Solutions to improve competitiveness in construction bidding of song da 6 joint stock company = giải pháp nâng cao khả năng cạnh tranh trong công tác Đấu thầu

Solutions to improve competitiveness in construction bidding of Song Da 6 Joint Stock Company = Giải pháp nâng cao khả năng cạnh tranh trong công tác đấu thầu

ĐẠI HỌC QUỐC GIA HÀ NỘI TRƯỜNG QUẢN TRỊ VÀ KINH DOANH

-

PHẠM MINH THÁI

SOLUTIONS TO IMPROVE COMPETITIVENESS IN CONSTRUCTION BIDDING OF SONG DA 6

JOINT STOCK COMPANY

GIẢI PHÁP NÂNG CAO KHẢ NĂNG CẠNH TRANH

TRONG CÔNG TÁC ĐẤU THẦU TẠI CÔNG TY CỔ PHẦN SÔNG ĐÀ 6

LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH

HÀ NỘI - 2022

ĐẠI HỌC QUỐC GIA HÀ NỘI TRƯỜNG QUẢN TRỊ VÀ KINH DOANH

-

PHẠM MINH THÁI

SOLUTIONS TO IMPROVE COMPETITIVENESS IN CONSTRUCTION BIDDING OF SONG DA 6

JOINT STOCK COMPANY

GIẢI PHÁP NÂNG CAO KHẢ NĂNG CẠNH TRANH

TRONG CÔNG TÁC ĐẤU THẦU TẠI CÔNG TY CỔ PHẦN SÔNG ĐÀ 6

Chuyên ngành: Quản trị kinh doanh

Mã số: 8340101.01

LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH

NGƯỜI HƯỚNG DẪN KHOA HỌC: TS TẠ THỊ ĐÀO

HÀ NỘI - 2022

DECLARATION

The author commits that the content in this thesis is the results of the author's own research, obtained during the study and research period, and has not been published in any other publications

The results of research and other people's research (figures, tables, formulas, graphs, and others) mentioned in this thesis have been quoted and agreed by the authors

I am responsible to The Thesis Defense Council, Faculty of Business and Administration and the law for the above commitments

In the process of making this survey, despite all efforts to improve the thesis, exchange and absorb the knowledge of the teachers, friends and colleagues and look for many documents, some errors or mistakes are unavoidable I would like to receive feedback from all the readers

Thank you!

TABLE OF CONTENT

DECLARATION i

ACKNOWLEDGEMENT ii

TABLE OF CONTENT iii

LIST OF ABBREVIATIONS ii

LIST OF TABLES i

LIST OF FIGURE iii

INTRODUCTION 1

CHAPTER 1: THEORETICAL, LEGAL AND PRACTICAL BASIS ON COMPETITION AND COMPETITIVENESS IN CONSTRUCTION BIDDING 4

1.1 Overview of construction bidding 4

1.1.1 Overview of construction bidding in the business of construction companies 4

1.1.2 Current regulations of the law on construction bidding 7

1.2 Overview of competition in construction bidding 11

1.2.1 Concept of competition in construction bidding 11

1.2.2 Classification of competition in construction bidding 12

1.2.3 Characteristics of competition in construction bidding 12

1.2.4 Competitive content in construction bidding of construction company 13

1.2.5 Competitive assessment in construction bidding according to current law of bidding 14

1.3 Competitiveness in construction bidding 16

1.3.1 The concept of competition in construction bidding 16

1.3.2 The role of improving competitiveness in construction bidding of company 17

1.3.3 Methods of evaluating competitiveness in construction bidding 18

1.3.4 Factors affecting the competitiveness in construction bidding of construction company 24

1.4 Criteria for evaluating the competitiveness in construction bidding 33

1.4.1 Criteria based on construction history of work 33

1.4.2 Criteria to evaluate the competitiveness of companies according to internal factors of companies 34

CHAPTER 2: CURRENT SITUATION OF BIDDING AND COMPETITIVENESS IN CONSTRUCTION BIDDING OF SONG DA 6 JOINT STOCK COMPANY 35

2.1 The Company background 35

2.1.1 Introduction about Song Da 6 Joint Stock Company 35

2.1.2 Organizational structure, functions of departments in the Company 38

2.1.3 Business and production fields 42

2.2 Actual situation of construction and installation bidding of Song Da 6 Joint Stock Company in the period of 2018 - 2021 42

