Project Management Approaches of a Japanese Construction Company In Vietnam: Procurement Management, Organizational Structure, Subcontractors Management, Customers Management and Safety Control

Japanese contractors have been setting up their companies in Vietnam since 1990 and operating successfully with many buildings finished on schedule with good performances. Although Japanese contractors have created a good reputation with Japanese standard quality and on time delivery, there have been some problems remained in their system that the report was analyze in terms of Procurement Management, Organizational Structure, Sub-contractors Management, Customer Management, and Safety Control. Mr. Le Hoang Nguyen focused on the following problems:

1. Procurement or project delivery type of the Japanese contractors is Design & Build.

2. The organization structure of the Japanese contractors is usually too simple to meet all the requirements such as safety and QA/QC properly.
3. The owner – the main contractor – subcontractors – suppliers can form a supply chain.
4. The most important thing, how to control safety matters following the safety plan in the actual Vietnamese conditions with local subcontractors.

In conclusion, by analyzing the current project management approaches in Japanese construction companies in terms of procurement management, organization management, sub-contractors management, customer management and safety control, the report will find out strengths & weaknesses of the existing system and recommend for improvements.

The objectives of this case study were to : (i) study the current practices in Japanese contractors in Vietnam in term of Procurement Management, Organizational Structure Management, Sub-contractors Management, Customer Management, and Safety Control; (ii) investigate for an efficiency of organization set up; (iii) find out strength and weakness of the current system; and (iv) recommend approaches for improvements.

Conclusion

Basically, through the analysis of the current project management approaches the strengths and weaknesses of the current system were found at some points. Although the report shows the efficiency of the existing organization and the management system, in conclusion, the mentioned above project managements was reviewed and some approaches are recommended for improvements.

1. Procurement Management and organizational structure

Design & Build with lump sum contract and fast-track management is still the strong point of this type of procurement. This is based on the relationship and trust. Though, the high cost and risk are the remained issues need to be improved to increase the contractor’s competitiveness. There are some proposed approaches such as breaking down the scopes of work into smaller scopes with specialty suppliers, direct purchasing for main materials, equipments and machines. As a result, the direct cost could be reduced considerably.

As the demands of the procurement system, the organizational structure has some related issues. The organization is too simple to cover all the required works in terms of technical issues, construction works, QA/QC, safety matters and purchasing orders. In the proposal, the organizational structure should include necessary departments: Technical Department included QA/QC and Safety departments, Construction Department, Commercial Department with Procurement Department, Administration Department and Accounting Department etc.

The concerned issue is that how to localize the management in the Japanese construction companies in Vietnam. The return of the localization the management could be the cost reduction, better communication, management and/ or coordination between local staffs & different departments and local suppliers, subcontractors, consultants. This is essential to form a supply chain network.

2. Sub-contractors management and customer management

As a matter of fact, in a general view, subcontractors – main contractor – customers form a supply chain network through project by project. So, the importance of relationships, between the client and the contractor, the contractor and the subcontractors should be understood properly. Moreover, the relationship should be focused on improving performance and adding value to the process.

In order to achieve the above targets, the following approaches could be applied.

First, at least three companies of each supplier, subcontractor and consultant should be considered, evaluated and then maintained for every project to have the best competitive price and performance delivery. Second, co-operations with supplier, subcontractor and consultant should be in more than one project in order to incorporate the knowledge into the new project and achieve continual improvement. Third, long-term relationship with the subcontractors should be considered and maintained in the concept of supply chain network by keeping payments on schedule and variations approval and any necessary supports at the right time of need. In other word, the Japanese contractor has to play the main role as the chairman in every meeting and co-ordinations in terms of time, cost, quality, and safety control in all the phases of the project.

Customers are almost the Japanese companies, the unique specific characteristic in Japanese contractor. Because of the increasing critical competition, the demand is that how to get jobs from non-Japanese customers. Achieved this target, the Japanese contractors not only could increase their competitiveness with local contractors but also expand the supply chain network.

3. Safety control

Finally and the most importance is safety first, the much different thing compared with local contractors. Safety control at jobsite is follow the company safety policy, safety targets and safety plan with specific measures and safety construction cycle in daily, weekly and monthly. However, the following recommendations should be considered.

First, the safety policy should include all of business activities, and the organization should be set up to make sure the safety plan is implemented seriously sufficiently and efficiently.

Second, planning and implementing safety targets should get agreements with managers and supervisors to make sure the targets are achievable. In addition, purchasing and supply policy should be taken into account too.

Finally, for continual improvement, not only safety construction cycle is implemented regularly but also PDCA (Plan-Do-Check-Action) circle should be applied continuously. Moreover, health and environment matters should be taken care of and applied at jobsite for a better working and living environment.

His thesis abstract is copied and pasted below.

Abstract

Vietnam construction industry has been developing significantly since 1990 with more and more high-rise buildings and factories built in Ho Chi Minh City, Hanoi, Da Nang, Can Tho and other cities due to continuously increasing demands in economical, cultural and social aspects. Foreign contractors found this big chance and set up their company in Vietnam at the right time. Among them are Japanese contractors such as Kazima Corporation, Shimizu Corporation, Obayashi Corporation, Fujita Corporation, and Taisei Corporation, which have been operating over fifteen years in mainly the industrial buildings section. As the result, the competition between the contractors, local and foreign companies, has been increasing dramatically. So the most challenge for the Japanese

contractors in Vietnam is how to increase efficiency, competitiveness and sustainable development.

For these purposes, this report will analyze the current project management approaches in Japanese contractors in Vietnam in terms of:

1. Procurement Management.

2. Organizational structure.
3. Sub-contractors Management.
4. Customers Management.
5. Safety Control.

Finally, in comparison with the theory and practices, the report will point out the strengths and weaknesses of the existing management system in comparison with the local companies, then recommend for improvement approaches that could be applied in Vietnam.