Company Overview
Hoa Binh Construction Group J.S.C
Celebrating its 30th anniversary in 2017, Hoa Binh Construction Group J.S.C (HBC) has established a strong reputation in the construction industry As a leading general contractor, HBC has secured numerous significant contracts over the years, focusing on roles such as EPC, main contractor, and design-build contractor Initially aiming to be the top construction company in Vietnam, HBC has broadened its vision to become a competitive global contractor, with expansion efforts underway in Canada, Australia, and Myanmar A pivotal moment for the company was the investment from Hyundai Elevator, which acquired shares and gained control, with plans for further foreign partnerships expected to finalize in the second quarter.
In 2018, the company experienced a remarkable revenue growth, tripling its figures compared to 2015, while profits surged nearly eightfold during the same period.
Source: HBC‟s website (www.hbcr.vn)
Figure 1: A part of HBC organizational structure
Contract Department
In the competitive landscape of contracting, companies must vie for jobs against numerous competitors Once a contract is awarded to the HBC, it is essential to have a dedicated department responsible for reviewing, negotiating, and drafting the contract for signing This team should possess a blend of expertise in both the construction industry and legal matters to ensure effective contract management.
The Contract Department was created to effectively manage the Main Contract by reviewing, negotiating, and drafting agreements with Owners and Developers Additionally, it ensures that the approved budget aligns with the chosen Subcontractors before proceeding to review, negotiate, and draft subcontract agreements Furthermore, the department collaborates with other company divisions to fulfill HBC's overarching objectives.
Figure 2: Contract Department „s organizational structure
It can be seen in the Figure 2 that Contract Department is one of the fourDepartments 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 -
In recent years, the company has exhibited several notable symptoms during its operations This thesis aims to identify these symptoms and examine their existence, along with the impact of the Contract on these issues.
Department In other words, the purpose is to analyze the link between the causes, effects and symptoms.
Symptoms
High and increasing Days sales outstanding.
For construction companies, monthly bills to project owners represent accounts receivable until payment is received Over the past four years, HBC's financial reports indicate a steady increase in receivables As noted by Bryk, delayed payments from owners or developers can lead to significant financing charges when companies need cash to fulfill obligations High overdue accounts receivable can hinder free cash flow, restricting the ability to invest in growth opportunities, acquire new machinery, or develop new products Consequently, excessive accounts receivable can adversely impact cash flow, forcing companies to delay payments to suppliers or vendors.
Turnover Ratio and days sales outstanding of HBC at the average of 2018 is 1.79 and
The company's receivables turnover ratio is 1.79, indicating that it collects its receivables approximately once every 203 days This means that after HBC makes a credit sale, it takes around 203 days to receive the cash from that transaction.
Days sales outstanding of HBC, CTD and PHC
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
A comparative analysis of day sales outstanding (DSO) reveals that HBC's primary competitors, CTD and PHC, have maintained relatively stable DSO levels, remaining under 100 days from 2017 to 2018 Despite a slight increase in their DSO during this period, it remains insignificant In stark contrast, HBC faces a significantly longer cash collection period, taking nearly twice as long as its rivals to receive payments within a year.
Figure 3: Data of day sales outstanding from January, 2015 to December, 2018 in HBC, CTD and PHC.
When a construction company enters into contracts with Owners/Developers, it often involves multiple suppliers and vendors Until the company receives payment from these contracts, it must cover costs upfront, which can jeopardize cash flow stability Investigations reveal that HBC is experiencing high and increasing Days Sales Outstanding, indicating a critical issue that requires immediate attention.
Problem identification
Potential problems
3.1.1 Inefficient project coordination at Site and in back office
A focus group was convened by the consultant, including all members of the Contract Department, which has been without a manager for an extended period, leading to major decisions being made by the Director of the Supply Division During the interview, Ms Hoan, the team leader, highlighted the issue of delayed payments from Owners/Developers investing in construction projects Ms Linh, an accounting specialist, identified two primary reasons for the consistently high accounts receivable: first, HBC's adherence to Vietnamese accounting laws, which requires recording accounts receivable when construction progress reaches specific milestones, even if invoices are not yet issued; and second, the persistent delays in payments from Owners/Developers since the inception of the projects The group discussed various ongoing projects, with Ms Linh noting that these issues are particularly prevalent across many of them.
