However, there still have many difficulties and obstacles in managing road construction maintenance contracts as follows: i backward methods for selecting contractors to carry out the ro
Trang 1UNIVERSITY OF TRANSPORT AND COMMUNICATIONS
BUI THI NGOC LAN
STUDY ON IMPROVING THE MANAGING FOR MAINTENANCE
CONTRACT ROAD CONSTRUCTION IN VIETNAM
Major: Construction management
Code: 9580302
SUMMARY OF PHD THESIS IN ECONOMICS
HA NOI – 2020
Trang 2The thesis is completed at: University of Transport and Communications
Supervisors: 1 Prof Dr Sc Nghiem Van Dinh
2 Dr Nguyen Quynh Sang
The thesis can be found at:
- The National Library
- The University’s Library
Trang 3PREAMBLE
1 The necessary of the thesis:
The management, exploitation and maintenance play a significant role in our national important and long-term road management, which aims at prolonging the existence of road constructions To achieve the strategy’s goals, road management operators have applied variety of implementation methods and they have gained certain results However, there still have many difficulties and obstacles in managing road construction maintenance contracts as follows: (i) backward methods for selecting contractors to carry out the road construction maintenance contracts, the maintenance socializing has not been implemented; (ii) slow renovation in managing maintenance contract for road construction; (iii) the management of maintenance contract for road constructions has been greatly paid attention to, however, there are still lack of unified and specified legal regulations on this field; (iv) the staffs are not of the same quality levels at all units involved in the bidding and at the road construction management levels.; (v) road construction management authorities and contractors are lack of experiences; thus, all of them meet with difficulties in managing maintenance contract for road construction
It can be seen that there are many obstacles in the managing of maintenance contract for road constructions Therefore, it’s necessary to do research on Managing the maintenance contract for road constructions, which finds solutions to solve existing problems This is a significant task, which needs to be focused on to improve the Management for road construction maintenance contract in Vietnam As the consequences, the thesis “Study on improving the Managing for maintenance contract road construction in Vietnam” has important and necessary meaning in both theoretical and practical implications
2 Studying purposes of the thesis
The thesis aims ate systematizing, supplementing and clarifying the basic theories
for road construction maintenance contract; referring to other nations’ experiences; and concurrently, bases on analysis and evaluation of existing management for road constructions in Vietnam, work out and propose solutions to improve the Management for road construction maintenance contract in Vietnam
3 Object and scope:
3.1 Object of the study:
The object of the thesis is the Management for road construction maintenance contract managed by Vietnamese Authorities, from the perspective of the Owner of road constructions
3.2 Scope of the study:
Trang 4- As for studying space: The thesis is limited in the reality of the Management for road construction maintenance contracts which are being managed by Vietnamese Authorities
- As for studying duration: The thesis mainly studies the reality of the Management for road construction maintenance contracts in Vietnam during the period between 2013 and
2018
- As for the studying content: The thesis focuses on studying the reality of the Management for maintenance contracts applied to national road constructions which are being managed by Vietnamese Authorities, in order to provide solutions to improve the Management for road construction maintenance contract in Vietnam
4 Theoretical and practical basis
- As for theoretical aspect: The study is based on the theoretical background of Marxist -
Leninist philosophy in combination with applying the management mechanism and policies of Vietnamese Government in the management for road construction maintenance, etc.; Synthetically applying scientific knowledge in fields of management, economics and laws which are related to the management for road construction maintenance contract
- As for practical aspect: By studying the situation of Management for road construction
maintenance contract in Vietnam during the period between 2013 and 2018, I have found many obstacles and difficulties which need to be solved to improve the road construction maintenance contract, as follows: (i) Content and quality of bidding documents at the time of the bidding, and contract documents at the time of contract signing; (ii) Provisions on instructions and decisions of maintenance contracts; (iii) Evaluation procedure for the maintenance contents agreed in the contract; (iv) Standardize the process of stage payment, inspecting and acceptance, etc
5 Studying methods
5.1 The methods to be used:
The following methods are used in this thesis: Inheritance method, Professional method, Questionnaire survey method and Statistical method
5.2 Survey and assessment for the real situation of road construction maintenance contract