2.2.1 Searching for project information and bidding packages 42

2.2.2 The Company's order to participate in the bidding 43

2.2.3 Winning bidding results of the Company in the period of 2018 - 2021 45

2.2.4 Summary of results achieved in the construction bidding of the Company in the period of 2018 - 2021 46

2.2.5 Analysis of the results achieved in the construction bidding of the Company in the period of 2018 -:-2021 47

2.3 Analysis and assessment of competitiveness in construction bidding of Song Da 6 Joint Stock Company 48

2.3.1 Analysis and assessment of competitiveness in construction bidding based on the competitive method 48

2.3.2 Analyze and evaluate internal factors affecting the Company's competitiveness 52

2.3.3 Analyze and evaluate external factors affecting the Company's competitiveness in construction bidding 60

2.4 Analysis of criteria for assessing competitiveness in construction bidding of Song Da 6 Joint Stock Company by the method of using SWOT analysis model 67 2.4.1 Analysis of strengths and weaknesses (S/W) affecting competitiveness in

construction bidding of Song Da 6 Joint Stock Company 67 2.4.2 Summary results of analysis and assessment of competitiveness in construction bidding of Song Da 6 Joint Stock Company & causes of shortcomings and limitations 69 CHAPTER 3: PROPOSE SOLUTIONS TO IMPROVE COMPETITIVENESS IN CONSTRUCTION BIDDING OF SONG DA 6 JOINT STOCK COMPANY 72 3.1 Business development orientation of Song Da 6 Joint Stock Company in the period from 2022 -:- 2025 72 3.1.1 Development perspective of Song Da 6 Joint Stock Company 72 3.1.2 The Company's business development goals 73 3.2 Proposing solutions to improve competitiveness in construction bidding of Song Da 6 Joint Stock Company 74 3.2.1 Using the SWOT model to offer solutions to improve the Company's competitiveness in construction bidding 74 3.2.2 Solutions to concentrate production and business resources and bid for construction in strong fields 77 3.2.3 Solution group to improve the Company's capacity 78 3.2.4 A group of solutions on competitive methods to improve the Company's competitiveness in construction bidding 83 3.2.5 A group of solutions to help improve the Company's competitiveness in construction bidding 90 CONCLUSION 95 REFERENCE DOCUMENTS 96 APPENDIX

LIST OF TABLES

Table 1.1: Criteria to test the resources and capabilities of companies to identify

sustainable competitive advantage 18

Table 1.2: Some conclusions drawn from the test results of four criteria 19

Table 1.3 Competitiveness profile matrix 20

Table 1.4 Swot matrix 23

Table 2.1 Winning bidding results of the Company in the period of 2018 - 2021 45

Table 2.2: Summary of the Company's bidding results for the period 2018-:-2021 46

Table 2.3 Key production and business in 2018, 2019, 2020 and 2021 52

Table 2.4 Statistical table of main machinery and equipment of the Company 53

Table 2.5: Statistics of indirect officer qualifications of the Company in 2022 55

