However, the implementation of the plan has thus far been slow; Implementation process changes; business payment and settlement was still at large; outdated models that does not fit the
Trang 1VIETNAM ACADEMY OF SOCIAL SCIENCE
GRADUATE ACADEMY OF SOCIAL SCIENCES
NGUYEN THUY LAN
INNOVATING THE MANAGEMENT OF CONSTRUCTION INVESTMENT PROJECTS USING STATE BUDGET AT STATE- OWNED SCIENCE AND TECHNOLOGY INSTITUTIONS
Major: Economic Management Code: 62.34.04.10
DOCTORAL DISSERTATION SUMMARY
HANOI, 2016
Trang 2This work is completed at:
GRADUATE ACADEMY OF SOCIAL SCIENCES
Supervisor: 1 ASSOC.PROF DR NGUYEN XUAN DUNG
2 ASSOC.PROF DR CU CHI LOI
Reviewer 1: PROF DR NGUYEN QUANG THAI
Reviewer 2: ASSOC.PROF DR TRAN ĐINH THAO
Reviewer 3: ASSOC.PROF DR PHAM XUAN ANH
The thesis will be defenced in the Commission for doctoral thesis evaluation of the Graduate Academy of Social Sciences
At……… , on……….2016
The thesis can be found at:
- The National Libary of Vietnam
- The Library of the Graduate Academy of Social Sciences
Trang 3INTRODUCTION
1 The urgency of the research
Effective allocation of scarce resourcesin the management of public investment projects generally and construction investment projects using state budget particularlyis considered to be a major State’s policy Currently, the State has passed serveral policies aimed at gradually changing the mechanism of financial management activities for the public service units, including the Science and Technology business units, as well as investing in qualified facilities and signing these facilties to management units, then determining the appropriate depreciation according to the law, steadily giving these units control over their own budgets and reducing financial assistance from the State’s budget The State has spent its budget on science and technology in general and scientific and technological institutions of government in particular, which focus was equipment for scientific research purposes State budget investment capital has enhanced work area as well as upgrading a number of specialized research institutes, laboratories, information centers, library, etc However, the implementation of the plan has thus far been slow; Implementation process changes; business payment and settlement was still at large; outdated models that does not fit the new regulations of the State
as well as unclear Project Management System,
For the reasons above, the issue of "Innovating the management of construction investment projects using state budget at state-owned science and technology institutions" is the author selected research topic for her doctoral dissertation, majoring in in the field of economic management
2 The purposes and tasks of the dissertation
2.1 Purposes of the dissertation:The thesis will examine the reality of
Construction Investment in the organization of government science and technology
in the period from 2006 to 2015, analyzing the accomplishments as well as the drawbacks of the policies, deducing the reasons to the problem while at the same time and proposing solutions in the upcoming periods
2.2.Tasks of the dissertation
- Literaturally reviewingstudies related to the chosen topic from some countries in the area
- Introducing and clarifying concepts relating toconstruction investmentproject management using the state budget
Trang 4- Assessing the situation of the management of construction investment projects using state budget at state-owned science and technology institutions, highlighting and analyzing the main issues
- Proposing some major solutions for improving and innovatingthe management of construction investment projects using state budget at state-owned science and technology institutions
3 Subject and Scope of the Research
3.1 Subject of Research: Management of construction investment projects funded
by the state budget at science and technology institutions of the government
3.2 Scope of Research
- Content:The process of organizing the management andimplementation
ofconstruction investment projectsusing funds from the state budget
- Scope: Construction Investment Projects held at State owned Science and
Technology Institution
- Duration: From 2006 to 2015, oriented to 2020 and projected until 2030
4 The methodology and research methods of the disseration
- Literature review research: Focusing on the theoretical framework of the subject
in questions; referencing past researches of the same caliber
- Research Survey Methodology: Surveying government officials having worked or
currently working in the field of Project Construction Investment funded by state budget (received 124 responses), in-depth interviews with five expert in the field of organization of government science and technology Using statistical methods, combined with SPSS software to determine the frequency of the same comments as
a basis for evaluation
- Using statistical analysis and comparative rate control: Using secondary data
