NATIONAL ECONOMICS UNIVERSITY English for Business Department Faculty of English for Economics LÊ TH Ị CÚC-CQ 483936 IMPROVING COMPETITIVE ABILITY IN CONSTRUCTION BIDDING IN THANH NAM CONSTRUCTION AND INVESTMENT JOIN STOCK COMAPNY Hanoi, May, 2010 i NATIONAL ECONOMICS UNIVERSITY English for Business Department Faculty of English for Economics LÊ THỊ CÚC-CQ 483936 IMPROVING COMPETITIVE ABILITY IN CONSTRUCTION BIDDING IN THANH NAM CONSTRUCTION AND INVESTMENT JOIN STOCK COMPANY Field: English for Business Studies Code: 701 Supervisor: Principal Lecturer, M.A, Ms. HÀ THỊ KIM ANH Hanoi, May, 2010 ii ACKNOWLEDGEMENT I would like to specially thank my supervisor, my teacher-Ms. Ha Thi Kim Anh, who has supported me with guidance and encouragement, without your instructions I will never accomplish this report. I would like to thank my family; they always are beside me to help me complete this report. I also would like to thank Mr. Hoang Duy Khanh-The Deputy chief of project management department of Thanh Nam construction and Investment Company, who fully supplied me with the information in this report. I would like to thank English for Business Department-Faculty of English for Economics. Implementation this report is one of the ways to help us-future businessman (businesswoman) to apply theory into practice. However, in fact, there are many things that are beyond my understanding, so I look forward to receiving sympathy from the readers. I also would like to thank for your attention. iii Table of contents Acknowledgement i Table of contents………………………………………………………………… ii Executive summary……………………………………………………………….vi Introduction…………………………………………………………………… vii Chapter1 introduction…… 1 1. Introduction to Thanh Nam construction and investment joint stock company…………………………………………………………………………….1 2. The problem………………………………………………………………… 2 3. Research question, purpose, scope of work, methodology and some basic concepts………………………………………………………………… ……… 3 3.1Research question………………………………………….…………………….3 3.2 Purpose …………………………………………………………………………3 3.3 Scope of work………………………………………………………………… 3 3.4 Methodology……………………………………………………………………3 3.5 Some basic concepts…………………………………………………………….4 Chapter2 theoretical framework……………………………………………… 6 1. Competition conception in construction bidding……………………………… 6 2. Modes of competition in construction bidding………………………………… 8 Chapter 3 analysis and findings…………………………………………………11 I. Analysis………………………… ………………………………………… 11 1. Financial resources…………………………………………………………… 11 2. Technical ability……………………………………………………………… 12 3. Management capability……………………………………………………… 13 4. Reputations…………………………………………………………………… 14 II. Findings………………………………… ……………………………….… 17 1. Advantages…………………………………………………………………… 17 iv 1.1 Financial resources…………………………… ………………………… 17 1.2 Technical ability……………………………………………………………….17 1.3 Management ability………………………………………………………… 18 1.4 Reputations………………………………………………………………… 18 2. Disadvantages 2.1 Financial resources…………………………… ………………………… 18 2.2 Technical ability…………………………………………………………… 18 2.3 Management ability……………………………………………………………19 2.4 Reputations…………………………………………………………………….19 Chapter 4 recommendations……………………………….………………… 21 1. Recommendation number 1…………………………………………………… 21 2. Recommendation number 2…………………………………………………… 22 3. Recommendation number 3…………………………………………………… 24 4. Recommendation number 4…………………………………………………… 27 5. Recommendation number 5…………………………………………………… 28 6. Recommendation number 6…………………………………………………… 29 Conclusion…………………… …………………………………………… viii References……………………………………………………… …………… ix v EXECUTIVE SUMMARY Competition is now harder than ever everywhere, especially in construction bidding. Thanh Nam Construction and Investment Join stock Company is not out of this cycle. However, in some recent bids, they lost many important contracts into the rivals’ hands. This report aims at analyzing their advantages and disadvantages in construction bidding to find out the reasons why they did not win those contracts. From what has been found, I will try to give some recommendations to this situation of Thanh Nam. These recommendations concentrate on improving financial strength, staff qualification, technology, bidding documents… The objectives of this report are as follows: Chapter 1: Introduction to Thanh Nam Construction and Investment Join Stock Company, the problem, the purpose, the scope of work, methodology, and some basic concepts in this report. Chapter 2: Reviewing competition theory and criteria used for contractors pre-qualification and bid evaluation as stated in the literature. Chapter 3: Analyzing all the facts in Thanh Nam basing on these criteria, after that I will identify what are the company’s advantages, what are the disadvantages? Chapter 4: Basing on what I have found, I will give some helpful recommendations for Thanh Nam’s situation. INTRODUCTION The research topic of this report is improving competitive ability in construction bidding in Thanh Nam construction and investment join stock vi company. This topic was implemented based on the theory of competition and the main criteria for choosing a building