Table 2.6: Worker’s statistics of the Company in 2022 56

Table 2.7: Statistics of indirect officer certificates of the Company in 2022 56

Table 2.8: Current main competitors of the Company 62

Table 2.9: Matrix of competitive image of the Company and its competitors 63

Table 2.10 Strengths and Weaknesses of the Company 69

Table 3.1 The Company's Opportunities and Threats 74

Table 3.2 The Company's Strengths and Weaknesses 75

LIST OF ABBREVIATIONS

Construction Construction audit division

LIST OF FIGURE

Figure 2.1 Company organization Structure 38 Figure 2.2 Procedure for preparing tender documents of the Company 44 Figure 2.3 Contract negotiation and signing process 45 Figure 3.1 Solutions to improve the Company's competitiveness in construction bidding 77

INTRODUCTION

1 Rationale:

Nowadays, bidding is applied in many fields, but the most is still in the field of construction In the current market economy, the bidding in the basic construction field plays a great role for investors, contractors and the State On the other hand, due to the production and business process of construction companies is started by signing a construction contract, the development of the business depends greatly on the ability to win bids and signing contracts, therefore, bidding to find jobs has always been a matter

of survival for companies Especially, in the current condition of Vietnam construction field, with the growth of domestic construction companies, the attendance of foreign construction corporations, the strong development of construction science and technology, the competition in bidding among construction companies is becoming more and more fierce

In order to win in construction bidding, the construction companies must continuously improve their competitiveness to prove their superiority compared to other contractors under the Investor's assessment Each contractor must not only understand the bidding procedures and do well at all stages: preparation of capacity documents, making construction methods, construction schedule, calculation and deciding the bid prices, but also must enhance its capacities and competitiveness to improve the bidding efficiency

Song Da 6 Joint Stock Company is a construction contractor operating in the field of construction with products that are individual works, large-scale, complex production techniques, single production, long production time Finding consecutive projects is always a top priority that is vital to the existence and development of the Company

As an officer working in the field of bidding, the author notices that the bidding work of Song Da 6 Joint Stock Company in the past few years has archived certain achievements but not really efficiency, the winning value is not commensurate with the production capacity of the Company, the winning rate of Song Da 6 Joint Stock

Company did not meet the plan, leading to a lack of jobs for workers and machinery From the above awareness, the author has chosen the topic "Solutions to improve competitiveness in construction bidding of Song Da 6 Joint Stock Company" as the research topic for his master's thesis with hopes to find effective directions and solutions, on that basis, to advise the Company's management to improve and enhance bidding performance, contributing to the existence and sustainable development of the Company

2 Objectives of the Research, Research tasks:

The objective of the study is to propose solutions to improve the competitiveness

in construction bidding of Song Da 6 Joint Stock Company

In order to achieve the above research purpose, the thesis needs to perform the following tasks:

- Systematize legal and practical issues of competition and competitiveness in construction bidding of construction companies

- Research on the current situation of competitiveness in construction bidding of Song Da 6 Joint Stock Company

- Proposing solutions to improve competitiveness in construction bidding of Song

Da 6 Joint Stock Company

comparison, combined with qualitative and quantitative analysis to solve the research content

- The study of the topic was carried out on the following bases:

Scientific basis of the topic: Theory of corporate governance, the theory of competition, the theory of construction bidding

Practical basis of the topic: Practical competitive activities in bidding for construction of construction companies in general and Song Da 6 Joint Stock Company in particular

Legal basis of the topic: State legal documents on competition and bidding for construction

- Data collection method: Collecting data from periodical reports (monthly, quarterly, annually) of the Company from 2018 to 2021, using questionnaire and consulting experts

The thesis also uses secondary documents, published document, laws, circulars, decrees, information from forums, specialized websites

- Data process method: using the Competitive Profile Matrix method, using Microsoft Excel software

6 The structure of the thesis

The thesis is divided into 3 chapters, as follows:

Chapter 1: Theoretical, legal and practical basis on competition and competitiveness

