Lack of coordination at HBC’S contract department

UNIVERSITY OF ECONOMICS HO CHI MINH CITYInternational School of Business ---Tran Minh Tam LACK OF COORDINATION AT HBC’S CONTRACT DEPARTMENT MASTER OF BUSINESS HONOURS Ho Chi Minh City

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business

-Tran Minh Tam

LACK OF COORDINATION AT HBC’S CONTRACT DEPARTMENT

MASTER OF BUSINESS (HONOURS)

Ho Chi Minh City – Year 2019

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business

-Tran Minh Tam

LACK OF COORDINATION AT HBC’S CONTRACT DEPARTMENT

MASTER OF BUSINESS (HONOURS)

SUPERVISOR: Professor Doan Anh Tuan

Ho Chi Minh City – Year 2019

LACK OF COORDINATION AT HBC’S CONTRACT

DEPARTMENT

Table of Contents

Executive Summary 5

1 Company Overview 6

1.1 Hoa Binh Construction Group J.S.C 6

1.2 Contract Department 7

2 Symptoms 8

High and increasing Days sales outstanding 8

3 Problem identification 10

3.1 Potential problems 10

3.1.1 Inefficient project coordination at Site and in back office 10

3.1.2 Lack of long-time working employees 12

3.1.3 Lack of coordination within the department 12

3.2 Validating problems 15

3.2.1 Problem Validating 1: Inefficient project coordination at Site and in back office 15

3.2.2 Problem Validating 2: Lack of long-time working employees 17

3.2.3 Problem Validating 3: Lack of coordination within the department 18

3.3 The important and consequences of the problem 20

4 Cause validations 23

4.1 Potential causes 25

4.1.1 Work Overload 25

4.1.2 Poor Communication 25

4.1.3 Lack of work-interaction 26

4.2 Causes Validation 26

4.2.1 Validating the first cause: Work Overload 26

4.2.2 Validating the second cause: Poor communication 30

4.2.3 Validating the third cause: Lack of work-interaction within the department 31

5 Alternative solutions 34

Solution 1 – Provide orientation and internal knowledge sharing class 34

Solution 2 – Setting goal and specific tasks for employees in HBC E-learning System 37

6 Action plan 40

7 Supporting information 40

7.1 Interviewees‟ Demographic 40

7.2 Interview Guide 40

References 43

Appendices 47

Appendix 1: Definition of theoretical frameworks 47

Appendix 2: Form of proposal 48

Appendix 3: Bidding results in 2019 of HBC (1st and 2nd quarter only) 52

Appendix 4: Days sales outstanding of HBC, CTD and PHC 57

Appendix 5: Transcript summary 58

LIST OF ABBREVIATIONS

HBC Hoa Binh Construction Group Joint Stock Company

DSO Days sales outstanding

EPC Engineering, Procurement, Construction

CTD Coteccons Construction Joint Stock Company

PHC Phuc Hung Holdings., JSC

UEH University of Economics Ho Chi Minh City

UOL University of Law Ho Chi Minh City

QS

AR

Quality Surveyor Account Receivable

LIST OF TABLES

Table 1: Data of net sales, average account receivable, account receivable turnover ratio and day sales

outstanding from January, 2015 to December, 2018 in HBC 9

Table 2: Data of due dated value of 10 on-going biggest projects from 2015 to 2019 in HBC 11

Table 3: Data of personnel in Contract Department in 2019 in HBC 12

Table 4: Data of payment in Sunshine City Saigon Project in HBC 15

Table 5 - The assignment of the Main-contract execution of the Contract Department during the 2019 period – quarter 1, 2 29

Table 6 - The assignment of the Subcontract execution of the Contract Department during the 2019 period (with ONG = Ongoing, STO = Stop, COM = Completed) 29

Table 7 Estimated costs of two alternative solutions 40

Table 8 - Action plan of two selected solutions from June 2019 to January 2020 39

Table 9 - Interviewees’ Demographic 40

TABLE OF FIGURES Figure 1: A part of HBC organizational structure 7

Figure 2: Contract Department ‘s organizational structure 7

Figure 3: Data of day sales outstanding from January, 2015 to December, 2018 in HBC, CTD and PHC 9

Figure 4: Contract Executive job’s description in executing Main Contract in HBC 19

Figure 5 - The display of HBC E-learning system (http://www.el.hbcr.vn) 38

LIST OF DIAGRAMS Diagram 1: Initial cause-effect map of Contract Department in HBC 14

Diagram 2: Updated cause-effect map of Contract Department in HBC 24

Diagram 3: Final cause-effect map of Contract Department in HBC 33

Executive Summary

Over the last couple of years, the development of Hoa Binh Construction Group J.S.C has been significantly recognized in the construction industry However, during the difficult times ahead that construction companies are about to encounter, constantly increasing in account receivable has been recorded as a cautious signal in financial report of the company This paper is about to give a full picture of how a typical construction company struggling to find the solutions to solve the mentioned symptom By first, the researcher gives a short portrait of the company Then, by some intensive working, the author identified an apparently seen symptom before using some techniques data including qualitative research such as focus group to establish three potential problems, follow then by reviewing literature and further conducted an in-depth interview in confirming the main problem and its important and consequences The research also gives further look at the potential causes and once again validating them to find the main cause and sub-causes in order to give the rightful solutions for an agency to improve