Table 2: Data of due dated value of 10 on-going biggest projects from 2015 to 2019 in HBC
In a recent focus group discussion, participants explored the reasons behind payment delays, with Ms Van Anh highlighting that the contracts specify payment terms exceeding 45 days Despite the paperwork being completed, Ms Lien noted that submission of payment documents is consistently late Ms Hoan emphasized the need to review signed contracts to identify provisions affecting payment timelines and to verify submission dates with Ms Linh She acknowledged that external factors could contribute to delays, even when contractual obligations are met Key issues affecting cash flow for Owners/Developers include project suspensions, financial shortages, and the willingness to pay Additionally, Ms Quyen pointed out that inefficient coordination between on-site and back-office teams further exacerbates payment document submission delays, a sentiment echoed by other attendees.
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 intensifies as the consultant questions the experience of the young, dynamic team, suggesting that their lack of tenure may contribute to unfavorable contract negotiations Many remain silent, reflecting a common concern highlighted by Ms Hoan, who notes that most team members have limited long-term experience and predominantly graduated from Economy-Law programs, resulting in a narrow understanding of the construction industry Mr Tuyen, a seasoned Human Resource specialist, provides a detailed table outlining the education and experience of each member in the department.
No Name Education Major Year
1 Nguyen Thi Hoan UOL Law 2010 9 Leader
2 Tran Hong Ngoc UEH Law 2018 9 Main
3 Nguyen Thi Van Anh UOL Law 2016 10+ Main
5 Tran Thuc Quyen UOL Law 2017 05 Main
6 Tran Gia Bao Tran IU BA 2018 10+ Main
7 Do Thi Lien UEH BA 2009 0 Adminstrativ e Table 3: Data of personnel in Contract Department in 2019 in HBC
3.1.3 Lack of coordination within the department
The interview highlights a potential issue regarding the relationships among employees within the department It also addresses the unfavorable contract provisions related to pending contracts, specifically those with delayed payments, as discussed by Ms Hoan, who was recently promoted to Deputy Manager of the department.
In 2017, it was noted that employees preferred to work dependently and felt constrained by confidentiality agreements under Ms Lien's supervision, which limited their ability to reference other contracts Observational techniques revealed a noticeable hesitation among interviewees, a common issue in focus group settings where individuals may feel shy to express their true feelings in the presence of a leader This created a tense atmosphere during interviews, highlighting the need for further investigation through literature reviews and prior research conducted by journalists and scholars.
The interview has provided a clear insight into the potential issues within this department related to the two identified symptoms, allowing for the development of an initial causes-and-effects map.
Diagram 1: Initial cause-effect map of Contract Department in HBC
Validating problems
To validate the foregoing potential problems, the author is about to have a review on literature and some data gathered while working with members in the focus group interview.
To clarify the ambiguous findings, the author conducted an in-depth interview with Mr Nguyen Le Tan, the Director of the Supply Division at HBC, who brings over 20 years of experience to the discussion This interview aims to validate the second potential issue concerning human factors within the organization.
3.2.1 Problem Validating 1: Inefficient project coordination at Site and in back office
Reeves (3) identified that late submission of payment documents often stems from errors in claims submissions, including insufficient supporting reports, incorrect calculations, and failure to follow proper contract procedures Consequently, contractors are required to correct and resubmit these claims, leading to delays in payment document submission.
Linh, we have another look at this potential problem (the biggest due dated value contract Sunshine City Saigon):
Working volume to get approval in contract
5th day the following month
20-25th of the following month
15th day the following month
30th of the 2nd month
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
Timely payment, as outlined in the contract, may require special considerations Delays in payment can arise from external factors, but any issues within the Contractor's control should be viewed as potential problems for the company.
Each contract typically features distinct payment methods, with a standard process involving the contractor summarizing all completed work at the beginning of the following month for approval by the Owners/Developers before invoicing This claim process can face delays when Owners/Developers fail to fulfill their payment obligations or approve work within the agreed timeframe They reserve the right to reject claims they deem inappropriate, but must provide detailed explanations or evidence for their decisions Instances of wrongful payment withholding by investors are noted, as some clients may expect informal "gifts" from contractors before releasing funds Additionally, disputes over work valuation, whether specified in the contract or arising from changes, can lead to conflicts between Owners and Contractors, further contributing to payment delays.
The author found the data insufficient to confirm the problem, as Mr Tan expressed differing views on the coordination between the Site and the back office The director highlighted various factors contributing to the delayed submission of payment documents, noting that contractors often struggle to submit invoices on time despite contractual obligations This delay is largely due to the need for Owner/Developer approval on monthly work volumes and invoices, which can be time-consuming and beyond the control of the Quality Surveyor or Contract Executive Surprisingly, Mr Tan revealed that HBC's coordination system between the office and Site is a sophisticated and costly setup worth billions of VND, with trained personnel enhancing both the quality and efficiency of communication.
