Project Management Practice in Small and Medium Vietnamese Contractor: A Case Study of Nhat Dang Company

In the last ten years, Viet Nam economy is one of the fastest growing economies in the world. Along with this economic development is the boosts in construction industry which mostly involve are small and medium construction enterprise. These SMEs are comprised of small number of employees and have limited total assets. According to Vietnam’s Decree 56/2009/NĐ-CP, SMEs are divided into three levels based on the total assets and number of employees such as:
- Micro enterprises: under 10 employees.
- Small enterprises: total assets are under 20 billion VND and number of employees is from 10 to 200 peoples.
- Medium enterprises: total assets are from 20 to 100 billion VND and number of employees is from 200 to 300 peoples.

With limited financial and human resources, SME contractors are unable to win big projects or operate many projects at the same time. SMEs also easily encounter cash shortage problem. According to Ling et al. (2009), one of the weaknesses of Vietnamese contractors is lack of project management ability. Almost all performed projects in Vietnam encountered delay, low quality or cost overrun due to low project management capability of the owners and contactors. Most SMEs are founded by an engineer or architect, who had worked for a bigger company and who is well-experienced in construction but not in management. With limited financial capacity, SMEs cannot hire good project manager resulting to poor project management capability.

The requirement of strong project management ability is becoming more essential for Vietnamese SME contractors since more projects have participation of foreign owners, consultants or main contractors, where requirement of schedule and quality performance are very strict. But how could SME contractors do it effectively with limited resources is still a question.

Mr. Vo Dinh Nguyen made a project study which objectives were to: (1) investigate project management functions of a small construction company; (2) identify strengths and weaknesses of project management of the company; and (3) propose recommendations for improvement of project management functions in small construction company.

Conclusion

By reviewing related theory of project management and analyzing the operation practice of Nhat Dang Company, the strengths and weaknesses of the company in certain areas of project management are summarized in table below.



Project management is not just limited in these aspects and to have a more general view of company management capability; other areas of project management knowledge should also be studied. These include:
- Project scope management;
- Project human resource management;
- Project communications management; and
- Project integration management.

Base on identified strengths and weaknesses, the case study proposed solutions to improve project management competency of the company in studied areas. Some solutions that require more resources should be planned to apply when the management capability reach a higher level. They may be useful for some Vietnamese SME contractors which are in the same situation but may be unsuitable for others. Some essential solutions that the company needs to achieve to ensure their operations are:
- Full utilization of earned value technique for better schedule and cost control.
- Develop an advance resource requirement plan for each project.
- Establish the project spending plan and funding requirement and follow the plan in operation.
- Carry out the project risk management process.

- Enhance the role of the project team.

Another weakness that the company management has is the lack of measuring, recording and analyzing the results of management processes for improvement. A useful model for continuous improvement is the Plan – Do - Check – Act cycle as show in figure below.



Plan : Define the goal and processes to achieve it

Do : Implement processes

Check : Measure the process and results against defined values to find out variations.

Act : Analyze variations and determine necessary actions to improve future operations.

This model is helpful and can be applied in any process of management, any organization for improving management competence.

His abstract is copied and posted.

Abstract

Project management plays a very important role in the management of construction enterprises. Although being the major element in Vietnam construction industry, most of Vietnamese SME contractors are still weak in project management capability. Improving project management capabilities are essential needs for survival and development of SME contractors.

This report reviews theory of project management in areas of time, cost, quality, procurement and risk management. Necessary processes and knowledge for those project management functions are identified and analyzed.

By analyzing past performance and practice of project management in Nhat Dang construction company, a typical SME contractor in Ho Chi Minh City, the report point out strengths and weaknesses in project management of the company. Necessary solutions for improvements of project management functions are proposed. These solutions can be applied to similar small construction companies either.