Throughout the research, readers may find there are still some connection and contrast in and between the literature found and the answer received from the interviewees, as well as the difference in perception of people from the executive level, to the deputy manager level and to the director level The paper also pointed out some limit of the focus group technique to get the clearer picture at the symptoms and potential problems of the company Furthermore, the solution is given to enhance the effort of cure the department problem first, before having affection to the symptoms of the company

1 Company Overview

Having just celebrated their 30th anniversary in operating in 2017, Hoa Binh Construction Group J.S.C (HBC) – one of the pioneers in the construction industry, has gained itself a valuable image in the market HBC has been constantly awarded billions contract over the years, especially as the role of the General contractor (EPC), Main contractor and Design and Build Contractor The mission of the company was once to become the leading construction company in Vietnam, however, the company has been expanding their mission to become one of the competent contractor in the world, beginning in Canada, Australia and Myanmar The company started his first sign when allowing the Hyundai Elevator to buy stocks and get the first control of the company, the private placement of shares to foreign partners will be completed in the second quarter of

2019 The overall of 2018 saw the company revue increase 3 times over the year of 2015 and the profit is even more impressive in figures, increase as almost 8 times over the year

of 2015

Source: HBC‟s website (www.hbcr.vn)

Figure 1: A part of HBC organizational structure

1.2 Contract Department

As the contractor, it could be clearly seen that companies has to compete to get

the jobs among the other competitors When things going the right way, that means

when the HBC is awarded the contract, there has to be a department who takes the

responsibility of review, negotiate and draft the contract for signing That being said,

such people shall own knowledge in a mixed between the construction field and the

legal one

The Contract Department was established with the aim to (i) Review, negotiate

and draft the Main Contract with Owners/ Developers, (ii) Check the approved budget

with the approved Subcontractors before review, negotiate and draft subcontract with

Subcontractors, (iii) to coordinate with other departments in the company system to

complete the general mission of HBC

Figure 2: Contract Department „s organizational structure

It can be seen in the Figure 2 that Contract Department is one of the four

Departments located in the Supply Division The Contract Department is led by Mr

Nguyen Le Tan - the Director of the Supply Division and Mrs Nguyen Thi Hoan -

Deputy Contract Manager

During the operation over the last few years, some symptoms of the company has been recorded Therefore, this thesis will indicate those symptoms and investigate

whether there is an existence in those symptoms and the role of the Contract

Department In other words, the purpose is to analyze the link between the causes,

effects and symptoms

2 Symptoms

High and increasing Days sales outstanding

For construction companies the monthly bills or draws to the Owners of the construction projects constitute an account receivable until the bill is paid (1) It is

inevitably seen from the financial reports for over the last 04 years that the receivables

of HBC gradually increases According to Bryk (2), in case the company needs to get

cash to meet its obligations with other parties since Owners/Developers are paying

late, it could bring up many financing charges Incurring overdue account receivable

still has a cost Instead of having free cash-flow to put resources into development

opportunities, purchase new machinery or establish new items, your money is tied up

on balance sheet Keeping the account receivables too high may have seriously

affected on the cash flow of the company, and therefore the company has to delay the

payments to any suppliers or vendors as the case maybe The Account Receivable

Turnover Ratio and days sales outstanding of HBC at the average of 2018 is 1.79 and

203.49 respectively, it means that the company collects the receivables about 1.79

times a year or once every 203 days In other words, when HBC makes a credit sale, it

will take the company 203 days to collect the cash from that sale

(Source: HBC‟s financial report (2015, 2016, 2017, 2018)

Table 1: Data of net sales, average account receivable, account receivable turnover

ratio and day sales outstanding from January, 2015 to December, 2018 in HBC

When taking a look beyond the company boundary, it is apparently that the two biggest rivals of HBC still keep the amount unconcernedly This paper is making a benchmark in DSO with CTD and PHC construction companies, two of the biggest rivals of the company To be specific, it could be clearly seen that the day sales outstanding of CTD and PHC seem to increase over the 2017-2018, however it is insignificant as it is still remained under 100 days In contrast, HBC, at least has to

wait twice the time of the rivals to collect cash within the period of one year

Figure 3: Data of day sales outstanding from January, 2015 to December, 2018 in HBC, CTD and PHC

Days sales outstanding of HBC, CTD and PHC

For a construction company by nature, when enters into contract with Owner/Developers, it is commonly seen that there are involvements of many suppliers and vendors Until the company receives the payment from Owner/Developers from such contract, the company has to pay the cost itself to their suppliers and vendors which may be a serious case for the instability of cash flow of HBC As a result of those investigation, it illustrates that HBC have a High and increasing Days sales outstanding, such signal should be also seen as a symptom which the company needs

to focus on now

3 Problem identification

The problem identification process starting with identify potential problems The consultant has taken a focus group method with all of the member in the Contract Department to find out the main problem

