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SOLUTION TO IMPROVING THE EFFECTIVENESS OF PROJECT IMPLEMENTATION AT TRUONG THANH ONE MEMBER LIMITED LIABILITY COMPANY Table of Contents ACKNOWLEDGEMENT...3 LIST OF TABLES & FIGURES...5

SOLUTION TO IMPROVING THE EFFECTIVENESS OF PROJECT IMPLEMENTATION AT TRUONG THANH ONE MEMBER LIMITED LIABILITY COMPANY

Table of Contents

ACKNOWLEDGEMENT 3

LIST OF TABLES & FIGURES 5

INTRODUCTION 1

CHAPTER 1: BACKGROUND OF PROJECT’S EFFECTIVENESS IN BUSINESS 7

1.1 Project management, project progress and project’s effectiveness 7

1.1.1 Definitions, features related to Project and Project Management 7

1.1.2 Project’s procedure and effectiveness 12

1.2 Criteria to evaluate the effectiveness of project execution in a company 14

1.2.1 Profit – cost of a project (P/C) 14

1.2.2 Effectiveness of work and productivity 17

1.2.3 Evaluation of project quality 19

1.2.4 Evaluation of project implementation progress 20

1.3 Methods of evaluating the effectiveness of a project 22

1.3.1 Evaluating the effectiveness of a project by quantitative methodology 22

1.3.2 Evaluating the effectiveness of a project by qualitative method 23

CHAPTER 2: CURRENT SITUATION OF EFFECTIVENESS IN PROJECT IMPLEMENTING

AT TRUONG THANH ONE MEMBER LIMITED LIABILITY COMPANY 27

2.1 Overview about Truong Thanh Company 27

2.1.1 General introduction about the company 27

2.1.2 Establishment history of the company: 27

2.1.3 Organization chart of company: 29

2.1.4 Capacity and experience to implement construction project 30

2.1.5 Particular projects of Truong Thanh Company 31

2.2.1 Results of deployed projects 32

2.2.2 Analyze quality of the project 36

2.2.3 Analyze the result of project implementation progress 37

2.2.4 Current situation about effectiveness of project implementation via making survey with experts and employees 38

2.3 Conclusion about effectiveness of project implementation in Truong Thanh One member Limited Liability Company 40

2.3.1 The strengths 40

2.3.2 The restrictions and weaknesses 41

2.3.3 Reasons for the restrictions and weaknesses 41

CHAPTER 3: SOLUTION FOR IMPROVING THE EFFECTIVENESS OF PROJECT EXECUTION AT TRUONG THANH COMPANY 43

3.1 Reform the organizing procedure and controlling the project’s progress 43

3.1.1 Diagram: 43

3.1.2 Explanation of the diagram 45

3.1.3 Changes comparing to the current procedure 47

3.2 Enhancing the human resources management and increase the productivity 48

3.3 Improve the cost controlling effectiveness 52

3.3.1 Control the material cost 52

3.3.2 Table of allocating the material cost of project 54

3.4 Complete the project’s quality management 57

CONCLUSION 60

REFERENCES i

APPENDIX iii

LIST OF TABLES & FIGURES

1) 1 Table 1.1 List of construction cost and controlling method

2) 2 Table 1.2 Table of quality evaluation summary

3) 3 Table 1.3 List of Experts interviewing

4) 4 Table 2.1 Experience year to implement construction project – Truong Thanh

Company

5) 5 Table 2.2 Qualification statistics of employees – Truong Thanh Company

6) 6 Table 2.3 Table of Regression analysis

7) 7 Table 2.4 Table of Completed Regression Analysis (shortened)

8) 8 Table 2.5 Table of collecting and evaluating quality of project –

Project of embanking Uong River

9) 9 Table 2.6 Collected result of questionnaire about project management

10 Table 3.1 Suggestion of performance evaluation model - KPI of Planning

14 Table 3.5 Proposal of Table of Project’s cost monitoring - Material

15 Table 3.6 Proposal of Table of Total project’s cost managing

16 Table 3.7 Proposal of Table of Project’s quality evaluation

17 Figure 1 Thesis researching procedure

18 Figure 1.1 Project management function

19 Figure 1.2 Project’s procedure

20 Figure 1.3 Example of Gantt construction project

21 Figure 1.4 Example of method of setting up PERT chart in project management

22 Figure 2.1 Organization chart of Truong Thanh company

23 Figure 2.2 Progress of project implementation – Truong Thanh Company

24 Figure 3.1 Procedure of quality management of construction work

Preparing and implementing construction projects is currently the main activity of TruongThanh One Member Limited Liability Company In particular, the management ofconstruction project plays a critical role in ensuring the success and effectiveness ofconstruction projects Therefore, in order to achieve effectiveness in business activities, it

is necessary to focus on enhancing project management which is meaningful for TruongThanh Company development