CHAPTER 1 THEORETICAL, LEGAL AND PRACTICAL BASIS ON COMPETITION

AND COMPETITIVENESS IN CONSTRUCTION BIDDING

1.1 Overview of construction bidding

1.1.1 Overview of construction bidding in the business of construction companies

1.1.1.1 The concept of construction bidding

a Bidding definition

From the perspective of the Employer, “Bidding is the the process of selecting a tenderer to sign and implement contract of provision of advisory services, non-advisory services, procurement of goods, construction and installation; selecting an investor to sign and implement contract of investment project in form of public-private partnership, investment project with land use on the basis of ensuring competitiveness, fairness, transparency and economic efficiency” [Bidding law 43/2013 /QH]

From the perspective of the Contractor, bidding is the process of studying the bidding documents of the procuring entity and preparing the bids that meet the requirements set forth in the bidding documents base on the contractor's capacity, strategy for the package as well as on the basis of analyzing strategy of other contractors who also participate in bidding for that package

b Construction bidding definition

Bidding for construction from the perspective of the Employer is the process of selecting a contractor to perform the construction work and equipment installation work of projects that can meet the technical requirements of the project and have the most reasonable cost

Bidding for construction from the perspective of the Contractor is the work of the Construction Contractor to prepare the Bid in order to best meet the requirements of the Bidding Documents compared to other contractors participating in the bidding package in order to be selected to perform that work Tender document of contractors are prepared based on their capacity, objectives and taking into account the competitiveness of other bidders who also participating in the bidding package

Other definitions relevant to bidding:

Bid solicitor: A professional agency or company which is decided by the employer

to organize bidding according to the provisions of the law on bidding

Bidding invitation document: Is the entire document used for open bidding or limited

bidding, including requirements for a project of a bidding package, as a basis for contractors to prepare tender documents and for bid solicitors to evaluate the tender documents to select the winning tenderer; it is the basis for the negotiation, finalization and

signing of the contract

Tender document: Means all documents prepared by the tenderers according to the

requirements of the bidding invitation documents and submitted to the bid solicitor in

accordance with the provisions stated in the bidding documents

Bidding package price: is the price determined for each bidding package in the

project's bidding plan on the basis of the total investment or the approved total cost

estimate

Bid price: is the price stated by the tenderer in the tender document, including all

necessary costs to implement the bidding package at the request of the bidding documents

1.1.1.2 Principles of construction bidding

- Principle of fair competition: All bidders participating in the bidding must be treated equally by the Employer The necessary information must be provided fully, accurately, without bias and completely public

- Principle of confidential: The Employer must keep confidential the relevant data and information of the Contractors of the project under bidding, must not disclose this Contractor's information to another Contractor

- Principle of fair evaluation: The tender documents must be evaluated accurately according to the standards and evaluated by a competent and qualified Bidding Board, without bias The bid evaluation results must be quantified in order to have an accurate selection and decision Tenderers who violate the Bidding Regulations must be immediately eliminated Full explanation must be given when a decision is made to exclude or select a tenderer to avoid suspicion of the parties

- Principle of capacity requirements: When organizing bidding or participating in

bidding, the Employer and Contractors must have practical capabilities to be able to ensure the requirements of the proposed project such as: technical, financial, machinery, equipment, This principle is set to avoid damage caused by the Employer’s or the Contractor's inability to perform their commitments

- Principle of responsibility: The responsibility of the Employer and the Contractor must be specifically confirmed during the implementation as well as after the completion of the work On the other hand, between the Employer and the Contractor must strictly comply with the State's regulations on bidding

1.1.1.3 The role of bidding for the economy and society

- Bidding contributes to improving the efficiency of the State management of investment and construction, managing capital use effectively, limiting and eliminating situations such as loss and waste of investment capital, especially budget capital and negative phenomena arise in construction

- Bidding creates workable competition in the field of capital construction, promoting the development of the commodity economy in the industry as well as in the national economy

- Society becomes civilized due to transparent bidding information, fair and convenient in accessing to information The companies that can execute the work better will be selected by the Employer Everyone, every Company will trust more in the Law and the State Through that, all must try, that is what makes society develop sustainably

