Bidding activities in vietnam airlines jsc’s projects during 2013 to 2015

NATIONAL ECONOMICS UNIVERSITY EXCELLENT EDUCATIONAL PROGRAM BACHELOR’S THESIS Topic BIDDING ACTIVITIES IN VIETNAM AIRLINES JSC’S PROJECTS DURING 2013 TO 2015 Student Ta Huu Vu Major Investment Class I[.]

NATIONAL ECONOMICS UNIVERSITY EXCELLENT EDUCATIONAL PROGRAM BACHELOR’S THESIS Topic: BIDDING ACTIVITIES IN VIETNAM AIRLINES JSC’S PROJECTS DURING 2013 TO 2015 Student Major Class : Ta Huu Vu : Investment : Investment CLC Student’s ID : 11124609 Supervisor : PhD Dinh Dao Anh Thuy HANOI, 2016 ACKNOWLEDGEMENTS In order to complete this thesis, the author had received many assistance Therefore, the author would like to give acknowledgement to the ones who contributed to this thesis by their support and motivation First and foremost, the author would like to express the deepest gratitude to the supervisor, Ph.D Dinh Dao Anh Thuy Her kindly support and valuable advices during the completion of the thesis Thanks to her instruction, the thesis has been completed effectively Secondly, the author would like to give sincere thanks to the manager and the staff of Investment and Procurement Department of Vietnam Airlines JSC Despite of their busy work, they still give the author their fullest support in giving instruct and advice for the completion of the thesis Once again, many thanks to their supports in providing the best condition for the author to have a better understanding about bidding and to complete this thesis Sincerely, Ta Huu Vu Table of Contents INTRODUCTION Chapter Theories of bidding 1.1 Definition and roles of bidding .3 1.1.1 Definition of bidding 1.1.2 Roles of bidding .4 1.2 Principles of bidding .6 1.2.1 Competition 1.2.2 Fairness 1.2.3 Openness 1.2.4 Transparency 1.3 Procedure of bidding .8 1.3.1 One-stage single-envelope .9 1.3.2 One-stage two-envelope 1.3.3 Two-stage single-envelope .10 1.3.4 Two-stage two-envelope 10 1.4 Methods of bidder selection 10 1.4.1 Open bidding 11 1.4.2 Shopping 11 1.4.3 Limited bidding 12 1.4.4 Direct appointment 12 1.4.5 Repeat order 13 1.4.6 Force account 13 1.5 Bidding process .14 1.5.1 Preparation for bidding 14 1.5.2 Review of bidding proposal 15 1.5.3 Finalization or negotiation and signature of the contract 18 Chapter Current bidding performance of Vietnam Airlines JSC from 2013 2015 19 2.1 Vietnam Airlines JSC.’s overview 19 2.1.1 General information .19 2.1.2 The history of Vietnam Airlines .19 2.1.3 Lines of business 21 2.1.4 The structure of Vietnam Airlines 23 2.2 Characteristics of Vietnam Airlines JSC.’s bidding packages .27 2.3 Decentralization in bidding management of Vietnam Airlines 28 2.4 Procedure of bidding of Vietnam Airlines JSC .28 2.4.1 Bid planning 28 2.4.2 Preparation for bidding 29 2.4.3 Review of bidding proposal 31 2.4.4 Completion and contract signing 33 2.5 Examples of a specific project .33 2.5.1 “Procurement of 150 ULD 2-level shelves” bidding package 33 2.5.2 “Procurement of aircraft nose gear towbar tractor category 4, towbar and 12 towbar head” bidding package .39 2.6 Assessment of Vietnam Airlines’ bidding activities from 2013 - 2015 45 2.6.1 Result of bidding activities .45 2.6.2 Current limits and main causes .51 Chapter Recommended solutions to improve bidding efficiency in Vietnam Airlines JSC 54 3.1 Vietnam Airlines’ development plan from 2016 - 2020 54 3.1.1 Target and direction for the 2016 - 2020 54 3.1.2 Investment plan for 2016 to 2020 57 3.2 Recommended solutions .57 3.2.1 Short term solutions .58 3.2.2 Long term solutions 59 CONCLUSION 60 REFERENCES 61 APENDIXES 62 APPENDIX A 62 APPENDIX B 65 STATUTORY DECLARATION I herewith formally declare that I myself have written the submitted Bachelor’s Thesis independently I did not use any outside support except for the quoted literature and other sources mentioned at the end of this paper Hanoi, ./ / 2016 Signature Ta Huu Vu ABBREVIATION ODA Official Development Assistance CEO Chief Executive Officer BOM Board of Management VASCO Vietnam Air Service Co TIAGS Tan Son Nhat International Ground Service Ltd NIAGS Noi Bai International Ground Service Ltd DIAGS Da Nang International Ground Service Ltd MEC Handling Equipment Engineering Co LIST OF TABLES AND FIGURES Table 2.1 Financial evaluation result of “Procurement of 150 ULD 2-level shelves” bidding package .38 Table 2.2 Bidder’s eligibility assessment and technical evaluation results 42 Table 2.3 Financial evaluation result of “Procurement of aircraft nose gear towbar tractor category 4, towbar and 12 towbar