3.2.2 Problem Validating 2: Lack of long-time working employees
A skilled negotiator significantly increases the likelihood of securing favorable contract provisions Key factors influencing negotiation outcomes include the relationship with suppliers or subcontractors, trust, and the negotiator's expertise Experienced negotiators are more likely to achieve advantageous terms However, entering into contracts with inherent risks, such as the "pay when paid" clause, can lead to unfavorable situations, where contractors only compensate subcontractors after receiving payment from owners or developers.
The "pay when paid" clause in contracts can lead to significant payment delays, particularly affecting subcontractors who perform smaller tasks within larger projects Ansah (8) emphasizes the necessity of implementing mechanisms, whether through contractual or statutory rights, to prevent or mitigate these delayed payment issues.
In an interview with Mr Tan regarding personnel challenges in HBC's Contract Department, he expressed that the perceived issue may not be accurate He emphasized their rigorous recruitment process, noting that while candidates may not have extensive tenures at HBC, they possess substantial experience in the construction industry The selection process is highly competitive, beginning with assessments of English proficiency and IQ, followed by ten specialized questions related to construction that require seasoned expertise, including inquiries about the FIDIC book Mr Tan affirmed that, despite working independently, the team members are highly competent in their roles.
3.2.3 Problem Validating 3: Lack of coordination within the department
An agent-based framework for supply chain coordination in construction emphasizes the importance of integrating key business processes and stakeholders to achieve collective tasks and mutual benefits (Xue et al 9) The construction industry often faces criticisms regarding poor performance, and effective coordination is seen as a crucial solution to enhance overall performance (10) By linking individuals and fostering collaboration, coordination improves organizational competitiveness (11) Additionally, managers can enhance knowledge sharing and coordination by aligning their roles with their capabilities, leading to more effective collaboration (Wen 11).
A closed discussion was organized by the author within the Contract department, excluding Ms Hoan, revealing that six employees often work independently and lack respect for the newly promoted deputy manager This environment fosters hesitation in discussing unfamiliar topics, leading to a culture of poor information sharing Consequently, employees may either overextend themselves or become complacent Additionally, restricted access to other contracts hampers their ability to identify unfavorable terms during the review and negotiation process, potentially resulting in harmful provisions being accepted.
Figure 4: Contract Executive job‟s description in executing Main Contract in HBC
Mr Tan expresses his concerns about the high turnover rate in the Contract Department, noting that over half of the staff has left, often citing they have found a "new home." He feels disappointment with each departure Meanwhile, Ms Hoan, recently promoted to Deputy General Manager at just 28, faces challenges in her new role, particularly from older colleagues who are resistant to the changes in protocol requiring their signatures to go through her first Despite her youth, she has earned the director's praise for her contributions and has a solid foundation in construction knowledge, having graduated in Law.
The absence of Ms Hoan has created a stressful atmosphere within the Contract Department, causing team members to hesitate in expressing themselves and sharing information This has led to a reliance on one another, often overlooking beneficial contract provisions that have been successfully negotiated Additionally, the need to go through Ms Hoan for any contract references further hampers coordination and collaboration among the team, exacerbating the existing communication challenges.
The important and consequences of the problem
The author identifies three potential issues and has gathered ample data to confirm the primary challenge facing the business This section revisits each potential problem in detail, providing a thorough analysis of their implications.
The author conducted a focus group within the department, revealing a shared concern about inefficient project coordination between the site and back office, which is contributing to an increasing Days Sales Outstanding (DSO) Data from Ms Linh indicates ongoing projects are facing payment delays, linked to HBC's accounts receivable policy governed by VAS 15, which allows revenue recognition before actual payment is received While this method is employed by competitors like Coteccons, it poses risks for HBC due to large receivables that depend on customer acceptance of work Despite multiple discussions among HBC's top management about the impact of revenue recognition on financial statements, the author identifies a systemic issue where delays in documentation by contractors lead to late payment submissions For instance, in the Sunshine City Saigon project, payment delays were attributed to late submission of approved work volumes and invoices However, Mr Tan disputes this explanation, suggesting that various factors contribute to the delays, and emphasizes that HBC's procedures, based on a comprehensive ISO system, are strictly followed by all executors.
During the focus group, interviewees highlighted issues with contract clauses related to payment delays The author observed a correlation between long-tenured employees and successful negotiation outcomes, suggesting that their extensive legal experience enables them to handle various contracts effectively However, a surprising lack of coordination among team members was noted, which can complicate contract negotiations, especially with new and promoted managers lacking authority Literature supports this notion, indicating that poor coordination can lead to significant challenges, a sentiment echoed by Mr Tan This ongoing issue results in missed opportunities to avoid unfavorable contract clauses, contributing to delayed payments and high Days Sales Outstanding (DSO) Ultimately, problems with receivables often lead to overdue payments, which can escalate to insolvency.