PhD student had consulted experts and identified a number of key factors which affect the Management for road construction maintenance contract, they include: (i) Mechanisms and legal policies of Vietnamese Government; (ii) The owner of the road construction and (iii) Contractor for road construction maintenance
After the identifying, PhD student had conducted a questionnaire survey; used SPSS software to assess the impact of the factors on the Management for road construction maintenance contracts; and arranged the factors based on their impacting levels; then, work out detail, accurate and sufficient solutions to improve the Management for road construction maintenance contract
Trang 56 Scientific and practical significance of the thesis
6.1 Meaning of science
With scientific studying methods, this thesis has systematized, enriched the basic theories on road construction maintenance, maintenance contract for road construction, and Management for road construction maintenance contract; Creating the premise for proposing solutions to improve the Management for road construction maintenance contract in Vietnam The studying results can be used in researching and training as well
as practical management for road construction maintenance contract in Vietnam
6.2 Practical significance
The thesis analyzes the achieved results and the limitations, shortcomings in the process of managing road construction maintenance contracts; Concurrently, it proposes solutions to improve the Management for road construction maintenance contract in Vietnam The study brings about practical contributions to the widespread application, effective improvement for the implementation of the Management for road construction maintenance contract Whereby, enhance the quality the Management for road construction maintenance contract in Vietnam
7 The structure of the thesis
Excluding the Preamble, Conclusions and the List of references, this thesis include
4 following chapters:
Chapter 1: Overview of studied situation relates to the thesis
Chapter 2: Theoretical and practical basis for road construction maintenance contract
and its management
Chapter 3: Real situation and results of Management for road construction maintenance
contract in Vietnam
Chapter 4: Solutions to improve the Management for road construction maintenance
contract in Vietnam
CHAPTER 1:
OVERVIEW OF STUDIED SITUATION RELATES TO THE THESIS
1.1 Similar studies in the world
1.1.1 World studies which relate to road construction maintenance
Most studies relate to the enhancement for quality of road construction maintenance, financial restructure for road construction maintenance, legal regulations on road construction maintenance, strategies to be used to improve the road construction quality, handover rights to private companies to construct, exploit and maintain road constructions, etc
1.1.2 World studies which relate to road construction maintenance contract and Management for road construction maintenance contract
Trang 6Most studies relate to the results obtained when applying Performance base maintenance contracts (PBC contracts), which help to reduce the cost for maintenance of road constructions and improving road conditions; The studies determine payment conditions, the performance standards in road construction maintenance contract, strengths and weaknesses of those contracts
1.2 Overview of domestic studies
PhD student have studied and synthesized domestic scientific works according to four specific contents (i) Activities implemented in road construction exploitation and maintenance management; (ii) plans and forms of management for road construction exploitation and maintenance; (iii) effectiveness of exploitation and maintenance of maintenance contracts and (iv) application of contracts in road construction maintenance
1.2.1 Management for road construction exploitation and maintenance
The studies focus on the important role of road construction; increasing income from road users to provide capital to the road construction and maintenance; management for road construction maintenance; maintenance policies; biding mechanism for road construction maintenance; related problems in road construction management, exploitation and maintenance, etc
1.2.2 Methods to manage road construction exploitation and maintenance
The studies focus on solutions related to institutional strengthening of maintenance activities; methods to solve shortcomings in the last period of construction investment which relate to construction maintenance have not met requirements Shortcomings in Bidding for road construction maintenance, Road construction management and maintenance should be pointed out and resolved Then, enhance the socializing in the road construction maintenance
1.2.3 Effectiveness of the road construction exploitation, maintenance and management of maintenance contracts
The majority of these studies focuses on: The maintenance costs and benefits obtained from the project during its operation; The benefits from transferring the road constructions - the owners have capital to turn over into other projects as well as obtain effective exploitation and maintenance; The roles of road construction maintenance and factors affect to the maintenance quality; high cost of road construction maintenance shall affect the maintenance management
1.2.4 Application of different types of contract in road management, exploitation and maintenance