3.1 Potential problems

3.1.1 Inefficient project coordination at Site and in back office

A focus group was initiated by the consultant with the involvement of all of the members in the Contract Department This Department for a long time has not owned

a manager, therefore all of the major decisions has been made by the Director of the Supply Division The account receivables symptom has been raised first during the focus group interview, Ms Hoan – the current leader of the team, expressed her feeling that the delay payments of Owners/Developers – these are people who spend money on investing construction projects, Ms Linh – an accountant specialist also emphasizes that high receivable every years is caused by two main reasons (i) HBC used an typical accountant according to accounting law of Vietnam, when the progress

of the construction project hit the specific miles stone such as 70% of total progress, even the invoice has not been released, the account receivable has also been recorded and (ii) Delay payments from Owners/ Developers from the very first projects until now The group has discussed a lot of projects, but according to Ms Linh, there are lots of projects ongoing but these are the most common ones:

No Project Year

started

Price (billion)

Due dated value (billion)

to find all of the provisions that affect the payment time and with Ms Linh to find out all of the submission date is late or not, she also takes some notes from the external factors, even though everyone did the perfect jobs according to the contract, risks may come from the other side of the Contract Owners/Developers are the one who developing the Project, and there are possible plenty of reasons that may affect to their cash flow as may lead to the shortage of finance to afford for the Contractor (i) Project suspended by competence authority, (ii) Lack of financial source or even the subjective factor (iii) the willing of the Owners/Developers to pay This gets a little deeper into the story as the payment of the servant depends a lot on the spirit of the boss The consultant reinforces the topic by raising the cause leading to late submission of payment documents, the answer of Ms Quyen said that the inefficient

project coordination between people working at Site and in back office received the

consent by other interviewee

Therefore, this inefficient project coordination maybe a problem of the

company as it may affect the company cash flow and increase the account receivable

3.1.2 Lack of long-time working employees

The debate is getting hotter when the consultant goes into the tenure of the

interviewees, by asking whether the young and dynamic team has enough experience

to handle all the work and maybe one of the causes lead to the unfavorable contract

provision when negotiating, most of them remains silent Ms Hoan expressed her

feeling that this shall be a problem that most of them has little long-time working in

the company and almost everyone graduated from Economy – Law school and majors

in Law, therefore, the knowledge in the construction industry is limited The following

table is given by Mr Tuyen – who is a veteran Human Resource specialist, giving

details on education and experience of each and everyone in the Department

Join

Years in Construction Field

Role

Contract/ Subcontract

Contract

Tung

Contract/ Subcontract

Contract

e Table 3: Data of personnel in Contract Department in 2019 in HBC

3.1.3 Lack of coordination within the department

The abovementioned interview continues to give another potential problem that may

be examined, about the connection between each employees within the department When mentioned about the unfavorable contract provisions among the pending contracts – it means the contracts that the payment has been delayed, Ms Hoan – who have just been promoted to the Deputy Manager of the department since the end of

2017, said that everyone here likes to work dependently, and they are restricted to get reference from other signed contracts as they are heavily protected under Ms Lien‟s custody for the confidentiality By observation technique, the consultant can feel the hesitation from the look of other interviewees, which has always been known as the limit of the focus group technique When people are sitting next to their leader, they are shy to express what they are feeling But the common feeling is that the interview has been going on a very tense atmosphere and this potential problem shall be examined by getting further into the literature review and previous researches conducted by journalists and researchers

The interview has given the reader and clearly picture at what could be called the potential problems within this department towards the two mentioned symptoms, the initial causes-effects map could be drawn as follows:

Diagram 1: Initial cause-effect map of Contract Department in HBC

who has more than 20 years of working in HBC to validate the second potential

problem as it related to a problem among the human factors

3.2.1 Problem Validating 1: Inefficient project coordination at Site and in back

office

In his journal, Reeves (3) expressed that one of the fundamental causes behind late submission of payment documents is when there are mistakes in submitting

claims Such claims is made without sufficient supporting reports, wrongly calculated

and those submitted without using the correct procedures in contract When this is the

case, contractors need to resubmit the claims after making the necessary corrections

and may cause late submission of payment documents Gather from the data of Ms

Linh, we have another look at this potential problem (the biggest due dated value

contract Sunshine City Saigon):

Date invoiced

Received

(Payment

30%)

Due dated

value (billion)

15th day the following month

30th of the 2nd month

in valuation Table 4: Data of payment in Sunshine City Saigon Project in HBC

The inefficient project coordination in Site and back office has clearly shown in the Table 3, when the correct and accuracy invoice is released to the Owners/

Developers, it may take at least sixty (60) days to receive the payment, that is what

described in the Contract and may need some special gift to get the payment within such time Being delay in payment may come from the external reasons, however, for the reasons that could be controlled by the Contractor, there shall be recognized as a potential problems of the company

As frequent, each of the contract will have different payment methods As a general and basic contract, for all the works the contractor has executed during the month, will be summaried at the start of the following month and then getting approved by the Owners/Developers before invoicing the approved value, this is so called a claim process However, delay payment caused by Owners/Developers is when they do not execute his obligation to pay the amount or to approve the working volume within a stipulated time in terms of the contract (3) They actually have the right to reject what are in their opinion is not right, with have to attach with detailed explanation or evidence There are cases where the investor are wrongfully withholding the payment Odeh et al (4) list exactly what Ms Hoan has expressed her thinking in the previous part, this is sensitive but in some way very common as there some clients who want to receive some kind of informal and secret „gifts‟ from the contractors before releasing the payment Another factor adding to delay installments

is when contractors disputes with the valuation of work, whether it has been defined

in the contract or result by reason of variation This would then creates conflicts between Owners and Contractors and which could be a reason for delay of Owners/Developers