From a macroeconomic perspective, García-Teruel highlights that the level of accounts receivable is influenced by the overall economic climate, with credit collections varying by industry and being impacted by negative macroeconomic shocks During challenging economic conditions, some owners and developers may struggle to make timely payments, leading to an increase in receivables for companies Despite this, Sunshine City has consistently awarded HBC numerous contracts in 2019, including over 800 billion VND in the northern region and more than 300 billion VND in the south, as detailed in Appendix 3.
A key indicator of poor organizational coordination is the presence of delays, which arise from ineffective communication between management, labor, production, and sales These delays can hinder the organization's effectiveness and negatively impact customer relations, leading to a perception of unreliability To mitigate delays and enhance coordination, organizations must focus on effectively managing work in progress, thereby improving overall operational efficiency and customer satisfaction.
Redundancy is a clear indicator of poor coordination within an organization, leading to unnecessary duplication of effort, resources, and time in producing the same item This issue often arises from insufficient collaboration among different departments By adopting effective control measures to minimize redundancies, organizations can enhance overall coordination and efficiency.
To operate optimally, organizations must effectively manage information; however, when information is not readily accessible, it can lead to significant setbacks Poor coordination results in gaps in information acquisition and distribution, rendering resources ineffective and causing missed opportunities By establishing an accountability system for information management, organizations can enhance coordination and reduce the risk of lost information.
Lack of coordinated efforts within an organization can lead to stagnation in innovation and progress, making it obsolete in a competitive industry Inflexibility hinders the adoption of new methods for production and management, while insufficient coordination prevents the evaluation of potentially productive protocols.
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.
Cause validations
Potential causes
Research by Qaiser et al indicates that work overload, negative affectivity, and conflicts between work and family roles are positively linked to emotional exhaustion, while co-worker support can help mitigate this effect High workloads often hinder interpersonal interactions, resulting in increased stress, higher turnover intentions, and decreased job satisfaction Additionally, Farooqi et al found that work overload negatively impacts job satisfaction, which in turn affects employee performance and engagement—critical factors for organizational success.
Effective communication within a department is crucial for preventing work overload, as it enables management teams to coordinate efficiently Successful coordination fosters independence and reduces the risk of burnout, ultimately enhancing overall team performance.
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).
Effective communication is crucial for fostering a productive workplace, as it significantly boosts employee satisfaction and engagement When employees are provided with proper communication channels, they tend to be more cooperative and motivated, ultimately enhancing overall organizational performance.
What can be understood in common that communication consists of sharing and using information while lacking of correspondence results from insufficient information,
27 managers‟ use of proper communication practices should offer an effective means to increase cooperation and reduce employee vagueness (22).
Heaphy et al (23) highlight that ordinary interactions significantly affect employees' bodies, fostering a deeper connection between human physiology and organizational research Positive social interactions enhance worker motivation and creativity within hierarchical settings Furthermore, daily positive work-home and home-work interactions aid employees in managing their various roles and responsibilities, emphasizing the importance of examining the beneficial impacts of work and home on each other (24).
Schmidt (25) emphasizes that effective interactions between administrators and the data sources in the control room are crucial for collaborative monitoring of processes and each other's activities These interactions significantly enhance the ability to oversee and evaluate ongoing operations.
Causes Validation
The validation process aims to pinpoint the root cause of the main issue identified by the reader This involves conducting a literature review and interviewing departmental members, followed by a confirmation of findings with the Contract Director.
4.2.1 Validating the first cause: Work Overload
Workplace stress, caused by factors like work overload and coworker behavior, negatively impacts both employees and organizations, as highlighted by Ali et al (18) To mitigate this stress, it is essential to implement training programs, provide proper orientation, and ensure equitable pay and opportunities for all employees (26).
The writer investigated signs of employee work overload by observing the office environment, noting that most employees leave by 4:30 PM, with little evidence of overtime work This observation may suggest high efficiency rather than an absence of work overload Kuschel (27) supports the notion that work overload and long hours are interconnected To delve deeper, the writer conducted a group interview with members of the Contract Department, excluding the Director, to identify the root causes of the perceived workload issues Most participants, particularly those with more experience, acknowledged a heavy workload and expressed that they work diligently during regular hours Mr Van Anh reported feelings of emotional exhaustion and illness, aligning with research from India indicating that work overload can lead to symptoms such as excessive sleepiness and disengagement (28) Conversely, Ms Hoan offered three indicators to assess job overload.