The studies determine the risk levels in PPP projects in Vietnam; empirical evidence
in implementation Public - Private Partnership in the field of road traffic; major characteristics of PBC contracts, advantages and disadvantages when applying PBC contracts in road construction maintenance in Vietnam, etc
1.3 Comments on the studies and the insufficiences to be studied
Trang 71.3.1 What I have learnt from the overview of related works:
- Firstly, we should focus on the issues related to the management, exploitation and
maintenance of road constructions, risks in maintenance of road constructions, measures
to mobilize capital for maintenance activities, etc
- Secondly, we should focus on the methods for performing road construction
management, exploitation and maintenance; point out achievements as well as shortcomings in construction bidding and quality management in every stages of the construction investment process (of which, shortcomings in final stage of construction have not been sufficiently studies like in construction maintenance process), socialization for road construction maintenance, renovation in the form of road construction maintenance contract by applying PBC contracts, etc
- Thirdly, we should study on the effectiveness of the road construction exploitation and
maintenance, maintenance contract, road construction maintaining technologies, maintenance plans, factors that increase road construction maintenance cost
- Fourthly, we should do initial study on applying of the different types of road
construction maintenance contracts; evaluate the effectiveness of pilot PBC contracts in road construction maintenance in Vietnam, etc
1.3.2 Insufficiences to be studied
The above overview shows the insufficiencies in the studies on road construction maintenance and road construction maintenance contract, which need to be further studied:
- Firstly, there is still lack of systematic theoretical study on road construction
maintenance contract which suit specific conditions of Vietnam
- Secondly, there has not been a comprehensive evaluation with a scientific method on the
performing of maintenance and management for road construction maintenance contracts
in Vietnam
- Thirdly, there is a limitation in studies for methods and sanctions for road construction
maintenance contract
1.4 Framework of the thesis
To accomplish the proposed study objectives, the thesis is built with content specified in its chapters The management for road construction maintenance contracts is carried out under the impacts of Vietnamese legal document system, specific regulations and process in each different contract PhD student shall analyze each of the factors that affect the management for road construction maintenance contracts, bring about evaluation criteria and necessary requirements to improve contract management according to following approaches: (i) Study the roles of the State management, the system of legal documents applied to the management of maintenance contract for road constructions which are managed by the State; (ii) Study and emphasize on the contents, methods and affecting factors of the management for road construction maintenance
Trang 8contract and (iii) Evaluate the management of road construction maintenance contract in the specific conditions of Vietnam in a certain period of time, explain the situation and propose solutions that suit the reality, specific requirements of the management for road construction maintenance contract
CHAPTER 2: THEORETICAL AND PRACTICAL BASIS OF MAINTENANCE
CONTRACTS FOR ROAD CONSTRUCTION AND THE CONTRACT MANAGEMENT 2.1 Road constructions and their maintenance
2.1.1 Road construction
2.1.1.1 Concept
Road constructions include roads, parking places, signal lights, road signs, road markings, marker posts, barriers, traffic islands, median strips, milestones, walls, embankments, drainage systems, vehicle load inspecting stations, tollgates and other auxiliary equipment and constructions Roads include roads, bridges; road tunnels and ferries [30]
2.1.1.2 Classification of road construction
This classification is of great significance and is closely related to the exploitation and maintenance of road constructions According to Laws No.23/2008/QH12, the road construction network is divided into six systems as follows: (i) National highways; (ii) Provincial roads; (iii) District roads; (iv) Commune roads; (v) Urban roads and (vi) Specialized roads
2.1.1.3 Several characteristics of road construction that affect the maintenance
Specific characteristics of road constructions can greatly affect their maintenance, they include: (i) Systematic and continuous road construction; (ii) Road construction which are fixed assets and bear great impacts of nature; (iii) Road construction with long-term existence; (iv) Road construction that are not of pure public goods and (v) Road works bring benefits in the long run
2.1.2 Theory of road construction maintenance
2.1.2.1 Significance and importance of road construction maintenance
The significance: Road construction maintenance is to maintain the normal
conditions of the construction as designed and extend the life of the construction; concurrently, help to decrease the cost for the construction repairing
The importance: It is important because when roads, bridges, etc, are properly