Being the main person in charge of project management for construction works of TruongThanh Company, spending the past years to learn and practice, I realize that besides theachieving results, the project management of the Company still remains the restrictionsand weaknesses Although these weaknesses have affected on performance of theCompany’s construction works especially in economic recession period, no method isapplied to solve out the issues As a result, with the responsibility of manager and bylearning from course at PSGM, I has made a decision to choose the topic: “SOLUTION

TO IMPROVE EFFECTIVENESS IN PROJECT EXECUTION AT TRUONG THANHONE MEMBER LIMITED LIABILITY COMPANY”, which is not only for my thesis,but also for Truong Thanh Company to eliminate the existing restrictions and weaknesses

in order to improve the effectiveness in implementing the construction project in thefuture

The paper will aim at the following objectives:

- Systematize the theories about project management, management procedure and

effectiveness of implementing investment project of construction

- Set up system for evaluating the effectiveness of the construction project

- Analyze and evaluate the current situation of the construction project in Truong

Thanh One Member Limited Liability Company, leading to weaknesses andshortcomings to find out the solution

- Propose the solution to enhance effectiveness of project implementation in Truong

Thanh One Member Limited Liability Company

3.1. Research’s object

The thesis focuses on making research the effectiveness of project implementation inTruong Thanh One Member Limited Liability Company in the following fields: Humanresource management and labor productivity, cost management and cost savings,management of project progress

Figure 1: Process of thesis research

Source: Suggested by author Procedure interpretation: This thesis uses the method of applying theory to practice This

paper will mention the project management procedure and the method of modernmanagement Based on theory, by studying via direct observation and applyingeconometric models to imply to achievements in order to promote the strengths and findout the causes to fix and limit the weaknesses in current project management As a result,the practical solutions will be produced to enhance effectiveness of projectimplementation in Truong Thanh Company

4.2. Data collecting method

4.2.1 Secondary data: this is available data including:

- Data, textbooks about project management

- Available data of the industry

- Company’s data includes: process of current project implementation, summarized

and detailed data, reports about completed project of the company, financialstatement, etc

4.2.2 Primary data: this is data collected by the author by the following methods:

4.2.2.1 Interview: interview the experts, direct executives.

- Interview’s purpose: Find out the opinion of direct executives to evaluate thecurrent project implementation of the Company

- Interview’s content:

o Current implementation process: achievements and weaknesses

o Personnel organization, labor productivity and the factors effecting on labor

productivity

o Project process, situation of late progress and the methods to improve

o Management of project cost and unofficial cost, the factors effecting on project

o Managers of some departments

4.2.2.2 Survey: using questionnaires to choose major opinions

o Scope of survey: over all company members

o Survey’s objects: Manager and direct executives in project management

o Survey’s objectives: Choose major opinion about current project implementation

o Questionnaire making method:

 Number of expected questions: 10 questions, including:

 09 questions encoded the data in form of options (06 options for each question inwhich 05 options with available questions, the answerer tick the suitable one, therest for other opinion).

 01 opening question for individual opinion

o Delivery and collection method of questionnaire: deliver and collect directly

questionnaire Contact point to deliver and collect questionnaire is project manager

or head/ vice head of each department

4.3. Data analysis method

4.3.1 Qualitative method

- Personal evaluation about situation of project implementation in the Company

- Based on survey’s result, collecting the opinion of employees

- Comparing with personal opinion to make conclusion

4.3.2 Quantitative method

- Collecting the survey’s result to make conclusion

- Statistic and analyze the index of completed project, use regression model toanalyze the objectives and factors effecting on this objectives

- Comparing the results with each other to make conclusion

4.3.3 Combining 02 methods: Based on results of 02 methods, referring the critical notes

for the analysis process

5.1. Theoretical basis: systemize the general issues of project management in the

construction company at present

5.2. Factual basis: analyze and evaluate the situation of project management in Truong

Thanh Company at present Based on applying scientific theories, the thesis will providethe oriented and direct solutions for Truong Thanh Company in order to improve theproject management

The thesis includes:

Introduction

Chapter 1: Theoretical background of project’s effectiveness in business.

Chapter 2: Current situation of effectiveness in project implementing at Truong Thanh

One Member Limited Liability Company

Chapter 3: Solution for improving the effectiveness of project execution at Truong

ThanhOne Member Limited Liability Company

Conclusion

CHAPTER 1: BACKGROUND OF PROJECT’S EFFECTIVENESS IN BUSINESS

1.1 Project management, project progress and project’s effectiveness

1.1.1 Definitions, features related to Project and Project Management

The definition of “project” and “project management” has been defined by many of bothinternational and domestic scholars, which are usually emphasized on a specific feature

on purpose Abstractly it is “image of a situation or status which we want to achieve” Forexample, today we are visiting a blank area of land, in next five years we want to have abuilding with thousands of families living on that place It is a project of an apartment that

we want to execute More specifically, project is “a specialized activity or a unique mission which is implemented by special method, resource and schedule to create a new entity” By that many projects has been and being implemented These projects are

distinguished by their method, mission or resource used For example: the activity oftransferring the teachers to mountain region teaching the children of elementary ages iscalled project of “The anti-illiteracy campaign for the minorities” Another example is theactivity of purchasing the technical machine and training workers to operate to producethe goods or services; or building up the public infrastructures such as bridge, drainage,land road, railway; river and sea port, dyke, dam, lake, irrigational channel system …inwhich there are work such as factory, equipment…placed on land surface built at specificaddress is called the project of buildings construction investment It is type of projectwhich Truong Thanh Company has been mainly focused on, and is different from othertypes of project which are without of construction activity or the works attached to landsurface such as the project of buying auto, plane, and ship