However, the data the author received above is somehow not sufficient enough

to prove the existence of the problem When Mr Tan was asked about the coordination between the Site and the back office, he did not have the same thinking The director ensures that there are many factors that affect to the late submission of the payment documents Even though the time stipulated in the provision to ensure the conformation of the parties in contract to the obligations, Contractor always have difficult time submitting their invoice on time As a contractor, it is always subject to the Owner/ Developer‟s approval on the monthly working volume, on the calculation table, on the invoice It can take very long and nothing the Quality Surveyor working

at Site or a Contract Executive of HBC can control More astonishingly, he surprised the author when releasing the information that the coordination between the office and Site of HBC is built on an extremely expensive and elaborate system that worth billions VND People working at Site are being practiced and trained, therefore, this system is proved to augment the coordination between these people both in quality and time

3.2.2 Problem Validating 2: Lack of long-time working employees

Having a good negotiator with good skills and experience will enhance the possibility of getting a good contract provisions According to Bakar et al (5), three of the biggest factors influencing the negotation and the outcome of the contract are (i) relationship with supplier/subcontractor, (ii) trust and (iii) skills of negotiator, as a veteran working employee, people would be enable to get more favourable contract provision That being said, in contrast, if the contract is signed with risks involved from the beginning, that could be seen as Ali (6) and Arditi et al (7) said, as the use

of the pay when paid (back to back) clause in sub-contracts, it means that Contractor will only pay to Subcontractor when received money from Owners/ Developers The

„pay when paid‟ clause in contracts could cause delayed payment issues especially to the subcontractors who might just do a minor job in the whole package work In his published journal, Ansah (8) also agrees that that a mechanism for avoiding or reducing delayed payment needs to be taken in the form of contractual or statutory rights

When interviewing Mr Tan about this potential problem and giving him the details about the data of personnel in Contract Department in 2019 in HBC in Table 3,

he also thinks this is not the right problem The veteran said that they have an intensive recruitment process, as all of the candidates may not have a very long working time in HBC, however, they all are not freshman They have experience and having worked for the construction industry over years Not to mention, the interview test is difficult and very competitive They have to spend first test about the English and IQ Next the candidate has to answer ten different types of questions related to in

construction industry that requires an experienced executive to answer, there are translation and questions about the FIDIC book too The director ensures that people here though working separately and dependently, are the ones who are pretty solid at their job

3.2.3 Problem Validating 3: Lack of coordination within the department

According to Xue et al (9), An agent-based framework for supply chain coordination in construction, Coordination in construction is to build the integration of key construction business processes and key members involved in to accomplish a collective set of tasks and to achieve mutual benefits Furthermore, Criticisms of poor performance are not uncommon in the construction industry, and coordination is observed as the best solution to this problem (10) Coordination link people together and help the company improve the performance, effective coordinating the collective efforts of organization member enhance organization competitiveness (11) Also according to Wen (11), managers can adopt the knowledge sharing and coordination, and align their roles with abilities to achieve effective knowledge sharing and

coordination

To clarify the coordination within the Contract department, the author organizes a closed discussion with the involvement of 06 employees within this department except Ms Hoan, and finding out astonishingly that people usually working dependently from the others, most of them do not admire the newly promoted deputy manager and almost everyone hesitates to debate or discuss about things they are unknown Therefore, lack of sharing information and lack of given and receptive culture may urge people to the point where they will work over the limit, or lay them down as usual Morever, the restrictions in access to the other contracts to get information also may lead them to accept some unfavorable and harmful provisions that could not be foreseen at the stage of review, comment or even when negotiate and draft the final contract

Figure 4: Contract Executive job‟s description in executing Main Contract in HBC

Mr Tan continue to express his feeling towards this potential problem The

author is given a 30 years-anniversary book of HBC And when looking in such book,

there are more than half of the people working in Contract Department is leaving

Asking about this information, Mr Tan expresses his disappointment every time

people leaving but almost his received answer is that they find a new home When Ms

Hoan is promoted to the Deputy General Manager at the age of 28, there are lots of

thing going through the departments She is younger than most of them, except for one

people at that stage And speaking of Ms Hoan, the director seems to appreciate and

give praise for all the works she has done Even though graduated from Law, she

equipped herself very solidly about the knowledge in construction field But at new

role now, she encounters lots of resistance: from the older people in the department,

they used to go straight to the room of the Director for signature but now they have to

get the Deputy‟s signature prior consent, they have to carbon copy all of the emails to

Ms Hoan – that‟s what they are not used to, and in other aspects, when they are absent or leaving or going late, all have to get acquainted with the new situation The atmosphere is very stressful, and people seem to hesitate to express themselves and share more, leading to everyone working dependently and overlooked all of the others favorable contract provisions that has been successfully negotiated by the others in the department, not to mention that due to confidential, to release a single contract for reference, they have to get through Ms Hoan, which they do not want to do, and increases the lack of coordination among the Contract Department even more