maintained we can ensure that they are efficiently operated The quality deterioration of the roads, bridges, etc., due to the lack of maintenance can lead to future financial burden and cause legal and other related issues which affect the usage of roads and bridges
2.1.2.2 Road construction maintenance concept
Trang 9Road construction maintenance is a collection of works to ensure and maintain the normal, safe operating of road construction in accordance with the design regulations during the process of exploitation The content of road construction maintenance may include one or some or all of the following works: inspection, observation, quality inspection, maintenance and repair of works, but not including activities that modify the usage or scale of road construction [21]
2.1.2.3 Characteristics of road construction maintenance
Road construction maintenance has some specific characteristics as follows [13]:
- Must be done regularly and consecutively to: ensure road constructions are safely and smoothly exploited; timely handling of damages or generated issues that may cause traffic jam or accident, and problems arising from rains and floods, etc.; detect and prevent actions that encroach or use the road and traffic secure corridor
- The quality of road construction maintenance greatly depends on the construction investment results If the construction is appropriately designed and ensured with good quality, the road construction maintenance shall be guaranteed with high quality
- In road construction maintenance, if causes of damage are promptly detected, the road maintenance and repair shall be simply and cheaply carried out
- Road construction maintenance greatly depends on natural impacts and it is also affected by climate changes
2.1.2.4 Contents of road construction maintenance
The contents of road construction maintenance include one, some or all of the following jobs: Inspection, observation, quality control, maintenance and repair of road construction [17] [30]
2.1.2.5 Funds for road construction maintenance
Road construction maintenance funding is formed from following sources: (i) Annual state budget allocations; (ii) Fee collected from users of road constructions which are invested from non-state budgets; (iii) Capitals invested by road construction owners; (iv) Contributions and mobilization from organizations and individuals and (v) Other legal capital sources
2.1.2.6 The implementation of road construction maintenance:
The of implementation of road construction maintenance includes: (i) Conducting surveys to assess current conditions; (ii) Determine the damage level of road works and items; (iii) Determine maintenance level, work out maintenance process and plan total investment of each maintenance level; (iv) Determine financial sources for performing road construction maintenance; (v) Identify works, items or jobs that need to be
maintained, maintenance conditions and standards, carrying, methods of implementation, scheduled progress, safety measures for equipment and people involved in the
maintenance and (vi) Documents for maintenance including road construction
Trang 10maintenance process, as-built drawings, records of equipment to be installed in the
2.2.1.2 Types of construction contracts
Base on different criteria, construction contracts are classified into many different types
2.2.1.3 Main content of a construction contract
A construction contract includes writing contract and accompanying documents
2.2.1.4 Construction contract price
According to Clause 1, Article 15 of Decree No.37/2015/ND-CP issued by Vietnamese Government on April 22nd 2015: “The price of a construction contract is an
amount of money which the contract-awarding party undertakes to pay the contractor for performing required works including work volume, quality, progress, payment terms, advance payment and other requirements in the contract”[35]
2.2.2 Contract for road construction maintenance
2.2.2.1 Formation of a road construction maintenance contract
Contract is a form of exchanging goods or services; it is the market economic conditions that have facilitated the formation of contracts between entities, including road construction maintenance contract Basic terms of a road construction maintenance contract shall set up the road construction maintenance contract including: route(s) to be maintained, technical and technological maintenance methods, implementation duration, the capital plan, etc
2.2.2.2 General overview on road maintenance contracts
Road construction maintenance contract is one of construction contract types, it is
a legal document binding the rights and obligations of contracting parties related to all
or part of the maintenance to ensure and maintain normal and safe working of road construction in accordance with the maintenance procedure and the design during the operation and exploitation
Road construction maintenance contract demonstrates the relationship of establishing, changing or terminating civil rights and obligations between the road construction operator manager and the maintenance contractor Therefore, the parties that enter into road construction maintenance contracts are the very parties involved in the
Trang 11contractual relationship, including the road construction operation manager - as the contract-awarding party, and the road construction maintenance contractors