From the above mentioned facts, the definition of project should be:

Project: a series of related activities which are implemented in the limited time with

restricted human resources; especially budget in order to achieve a specific and clear

target, which satisfy the demand of targeted object In other words, Project is a totalcombination of policies, activities and costs which is designed in order to achieve a goal

in limited time

Accordingly a project is including the following common features:

First, objective:

- A project is always having one or some clear objectives

- The directional objectives are consistent during the project period

- The final outcome is always compared with the initial objective in order to evaluate thesuitability or success of project

It is mentioned above as “status which we want to achieve” or “a specific mission needs

to be executed”.

Second, limited period of time:

- Progress schedule is planned precisely

- Clear starting and ending date

- Each time mark is monitored and evaluated

There is no project without specific date of implementation or completion And a cleartarget of a project always requires a clear date of achieving

of time To give the answer for those issues, the methodology of project management andimplementation has been introduced which are formed Project Management science.

To sum up, Project Management: is a science which carries out the research of how to

plan, organize and control, monitor the development of project in order to assure the ontime completion within the approved budget but still keep quality assurance in order toachieve specific purposes and targets

How important is the role of project management?

Increasing demand for goods and services which is produced by complex procedure, hightechnology; customer is more demanding; and knowledge of human kind is richer…which are factor the strong development of Project Management science Some greatworks of mankind like Great Wall of China, the Pyramid of Egypt are still a secretwithout the logic explanation relating to method of management and technology used,because without these factors these wonders has never ever been completed

In early of 19th century, science of project management has been formed by Henry Ganttwith invention of Gantt diagram as project managing tool; and by Henri Fayol withfinding of 05 managing functions which are basic for forming core theories of project andprogram management Frederick Winslow Taylor, furthermore, is a scientist whofollowed the scientific project management methodology with modern project managingtool, including the structure of work and resource assigning During the research, thosescientists have been focused on the following issues: how to complete the project ontime? How to make up a correct plan? How to allocate the resources and to use the toolcorrectly… The limitedness of cost, resources and time requires the correct and exact inapplying managing method Overall it is approving how important the projectmanagement is

Generally project management includes 03 functions along with 03 main periods of aproject:

First, planning function: This period is focused on choosing the target, defining theessential works, selecting the resources and preparing the action plan which can bedisplayed as a systematic diagram.

Second, organizing, leading and coordinating function: this is the process of allocating theresources including: budget, labor, equipment and time management – the most importantfactor This period is to set detail time of completion for each work part and for the wholeproject (starting date and ending date)

Third, monitoring function: This is the process of observing, checking the projectprogress, analyzing the completion status, settling related issues and reporting

Functions of project management, however, are not separate parts, and they build up aclosed procedure This content is approved during the re-establishment of project plan due

to outside factors which changes the initial plan remarkably (Figure 1.1 – Projectmanagement functions)

Figure 1.1: Project management function

Source: Prof-Dr Tu Quang Lam (2010), Project establishment and management textbook, University of Agriculture and Forestry, Thai Nguyen University, Chapter I

Drawbacks of project management

Project implementation is a closed procedure The reason of plan re-establishment is due

to drawbacks incurred during the project execution which leads to change of the initialplan as a must The normal issues are as follow:

In forming a project:

- The project plan is not fitted with the plan of the investor

- Controlling process is not prepared

- The priority order is not announced to all related parties

- No overview

In making plan:

- Too many complex tools used

- Creativeness is not appreciated

- Resources assumption is not realistic

In organizing and executing:

- Lack of internal cooperation

- Business culture is different and lack of information sharing

- Resources is not available whenever needed

- Hardly check whether the local authority’s ability is meeting the requirement forproject implementing

- The responsibility is not confirmed or clear

In controlling:

- Do not understanding the purpose of controlling

- Do not monitor the schedule

- Evaluation withdrawn from each meeting is not effective

- Responsibilities is not fitted with the power of executive

The planning and organizing function is reduced the potential drawbacks incurred at thevery first stage of a project, and monitoring function helps to improvise when drawbacksrises To achieve the project’s goal requires the ability of orientation, leadership andcontrolling of the manager in order to overcome the drawbacks and restructure the actionplan Therefore, project management is strictly and thoroughly during a projectimplementing period.