collected from previous researches as well as primary data from surveys and interviews to conduct ratio analysis to make comparisons to assess the situation and clarify the cause of the problems
- Analyzing and synthesizing systems:Observing the domestic and internatiomal
impact on science and technology in general, to project management in governmental institutions in particular to propose solutions
5 New scientific contributions of the disseration
- Formalizing some theoretical issues and practical project management with capital construction investment budget, clarification of the nature of the management of construction investment projectsusing the state budget,
Trang 5distinguishing the difference between the cost of capital construction investment and construction investment
- Proposing a system of project evaluation criteria through various stages: the evaluation of projects approved for decision making; the implementation of the project to assess the quality of management; the completion to evaluate the effectiveness of project management
- Assessing the situation of the state - budget construction investment project management in the government science and technology organization using SWOT analysis
- Proposing solutions for innovating construction investment project management using state budget regarding to financial resources, implementation and organization, organization structure and management process
6.Theoretical and practical significance of the dissertation
-Theoretically, the research has managed to indicate following points: the nature of the management of construction investment projects using the state budget,
difference between the cost and capital of construction investment
- Practically, the thesis has proposed a number of solutionsto innovate the management of construction investment projects using the state budget at the government science and technology organizations including a system of evaluation criteria and process management that could be appliedgenerally to public science and technology organizations
7 Structure of the dissertation:
The thesis is divided into four chapters as follows:
Chapter 1 Literature Review of research situation
Chapter 2.Theoretical and practical basis of the management of construction investment projects using the state budget at state-owned science and technology institutions
Chapter 3 Status of the management of construction investment projects using the state budget at state-owned science and technology institutions
Chapter 4.Solution to innovate the management of construction investment projects using the state budget at state-owned science and technology institutions
Trang 6CHAPTER 1 LITERATURE REVIEW OF RESEARCH SITUATION
1.1 Studies of foreign scholars
1.1.1 The Relationship between State’s Budget and Government Spending
Generally, the authors focused on the importance of the budget in macroeconomic management and budgeting priorities of the government as well as management of the state budget according to the tasks divided Many studies have shown the relationship between public investment, budget and social policies, which refers to the structure of capital expenditure in order to achieve high efficiency and limit
public debt and State budget deficit
1.1.2 Investment Project Management and Pulblic Investment Management
Studies on project management was recorded fairly early on, for example the research concerning the management of the progress and costs through horizontal chart of Henry Gantt (1861-1919); Project analysis and management of national target programs of Frederick Winslow Taylor (1856-1915); Project Management tools: resource allocation, division of work over time, project progress along gloves
and CPM network diagram; MPM; Pert, etc
In 1969 the Project Management Institution at the Georgia Institute of Technology
School of America was established Later in 1983 their publication of"A Guide to
the Project Management Body of Knowledge- PMBOK Guide" became the
handbookfor researchers and managers in the process of implementation of the project
On the otherhand, the researches conducted by World Bank has provided assessments of investment management for the Government, which consists of 8 basic characteristics: Orientation investment; Investment preparation; Project evaluation; Independent evaluation; Estimating project; Organization of implementation; Adjust the project (if neccessary); Monitoring from the grassroots;
Evaluation results via "A DiagnosticFramework for Assessing Public Investment
Management" (2010)
1.2 Studies of domestic scholars
1.2.1.Researches on Government Spending and Construction Investment
On a local scale, Trinh Thi Thuy Hong’s doctoral dissertation, named
"Management of state expenditure, investment in capital construction in the province of Binh Dinh," (2012) mentioned the content, method of preparation of cost estimates, executive expenses, settlement expenses in construction investment
Trang 7utilizing Government’s funds
1.2.2 Researches on managing construction investment projects