2.2.2.3 General requirements on contract documents and contractors
Contract signing is the final job of every bidding, binding all contract parties’ responsibilities and rights The form of each contract depends on specific characteristics
of each bidding package and clearly stated in the bidding plan and bidding invitation documents, which shall be basis for contract signing and specify general requirements on contract documents and contractor(s), to ensure the optimal performance of the contract management
2.2.2.4 Roles of road construction maintenance contract
- Firstly, road construction maintenance contract clearly and fully define the rights and
obligations of the parties involved in the contract, to ensure quality and schedule of the road construction maintenance package(s)
- Secondly, road construction maintenance contract is the basic for road construction
operation manager to direct, inspect and control the quality of the implementation as well
as the cost and progress of the contract to obtain the set forth investment objectives
- Thirdly, road construction maintenance contract is also the basis for related parties in
solving arisen problems as well as disputes arisen during the implementation of the signed contract, ensuring the smooth, on-time and legal implementation of the contract
2.2.2.5 Principles for signing road construction maintenance contracts
The signing of road construction maintenance contract should be in compliance with these basic principles: (i) Voluntariness, equality, goodwill, cooperation, honesty, mutual benefit and not being illegal; (ii) Maintenance contractor(s) must meet the capacity requirements on practicing and operation in accordance with legal regulations; (iii) The manager of the road construction operation has the right to sigh contract(s) with one or more than one contractor; (iv) The general contractor, the main contractor may sign a contract with one or several subcontractors, but the subcontractor(s) must be approved by the road construction operation manger and (v) The contract price must not exceed the bid-winning price or negotiated results
2.2.2.6 Forms of road construction maintenance contract
Forms of road construction maintenance contract is the expression of legal
agreement in written text that establish all parties’ rights and obligations that related to the entire work to ensure and maintain the normal and safe operation of road construction
in compliance with the regulations on maintenance process and the construction design during its operation These aim at maintain the service capacity of the road, bridge in the conditions of developing economy and increasing demands on passenger and commodity transporting
Trang 122.3 Theory of managing road construction maintenance contracts
2.3.1 Concept
The management of road construction maintenance contracts is the maximum mobilization of measures and resources so that all terms of the contracts signed between related parties are smoothly implemented and completed with the desired results
2.3.2 Factors affecting the management of road construction maintenance contracts
2.3.2.1 Legal mechanisms and policies of the Vietnamese Government
Legal mechanisms and policies of Vietnamese Government greatly impact on the management of road construction maintenance contracts With suitable mechanism and policies, appropriate and prompt and comprehensive legal regulations, the quality of contract management shall be guaranteed; Vice versa, there shall be immediately negative effects on the management
2.3.2.2 Operating manager of road constructions
Road construction operating manager may be the investment capital owner or the entities that the Government assigns to manage the state capital invested in the road construction; This manager is one of the two entities directly take part in the contract relationship Operating manager of the road construction is responsible for carrying out management contents in accordance with Vietnamese Legal regulation, on the basis of fully performing the management functions such as (i) Contract management planning; (ii) Organize the implementation of management plan for each specific contract; (iii) Supervising and monitoring the implementation of contract management plan; (iv) Promptly adjust the contract management plan in necessary cases as prescribed
2.3.2.3 Maintenance contractor
The capacity of the maintenance contractor is the prerequisite and the most important factor towards the quality and performance of the road construction maintenance contract The contractor's professional competence is expressed through such factors as high professionalism, competence, experience, qualifications and ethical qualities of his staffs, machinery and equipment, financial capacity, quantity and skillfulness of his workers, etc
Trang 132.3.3 Management contents for road construction maintenance contract
2.3.3.1 Bidding to select maintenance contractor
Bidding to select maintenance contractor is the process of preparing Bidding Documents and organizing the bidding
2.3.3.2 Negotiate and sign contract for road construction maintenance
The process of contract negotiating and signing is the later stage of the bidding process, and is the first step in the process of managing the implementation of road construction maintenance contract A good negotiation process may provide related parties a strictly regulated contract on each party’s rights and obligations