3.3 The important and consequences of the problem

The author has pointed out three potential problems and gained sufficient data

to prove the one the real problem of the business, this part is reviewing once again each of the potential ones respectively,

Firstly, the author conducted a thorough focus group with the members among the department and was surprisingly finding out everyone has the same think as the inefficient Project coordination in Site and back office leading the high and increasing DSO From the data getting from Ms Linh, we could see there has been on-going projects are being delayed in payment and she also shares about that account receivable recorded policy in HBC The recognition of revenue according to HBC schedule is stipulated in the 15th standard (VAS 15) on construction contracts - immediately to the point of accounting there, although not yet collected money, is the method that Vietnam still accepts This is the method that the big rival of the company such as Coteccons used to record the account receivable figure However, for large receivables of HBC, that it may involve risks as it was an estimate according to schedule, customers have not yet accepted payment because they have not been accepted, even if they are temporarily advance However, Ms Linh also confirms that there have been many meetings conducted between the top managers of HBC to discuss about the problem and Mr Le Viet Hai the revenue recognition method will affect the indicators on the financial statements, but avoid the distortions of shareholders and investors about the situation of HBC From there, the author continued to go through all of the literature finding out that there is a link connection

between the process, when the documents are being delayed by the Contractor itself, it leads to late submission of the payment documents and payment delay is the consequence By looking at the project information given by Ms Hoan (Sunshine City Saigon), the payment was delayed by the one taking responsibility to submit the approved monthly working volume (QS) and the late submission of invoice However, things are different when Mr Tan confirmed that the reason is not the one that we found The Director, who is familiar with many of the biggest Owners/ Developers in the construction industry showing there are many different factors but he does not think this is the right one and moreover, showing the list of procedures of HBC is built

on the most elaborated ISO System and being followed strictly by all of the executors

During the focus group, one thing that the interviewees mentioned about is the problem in the contract clauses giving effect to the delay in payment However, even though the author finding a link between the long-time working people usually successful in negotiation and therefore, a good contract signing is apparently This potential problem is reviewed by the overall background of the member in the departments and Mr Tan, when they both showing the fact that the Department has owned lots of law experiences and was recruited in a very careful way, this leading to the fact that almost every of them can negotiate lots of type of contract themselves But the thing the author getting surprised that there are actually lack of coordination between them even when interviewing, not alone working It will always get tougher

at the time goes by, when the new and promoted Manager is not the chief manager but just the deputy ones, and things are getting tougher when there are literature saying that lack of coordination within the department can cause trouble in work, and Mr Tan also have the same idea He realized that this is one of the problem has been consistently repeated when signing the contract Everyone works dependently and does not get the best out of each other, therefore, based on the general template, there are always a miss if people cannot learn how to avoid the unfavorable contract clauses leading to the delay in payment and the high DSO as mentioned The most critical ones are consequence of the fact that problems with receivables are usually the reason for accumulation of overdue payments and can lead to insolvency (12)

From a macroeconomic point of view, García‐ Teruel (13) states that level of account receivable is affected by the economic situation Credit collections depend on the industry (14), and effects of negative macroeconomic shocks (15) In a worsening economic and market conditions, some Owner/Developers cannot pay the payment on time, causing the company increases their receivable However, data showing that the Sunshine City (Owner of the project above) has consistently awarded HBC many news contract in 2019 When we taking a further look into some details in Appendix 3

we could see that Sunshine City awarded HBC in the first quarter of 2019 over 800 billion VND contract in north of Vietnam, and over 300 billion contract in the south of Vietnam

One of the signs that an organization lacks coordination is delay When there is

a lack of coordination between management, labor, production and sales, delays will result causing the organization to become ineffective When delays become part of the operations of the organization, customer relations will suffer for the organization Delays create unreliability and will alienate customers from the organization By controlling and properly managing work in progress, the organization can work to prevent delays and resulting coordination problems

Another sign of a lack of coordination within an organization is redundancy With redundancy, an organization will spend double the effort, material and time to produce the same item twice Redundancy typically results from a lack of coordination between various departments within the organization By implementing control measures to reduce redundancies, an organization can work toward improving overall coordination within the organization

Organizations must effectively utilize information to function at an optimal level When this information is not readily available as needed within the organization, the lack of information can create a cascading effect that will damage the organization Lack of coordination creates gaps in the acquisition and distribution

of information This in turn makes the organization's available resources ineffective and causes it to miss opportunities By implementing an accountability system for the

information, the organization can improve coordination and minimize lost information

When an organization does not support coordinated efforts, innovation and progress can become stagnant within it This can make the organization obsolete and unable to compete against other organizations in the same industry that have adopted a coordinated effort to adapting new methods of producing and managing the organization Inflexibility also freezes many protocols that could have potentially become productive This happens because there is not enough coordination to gauge the effectiveness of the new protocol

In conclusion, from an internal point of view, the Lack of coordination within the Department after going through focus group, literature and in-depth interview with

Mr Tan, all showing that this is the problem the author is looking for

4 Cause validations

In line with the previous analysis and based on literature reviews, some potential causes of the central problem are identified in the diagram 2 which is the updated cause- effect map of the department as below:

4.1 Potential causes

4.1.1 Work Overload

According to Qaiser et al (16) his journal proved that work over-load, negative affectivity, work-family conflict and family-work conflict has a positive association with emotional exhaustion though co-worker support helps to moderate the relationship between Indeed, having to a lot of work to do prevent people from interaction with each other, therefore leading to increase in stress, turnover intentions, and lower job satisfaction (17) Also proved in his work, Farooqi et al (18) said that the relationship of work overload on job satisfaction and relationship of job satisfaction on employee performance, employee engagement which is most important thing of any organization

The working overload may come from the lack of interaction between the people

in the department as communication tactics allow management teams to coordinate successfully without becoming overloaded and successful coordination and freedom from overload independency influence team performance (19)

4.1.2 Poor Communication

Correspondence among colleagues could enhance collaboration in the working environment because of it removes some uncertainty in the relationship and misunderstanding among the co-workers (20)

It is inevitably that communication is recognized as an essential key to an effective and solid workplace that generates the employee satisfaction, engagement and enhance organizational performance In other words, with communication, employees will be more cooperative and motivated if they are given adequate opportunities (21)

What can be understood in common that communication consists of sharing and using information while lacking of correspondence results from insufficient information,

managers‟ use of proper communication practices should offer an effective means to increase cooperation and reduce employee vagueness (22)

4.1.3 Lack of work-interaction

According to Heaphy et al (23), employees‟ bodies are influenced by ordinary interactions and, in so doing, encourages a stronger tie between human physiology and organizational research, social interactions has a positive affection on human and hierarchical settings influence worker motivation and physiological creativity Advancing every day positive work–home interaction and day by day positive home–work interaction activities have helped employees in dealing with their numerous of roles and obligations, which features the significance of analyzing the positive impacts that work and home could have on one another (24)

In his interdisciplinary research, Schmidt (25) said that interactions between

administrators from one viewpoint, and the data sources accessible in the control room are the methods the administrators working in pairs to monitor the overall process and/or the

other‟s activity Interactions sure does can help to monitor the other‟s activity

4.2 Causes Validation

The validating step is conducted to identify which cause has the real effect on the main problem that the reader has mentioned before By first the writer doing some literature review and interviewed the level of members in the department, before went to the Contract Director to confirm such finding

4.2.1 Validating the first cause: Work Overload

As it mentioned before and also has the same idea, Ali et al (18) said that stress in the workplace owing to various problems such as work overload, conduct of co- workers becomes detrimental not to himself but to the organization This stress can be reduced by giving training, orientation, proper pay package equal employee opportunities (26)

Respectively, the writer went straight to the office to find if there are actually signs

of being – work overload by the employees By confirming the cause, the writer has done some observation techniques to have the prior picture By observation, he could see that the company has the working time to end at 04:30pm, and he find it interestingly that almost everyone in the department leaves the room at such time There is rarely working overtime or overnight This may be a subjective finding as it could be explained for the high efficiency and high performance that leads to unnecessary additional working Also confirm the doubt, Kuschel, (27) said that there is a strong relationship between the concept and measurement of working time and workload: work overload and working long hours seem to be two faces of the same coin Therefore, realized that further interview is needed, the interview has conducted the second group interview within the following date with the participant of all members in the Contract Department except for the Director of course The purpose of the meeting is to make a further looking to which cause has been the central cause leading to the problem, by examining all of the three above-mentioned potential causes Most of them, except for the newbies, admitted that there work-load is heavy and even though they are not used to working overtime, they have to work really and extra hard during the working time Mr Van Anh expressed that she felt sick and emotional exhaustion all of the time, as the consequences of working overload Her expression is same as a research conducted in India that said people have work overload they can be shown with these signs like over sleepy, they become ill, not interested in anything as a result intellectual calibre will suffer (28) Ms Hoan disagrees with the discussion, telling that there are three ways to know if the people is overloaded

by the job:

1 The Main contract they are handling are too much

2 The Sub-contract they are handling are too much

3 The Main and sub-contract they are handling are too much

To confirm this,Haksever et al (29) said that the level of information overload is at its highest in situations where the contractors interact with the consultants and architect in

the design stage, and with subcontractors in the construction/completion stage That being said, the construction stage has the highest probability of information overload, followed

by the design stage (30) Most of HBC‟s contract are construction contract, over 90% of bid winning is for construction contract, the remaining is for Design & Build Contract

As deputy manager, Ms Hoan takes control of assigning the job and control their performance and make any corrections if needed However, as we mentioned before, in spite of being the one of the powerful people the department, most of them do not ask for her approval during their job execution That is how she assigns the job:

1 Assign someone a new Tender documents to follow during the pre-bidding stage and such people go on the executing in the Contract negotiation and management stage

2 After receiving the proposal for Subcontract of people in the Site for e.g in the Appendix 02, she assigns to the people who, may or may not, manages of the Main Contract of such Subcontract to execute the job Such manage work shall include drafting the Subcontract, discuss and negotiation of people in Site and Subcontractors/ Suppliers to final the Contract, prepare for signing and scanning the Contract before sending via email to such related people which has the authority to view and execute such contract

3 Assign to one people a Main Contract management and the Subcontract of such or different Main Contract

The following table shows how the Main Assignment is divided to people of the Departments (details of such value and more information shall be seen in Appendix 03)