1.1.1.4 The role of bidding for the construction company

The purpose of bidding is to win bids, find contracts and make profits Therefore, bidding plays an important role for contractors and is shown in the following aspects:

- Bidding creates pressure on companies to innovate and improve the ability to win bids as well as the quality of bid preparation

- Construction bidding with high winning results will bring many benefits to the contractor, bring jobs and income to the employees of the company, bring profits to the company from which the company can expand production and business, increase accumulation, and improve business capacity

- Construction bidding helps companies accumulate a lot of experience to complete competitive strategies, solutions to improve competitiveness, thereby winning over competitors and getting the leading position in the construction market

In summary, in order to win the bid, companies must improve their production and business organization, management organization, and improve the qualifications of the staff in preparing bids Companies themselves improve the efficiency of business management cost, financial management cost and improve production efficiency

1.1.1.5 The role of bidding for the Employer

Construction bidding brings the following main benefits:

- Select a contractor with good capacity and experience to perform the construction contract From there, the main benefits are as follows:

+ Help the Employer successfully complete the targets of the project

+ Help the Employer save investment costs by selecting the winning contractor with a bid price lower than the approved bidding package price

- Employers clearly define their functions and tasks in the process of selecting contractors to actively manage, minimize arising risks and accumulate a lot of experience to successfully complete the bidding work for the next bidding packages

1.1.2 Current regulations of the law on construction bidding

1.1.2.1 Principles of selecting contractor in construction activities

The principle of selecting contractor in construction activities is prescribed in Vietnamese law, which is the selection of a contractor that is fully qualified to provide suitable products and construction services, with reasonable bid value, meeting the requirements of the Employer and the objectives of the project The selection of contractors in construction activities is evaluated in two steps: preliminary assessment and detailed evaluation Preliminary assessment of contractors in order to select qualified contractors suitable to the requirements of the bidding package to participate

in the bidding at a later stage and use the pass or fail method to assess the capacity of experience, technical and financial ability of the participating contractors For detailed evaluation, the bid solicitor considers the contractor's ability to provide products and services on the basis of evaluation of criteria such as implementation progress,

construction methods, bid prices, contract conditions and other conditions proposed by the contractor in order to achieve investment objectives and project efficiency The selected contractor is the one with the most reasonable bid price and the highest economic efficiency for the project Depending on the scale and requirements of the bidding package, the bid solicitor may combine the two phases mentioned above or only perform the bidding phase when selecting a contractor

1.1.2.2 Forms of selecting contractor

According to the Law of bidding No 43/2013/QH13, forms of selecting contractor are:

- Selection of contractor in special cases

Except for open bidding, the conditions and scope of application of each form of contractor selection must comply with Articles 21,22,23,24,25 & 26 of the Law of Bidding No 43/2013/QH13

1.1.2.3 Method of selection contractor

Method of selection of contractors is stipulated in the Law of Bidding No 43/2013/QH13 Articles from 28 to 31 as below:

a) The one-phase method with one dossier bag

The one-phase method with one dossier bag is applied in the following cases:

- Open bidding, limited bidding for bidding package of non-advisory service provision; bidding package of procurement of goods, construction and installation, mixture content with small scale;

- Competitive quotation for bidding package of non-advisory service provision, goods procurement, construction and installation;

- Direct appointment of contractor for bidding package of the advisory service

provision, non-advisory service provision, goods procurement, construction and installment, mixture content;

- Direct procurement for bidding package of goods procurement;

- Direct appointment of contractor for selection of investor

Tenderers, investors may submit bidding dossiers, dossiers of proposals including technical proposals and financial proposals at the request of bid invitation dossiers, dossiers of requirements

The bid opening shall be conducted once for all bidding dossiers, dossier of proposals

b) The one-phase method with two dossier bags

The one-phase method with two dossier bags shall apply in the following cases:

- Open bidding, limited bidding for bidding package of provision of advisory services, non-advisory services, goods procurement, construction and installation, mixture content;

- Open bidding for selection of investor

Tenderer or investor may submit concurrently both dossier of technical proposals and dossier of financial proposals in a separate form at the request of bid invitation dossier

Bid opening shall be conducted twice Dossiers of technical proposals shall be opened as soon as bid closure Tenderers or investors satisfying the technical requirements shall be opened dossiers of financial proposals for assessment

c) The two-phase method with one dossier bag

The two-phase method with one dossier bag shall apply in cases of open bidding, limited bidding for bidding package of procurement of goods, construction and installation, mixture content with big scale and complex nature

In the first phase, tenderers may submit technical proposals and financial plans at the request of bid invitation dossiers but not yet had bidding price On the basis of exchange with each contractor participating in this phase, dossiers shall be determined for bid invitation in second phase

In second phase, tenderers participated in first phase shall be invited for submission

of bidding dossiers Bidding dossiers include technical proposals and financial proposals

at the request of bid invitation dossier for second phase, in which included bidding price and bidding guarantee

d) The two-phase method with two dossier bags

The two-phase method with two dossier bags shall apply in cases of open bidding, limited bidding for bidding package of goods procurement, construction and installation, mixture content with new, complex and particular techniques and technologies

In first phase, tenderers shall submit concurrently both dossier of technical proposals and dossier of financial proposals in a separate form at the request of bid invitation dossier Dossiers of technical proposals shall be opened as soon as bid closure

On the basis of assessment on technical proposals of tenderers in this phase, to determine contents corrected in techniques in comparison with bid invitation dossier and list of tenders satisfying requirements and being invited for bidding in second phase Dossier of financial proposals shall be opened in second phase

In second phase, tenderers satisfying requirements in first phase shall be invited for submission of bidding dossiers Bidding dossiers include technical proposals and financial proposals at the request of bid invitation dossier for second phase corresponding

to content corrected in techniques In this phase, dossiers of financial proposals submitted

in first phase shall be opened concurrently with bidding dossiers in second phase for assessment

1.1.2.4 Some current legal documents related to construction bidding activities

Law on construction bidding is a synthesis of legal regulations governing the relationships formed in construction bidding activities of domestic and foreign organizations and individuals participating in construction bidding activities Law on bidding plays an extremely important role in the effective implementation of bidding In general, our State has made great efforts in promulgating and gradually completing the system of legal documents governing the field of bidding in general and bidding for construction in particular to contribute to improving the State's management efficiency The current legal documents on bidding and related to bidding are: Construction Law No 50/2014/QH13 dated June 18, 2014; Bidding Law No 43/2013/QH13 dated 26/11/2013; Decree No 10/2021/ND-CP dated September 02, 2021 of the Government

on management of construction investment costs; Land Law No 45/2013/QH13 dated November 29, 2013; Housing Law No 65/2014/QH13 dated November 25, 2014; Decree No 63/2014/ND-CP dated June 26, 2014 of the Government detailing the implementation of a number of articles of the Law on Bidding regarding contractor selection

The governing scope of regulations on construction bidding is applied to projects using state capital of 30% or more for investment objectives, projects using state capital for asset procurement in order to maintain regular operations of State agencies, political organizations, socio-political organizations, socio-political-professional organizations, social organizations, socio-professional organizations, the people's armed man

1.2 Overview of competition in construction bidding

1.2.1 Concept of competition in construction bidding

The concept of competition has been mentioned by human society for a long time, but "What is competition?" Until now, there is no consensus on the concept According to the Organization for Economic Co-operation and Development (OECD),

“Competition is the ability of companies, industries, countries and regions to create jobs and higher incomes under conditions of international competition” Competition means trying to win a share, a victory for yourself between people and organizations working for the same benefit

When Karl Marx studied capitalist competition, he introduced the concept of competition as follows: "Capital competition is a rivalry, a fierce struggle between capitalists to win favorable conditions in the production and consumption of goods in order to gain huge profits”