1.1.2 Project’s procedure and effectiveness

Project’s procedure

Project’s procedure is a combination of stages which the project spends, starting fromstage of investing decision in project to the time of project’s completion, and move tonew project (Figure 1.2: Project’s procedure)

Figure 1.2: Project’s procedure

Source: Lecture by Dr Pham Hong Luan (2007) – University of Ho Chi Minh City – Chapter II slide 2

As can be seen from Figure 2, the project’s procedure has 03 stages: Preparing,Implementing and Finishing In this paper, the author wants to emphasize the stage II andperiod 4 of project’s procedure: construction At this period, project has been invested andstarted to be executed until completing It is, also, the main business of Truong ThanhCompany.

Project’s implementation and effectiveness

Project’s implementation is series of activities and work to convert the investment’s idea into specific result in order to achieve the planning objectives Process of implementing is

to carry out the function of project including mentioned above stage (Figure 2 – Project’s Procedure): planning, organizing and collaborating, controlling and the person who does these works is called project manager

For construction project, the implementation’s procedure includes:

- Preparing the construction plan and resources;

- Designing and estimating cost;

- Procuring, negotiating and signing the contract;

- Constructing and installing, purchasing the equipment;

- Testing, accepting and taking into operation

The project’s manager has to collaborate and control these activities tightly and strictlyfollow up the plan At this period, the project’s manager needs to consider the followingissues:

- Control the profits and costs;

- Control the progress (in time manner);

- Control the quality

In addition, the manager has to take care of other related issues including increasing theproductivity of employees, controlling of operating risks and reacting flexibly touncertainties If these issues are well controlled, the action plan will be conductedproperly and result in good outcomes

To sum up, within this paper, the author is doing research on the Construction Period of

an investment project from planning stage to executing and accepting and taking intooperation Besides, the important issues which the author focuses on are to control theprofit and cost, time and quality of a project

1.2 Criteria to evaluate the effectiveness of project execution in a company

Basic objective of a project is performed through result that each work’s part is conductedeffectively, completed as initial required, assured the quality, within the approved budgetand time of completion The project’s execution is considered ineffectiveness if thebudget is break through, the quality is under standard, the progress jumps over thedeadline Overall each criterion is tightly correlated and affects the final results Inmathematical point of views, the effectiveness of a project is considered a function withvariables of Cost, Performance, Time and Quality

H = f (C, P, T, Q)Including:

1.2.1 Profit – cost of a project (P/C)

Pursuant to Prof Thayer Watkins – University of San Jose State –the analysis of cost –benefit (CBA) is an evaluation and estimation of total value between benefits and cost of

a project to conclude whether the project is worth investing or effective CBA is related,but different from the effectiveness of cost analysis By that, with CBA, benefit and cost

is under cash, and be adjusted to time value of money, which the flow of benefit and flow

of cost in time manner (has tendency to happen at different point of time) are displayed inthe same definition “net current value”.

The projects of Truong Thanh Company are gained via bidding Therefore, the projectvalue is pre-estimated Then the each work’s part is assigned to each executive team Bythat, to control the profit of a project is to control the cost Based on the scope of thispaper to evaluate the effectiveness of Truong Thanh Company’s projects, author willemphasize on cost controlling process The cost portfolio is set up based on Circularabout Guidance to set up and control the investment cost of construction project no.05/2007/TT-BXD, including:

Total investment of construction project (hereafter called total investment) is total

estimated cost investing for constructing written in investment decision and is basis forinvestors to set up plan and manage the fund during implementing Total investment iscalculated and estimated at the project planning stage suitable with content of project andbasic designation, in case only report of economics – technology, total investment isestimated suitable with design of construction drawing

Total investment includes: construction cost; equipment cost; compensation for land

acquisition cost, re-settlement; operating cost construction consultancy cost; other costsand contingencies costs (Details at Appendix 1: Portfolio of project’s management costs– Truong Thanh Company)

For Truong Thanh Company, controlling the cost is core to gain profit from a project Thecontract price is not changed, and:

Profit = Contract price – Construction cost

As can be concluded from the formula, the less construction cost is, the more profit gains.However the deduction of cost must not be against the quality of work Therefore, to effectively control cost is to spend reasonably, exactly and avoid unreasonable costs incurred List of Truong Thanh Company’s costs can be classified as follow (table 1.1):

Table 1.1: List of construction cost and controlling method

Scale and the

project

Set up a group of experts withhigh qualification to doproject planning in theshortest time with the highestcorrectness

designerExternal hiring cost

Scale and the complexity of project

Utilize the internal designer instead of hiring external force to reduce the cost

cost

Externalpurchase

Price of materialWork’s designation

Make a comparing table ofprice and quality of material

of each item; select the bestone suitable with the design.Separate the work to controlthe costs

employee

Constructionlength of timeScale of project

Control construction length oftime

Control the productivity ofemployee

n machine

Depreciation

of machine,equipment,instrumentand tool

Scale of projectConstructionlength of time

Reasonably allocate the

instrument, tool, strictlycontrol the operating andusing status

cost

Externalpurchase

Scale of projectNumber of humanforce

Build the temporary worksuitable with scale andnumber of human force ofproject

purchase

Strictly comply withregulation of saving in

transportation, fuel,electricity, water, stationeryused…

Source: Recommend by the author.