head” bidding package 44 Table 2.4 Bidding package types from 2013 to 2015 46 Table 2.6 Saving portion due to bidding from 2013 - 2015 50 Table 3.1 The quantity of operating aircrafts planned for the 2016 – 2020 period 55 Table 3.2 Planned operating target from 2016-2020 of Vietnam Airlines 56 Table 3.3 Vietnam Airlines investment plan from 2016 – 2020 57 Figure 2.1 The diagram of Vietnam Airlines’ organizational structure 24 Figure 2.2 Number of Vietnam Airlines’ bidding packages from 2013 – 2015 46 Box 2.1 “Procurement of 150 ULD 2-level shelves” bidding package’s invitation for bids 35 Box 2.2 “Procurement of aircraft nose gear towbar tractor category 4, towbar and 12 towbar head” bidding package’s invitation for bids 41 EXECUTIVE SUMMARY The thesis focuses on studying about the bidding activities’ performance of Vietnam Airlines in the 2013 – 2015 period From the theory about bidding combined with the author’s study and assessment about the current situation of bidding in the company, the thesis points out both achievements and limits in bidding implementation From that, the author recommends some solutions for the company to improve its bidding effectiveness This thesis has main contents: Firstly, this thesis mentions about the theory of bidding, which includes definition, roles of bidding, bidding principles, methods of bidder selection and procedures of bidding These theories is acted as foundation for the author’s assessment about Vietnam Airlines’ bidding activities Secondly, the thesis focuses on demonstrating the process of bidding implementation in the company in detail Moreover, in order to provide a better insight about this process, the author presents examples of both domestical and international bidding packages In addition, with the data and information collected during the internship, the author consolidates and assess the result of the company’s bidding activities From that, the author conclude the achievements and limits in bidding implementation Finally, from the indicated limits, the author proposes solutions for the company to improve its bidding activities’ effectiveness in both short term and long term in accordance with the company’s development plan INTRODUCTION Rationale As a crucial industry of any industry, air transportation’s development always makes impacts to variety of aspects of a nation Especially, to a developing country like Vietnam, air transportation is an essential factor for the country in integrating into international economy Since the establishment, Vietnam Airlines Joint Stock Company has developed rapidly as a national airline, ensuring the flow of both passenger and cargo for the country, contributing to the economic development and national budget On the other hand, as the world is becoming “flatter”, the demand for air transportation is increasing day by day To meet to the requirement of reality, Vietnam Airlines has continuously invested to improve its capability The more investments are implemented, the more responsibility of the company in using capital from state budget As a result, it is essential for the company to consider efficiency of the investments Meanwhile, bidding is the key solution for a company in saving the expenses of the investments efficiently Therefore, understanding the vital role of bidding to investment, the author chooses the topic: “Bidding activities in Vietnam Airlines JSC’s projects during 2013 to 2015” as bachelor thesis’ topic Literature review The thesis focuses on demonstrating the bidding process in Vietnam Airlines JSC, its achievements and limits From that, the author proposes solutions to improve the company’s bidding performance Objectives The thesis has main objectives: - Studying the current performance in bidding implementation of Vietnam Airlines JSC - Comparing the practice to theory of bidding, from which, to indicate the results, achievements and limits - Proposing solutions to restrict the limits and improve the quality and effectiveness of bidding activities in the company Methodology The methods applied by the author in the thesis are: - Qualitative method: comparison - Quantitative method: statistics and data consolidating Scope The thesis studies about the bidding activities in Vietnam Airlines JSC in the period from 2013 – 2015 Research structure The thesis consists of chapters: Chapter 1: Theories of bidding Chapter 2: Current performance in bidding of Vietnam Airlines JSC from 2013 2015 Chapter 3: Recommended solutions to improve bidding efficiency in Vietnam Airlines JSC