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.
Haksever et al (29) identified that information overload peaks during interactions between contractors, consultants, and architects in the design phase, and with subcontractors during the construction phase The construction stage is particularly prone to information overload, followed closely by the design stage (30) Notably, over 90% of HBC's contracts are construction-related, with the remainder being Design & Build contracts.
As the deputy manager, Ms Hoan oversees job assignments and monitors performance, making necessary adjustments when required Despite her influential role within the department, many team members often proceed with their tasks without seeking her approval This reflects her management style and the dynamics of authority in the workplace.
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)
3 I Hai Quan Shopping Mall Van Anh
4 I Vinh Long Shopping Mall Hoan
5 II Celadon City Van Anh
6 I,II Vincity Grand Park (4 packges) Tran
7 II Nitori Ba Ria Van Anh
8 I,II Sunshine City Saigon (Everrich 3) 3 packages Hoan
9 II Tay Ninh hanging cap Ngoc
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.
Table 6 - The assignment of the Subcontract execution of the Contract Department during the 2019 period (with ONG = Ongoing, STO = Stop, COM = Completed)
Ms Hoan assigns tasks with a carbon copy to the Director for acknowledgment, indicating a structured workflow The table demonstrates that the workload among department members is stable and balanced; those handling more in the Main Contract tend to manage less in the Subcontract With the robust ISO System in place and her granted authority, Ms Hoan can review the working hours of all department personnel and confirms that overtime is not a significant issue This suggests that the lack of coordination is not primarily due to workload disparities.
4.2.2 Validating the second cause: Poor communication
Ineffective communication is a prevalent issue in the construction industry, often leading to various problems (31) This challenge arises from unsuccessful interactions among project participants, particularly between on-site workers and back-office staff (32) Hussain et al (33) emphasize the importance for managers and organizations in the construction sector to understand the causes and effects of communication breakdowns, urging them to implement strategies that enhance communication processes in their projects.
Ms Hoan has shared her perspective on the situation, noting a positive mutual feeling among colleagues, free from hate or dislike However, their strong personalities lead to weaker communication and solidarity Despite this, the Department organizes annual vacations and numerous parties, fostering some level of interaction during and after work hours Observations reveal that members of the Department engage in various private social media groups, such as Ms Liên's involvement with the Material Department, and others like Ms Quyen, Ms Tran, and Ms Ngoc participating in private groups, indicating a degree of connection outside formal settings.
Mr Tung and his colleagues enjoy a strong camaraderie both in and out of the workplace, while Ms Van Anh prefers to remain distant from the group This division within the department could lead to fragmented relationships; however, Ms Hoan noted that overall, they still share enjoyable moments together In a brief interview, Mr Tan provided an intriguing perspective on the team's communication, stating, “It’s not poor; they are still communicating with each other very well However, there are aspects of their work interactions that are lacking, which contributes to some challenges.”
4.2.3 Validating the third cause: Lack of work-interaction within the department
In the construction industry, the management of Main Contracts and Subcontracts differs significantly, with Main Contract management requiring a higher level of expertise and experience While Subcontract management primarily involves negotiating with suppliers and subcontractors, challenges can arise from job assignments and the inherent nature of the work For instance, employees like Ms Tran, Ms Hoan, and Ms Van Anh have limited experience with Subcontractor tasks, whereas Mr Tung, Ms Quyen, and Ms Ngoc, despite having less experience, are not heavily involved in Main Contract work Consequently, while team members may perform their individual roles effectively, the lack of interaction and coordination can unintentionally hinder collaboration, despite good communication among colleagues.
An in-depth interview with Ms Hoan and Mr Tan revealed that the lack of collaboration and communication among team members is a significant issue They noted that while there is nothing wrong with job assignments, individuals like Ms Van Anh and Ms Tran often overlook valuable insights from others, including Ms Hoan, who, despite being younger, possesses greater experience This age disparity can impact leadership effectiveness, as older team members may feel disconnected from the evolving career paths within the organization Such feelings of being "left behind" can lead to negative reactions from older employees, ultimately undermining the authority and perception of younger leaders.
Newcomers in the construction industry often find themselves limited to subcontracting roles, hindering their ability to gain experience with main contract execution For instance, Ms Quyen managed 420 subcontracts in 2018, which restricted her understanding of main contract procedures and ultimately contributed to her decision to leave the company by the end of May.