The authors have analyzed Project Management by looking at: Procurement Management, which consists of managing progress, volume, quality, costs, supplies, equipment, human resources, etc For example, the research by Bui Ngoc
Toan as editor in 2006 titled "Organization management and implementation of
construction projects;" Trinh Quoc Thang‘s "Management of investment projects construction" (2007); Do Dinh Duc and Bui Manh Hung’s "Management of construction investment projects" (2012) Bui Manh Hung and Bui Ngoc Toan,
Bach Tung Dao, Tran Anh Tu, co-editor of the 2012"Managing resources projects
construction investment;"Dr Thai Ba Can (2009), "Analysis and management of investment projects;" Tu Quang Phuong’s"Curriculum management of investment projects" in 2005 However, the on-site management approach did not manage to
distinguish much between cost management and capital managemen Meanwhile, these researches fail to analyze the process of annual planning, medium-term plan, advance spending and advance recovery, etc which implies the impraticality of theseresearches with institutions that have no specialized construction unit Serveral authors examining State funded project management activities in various Governmental branches, such as the construction and transportation sector, which would imoly that those project evaluation criteria can not be applied (Tran Van
Khoi’s doctoral thesis (1999), "Innovating the process of managing investment
projects and ehancing equipment capacity of transportation construction firm;" Le
Thanh Huong’s doctoral thesis (2005) “The reality of managing of investmen
projects in the construction infrastructure sector of Vietnam,” etc
1.2.3 Managing construction investment funds in project management
In this particular field, some studies propose solutions to prevent waste and
loss of state investment capital such as: Dr Thai Ba Can (2003), "Financial
management in construction investment;"Nguyen Manh Duc (1994) "Improving management mechanism in order to improve the efficiency of capital construction investment capital in Vietnam;" Nguyen Ngoc Dinh (1996) "Managing and improving the efficiency of capital use basic construction investment in VN,"etc
Many authors approach capital management from the State authorities to establish control and assuage outstanding debts in capital construction such as Le Hung Son
(2003)"Solutions to improve the quality of financial management of investment
Doctor-Associate Proffersor Nguyen Dinh Tai, Le Thanh Tu (2010) "Raising the
Trang 8efficiency of public investment in Vietnam;" the Ministry of Planning and
Investment research (2005), "Recommendations of to improving the efficiency
allocation of state budget investment;" Serveral studies and proposal to manage
investment capital from the state budget in areas such as Doi Quang Tuan’s doctoral thesis (2009), "Towardsimprovement of the investment capital for basic construction’s efficiency, managed by the city of Hanoi;" Le The Sau (2012)
"Effects of investment projects by state budget Bac Giang province," etc However
these resreaches are not applicable to Science and Technology projects
1.2.4 Research evaluation of investment projects construction
Some authors have proposed methods of cost analysis, assessment of financial efficiency of investment projects, such as: Nguyen Hong Thang eds (2010),
"Evaluation of investment projects the public sector"; Luu Thi Huong (2004),
“Financial evaluation of project" The studies on Project Invesment Evaluation lean towards the assessment of economic efficiency, not the benefits of said projects on social welfare
1.3 Research results and research questions
1.3.1 Research results
Both domestic and international researches about the state budget, public investment project management are recorded very early on They are also very systematic, ensuring the rationale for construction investment project implementation in general, the State capital construction investment project in particular However, these researches vary in economic and political differences
1.3.2 Research drawbacks amd research questionsvà vấn đề đặt ra cần tiếp tục nghiên cứu
First,in terms of the system uses data and research methods: Most authors use
the system of secondary statistics (GSO, Ministry of Planning and Investment, Ministry of Finance, Ministry of Transportation, MOIT ) to analyze, which means that the results may depend very much on the method of how the primary data was collected Through the system of secondary data and tabulated comparisons, the authors will thus analyzie the research by qualitative methods instead of using quantitative analysis (via sociological surveys, survey data, regression model SPSS
software, etc.) to identify the strengths and weaknesses of research subjects
Second, the approach: The authors approach the research at at macro level and
there is no specific procedure for the management of the state budget on construction project There is also litlle to no mention about investment on construction projects Project from the aspect of the state budget in the allocation