contractor in construction bidding. All the data in this report are provided by the project management department. The reseach question is “how to improve competitive ability in construction biding in Thanh Nam Construction and Investment Join Stock Company”. The research methods selected for this study are qualitative and quantitative approach from both primary data and secondary data. vii CHAPTER 1 INTRODUCTION 1. Introduction to Thanh Nam Construction and Investment Joint Stock Company THANH NAM COMPANY CC5A - Linh Dam - Hoang Liet - Hoang Mai Dist - Ha Noi Phone: 04.5632763/5632764 Fax: 04.5632762 Email: cotanagroup@fpt.vn Website: www.cotanagroup.vn Thanh Nam Construction and Investment Joint Stock Company (COTANA., JSC) is operating in according Joint stock company model. COTANA.,JSC’s framework of organization include Board of Director, Control Commitee, Board of Managers, 10 departments, 10 enterprises, 2 manufacturing workshops and Ho Chi Minh City Branch. Thanh Nam Construction and Investment Joint Stock Company (COTANA., JSC) was founded in 1993. After many years of development, Thanh Nam becomes a strong economic group in construction field. Due to the demand of developing process, Thanh Nam has established member companies which specialize in investment advice, infrastructure building, building and assembling civil and industrial projects, investing in real estate, engineering construction, manufacturing construction material, interior designing At present, Thanh Nam owns 1 branch in Ho Chi Minh City and 14 subsidiaries. The company has the staff of more than 300 construction engineers with experience and qualification in working (constructing and doing business), and a contigent of skillful blue collar workers who are the big potential for the developing process of the company. COTANAGROUP has now become a well-known contractor in the Vietnamese market and has been trusted by many investors. The company has constructed many works, some typical ones of which are: Hoa Binh Hotel in Ly Thuong Kiet street, the system of restaurants, hotels, and services of Kim Lien Tourism Company, Russian Culture Centre, Ruby plaza building, Viglacera viii building at no. 671 Hoang Hoa Tham street COTANAGROUP also constructed some department buildings in new urban areas in Hanoi City like Dinh Cong, Linh Dam, My Dinh, Viet Hung, Phap Van, Trung Hoa- Nhan Chinh, Dai Kim, and Van Canh. In addition, the company has works along the country like: Ho Chi Minh City, Hai Phong city, Quang Ninh, Bac Ninh, Hà Nam, Vũng Tàu, Kiên Giang… COTANAGROUP is not only a prestigious contractor but also is an investment and manufacture company with TSG safety glass and plastic window. Especially, the establishment BMS Thanh Nam Joint Venture Company - joint venturing with Korea to manufacture construction steel structure and couple jointing system used in concrete structure- has affirmed the ceaseless development of the company. In real estate trading and investing field, COTANAGROUP is one of the stock founders of VIHAJICO- the investor of ECOPARK city which spreads over an area of 500 ha. Cooperating with big construction partners to operate in investment field such as with HUD to found Hudland, the company has invested in constructing high-ranking multistory tenement building and villas in Viet Hung, Van Canh, Bac Ninh new urban area… 2. The problem In some recent bids, the company has lost some important contracts with great value. The more serious problem is their main competitors, Song Hong Construction JSC (INCOMEX) and Song Da Infrastructure Construction Joint Stock Company, obtained these contracts. The losing contracts are Thanh Xuan Trade and Services Centre, Xuan La trade centre-super market-office for rent, Ninh Binh Hospital, Mai Chau-Hoa Binh Treasury, Vietnam Trade-union Tourist base. The total value of these contracts is about 51.962 billion VN Dong. 3. Research question, purpose, scope of work, methodology and some key term definitions 3.1 Research question ix The only research question of this report is how to improve competitive ability in construction bidding in Thanh Nam Construction and Investment Join Stock Company. 3.2 Purpose The purpose of this report is to show all the facts in competitive ability of the company basing on the criteria basing on which to choose the winning contractor like: financial resources, technical ability, management capacity, reputation. Analyzing them basing on the fact of Thanh Nam to find out what are their advantages, what are their disadvantages. From my findings, I will give out some helpful recommendations. 3.3 Scope of work The company has many workshops and member companies, while this report has some limitation in size so the object in this report only is the mother company: Thanh Nam Construction and Investment Joint Stock Company, and the kind of bid I am studying here is only building and assembling bid in construction. 