In 2019, both the deputy manager and the director faced challenges in fostering collaboration within the department to enhance knowledge sharing and interaction among team members Previous attempts to create mixed assignments failed, as employees continued to work independently without engaging with colleagues who had relevant experience This lack of collaboration often resulted in unfavorable clauses during contract negotiations Additionally, Ms Quyen's long-standing relationships with suppliers and subcontractors may complicate her ability to work effectively with them in the future.
Ms Van Anh or Ms.Tran gives a consent to any clauses or conditions in the Subcontract which Ms Quyen has contrary idea against.
The primary cause of cooperative issues among employees in the department is identified as a lack of work interaction To address this key challenge, the following solutions will be proposed.
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
Alternative solutions
After conducting a thorough literature review and interviewing department members, we propose two solutions aimed specifically at addressing the root causes of insufficient work interaction It is important to note that these solutions do not tackle the issues of poor communication or work overload.
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.
Newcomers should familiarize themselves with subcontracting by reviewing various contract specimens, including labor, material supply, design, and construction contracts A comprehensive database should be created to store detailed information about each subcontractor, including successfully negotiated commercial clauses and those that must be accepted This database must be accessible to all department members for input and collaboration, aiding them in drafting and negotiating subcontracts This initiative not only provides newcomers with a clear understanding of their responsibilities during their probation period but also serves as a reliable reference for experienced executives.
Newcomers become productive earlier if they comprehend their work strongly based on fundamental understanding (36).
Main Contracts and Subcontracts, while distinct types of agreements, share several similarities Notably, Subcontracts are contingent upon Main Contracts; without the existence of a Main Contract, a Subcontract becomes unnecessary Additionally, the commercial clauses outlined in the Main Contract are typically enforced in a back-to-back manner in the Subcontract, except in cases involving low-value contracts or specific circumstances that may render such clauses inapplicable This approach often leads to concerns among Subcontractors regarding fairness in the application of these terms It is crucial for all members of the Contract Department to understand these dynamics.
Accessing the Main Contract should be streamlined for those managing Subcontracts, eliminating the need to sift through numerous paper versions or request scanned copies from site personnel It is concerning that the Contract Department struggles to locate the Main Contract independently While confidentiality is important, there are effective measures to protect sensitive information, such as providing access to all terms and conditions of the Main Contract while excluding price pages This approach would facilitate better communication and efficiency for those involved in Subcontract management.
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:
2 Introduce and discuss about FIDIC Yellow Book 1999 (D&B Contract)
3 Introduce and discuss about Insurance in Construction Contract.
Ms Hoan has successfully organized a class that has been well-received, with participants noting its valuable knowledge While newcomers may find the material overwhelming, it serves as a crucial foundation for their future careers Current employees benefit from the opportunity to enhance their expertise and engage in meaningful discussions Moving forward, other experienced team members like Mr Tan, Ms Van Anh, and Ms Tran should also develop and lead similar internal classes on relevant topics that consistently arise.
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.
Incentives should be organized monthly, allowing instructors to earn rewards or bonuses for their contributions Rewards play a crucial role, serving as recognition for employees' achievements and their impact on the organization Research by Korir et al highlights that inadequate reward management can diminish organizational performance and hinder staff motivation, collaboration, and innovation A fair reward distribution system signals to employees that management values their contributions and assessments.
Implementing a reward system significantly enhances employee motivation, encourages productivity, and reduces turnover rates When employees feel valued and are rewarded for their contributions, they are more likely to perform at their best Conversely, without a structured reward system, organizations risk losing skilled employees who are willing to mentor others, leading to decreased morale and cooperation among the remaining staff.
Accordingly, some benefits and costs of this solution could be described as below:
+ 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
The total estimated cost for organizing each training session is 5,500,000 VNĐ, which includes allowances for participating employees With six months remaining until the end of 2019, the budget for six training sessions is projected to be 33,000,000 VNĐ.
Setting goal and specific tasks for employees in HBC E-learning System
Interviewees ‟ Demogra phic
No Name Education Major Year
1 Nguyen Thi Hoan UOL Law 2010 9 Leader
2 Tran Hong Ngoc UEH Law 2018 9 Main
3 Nguyen Thi Van Anh UOL Law 2016 10+ Main
5 Tran Thuc Quyen UOL Law 2017 05 Main
6 Tran Gia Bao Tran IU BA 2018 10+ Main
7 Do Thi Lien UEH BA 2009 0 Adminstrativ e
Interview Guide
- Explain the purpose of the interview Information security.
- Group, job title, job description of interviewee.
1 How long have you worked at DAB?
2 What do you feel about your job at DAB?
3 It has been a problem that we could see on a lot of newspaper nowadays that the high account receivable of HBC is tremendous over years Can you give me any of your opinions about that?