As a result, the scale, time of completion, quality of personnel, etc play an important role

in effecting on the project cost Each type of cost has its own controlling and savingmethod Amongst the general controlling methods is to use Table of monitoring projectcost (new table model suggested in chapter 3) Table of monitoring project’s cost can beapplied to a single type of cost and then, combined to overall control the progress ofwhole project’s cost Comparing to the planning, the project manager can control the costlevel and cost speed of each work’s part Cost of a work’s part which is controlledeffectively has a reasonable spending speed and within the budget Cost which exceedsthe budget at warning level can be settled in time

1.2.2 Effectiveness of work and productivity

Evaluating an employee’s performance is a sensitive work because the conclusion willaffect the benefit of each person related to salary’s increasing, reward and disciplineconsidering, firing, training, promoting If an employee is evaluated properly, thepersonnel structuring will be more accurate, and this employee can perform their best.Besides this employee also feels satisfied for being appreciated He is more passionate forthe job which helps to reduce the cost and increase the productivity The important thing

is that company must establish the criteria clearly, suitably with the real situation and has

a good tool to control the evaluation

For evaluation of project effectiveness of Truong Thanh Company, it is essential work

Up to now, the Company has been building up the internal quality evaluating procedureand employee’s evaluation plays as an important role However, the procedure has beennot completed In the scope of this paper, author will only apply theory of work andproductivity evaluating methodology via table of targeted KPI

KPI (Key Performance Indicators) is used to evaluate the work performance Normallyeach work’s title has a job description or monthly working plan The manager will applythe indicators to evaluate the effectiveness of this position Based on the rate of KPIcompletion, company will give the reward or punishment to each person.

In process of forming KPI, the managers usually quantify the wanted objective intonumbers The specific numbers help the manager more easily in evaluating the work ofeach employee by comparing the actual outcomes with the planning one The differencecan be displayed by number or percentage completion On the other hand, to usuallymonitor the KPI helps the manager see the change of productivity of each employee who

is increasing or decreasing, so that the manager can motivate the employee in time Thecriteria for managing KPI are summarized as SMART:

Strong points of evaluation the employee’s performance based on KPIs are:

- Evaluating the capacity and the completion of work scientifically To apply KPIs incompany helps to increase the competitiveness by encouraging the employee showoff their best, and create a tight link between the different departments To clearlypoint out the direction and objective of company helps departments, divisions andeach individual develop consistently with company’s strategy at each moment

- Helping the company set the measurable criteria (quantification) and more flexibility

in setting up objective for each division or individual

- Evaluating the employee based on KPIs method will provide an overview of businessactivities of a company If evaluating properly, the employee will work harder, leads

to more productivity, and decrease the cost In addition, this system can find out the

good employees to appreciate which let the increasing loyalty To increase theproductivity of employee is to increase the effectiveness of Company.

- Helping the company in planning the human resource accurately, and also help to set

up the salary system more reasonably, make decision on human issues fairly

- Helping the company control the target and business strategy to produce goodoutcomes

- Analyzing the company more accurate

- Based on the performance and potentiality of employee which the manager has foundout, the employee can be trained further or introduced to join other projects toimprove their skills It is very important and useful in developing career path for anemployee at company’s key position

Normally KPIs provides the marking methodology based on quantifying each objectiveinto same measuring unit In this paper, author will recommend the Table of Workevaluation based on KPIs (suggestion of KPIs models in chapter 3) The quantification ofeach work’s part and employees rating is more accurate and objective

1.2.3 Evaluation of project quality

A project is considered to achieve the quality condition when meeting the criteria of costsand construction time spent and also gained the technical requirements in accordance withbidding profile

Each work’s part will be evaluated follows the acceptance minutes of the company(Appendix 4) Up to now each work’s parts has been evaluated separately, so authorsuggests use the Table of Quality Evaluation Summary (Examples in table 1.2 – QualityEvaluation Summary):

Table 1.2: Table of quality evaluation summary

Source: Suggested by author

The above table is work’s quality evaluation summary Based on this table, the managerhas a overview of works for evaluating the quality of work and make the improvement tomaintain the quality standard

1.2.4 Evaluation of project implementation progress

With a construction company, the length of time of implementation is very important andreceived the concern from all parties While the controlling of cost and evaluation ofeffectiveness is majorly internal activity, the completion process of a project refers toinvestor, subcontractors A unique feature of a project is the limit of execution time.Therefore with construction project, the construction schedule is one of the first factors inthe plan

