basic physical and organisational structures or services and facilities needed for economical and social applications, as a momentous factor for national economy soaring. According to Thanh and Dapice (2009), after the financial crisis in Southeast Asia in 1997, investments into infrastructure were 10% of GDP on average, assisting Vietnam in becoming one of the most East Asian economies renown for its expenditure in upgrading infrastructure. On the other hand, although attracting a vast amount of money, the construction industry has not utilised effectively this investment. Many construction projects both in the state-run sector and private ones have faced a series of problems in execution that affected not only cost but also quality of works. Together with other frequent matters such as cost overrun, reduction in profit margin and loss of public belief in state-funded projects, delay is one of the
1. Introduction
1.1. Background Since economic reformation in the mid 1980s, Vietnam has made efforts to develop market economy, and therefore, this country has achieved many significant goals, especially in the industrial and service sectors. Besides these successes, it cannot be denied that the construction industry has played an important role by contributing a large proportion in the national economy. The General Statistics Office of Vietnam (2007), for instance, showed that capital invested into construction was approximately 21,136 billion VND (1 $US = 16,132 VND), with an improvement of 30% compared with the previous year’s statistics. Moreover, in the same period, the Vietnam Government spent 107,440 billion VND on fundamental construction, accounting for 26.9% of budget. Concurrently, the Vietnam Government also determined developing the infrastructure system, the basic physical and organisational structures or services and facilities needed for economical and social applications, as a momentous factor for national economy soaring. According to Thanh and Dapice (2009), after the financial crisis in Southeast Asia in 1997, investments into infrastructure were 10% of GDP on average, assisting Vietnam in becoming one of the most East Asian economies renown for its expenditure in upgrading infrastructure. On the other hand, although attracting a vast amount of money, the construction industry has not utilised effectively this investment. Many construction projects both in the state-run sector and private ones have faced a series of problems in execution that affected not only cost but also quality of works. Together with other frequent matters such as cost overrun, reduction in profit margin and loss of public belief in state-funded projects, delay is one of the
References: Aibinu, A.A. and Odeyinka, H.A. (2006) Construction delays and their causative factors in Nigeria. ASCE Journal of Construction Engineering and Management. 667-677. BBC News (2007) Inflation in Vietnam passes 27% [online]. http://news.bbc.co.uk/1/hi/world/asia-pacific/7522804.stm [Accessed in 29th August, 2010] Bramble, B.B Long, L. H., Lee, Y. D. and Lee, J. Y. (2008) Delay and cost overruns in Vietnam large construction projects: A comparison with other selected countries. KSCE Journal of Civil Engineering, 12(6), 367-377. Online Compact Oxford English Dictionary (2010) Infrastructure [online]. http://www.askoxford.com/concise_oed/infrastructure [Accessed 20th August, 2010] Thanh, N.X Toor, S. and Ogunlana, S.O. (2008) Problems causing delays in major construction projects in Thailand. Construction Management and Economics, 26, 395-408. Tumi, S.A.H., Omran, A. and Pakir, A.H.K. (2009) Causes of delay in construction industry in Lybia. The International Conference on Economics and Administration. Faculty of Administration and Business, University of Bucharest, Romania, 265-272. Vietnam General Static Office (2007) Investments categorised by profession [online]. http://www.gso.gov.vn/default.aspx?tabid=392&idmid=3&ItemID=8699 [Accessed in 19th August, 2010] Vietnam General Static Office (2007) Mechanism of state budget [online]