5 II Celadon City Van Anh

Table 5 - The assignment of the Main-contract execution of the Contract Department during the 2019 period – quarter 1, 2

The following tables shows how the Subcontract Assignment is divided to people of the Departments

in the department, she confirms that there are lack of overtime working also Such

reference shall be seen as this is not the main cause of the problem leading to the lack of coordination problem

4.2.2 Validating the second cause: Poor communication

Most problems that occur within the construction industry are linked to be caused

by poor communication (31) Also agreed with that idea, poor communication which is described as an unsuccessful interaction between the project participants is common problem in the construction industry (32) This lack of interaction may form between people working on Site construction with back office According to Hussain et al (33), managers and organizations working in the construction industry are needed to know the causes and effect of lack communication and to take necessary activities in their projects

to enhance the communication process

To validate this cause, Ms Hoan has expressed her thought towards the situation,

by telling that their feeling towards each other is good, there is no hate or dislike among them However, due to their strong personality, the communication and the solidarity are not very strong There are still some vacations within the Department every year and a lot

of party has been created during the working time or after work and their communication through the journey or commitment to the party is also fine Even though this is a very sensitive cause to validate, by observation, the writer still observes people in the Department involving in different and private groups of social media group, like Ms Liên involving in a group of different department (Material Department which sitting next to ours), Ms Quyen, Ms Tran and Ms Ngoc involving in a private group or Ms Hoan and

Mr Tung are going very well together in both on-work and off-work activities, while Ms Van Anh do not want to join or involve or get close to the others Such different groups among the department may cause incoherent relationship, but overall, they all actually having fun together as Ms Hoan said The interview of Mr Tan was short, but what could

be summary about his thought makes the writer feeling surprisingly, Mr Tan was asked about the poor communication among them and his answer was quoted that “It‟s not poor, they are still communicating with each other very well, but when it comes to the work,

there were still something missing and lacking in and between them, but it is not poor communication”

4.2.3 Validating the third cause: Lack of work-interaction within the department

For a construction company, management of Main Contract and Subcontract are different by nature By value and by its importance, management of Main Contract requires a much deeper and more experience level of the executors while for the Subcontract, difficult only come from the side of handling and negotiating with suppliers and subcontractors Lack of work interaction may not cause from the way of people interacting but the others, it may depend on the jobs assignment and by nature of the Work For people like Ms Tran, Ms Hoan, Ms Van Anh, they rarely did the Subcontractor Works, but for people like Mr Tung, Ms Quyen, Ms Ngoc – who has less experience than the former, did not involve in much of the Main Contract Works Therefore, as time goes by, people keep doing perfectly their job, it has nothing wrong, but the lack of work-interactions happens and unintentionally leads to the lack of coordination among these people, even though people sitting together and having good communication between

By having a deeper interview with Ms Hoan and Mr Tan, the results indicate that this is an obvious cause of the finding In their expression, they admitted that it has nothing wrong with the job assignment, but when people like Ms Van Anh, Ms Tran received the assignment for a new Main Contract, they rarely go to the other ideas or opinion as reference and not go through Ms Hoan – who is the deputy managers and much younger than them, but has much more experience than them and they also do not look up and get what has been changes to the Subcontract procedure (34) said that age differences between leaders and supporters can also influence leadership efficiency.It is a clear signal to a younger leader that an elderly fan is not synchronized with the implicit career schedules of the organization Such a perception of "being backward" will cause older adherents to react negatively and reduce the perceptions of their own younger leader (35)

For other young and lack of experience newcomer, they have to do the Subcontracts time over time and does not have chance to execute the Main Contractor at all, for e.g Ms Quyen has to do 420 subcontracts alone during the 2018 period, which completely limited her from approaching the knowledge about the Main Contract execution procedure, and furthermore, leading her to quit the company at the end of May

2019 Both the deputy manager and the director still struggle to find solutions which can balance people in the department which encourage them to interact together, leading to share of knowledge, information and experience Such solutions in the past is initiated by assigning mixed between them, but the assignees from the date of assignment, continue what they have to do before, doing it all alone without any reference of much of interaction with people who has done something similarly or such type of contracts before, that leads to the unfavorable clauses it may had during the contract negotiation stage On the other hands, due to long time working with suppliers or subcontractors, Ms Quyen may find it difficulty when working with such suppliers or subcontractors again if

Ms Van Anh or Ms.Tran gives a consent to any clauses or conditions in the Subcontract which Ms Quyen has contrary idea against

Based on the summarized information from the interviews and the above validations, lack of work-interaction within the department can be identified as the main causes of cooperative problem among employees in the department Therefore, the solutions that the writer is about to propose to solve this only main cause is shown or the part below

In short, according to all previous analysis, the final cause-effect map will be

shown as below

Diagram 3: Final cause-effect map of Contract Department in HBC

5 Alternative solutions

Based on some intensive literature review and interview with the members of the Departments, here are some suggested solutions that may have been analyzed to find the real solution These two solutions are made only to solve the lack of the work interaction cause, not taking into account of both poor communication and work-overload problem

Solution 1 – Provide orientation and internal knowledge sharing class

This idea is to provide a careful and adequate orientation program for both new and experienced members the Department

