Joint name of contractors of bidding packages on north - south expressway: more harm than good

Recently, the Ministry of Transport has had Official Letter no.9245/BGTVT- CQLXD to the Prime Minister on selecting of construction contractors for the Eastern North-South Expressway construction project in the period of 2021-2025. Accordingly, the Ministry of Transport proposes to divide bidding packages with an estimated value of about VND 3,000 - 5,000 billion each, and each package will have about 3 contractors to implement.

To speed up the progress and improve the quality of investment in construction of key transport projects, in February 2022, Prime Minister directed to select capable and experienced contractors, and do to divide bidding packages to ensure synchronicity. So it is basically suitable to divide the project into bidding packages with such scales and values.

However, is it appropriate for the package to have many joint name contractors? In general, a bidding package with a value of VND 3,000 - 5,000 billion is not small. If it is a joint name of 3 contractors, it will become a small one. In fact, a joint name of contractors is to qualify for the bid, then the bidding package will be divided and each works on their section. Therefore, is the model of joint name of contractors meet the requirements of improving both speed and quality?

There will be no leader in a bidding package with a joint name of contractors, making it difficult for progress and quality managements. In case there is a ‘favorable’ contractor with weak capacity in a joint- name, it affects not only reputation but also progress, quality and synchronicity of the whole project.

Besides, when the project is divided, a contractor may be appointed to do many bidding packages but not adjacent to each other but scattered. With such construction conditions, it will be difficult and expensive to gather and coordinate machinery, equipment, materials, and workers among bidding packages, and it is difficult for the project management as well.

It is obvious that deploying the model of joint name of contractors in the project of North- South project phase 2 is doing more harm than good: there will be inadequacies that affect negatively to quality and projects of works. In addition, how to control the fact that contractors are in collusion and then divide a bidding package by themselves. It is also excluded some contractor use “back door” to be in joint name with a main contractor, and then the main contractors has to be responsible for everything. There are ideas that the division of bidding packages of the expressway should not be in term of value but in term of technical natures with binding conditions to joint names of contractors.

For a long time, division of domestic construction bidding packages has still mainly based on the value of the bidding package. Little consideration has been given to the plan of dividing the bidding package according to its technical natures. Short sections with special technical requirements will be divided into separated bidding packages; long sections with simple requirements can be combined into a package.

Along with calculating and dividing bidding packages according to their technical characteristics to make optimal use of strong contractors’ potentials. It is also necessary to study and apply the model of general contractor: selecting a contractor who has managed, construction of a large proportion of the highway, understand technical requirements, instead of choosing the form of joint-name for efficiency.

General contractor - a model for Vietnam's enterprises to reach a new stature

The general contractor model is considered an effective option when it is possible to overcome the inadequacies because the large bidding package will be in charge of by a general contractor... General contractor is a unit with potentials, which has taken on difficult and large projects and has experience in managing and implementing difficult and important items of a project. This is a model that creates favorable conditions to further improve the quality of domestic contractors to meet the increasing requirements for quality and progress of transport infrastructure projects in the future.

The North-South expressway project in the period 2021-2025 is both a challenge and an opportunity for transport infrastructure enterprises in Vietnam. The application of the general contractor model with the selection of a qualified, experienced and reputable general contractor is considered an important and necessary factor to bring the North - South expressway project to the finish line with quality and progress ensured. At the same time, management and project management costs of the PMUs are also significantly reduced.

Some experts commented that in case of applying the general contractor model, functional levels can flexibly apply the current relevant legal system so that the value of the bidding package can be raised to over VND 5,000 billion, even VND10,000 billion to create conditions for large enterprises to participate in large workloads and to reduce pressure on the project management apparatus.

In the process of project implementation, one of the accounts for a large proportion of construction costs is the costs of investment in machinery and equipment. When receiving a small package with not much profit, enterprises are likely to save costs, not strongly investing in equipment, which leads low efficiency. On the contrary, when having opportunities to implement large bidding packages, large contractors can boldly invest in equipment, it will improve efficiency, capacity and construction techniques.

At the same time, from the experience accumulated after large bidding packages and difficult projects, big contractors become more mature and pull small contractors up together. Setting limits and framing bidding packages from VND 3,000 to 5,000 billion creates a barrier for the development of enterprises. The lack of opportunities for breakthrough development will suffocate the desire to have further development. There are international-class construction corporations from countries such as Korea, China..,- those can beat domestic contractors at their ‘home playground’, Vietnam’s enterprises’ capacity stops only at the level of VND 3,000- 5,000.