4 So do you think which factors may affect the reason?
5 Late submission of payment documents are seen as the big problem, do you think which maybe the biggest obstruction you are facing that may affect the reason?
6 You all seem very new to the job here and has lack of years working here, do you think that because of that, you may get unfavorable contract provision when negotiating and leading to late payment of those contracts?
7 So you are the Deputy Manager of the department, I‟m sorry to ask that whether any
Chief Manager here? So if there is none, can you tell me about the difficulty being the Deputy one, may be in connection between the people in the department?
8 Here are some problems I think that need your confirmation, the results finding is that the coordination between the Site and the back office may affect to the overall high of AR as it creases that time of payment documents submission and leading to the delay in payment of customers? What about your opinion?
9 So how do you think about the lack of long time working employees in our department has anything to do with it? I have this data from Mr Tuyen – HR Executive.
10 At the day I conducted a focus group, I can feel the hesitation from the look of other interviewees When people are sitting next to Ms Hoan, they are shy to express what they are feeling The interview had been going on a very tense atmosphere. You think that maybe a problem?
11 There were some discussion last time about the lack of corporation problem which you all agreed as the main problem of your department now So you do think it may happen because of working overload?
12 So it is not coming from the working load, it may come from your lack of communication with each other, because I know there are several of researchers have found a link between the lack of communication leads to lack of coordination?
13 So we are still not finding a cause now May I ask deeper into this, so Ms Hoan how is your department interaction during the work? Do they share or help each other? Or their work have anything in common?
14 There were lots of causes have been given such as working overload, poor communication and lack of interaction within the people in the departments? So do you think it may be the main cause of the picture?
15 Lack of interaction means that they may not do the job done well by themselves Or lack of training maybe?
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Definition of theoretical frameworks
Accounts receivable represent the debts owed to a business by its customers due to the sale of goods or services conducted during regular operations These accounts are classified as assets, reflecting the amounts due to the company from credit sales Various theories have been developed to explain the concept of trade credit.
The receivable turnover rate is a key metric that reflects the productivity of accounts receivable by illustrating the relationship between credit sales and accounts receivable for a firm This ratio indicates the amount of credit sales generated per VND invested in accounts receivable and reveals how frequently receivables are collected throughout the year, thus highlighting the liquidity of these accounts A higher receivable turnover rate signifies better performance and efficiency in managing credit sales and collections.
Days Sales Outstanding (DSO) is a crucial metric for assessing a company's efficiency in collecting trade receivables, indicating the average number of days required to collect payments after a sale A lower DSO signifies a quicker reinvestment of capital into the business, enhancing financial agility To determine a company's DSO, one divides the accounts receivable for a specific period by the total credit sales during that same period, then multiplies by the number of days in the period Comparing DSO against industry benchmarks or competitors provides valuable insights into a company's financial health and operational effectiveness.
Bidding results in 2019 of HBC (1 st and 2 nd quarter only)
Days sales outstanding of HBC, CTD and PHC
1/ A focus group with people in Contract Department of HBC Ms
Hoan: My name is Nguyen Thi Hoan and I‟m Deputy Director of
Ms Anh: My name is Nguyen Thi Van Anh - Contract Executive
Ms Ngoc: My name is Tran Hong Ngoc - Contract Executive
Mr Tung: My name is Tran Pham Hoang Tung - Contract Executive
Ms Tran: My name is Tran Gia Bao Tran - Contract Executive
Ms Quyen: My name is Tran Thuc Quyen - Contract Executive
Ms Lien: My name is Do Thi Lien - Document Control Executive
Mr Linh: My name is Nguyen Thi Ngoc Linh - Accountant Executive
Mr Tuyen: My name is Huynh Thanh Tuyen – HR Executive
Contract Executive Contract Executive Contract Executive Contract Executive Contract Executive Document Control Executive Accountant Executive
Q1: How long have you worked at DAB?
Ms Hoan: 09 years, Ms Anh: 04 years, Ms Ngoc: 01 year, Mr Tung:
6 months Ms Tran: 01 year, Ms Quyen: 02 years, Ms Lien: 10 years.
In a recent interview, concerns were raised regarding HBC's significantly high accounts receivable, a topic frequently highlighted in various newspapers The interviewer sought insights on this ongoing issue, emphasizing its persistence over the years.
Ms Linh highlighted that HBC's high accounts receivable (AR) and days sales outstanding (DSO) stem from two primary factors Firstly, the company adheres to Vietnamese accounting regulations, which dictate that AR is recorded when a construction project reaches specific milestones, such as 70% completion, even if invoices have not yet been issued Secondly, delays in payments from clients further exacerbate the situation.