We use Gantt chart to make up the project progress The horizontal Gantt chart, or alsocalled Gantt graph or Gantt diagram, is the oldest chart of project progress, whichinvented in 1910 by Henry Gantt See the example Figure 1.3 – example of Gantt chart inconstruction project:

Figure 1.3: Example of Gantt construction project

Source: http://ttvnol.com/threads/su-dung-word-de-ve-so-do-gantt-help-me.464537/

Despite the classic factors, due to the simplicity nowadays horizontal Gantt chart ispopularly used in project management, and even improved to apply in modern softwaresuch as Microsoft Project to display a complex form of progress like network chart (ofproject) With technical or construction project with many parts, Gantt chart is appliedand developed to advances charts like Critical Part Method or Arrow Diagram Method.Besides, for work without the specific completion length of time, we use PERT (programevaluation and review technique), which shows the order of work and the finishing date,and points out the work’s part must completed on time in order to avoid the slowdown forthe whole project, or transfer the resource from not critical task to critical one withoutaffective the completion length of time For example Figure 1.4 – Example of method ofsetting up PERT chart in project management

Figure 1.4: Example of method of setting up PERT chart in project management

Source: https://dlhsoft.com/ProjectManagementLibrary/Home.aspx

At present we usually combine all methods to make up the project progress Each method has its own advantages and the combination of them can produce the perfect outcomes

1.3 Methods of evaluating the effectiveness of a project

1.3.1 Evaluating the effectiveness of a project by quantitative methodology

1.3.1.1 Analyze the data of completed project

Analyze the data by the variables method

It is the simplest, however, the most effective and suitable analyzing method for TruongThanh Company As being said above, projects of Truong Thanh Company are assignedunder lump-sum contract to the subsidiaries The method of variables evaluation willpoint out the difference between actual outcomes and planning target, help the managerssee clearly the strong and weak points to focus on In addition, it shows the decreasing orincreasing situation of items in different moment If the variables in cost items is low, it is

a strong point and need to maintain in controlling the costs, and in contrast, an cost item isalways surpass the budget leads to the decrease of profit, we need to consider this item

and make the improvement The variables method is also used to evaluate the projectcompletion process and effectiveness of employees.

Regression function method

This is method of using the statistics regression function to find out the relationshipbetween a variable to others This method is often used in improvement or enhancementactivities of a project And this method is applied only when key factors are known Theregression function is as follow:

Y = 0 + 1X1 + 2X2 +…+ nXn + 

X1,i, X2,i,…,X,I are independent variables along with observe I; β are arguments ofregression By analyzing the regression function, the manager can easily point out theeffect of variables X to Y, which gives clues to make the best decision In other words, itshows how to select which variable to increase or decrease to achieve the targeted value

of Y

This method provides the accuracy at high level, however, in order to apply we need tocollect the right data and define the independent variables Generally this method isapplied to quantify the objective such as cost items and project completion progress Ifthis method is used to evaluate the employee’s performance, the objective must bequantified accurately

1.3.1.2 The strong and weak points of project execution by analyzing real data

After summarizing all above researches, author will point out the strong and weak points

of Truong Thanh Company and suggest the method to enhance the strength, to limit theweakness in order to upgrade the effectiveness of investment project

1.3.2 Evaluating the effectiveness of a project by qualitative method

1.3.2.1 Generalize and analyze result of experts interviewing

Interview is researching method which is emphasized more on an individual in

comparison with table of questions In personal interview, the interviewer faces directly

with the interviewee Different from the questionnaire sent via email, the interviewer has

chance to ask the next and next questions An interview method is applied in this paper asfollow:

Firstly is individual interview without standardization (Free interview) The benefit of thismethod is making up the comfortable feelings for both asking and answering people Theweakness is that the interviewer must have ability to direct the content attached to theinitial purpose With this kind of method, we can collect the most objective ideas aboutresearching content However, there might incur the potential error because theinterviewee is affected mentally or lack of knowledge about the asking topic Thereforethis method is often conducted in large scale to gain the more accurate result

Secondly is specialized interview This type of interview is conducted with experts tomake a deep research on an issue In free interview, the interviewer can select anyone toask for an objective opinion, but in specialized interview, the interviewee must hasknowledge and understanding deeply about the asking issue Within this paper, theinterviewees are persons who usually work as project manager Those people have clearunderstandings and many experiences in project management Their opinions arewithdrawn from years of working with high rate of accuracy By this method, we onlyneed interview some experts to have the general ideas on interviewing issue

Combining types of interview methods, we can make a conclusion for the researchingissues Content of interview within this paper is focused on the effectiveness of projectexecution at Truong Thanh Company, the group of questions are including:

- Project construction cost management

- Project quality

- Project completion progress

We select 05 experts of Truong Thanh Company who have real experience in managingprojects over the years to make the interview They will provide the correct informationfor this research List of interviewee is at the Table 1.3 – List of experts interviewing:

Table 1.3: List of Experts interviewing

1) 1 Dam QuocHoan Planning division Head of division

Source: suggested by author

1.3.2.2 Generalize and analyze the result of employee survey

Employee surveying method uses Table of question There are 02 ways:

Table of question is a survey sent via letter of email: This method has some of followingstrengths: low cost, same content for a large number of participants This method alsoallows the participant to finish the questions whenever they have time However, thismethod includes some weak points The rate of feedback sent back via email is low andthe survey is not suitable with questions which require a lot of information

The second type is Table of question for a group A group of people concentrates to

answer a package of questions For convenient purpose, the surveying will be executed oneach group The researcher can send the question to the attendees and make sure of thehigh rate of feedback If the attendees do not understand the meaning of question, theycan immediately require for explanation Besides, the survey place is often in anorganization, company (in the same company or organization); which is easy toconcentrate on a group to attend the survey

Similarly to interview method, the content of questions is divided into 03 groups of thefollowing issues: cost controlling, quality evaluating and completion progress Details ofthe survey of Truong Thanh Company are mentioned in Chapter II of this paper

The survey is conducted on 30 employees of the company who are directly taking part inmany projects These employees are experienced and clearly understand the procedure ofimplementing project Within this paper, author only applied the scale of 30 attendees andwill continue with larger scale when applying this paper into real business

CHAPTER 2: CURRENT SITUATION OF EFFECTIVENESS IN PROJECT IMPLEMENTING AT TRUONG THANH ONE MEMBER LIMITED LIABILITY

COMPANY

2.1 Overview about Truong Thanh Company

2.1.1 General introduction about the company

 Name of company: Công ty TNHH một thành viên Trường Thành

 Name for international transaction: Truong Thanh One Member Limited LiabilityCompany

 Shortened name: Truong Thanh Company

Address of head office:

 Address: Km 11 – 32 Highway – PhuDien – TuLiem – Hanoi

 Phone: 04.3765 8281 - 04.38 370 185

 Fax: 04.3765 8281 - 04.38 372 573

 Website: www.congtytruongthanh.vn

Date of Establishment:

 Truong Thanh Company – Ministry of Defense: established on 21st September 1996

 Exchanging into Truong Thanh One member Limited Liability Company pursuant tothe decision no 2943/QD-BQP on 12th August 2010 issued by Ministry of Defense

2.1.2 Establishment history of the company:

Truong Thanh One member Limited Liability Company is company with 100% state-owncapital with legal status, independent and separate economic accounting system Ministry

of Defense is representative owner High Command of Border Guard is the upper levelorganization in charge of direct management.

Based on merging Truong Son Enterprise (corps 88) and Thanh Son Enterprise (workshop5), the company was established pursuant to the Decision no.1575/QDQP on 21stSeptember 1996 issued by Minister of Department of Defense with the former name isTruong Thanh Company

Since established, the company has been adjusted many times on scope and organization:

- February 2002, pursuant to the Decision no.52/QD-BTL on 18th February 2002 issued

by High Command of Border Guard, the company handed over the status quo offunction, duty of weapon repair, army technology equipment to army equipment andweapon repair workshop (workshop 5) belonged to Department of technologiclogistics

- December 2003, pursuant to the Decision no.117/2003/QD-BQP on 09th September

2003 issued by Minister of Department of Defense, the company merged with VanDon Company belonged to Headquarter of QuangNinh Border Guard

- August 2010, pursuant to the Decision no.2943/QD-BQP on 12th August 2010 issued

by Department of Defense, Truong Thanh Company is converted into Truong ThanhOne member Limited Liability Company

From establishment to now on, along with the efforts of the whole company’s employees,business activities of the company has kept developing in scale and scope of business: in

2003, the mergence between Van Don company and Truong Thanh company into VanDon Enterprise diversified the scope of company’s business; in 2004, Ho Chi MinhBranch, I Construction Enterprise and 05 belonged teams was established to broadenscale of company’s business in nationwide In order to meet the business demand, withdevelopment tendency, the company established II Construction Enterprise and 07belonged construction team which contribute the total number of members to 04 units and

12 belonged construction teams

August 2010, pursuant to the Decision issued by Department of Defense related toconvert Truong Thanh Company into Truong Thanh One member Limited LiabilityCompany, the company has strengthened and completed the organization of the companyinclude converting the member enterprises into branch of the company; establishing thenew enterprise to consult, survey and design construction – Branch of company and 03belonged team, increasing the total number of member units (company’s branch) into 05units and 15 belonged construction team which is considered as milestone to mark thedeveloping period about scale of the company.