For newcomers, they have to get used to the Subcontract first, there shall be specimen for different types of contract including labor and material supply contract, design contract, construction contract and so on There shall be a data base file that encompasses available information about every kind and character and name of each Subcontractor, which commercial clauses have been successfully negotiated against such Subcontractor and which ones the company has to put up with This file shall be available

to all of the member within the department to enter and contribute, also to gather information during their draft and negotiate the Subcontract The benefit of this action not only to give the newbie the overall picture of what they are going to do or execute during their probation time, but also to ensure the experience and current executives have the

Newcomers become productive earlier if they comprehend their work strongly based on fundamental understanding (36)

Main Contract and Subcontract are different types of Contract, but it has a lot of things in common First, Subcontract derives from Main Contract, without Main Contract, the Subcontract is not needed Secondly, all of the commercial clauses are stipulated in the Main Contract shall be applied on a back-to-back basis to all the commercial clauses in the Subcontract, save for some Contract that has small value or could not be applied due to some specific reason, especially that the Subcontractors always feel unfair when applied

could directly and straightforwardly enter, gather and refer to information to the Main Contract which they need, instead of now, the people who do the Subcontract has to find it

on numerous paper version to find the Main Contract, or need to ask for the scanned version of people working in the Site who taking charge of such project to get the Main Contract scanning file It is ridiculously that people in the Contract Department could not find the Main Contract themselves Questions were raised but the answers were the same all the time, due to its confidential It‟s confidential, for sure, but there are ways to avoid the expose of confidential information, such as scanning the whole version of the Main Contract except the price pages or always make available of all terms and conditions of the Main Contract for people who is taking charge of such Subcontract

The first and second quarter of 2019 saw Ms Hoan has organized 03 of the internal knowledge sharing classes, with the class usually occurs in the Saturday with the following contents:

1 Changes in FIDIC Redbook 1999, 2017

2 Introduce and discuss about FIDIC Yellow Book 1999 (D&B Contract)

3 Introduce and discuss about Insurance in Construction Contract

Such class has been spontaneously organized by Ms Hoan, and almost everyone replied that such class has given them superior knowledge For newcomers, this maybe too much, but it could be note as they would have worked in the later stage of their career, for the current ones, this could be a chance to reinforce their knowledge and experience and also spend time for some queries, debates and discussions among the participants Such internal classes shall be developed and organized by other veterans in the departments such

as Mr Tan, Ms Van Anh, Ms Tran, about those related topics that has been always subject

to raise:

1 Changes in FIDIC Yellow Book 2017

2 Introduce and discuss about Bank Guarantee in Construction Contract

3 Introduce and discuss about Bill of Quantity in Construction Contract

4 Introduce and discuss about Variations in Construction Contract

5 Introduce and discuss about Payment/Retention in Construction Contract

6 Introduce and discuss about Damages/Indemntity/Liablitiy in Construction Contract Such as shall be organized in a periodical time within a month, and such instructors shall be available to receive some rewards or bonus within such a month Rewards is every important and can be described as “an award given to an employee on their achievement and contribution towards their companies” (37) According to Korir et al (38), Organizations have a poor or non-reward management structure leading to lower organizational performance, discourage the obligations, motivations and innovations of staffs to work with others to fulfill their common goals In particular, a fair distribution system signals for o staff that the management emphasizes on staff assessment (39)

Through reward system, employees‟ motivation is improved, urges members to work and decrease the labor turnover rate Consequently, it could be said that if employees are well-treated and make the most of their present work, the results would be better Then again, if the firm does not have any plans to implement reward for such contributed employees, who is willing to share their time and experience toward the youngsters, it will result in the failure of inspiring employees and retaining talented staffs, causing lack of cooperation among remaining employees

Accordingly, some benefits and costs of this solution could be described as below:

• Benefits:

+ To improve the performance of new and current employees

+ To enhance communication between the members of the departments

+ Be able to recognize and reward the talented people

+ To ensure the consistent all of types of Contract from the Main Contract to the Subcontract, therefore avoid unfavorable Contract Clause which has adverse effect on the Company

+ To enhance the ability to retain stellar employees

+ To the data-base for the Department for reference

• Costs: The cost of each section organized is including Allowances for employees involved, training is estimated as 5,500,000 VNĐ/ per session There are still 6 months up to the end of 2019, therefore, the estimated budget for 6 sessions are 33,000,000 VNĐ

Solution 2 – Setting goal and specific tasks for employees in HBC E-learning System

Thanks to the highly advanced system which was opened at the end of May 2019, HBC‟s employees not only in the Contract Department can enter into one of the most decorated learning page of the company, the E-learning system Where every Department

of the company is able to create contents including tips, videos, text or other form that can bring knowledge to the others one, and also to judge member of the department Not only they can attend on the internal class, they could apply for the external and related to gain knowledge for themselves and KPIs for completion much as the class This urges the member of the Department to equip some of the new knowledge and create an interlink between people who are working at Site and people working in back office

For an educational organization, it could be a must for an e-learning system build, but for such an enterprises that focusing much on construction activities, building such system may require billion, but it is an intensive project that becomes requirement of all people in the company to participate Therefore, to build on this, to create and enhance the engagement of all people in the Contract Department to involve and achieve great results, may become a big step of the Department that people at the top like Mr Tan or Ms Hoan are looking for