Trang 9and management agencies directly implementing the project; Project Management
or Construction Investment research at a local from the state budget, a specific field, the type of production and business projects, transport infrastructure, should the investment policy, QDDT, project evaluation, organizing now, will have management practices and how other organizations implement projects of public service units, particularly units of public sector science and technology
Thus, despite there have been many studies about managing investment construction run by state budget but there is by far no guide for the state owned institutions in science and technology, which needs to be examined more closely
CHAPTER2 THEORETICAL AND PRACTICAL BASIS OF THE
MANAGEMENT OF CONSTRUCTION INVESTMENT PROJECTS USING STATE BUDGET AT STATE-OWNED SCIENCE AND
TECHNOLOGY INSTITUTIONS 2.1 Public investment andstate funded construction investment
2.1.1.Investment and public investment
According to the author, "investment is the use of resources (capital, physical assets, intellectual labor, technology, .) in order to conduct current operations (create, exploit and use Its assets ) to obtain beneficial results (increase of capital, physical assets, intellectual, technological .) in order to implement certain objectives in the future " Investment activities include private investment and public investment, also known as public investment Public investment is the investment activities of the State in programs and projects
to build infrastructure and socio-economic investments in programs and projects for socio-economic development (Law on Public Investment No 49/2014 / QH13 dated 06/18/2014)
2.1.2 The concept and nature of construction investment by state budget
Capital investment in construction using the state budget according to the author are: "the investment activities of the State in programs, projects include new construction, repair and renovation of buildings to serve economic development and social " Capital investment in construction by nature is a form of state budget funds for public investment activities in new construction, repair and renovation of buildings to serve socio-economic development policy of the Party and the State "
Trang 102.2 Capital formation resources, capital construction investment and investment and construction project management
2.2.1 Capital
Author: The capital is full of material wealth exists in the form of a country, business or household at a certain time to get used to the country's development,
operations enterprise and business or household to maximize profits
2.2.2 The sources of capital
State funds include capital budget; SOE capital; The capital domestic borrowing (bonds, equity bonds, preferential loans ) Funds from the private sector include: The savings of the population, the accumulated amount of the private enterprises, cooperatives Capital Markets: Channel attract idle capital of households,
businesses, financial institutions a large capital for the economy
2.2.3 The cost of construction investment and construction investment
The cost of capital construction investment to achieve the purpose of construction, including: preparation of investment; investment implementation; work is put into exploitation and use and other costs related to the construction of the approved ecommerce
2.2.4 Management of construction investment projects by state budget
The author said: "Management of capital construction investment project using the state budget is the process of planning, organization management, control and supervision from the beginning to the end of the project to ensure the project consistent with master plan development sectors, the State regulatory compliance, completed on schedule, quality by design and within the approved budget "
2.3 Project Management Cycle and content built with capital investment budget 2.3.1 Cycle implementation of investment projects in construction
The cycle includes: Preparation of investment; Investment implementation; Ended investment
2.3.2 Content management of construction investment projects by state budget
2.3.2.1 Project management scope
Manage project scope includes: management planning, plan (medium-term and annual), ordering the project to implement rolling
2.3.2.2.Preparation of investment management and formulation, appraisal and approval of design
Identify investors, established approved investment policy; Invesment up; The agreement with the State management agencies in planning, architecture, environment, fire protection, not static (if any), infrastructure (electricity, water
Trang 11supply, drainage, communications .); Appraisal and approval of projects; Formulation, appraisal and approval of design and cost estimates Assessment phase project under the following criteria:
- Identify investors, established approved investment policy; Invesment up; The agreement with the State management agencies in planning, architecture, environment, fire protection, not static (if any), infrastructure (electricity, water supply, drainage, communications .); Appraisal and approval of projects; Formulation, appraisal and approval of design and cost estimates Assessment phase project under the following criteria:
- Group of economic -financial indicators: total investment index and density structure of the construction costs (1); Investment capital unit cost indicator (2); Payback period (3); The net present value (4); Internal rate of return IRR (5);
- Group of socio-economic indicators: Improvingd working conditions; increasing user comfort and space of working area;
2.3.2.3.Procurement Management
The content of bidding management including procurement plan management; Organization of bidding and contract negotiation The authors evaluate the effectiveness of proposed procurement management through criteria: Bidding savings of each package in a project (6); Bidding savings rate of the project (7)
2.3.2.6.Cost Management
- Cost management: e-commerce and construction investment
- Capital Management: Management of advance and withdrawal, payment, settlement To evaluate the effectiveness of capital management, the authors propose the following criteria: Rate of disbursements during the year (8); The rate
of capital payment in the year(9); Coefficient of assets put in use (10)
2.3.2.7 Delivery of completed project Management
If the investor is the utilzer, then he will perform works reception If the investor is not the manager of the project, the investor needs to to hand over to the
Trang 12user appropriate paperwork, including: Legal documents; The quality control records; Settlement records (process operation instructions and maintenance work; list of equipment, spare parts, supplies and replacement reserves; the value of fixed assets in use)
2.3.3 Forms of project management
- Owner directly handles project management
- Investor establishment of project management
- Investor hire project management consultants
- Project Management Unit project
- Project management unit area, the project management specialization.- General building contractors
2.3.4 Factors affecting project management
2.3.4.1 Objective factors
- Environmental law: law system directly affected and indirectly affected
- The natural environment, geological climate conditions
- Socio-economic environment and budgetary resources
- The State management agencies
2.3.4.2 Subjective factors
- Characteristics of the scale and nature of the investment project
- Development planning sectors
- Financial resources of the project
- The organization of the personnel and operating procedures
2.4 Lessons Learned Project funded by the State of some countries
2.4.1 Experience Project funded by the State of China and Korea
- Establish a legal framework for investment activities in the State capital
- Development of strategy, planning, phased development Plan
- Prepare carefully the investment project
- Organization of project implementation and monitoring closely
Trang 13Second, full project management legislation, appropriate updates practices corruption laws stricter, contributed to curb corruption
Anti-Third, the system construction norms in full DTXD, formed spreadsheets costs, construction costs for the construction investment project according to market space, contribute to ensuring project quality
Fourth, the development of design consulting firm, supervision, project management bidding centers, associations manage costs, quality, engineering valuation, expert independent assessment; building information systems market prices, the capacity of contractors, consultants to provide transparency of the market
Fifthly, close monitoring from all levels and branches through the investor's report, the independent grading frame from the authorities to regulate and timely treatment Building community monitoring mechanism to detect the leakage phenomenon, the territorial capital charges Implementing responsible head Sixth, socializing investment resources in the form of PPP for infrastructure construction such as science and technology laboratories, research centers as well
as diversifying fundings to ease the pressure on the State capital
Evaluation formula system:
(1) Total investment TMĐT=CXD+CTB+CTV+CQLDA+CK+CGPMB+DP
In which : CXD: Cost of construction; CTB: Cost of equipment; CTV: Cost of advisory; CQLDA: Cost of project management; CK: Other cost; CGPMB: Cost of site clearing compensation; DP: Cost of redundancy;
(2) Investment capital unit cost indicator: S= CP/N In which:
CP= CXD+CTB+CQLDA+CTV+CK; N: Capacity of the project as designed
T: Payback period (years); L: Annual expected profit; K: Annual
depreciation; TMĐT: Total project investment
(4) Net present value NPV = PV (Cash inflow) - PV (Cahs outflow)
If NPV>0, the project is possible, If NPV<0 project is impossible
(5) Internal rate of return
2 1
1 1
2 1
NPV NPV
NPV )
r r r IRR