Along with the development in scale, within 15 construction and development years, withtradition of solidarity, discipline, dynamism and creativity of company’s employees,Truong Thanh one member limited liability company has achieved many criticalachievements in business and organization: finishing the basic target in business everyyear assigned by High Command with the good growth, finishing the target of defensemanufacture as planned Majority of works for defense and social welfare have beenexecuted on schedule with ensured quality; profitable business in order to maintain anddevelop the state capital, obey the Law, regulations of Army, finishing the obligation topay the tax for the State and senior, the life of company’s employees keep developing, theactivities of politic and spiritual culture is maintain and enhance

Recording the development in scale and business effectiveness of the company, March

2006, Department of Defense issued the Decision no.697/QD-BQP on 29th March 2006 torecognize Truong Thanh Company as Enterprise Class I

Maintaining and developing the achievements, in September 2010, Department ofDefense continued to issue the Decision no.3699/QD-BQP on 30th September 2010 torecognize Truong Thanh one member limited liability company as Enterprise Class I

2.1.3 Organization chart of company:

(Looking at figure 2.1 – Organization chart of Truong Thanh Company)

Figure 2.1: Organization chart of Truong Thanh Company

Source: http://www.congtytruongthanh.vn/index.php/home/gioithieu?id=16

2.1.4 Capacity and experience to implement construction project

Experience:

 Total experience year of civil works: 25 years

 Total experience year of housing construction: 25 years (view table 2.1)

Table 2.1: Experience year to implement construction project – Truong Thanh Company

Source: Capacity Profile – Truong Thanh Company

 Specialized staff of the company is high professional skill: view table 2.2

Table 2.2: Qualification statistics of employees – Truong Thanh Company

No Professional knowledge in

major

experience

Experiencelevel

Source: Capacity Profile – Truong Thanh Company

2.1.5 Particular projects of Truong Thanh Company

(View Appendix 6: List of remarkable projects – Truong Thanh Company)

2.2 Evaluation about situation of current project implementation and

management in Truong Thanh Company.

2.2.1 Results of deployed projects

Analyze by quantitative method.

Firstly, the author will analyze Profit and Loss of the project In order to do this, theauthor has investigated 30 outstanding project of the company as tables in Appendix 05 –Table of cost and work progress statistics According to Appendix 05, we realize that:

- Majority of projects make profits, only 16.67% of projects get loss

- The loss projects is delayed in long time, in which typically is Academy of BorderGuard 8D2 project with the loss of 179.31 mils VND and delay of 365 days

- Cost of raw materials accounted for high rate of total cost, indicating that total cost isaffected by cost of raw materials

- Other cost and camp costs are not effect on the total cost of execution, accounting forless than 2% of total project cost The common cost is low level, only accounting forapproximately 5% of total cost

- Labor cost depends much on the progress of the project, leading to the high labor cost

if the delay of project exists in long time

In order to appraise the above remarks, we analyze by regression model to evaluate thedependable level of total cost on types of cost and progress of the project

Form of the regression model as follows:

Y = 0 + 1X1 + 2X2 +…+ nXn + With the below variables:

- Y: total cost of the project

Making the regression model (reliability rate α = 0.05) by Megastat software, we achieve the result as follows:

Table 2.3: Table of regression analysis

variables coefficients std error t (df=21) p-value

Source of data: Collected in Appendix 06

Data of the regression analysis show that:

- Variable X8 and X7 have a value P – value > 0.05, therefore the data refer the total

cost is not effected on time of project and the delay of project implementation

- Variable X4 and X6 have a value P – value > 0.05, shown that the total cost is not

depended on other direct cost and camp cost

Eliminating the above variable out of model, make a new regression analysis with the rest

variables coefficients std error t (df=25) p-value

Source of data: Collected in Appendix 09

According to regression analysis, the above model is reasonable if all variable have value p-value < 0.05 and in the range of reliability Therefore:

- Total cost will depend on raw material cost, labor cost, execution machine cost and

common costs Form of function of total cost as below:

- Coefficient is opposed meaning to value of p-value of common cost, it means that the common cost is not currently well controlled with a large variation and large

reliability (3.4373, 10 319) of these variables

According to this result, we realize that:

- Cost of project depends a lots on raw materials cost, labor cost, construction machine cost and common cost, therefore, it is essential to concentrate on these costs

- Common cost is not currently well controlled with high variation

2.2.2 Analyze quality of the project

In order to analyze quality of the project, we choose randomly a completed work, by applying Table of collecting and evaluating quality of project for Project of embanking Uong river, we receive the below data: (looking at Table 2.5)

Table 2.5: Table of collecting and evaluating quality of project –

Project of embanking Uong River

Source: The author proposed

By choosing randomly, it indicates that projects of the company achieve the standard (thisconclusion needs to be checked widespread in the whole projects) However, the delaystill exists

2.2.3 Analyze the result of project implementation progress.

Based on Appendix 06, we realize that all current projects of Truong Thanh Company aredelayed In order to consider about delay of progress, we review current progress ofproject implementation of Truong Thanh Company (view figure 2.2):

Figure 2.2: Progress of project implementation – Truong Thanh Company

Source: collected by Truong Thanh Company

Currently, the company hires teams by the piece for the whole projects and onlyexamines, evaluates when finishing It is inattention in project management that leads to