The Vietnamese Dictionary of General Knowledge also explains competition in the economic sense is the competition between producers of goods, between traders and businessmen in the economy to win the most favorable conditions for production, consumption and market

Thus, competition is the activity of companies in the production of goods with the aim of competing with each other to dominate the market in order to earn high profits Understood in the most general sense, competition is the rivalry between

business entities in the winning for markets and customers

From the concept of competition in general, the thesis introduces the concept of competition in construction bidding as follows:

Competition in construction bidding is the process of competing between the construction companies about searching for bidding information, making and submitting bids, ensuring the winning bid, negotiating and signing contract with employers to perform the construction and installation bidding package

1.2.2 Classification of competition in construction bidding

1.2.2.1 Classification of competition according to form and method of bidding

- Competition in limited bidding, one-phase method with one dossier bag

- Competition in open bidding, one-phase method with one dossier bag

- Competition in limited bidding, two-phase method with two dossier bags

- Competition in open bidding, two-phase method with two dossier bags

1.2.2.2 Classification of competition according to the type of contract applied to the bidding package

- Competition in a form of a lump sum contract

- Competition in a form of a fixed price contract

- Competition in a form of an adjustable price contract

- Competition in a form of a combination contract

- Competition in a form of a General contractor

1.2.2.3 Classification according to capital sources of the construction bidding package

- Competition of construction bidding package using state-funded capital

- Competition of construction bidding package using a non-budget state capital

- Competition of construction bidding package using other funds

1.2.3 Characteristics of competition in construction bidding

Due to the characteristics of products and construction production, the competitive characteristics of construction bidding are created as follows:

- Competition in construction bidding depends on the uniqueness of the bidding package

- Competition in construction bidding is a process involving many different jobs and different contents that must be proposed in the tender documents

- Competition in construction bidding requires fairness and transparency

- Competition in bidding is conditional competition including:

+ Regulations on eligibility conditions of contractors take part in the bid

+ Regulations on conditions for rejection of tender documents

- Competition in construction bidding is diverse and complex

- Competition in construction bidding is carried out before the product of the bidding package is formed

- Competition in construction bidding is specified for each capital source in accordance with the law on management of each such capital source

1.2.4 Competitive content in construction bidding of construction company

1.2.4.1 Competition in terms of capacity and experience includes:

- Technical capacity

- Manpower capacity

- Equipment capacity

- Financial capacity

- Experience of the contractor

1.2.4.2 Competition in terms of technical, quality and construction progress

a) Competition about technical, quality of the project

Improving the quality of works is important to the existence and development of companies Construction companies hand over to employers the construction works that ensure technical, aesthetic, quality assurance and construction time will increase the reputation of the company in the market At the same time, improving the quality

of works contributes to improving production and business efficiency, increasing revenue, increasing profits, and ensuring the set goals of the company

b) Competition about the construction progress

Depending on the scale, characteristic of the work and the contractor's ability, the contractor will make a construction schedule plan From the construction schedule, the employer can evaluate the contractor in terms of management qualifications,

construction technical qualifications and the contractor's machinery, equipment and human capacity

Normally, the employer evaluates the construction progress of the contractor according to 2 contents:

- The level of assurance of the total construction progress specified in the bidding documents The contractor who is able to come up with technical methods to shorten the construction time will have the greater the probability of winning the bid

- Assessment of the reasonableness of the completion schedule among related work items The progress of completing the work items is related to the advance payment to the contractor, related to the use of the items after completion

Therefore, the contractor who is able to ensure the construction progress and has reasonable construction methods will have a competitive advantage in the bidding process

1.2.4.3 Competition about the bidding price

The bidding price has a great impact on the success or failure of the company in the bidding process When participating in bids, companies want to offer a reasonable price, lower than the price of competitors in order to attract the attention of employers, this makes price competition among companies very fierce

