Infrastructure project implementation

Over the past few years, the government of Vietnam has approved a number of infrastructure investment projects. However, the increasingly poor performance of existing civil engineering works is affecting the effectiveness of these investments.

Many roads in Vietnam are still in bad condition, suffering from insufficient structure (such as poor drainage and inadequate foundations or supporting structures) and poor maintenance. Even some newly-built major municipal roads and bridges also suffered severe quality problems. For example, shortly after being built or upgraded, a number of roads in Ho Chi Minh City were dug up again for the installation of underground utilities, causing further traffic congestion. Finishing work was done improperly and potholes were common on these roads (Tuan, 2010). The first phase of the ring road around the central city of Ha Tinh was completed in 2009 with a total investment of

VND 300 billion (around USD 19 million at that time). However, the road has already exhibited a number of serious surface distortions (Van, 2010b, 2010a).

The construction of Can Tho Stayed-cable Bridge over Hau River connecting Can Tho City and Vinh Long province in the south of Vietnam started in 2004. The bridge, the longest stayed-cable bridge in Southeast Asia, was designed by a Japanese consultant and constructed by Vietnamese, Japanese and Chinese contractors. The USD 342.6 million investment (2001 exchange rate) was funded mainly by ODA from Japan and a small corresponding portion from the state budget of Vietnam.

While still under construction in 2007, two side spans of the bridge collapsed (Nguyen, 2007). Although it was planned to be completed in 2008, the incident subsequently delayed the completion until 2010 (Nguyen, 2009).

The Kim Lien Road Tunnel, one of the most modern road tunnels in Vietnam was built to reduce traffic congestion in one of the major traffic corridors of Hanoi.

The VND 467 billion (around USD 28 million at that time) investment was funded mainly by ODA and a small corresponding portion from the state budget of Vietnam.

The tunnel was designed and constructed by Japanese firms (Do, 2010). The construction of the tunnel started in 2006 and was planned to be completed within 22 months, but was delayed by a year. Completed in 2009, the tunnel was severely flooded on the opening day in 2009 (Duc, 2009). A few months after the opening, a number of leaks also appeared in the tunnel’s connections (Tien and Huong, 2009).

The Thu Thiem Tunnel crossing Sai Gon River in the south, the longest river tunnel in Southeast Asia, is the main part of the East-West Highway and tunnel project that run through southern Ho Chi Minh City; the total estimated cost was about USD 583 million and was mainly funded by ODA from Japan and a small corresponding portion from the state budget of Vietnam (Prime Minister's Office of

Vietnam, 2000a). The six-lane road tunnel is 1490m long designed and constructed by Japanese firms. The construction works started in 2005. In 2008, the four under-river tunnel sections had a number of cracks when the construction of these tunnel sections was almost complete. The tunnel was opened for use in 2011 (Kap, 2008; Vu, 2008;

Quang, 2011).

The feasibility and cost effectiveness of building major infrastructure projects were questionable as well. One of the most problematic issues in building municipal roads is site-clearance related issues, which often remarkably raised total development time and costs of these roads. For example, the construction cost for the Nam Ky Khoi Nghia Road, which played a key role in the development of the urban transport axis of Ho Chi Minh city, was only VND 68 billion, but site clearance cost was VND 654 billion, almost 10 times higher (Vo, 2008). Likewise, many ports have been built albeit in a very low cost-effective way. For example, in 2004, the first phase of the Cai Lan Port in the northern city of Hai Phong was completed and available for use with a total cost of VND 1,500 billion (around USD 96 million at that time) funded by ODA from Japan, and was expected to be one of the central ports in the north to accommodate ships of up to 40,000 DWT. The port, however, could accommodate only 15-20,000 DWT ships. Consequently, container cargos carried by 40,000 DWT ships were trans-shipped to 15,000 DWT ships before being unloaded in the port. This subsequently increased the shipping costs (and time) by tens of millions of USD per year (Do, 2006). Upgrades to the port, including the dredging operation for the passage leading to the port to accommodate ships of up to 40,000 DWT, is currently under development with an investment of USD 100 million (Moore et al., 2010).