3.4 Methodology The research methods selected for this study are qualitative and quantitative approaching from both primary data and secondary data. Primary data are facts and figures that are directly get from the department of project management. Secondary data are collected from books, decree; statute…The data collected was then statistically analyzed in pursuit of an answer to the research question: how to improve competitive ability in Thanh Nam Construction and Investment Joint Stock Company. 3.5 Some key term definitions There are some concepts that are useful in my report: x [...]... concept: Construction bidding (building and assembling bidding) is a method to select investor who has the best ability in carrying out work related to building and assembling equipment process of project or work…to satisfy owner of the project Basic contents of construction bidding Contractors (who want to win the contract) point out their own request and inform investors Basing on demands of investors,... finance, engineering, law, international bidding for planning and technical department staff and technical THE COMPANY’S TRAINING PLAN Field of Training Finance Technique Law Language Computer AutoCAD Trainee Bidding document staff Deputy managers Bidding document staff Staff and experts Staff and experts Technical staff Quantity 5 2 Method Sending to training centers Sending to training centers 1... business Expanding meaning: competition among constructional firms in bidding is the process which is begun by searching for information, hiving out bidding solutions, signing, performing contract until completing the project, handing over to use and warranting work to satisfy investors’ demands 2 Modes of competition in construction bidding Pre-qualification and bid evaluation procedures involve different... skill, construction engineering and equipment quality of the contractor These are three main modes that contractors use in construction bidding These methods can be used independently or together, depending on each situation, the importance and economic significance of each project xvii CHAPTER 3 ANALYSIS AND FINDINGS I ANALYSIS 1 Financial resources In construction bidding, raising capital ability. .. Typical Business award and another 28 merit lists of the Ministry of Construction In following list, there are works that the company won and was appreciated in recent three years: The names of wining contract in three years 2007-2008-2009 (Source: The Project Management Department, unit: billion VN Dong) Number 1 2 3 4 5 6 7 8 9 10 11 12 13 Name of works Thanh Nam construction and investment join stock. .. Ninh Binh Hospital Mai Chau-Hoa Binh Treasury Vietnam Trade-union Tourist Base Hanoi Value ( billionVN Dong) 11320 Hanoi 10200 Ninh Binh Hoa Binh Hanoi 15400 7542 7500 2 3 4 5 xxvii CHAPTER 4 RECOMMENDATIONS After analyzing and finding some remain problems, now we all know advantages and disadvantages of Thanh Nam in construction bidding Hopefully, Thanh Nam will further develop their advantages in. .. solution in executing the work The investors will consider contractors’ ability and their solution to choose the most suitable contractor Contractors are economic organizations who have legal personality to take part in bidding Construction bidding forms Similar to other bidding types, construction bidding is held into two main forms (prescribed at point 4 -construction statute) + Extensive bidding: this... Extensive bidding: this is the bidding form which does not limit the number of investor who wants to take tender Its advantage is publicity and fair competition so this is the main form is applied in construction bidding + Restriction bidding: this is the bidding form in which the tender inviter only invites some investor (maximum is 5) to take part in bidding The list of the investors must be approved... through bidding Therefore, to win the bid, the contractor must have appropriate conditions for investors to approve When participating in bidding, companies must introduce its own capacity, in which capacity of machines and equipment is very much of interest of investors and have been a key factor in selecting contractors With the actual machinery and equipment condition, No 1 Light Industrial Construction. .. competitiveness in bidding for construction, a company must create and maintain its reputation with customers in the market and build a competitive advantage when entering the bidding In doing so, marketing activities xxxiv must be considered properly However, the No 1 Light Industrial Construction Company currently has no marketing department as its true meaning The formation of the company's marketing is . for Business Department Faculty of English for Economics LÊ TH Ị CÚC-CQ 483936 IMPROVING COMPETITIVE ABILITY IN CONSTRUCTION BIDDING IN THANH NAM CONSTRUCTION AND INVESTMENT JOIN STOCK COMAPNY Hanoi,. UNIVERSITY English for Business Department Faculty of English for Economics LÊ THỊ CÚC-CQ 483936 IMPROVING COMPETITIVE ABILITY IN CONSTRUCTION BIDDING IN THANH NAM CONSTRUCTION AND INVESTMENT JOIN STOCK COMPANY . only is the mother company: Thanh Nam Construction and Investment Joint Stock Company, and the kind of bid I am studying here is only building and assembling bid in construction. 3.4 Methodology The