Owners/ Developers from the very first projects until now I could give you short information later about list of big projects are being delay in payment.
Ms Hoan: I also think so too, that the delay payments of
Owners/Developers – these are people who spent money on investing construction projects are contributing to the date of collecting cash of
Interviewer: So do you think which factors may affect the reason?
Ms Van Anh: I think because in these contracts that Ms Linh will give you later, the date of payment is very long (> 45 days) at least.
Ms Lien: For me, I think that the date of submission the payment
Typical accountant according to accounting law of Vietnam Delay payments from Owners/ Developers
In contracts, the date of payment is very longThe date of submission the payment documents is always very late. documents is always very late.
Ms Hoan emphasized the need to re-evaluate the responses from Ms Van Anh and Ms Lien against the signed contracts to identify any provisions impacting payment timelines She also suggested consulting with Ms Linh to verify whether any submission dates were missed Additionally, Ms Hoan noted the importance of considering external factors, acknowledging that even if all parties fulfilled their contractual obligations, risks could still arise from the other side of the agreement.
Owners and developers play a crucial role in project development, but various factors can impact their cash flow and lead to financial shortages for contractors These factors include project suspensions by competent authorities, a lack of financial resources, and the owners' or developers' willingness to make payments.
The late submission of payment documents is a significant issue, and it raises the question of what the primary obstacles are that contribute to this problem Identifying these challenges is crucial for understanding their impact on timely payments.
Ms Quyen: For me is the inefficient project coordination between people working at Site and in back office.
This question is also raised to the other members of the department and received the consent by all.
Interviewer: As I see from your information, you all seem very new to
Risks may come from the other side of the Contract.
Little time working in the
Potential Problem 1: The inefficient project coordination between people working at Site and in back office.
The lack of long-term employment and insufficient years of experience in this role may result in unfavorable contract terms during negotiations, potentially leading to delayed payments on those contracts.
Ms Hoan: I think this shall be a problem that most of them has little time working in the company and almost everyone graduated from Economy –
Law school and legal majors often lack comprehensive knowledge of the construction industry However, Ms Tuyen will later share detailed information about our department profile to provide a clearer understanding.
In an interview, the Deputy Manager, Ms Hoan, was asked about the absence of a Chief Manager in the department She discussed the challenges she faces in her role, particularly regarding communication and relationships among team members.
Ms Hoan: Year, I have just been promoted over 2 years ago Everyone here likes to work dependently, and they are free to express what they want.
Thank you, Ms Hoan, for your insights As we conclude this discussion, it's important to note that knowledge within the construction industry remains limited, highlighting the need for ongoing education and development in this field.
Everyone here likes to work dependently, and they are free to express what they want employees
Lack of coordination within the department
2/ An in-depth interview with Mr Tan – General Director of the
In an insightful interview with Mr Tan, the manager of the Contract Department, the discussion centered on the department's dynamics and challenges The interviewer expressed gratitude for the opportunity to explore the reasons behind the high turnover rates identified in a prior focus group interview with department members.
Over the years, various potential issues related to Accounts Receivable (AR) have been identified through an extensive literature review One significant concern is the coordination between the site and the back office, which can impact the overall efficiency of AR Delays in the submission of payment documents can lead to slower payment processing from customers I would appreciate your thoughts on this matter.
Mr Tan highlights that various factors contribute to the delayed submission of payment documents, despite the contractual obligations set forth to ensure compliance from all parties involved.
Contractors often face challenges in submitting their invoices promptly due to the necessity of obtaining approval from the Owner or Developer for the monthly work volume and invoice calculations This process can be time-consuming, leaving Quality Surveyors on-site with limited ability to expedite approvals.
Contract Executive of HBC can control Moreover, HBC has built an
Contractor always have difficult time submitting their invoice on time.
As a contractor, it is always subject to the Owner/
To validate the Potential Problem 1 extremely expensive and elaborate system that worth billions VND.
People working at Site are being practiced and trained everyday, therefore, this system is proved to augment the coordination between these people both in quality and time.
The interviewer inquired about the impact of a lack of long-term employees in the department, referencing data provided by Mr Tuyen, the HR Executive.
At HBC, we implement a rigorous recruitment process, ensuring that our team members are not newcomers but seasoned professionals with extensive experience in the construction industry Candidates face a challenging and competitive interview, which includes an initial test assessing their English proficiency and IQ Following this, they must respond to ten diverse questions pertinent to the construction sector, demonstrating their expertise, including knowledge of the FIDIC book Although our employees work independently, they are highly skilled and reliable in their respective roles.
Interviewer: Hmm, so it may not be the problem we are looking for.