A development of a deep water seaport at Lach Huyen, also near Haiphong is under consideration. The unstable site of the port requires a multi-billion dollar

investment, let alone other issues. However, the feasibility of the development, which should be studied carefully, has been studied and verified by the same company (Dao, 2007).

A report by the Standing Committee of the National Assembly discovered that within 3 years from 2005 to 2007, the number of infrastructure developments with fraudulent practices, or with time delay, low quality, or low-cost effectiveness have gone up both by total amount and by percentage. The number was 1882 projects, accounting for 14.57% of the total number of projects in 2005; and 3,173 projects, accounting for 18.1% of the total number of projects in 2006. The number continued to increase to 4,763 projects in 2007. According to the general secretary of VFCEA, Mr. Tran Ngoc Hung, time delay was, in fact, worse than what was reported;

construction time in Vietnam was often 1.5 to 2 times longer than that in other regional countries; and an upward trend could also be found in loss and waste in construction. Unnecessary bureaucracy was one of the major causes of time delay. On average, total time from acquiring investment approval to the beginning of construction works was about 42 months for group-A projects, 29 months for group-B and 23 months for group-C. Some group-A developments took 4 years to clear the site and 5 to 7 years to complete the construction works (Vo, 2008).

Long et al. (2004) conducted a survey of the issues relating to the poor performance of large construction projects in Vietnam. The survey’s respondents were owners, designers/consultants and contractors/subcontractors. Top ranked factors included incompetent designers and contractors; poor estimation and change management; social and technological issues; site related issues, and improper techniques and tools. The problems for these factors are listed in Table 6.8.

Table 6.8 Major factors explaining the poor performance of large construction projects in Vietnam

Factors Problems

Incompetent designers and contractors

 Inadequate project management assistance;

 Impractical design;

 Lack of involvement through project life;

 Contractor’s financial difficulties;

 Incompetent project team; and

 Poor site management.

Poor estimation and change management

 Excessive contractors and/or subcontractors;

 Inaccurate time estimating;

 Inaccurate cost estimating; and

 Excessive change orders.

Social and technological issues

 Obsolete technology;

 Bureaucracy; and

 Fraudulent practices and kickbacks.

Site related issues ^ Slow site clearance; and

 Unsatisfactory site compensation.

Improper techniques/tools ^ Inadequate modern equipment; and

 Improper planning and scheduling.

Source: Adapted from Long et al. (2004)

Similarly, Le-Hoai et al. (2008) conducted a survey on the cause of delay and cost overruns in large construction projects located in robust development economic zones in Vietnam. The study revealed a number of issues in the implementation of construction projects, which were often funded by the government. These issues included slow payment of completed works, poor contract management, obsolete or unsuitable construction methods and unforeseen site conditions; poor site management and supervision, slow information flow between parties and poor project management assistance; mistakes in design, design changes and additional works;

shortages of materials, inaccurate estimates and price fluctuations; financial difficulties of contractors and owners; obstacles from government; and shortages of skilled workers. Besides delay and cost overruns, other consequences caused by these

of sponsors’ as well as citizens’ trust in government-funded projects (Le-Hoai et al., 2008).

In a recent work by Ling and Hoang (2010), a number of risks related to the implementation of construction projects in Vietnam were also identified. The major risks were corruption, termination of public projects, bureaucratic administrative system, changing and inconsistent regulations, inadequate legal framework, and fluctuation of exchange, interest and inflation rates.

While investments in infrastructure have increased, the level of development and the rate of implementation of infrastructure construction have not been improved as expected. Vietnam was still suffering from more and more infrastructure weaknesses. Investments in infrastructure developments were often large and funded by state budget, loans and aids from international organizations. Low quality, time and cost effectiveness of infrastructure construction in Vietnam thus not only resulted in huge waste of resources and under-capacity performance of infrastructure in the short term but also severely affected the economic development in the long term.

6.6 Government institutions involved in the development planning process