Investment in infrastructure construction is crucial to boosting economic growth. However, many transport projects managed by the Ministry of Transport are taking much longer than expected pace due to soaring material costs and management weaknesses in implementing projects.
Since early this year, increases in the prices of building materials have had a negative impact on the implementation of most key transport projects. The price of asphalt is now three times higher than earlier in the year and have caused major difficulties for contractors. In addition, the capability of contractors also plays a vital role in ensuring that adequate progress is made.
For example, a number of incompetent small and medium-sized enterprises are engaged in some ODA-funded transport projects, which has led to the slow pace and poor quality work.
According to Deputy Head of the Planning and Investment under the Ministry of Transport Ha Khac Hao, in order to resolve this, it is imperative to review the bidding process by selecting financially strong contractors.
In many countries in the world, businesses are often put under the control of auditing companies, especially independent ones. This helps to define the financial capacity of businesses. However, such an auditing system remains new in Vietnam so it is difficult for the relevant agencies to define a business’ financial capacity.
For projects that have been delayed due to the poor abilities of contractors, the Ministry of Transport has asked project management boards to review and even re-tender and assign capable contractors to fulfil the projects.
In the coming period, it will be necessary to manage and organise the bids for construction projects more transparently and strictly.
Deputy Minister of Transport Nguyen Hong Truong said bids will now undergo many rounds to ensure that construction projects are implemented by qualified contractors with adequate financial capacity and management capacity. During the implementation of construction projects, if any contractor shows any signs of poor performance or bad financial capacity, leading to the delay of projects, the contract will be terminated and the contractor may even be included in a black list and be banned from bidding for other projects.
Constant changes in the law have also contributed to the delay of construction projects. For example, decree No. 16 stipulates the transfer of the rights of investment ownership from management boards to corresponding agencies. The transfer requires a certain amount of time for agencies to manage the projects, particularly unfinished projects.
Local authorities are now in charge of site clearance for projects, however, as most lack experience in this, site clearance is ineffective and takes far too long.
From now until the end of the year, the Ministry of Transport and the relevant agencies need to review all the legislation to accelerate the legal process for construction projects. Moreover, the ministry should cooperate with localities on site clearance to create better conditions for investors.
The Ministry of Transport is cooperating with other ministries and agencies to conduct research and build common regulations for bidding in line with international practices, including changes in costs to make sure that contractors do not suffer losses. Slippage in prices has been piloted and will soon be applied widely in other projects.
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