2.3.3.3 Management for road construction maintenance contract implementation
The management is carried out on the following aspects: (i) Maintenance quality according to the contract’s terms and conditions; (ii) Work volume and prices in accordance with the contract; (iii) Contract performance schedule; (iv) Labor safety, environmental protection, fire and explosion prevention; (v) Contract adjustment and other contents
2.3.3.4 Acceptance and liquidation of contracts
Acceptance and liquidation of contracts include determining the followings: the quantity and quality of completed products and works; the final settlement value; liabilities; returns for contract performance guarantee when transit to the contract warranty period; warranty management works; contract liquidation
2.3.4 Managing process for road construction maintenance contract
By studying current legal documents, the PhD student summarizes the typical process as follows
Trang 142.4 Experiences from other nations in managing road construction maintenance contract, and lessons for Vietnam
2.4.1 Experiences from other nations in managing road construction maintenance contracts
2.4.1.1 Experiences from China
The relationship between road construction management authorities and maintenance contractor had shifted from subordinate to owner and contractor Since then, management for maintenance contract according to PBC contract was first applied in China
2.4.1.2 Experience from Japan
Trang 15Currently, in Japan, PBC contracts are widely applied and implemented in bidding to select road construction maintenance contractor and manage maintenance contracts
2.4.1.3 Experiences from Argentina
They manage road construction maintenance contracts based on the performance quality, with the combination of repair and regular maintenance (which is called Crema Contract); And achieve specific results including: No contract delay; Maintenance cost savings; Quickly and simply operation control; The acceptance and payment must be done fluently and conveniently throughout 5 years, there is no stopping or delay due to lack of capital
2.4.1.4 Experiences from Australia
The PBC contract is considered as the contract to perform road construction maintenance and this type of contract is applied throughout the country Australian PBC contract has a typical characteristic: it is designed to transfer overall control and responsibility for road construction maintenance to private contractors
2.4.2 Lessons for Vietnam
Firstly, we should strongly focus on the management work; clearly separating the
responsibilities and obligations of the State management agencies on road constructions and maintenance contractors; Develop a systematic framework for managing road construction maintenance contract with the view of Party A (Buyer) in terms of (i) Identify the contract's partner (prepare Bidding Documents and select maintenance contractor); (ii) Negotiate and sign contracts (Procedure, content, etc.); (iii) Manage the contract performance (maintenance quality, contract volume and price, implementation schedule, labor safety, etc.), (iv) Acceptance and liquidation (terms and procedures for acceptance, payment and final settlement of the contracts, etc.)
Secondly, enhance the awareness and responsibility of the maintenance contractor during
the implementation of road construction maintenance contract; the saving of maintenance costs, improving the investment efficiency for maintenance always comes from Contractors who positively participate in management and maintenance activities; Enhance the imitativeness of the Contractor in all decisions, how-where-when and when
to perform and fully responsible for the performance of the signed maintenance contract
Thirdly, the implementation of the PBC contract brings about lots of benefits to the State
management authorities in the field of road constructions, maintenance contractors and the whole society Being called with different names such as Package Contract; hybrid contracts, etc., the contract applied in different construction conditions bring about certain benefits Therefore, it is necessary to take measures to enhance the application of PBC contracts in road construction maintenance in Vietnam (such as: form specific standards of technical designs; criteria to evaluate quality, progress and volume in accordance with each specific project; etc.) to ensure the quality of the management for road construction in Vietnam
Trang 16CHAPTER 3: CURRENT CONDITIONS AND RESULTS OF MANAGEMENT FOR ROAD CONSTRUCTION MAINTENANCE CONTRACT IN VIETNAM 3.1 Overview on road network and the reality of road construction maintenance management in Vietnam
3.1.1 Key elements constituting the road network of Vietnam
Table 3.1 - Statistics of some main components of road constructions in the period of 2013-2016
3.1.2 Vietnam national highway system
Vietnam's national highway system covers the whole territory and acts as a main axis for transport links between regions, economic centers, airports, seaports, border gates and important transport hubs The national highway system accounts for 4.23% of the road network's length, which is the arterial routes and accounts for the largest volume of transport compared to other roads [105]
3.1.3 Rural transport system