Different from normal consumer products, the price of construction works is determined before the construction works and is determined through bidding The construction work price stated in the bid documents is called the bidding price The price depends on the competitiveness of the contractor, the bidding price also is impacted by many other factors such as: natural conditions, socio-economic conditions where the bidding package is implemented, roads, electricity and water, ability to exploit materials on site, educational level, economic and technical characteristics of the bidding package, implementation schedule, etc

1.2.5 Competitive assessment in construction bidding according to current law of bidding

a) Criteria used to evaluate tender document in construction bidding

- Criteria about capacity and experience

- Criteria about technical method

- Criteria about bidding price

b) Method of evaluating tender document in construction bidding according to legal standards

- Evaluate method of capacity and experience for construction bidding packages

- Evaluate method of technical for construction bidding packages

- Evaluate method of financial for construction bidding packages

+ Evaluate according to the lowest price method

This method applied to simple and small scale bidding packages in which technical, financial and commercial proposals are considered to be on the same ground when meeting the requirements stated in the Bidding document

Tender document evaluation criteria include: evaluation criteria of capacity, experience and other criteria of the package

For tender documents that have been evaluated to meet the criteria specified at the above points, the bidding price shall be based on the bidding price after error correction, deviation correction, minus the discount value (if any) The bidder with the lowest price is ranked first

+ Evaluation according to the evaluation price method

This method applied the evaluation criteria applicable to bidding packages where the costs are convertible on the same

Criteria for evaluating the tender document include: criteria for evaluating capacity, experience in case prequalification is not applied, criteria for evaluating technical proposal, and criteria for determining the evaluation price Factors are converted on the same ground to determine the price include: necessary costs for operation, maintenance and other costs related to the origin of goods, interest, progress, the quality of the goods or construction works in the bidding package, the reputation of the contractor through the progress and quality of previous similar contracts and other factors

For tender documents that have passed the technical evaluation, they will be compared and ranked based on the evaluation The bidder with the lowest evaluated

price is ranked first

+ Evaluation by the method of combining technical and price:

Applicable to technology, telecommunications bidding packages or goods procurement, construction and installation, mixed bidding packages when the lowest price method and the evaluated price method cannot be applied

Criteria for evaluation of tender document: criteria for evaluation of capacity and experience in case prequalification is not applied; technical evaluation standards; composite assessment standards The integrated evaluation standard is built on the basis of a combination of technical and price;

For tender documents that have passed the technical evaluation, the corresponding ranking shall be based on the aggregated scores The contractor with the highest aggregate score is ranked first

For evaluation criteria of capacity and experience, use pass and fail criteria For technical evaluation criteria, use the scoring method or pass and fail criteria For the method of combing technical and price using the scoring method, the minimum required technical score must be specified not less than 70% of the total technical score

1.3 Competitiveness in construction bidding

1.3.1 The concept of competition in construction bidding

Currently, there are many different concepts about the competitiveness of companies According to author Le Dang Doanh in the research work “Enhancing the competitiveness of enterprises in the time of integration”: Competitiveness of enterprises is measured by the ability to maintain and expand market share, earn profits for enterprises in the competitive environment at domestic and foreign market”

In the research work "Enhancing the competitiveness of enterprises in the process

of international economic integration", author Vu Trong Lam has synthesized and introduced the concept of competitiveness of enterprises as follows: An enterprise's competitiveness is the ability of an enterprise to create, maintain, use and create new competitive advantages in order to meet the needs of customers (compared to competitors) and achieve its objectives goals of enterprises in the domestic and

international competitive environment” Author Tran Suu in the research work

"Competitiveness of enterprises in the context of globalization (2006) also has the same opinion: "Competitiveness of enterprises is the ability to create competitive advantages, have ability to create higher productivity and quality than competitors, occupy a large market share, generate high income and develop sustainably”

Applying the above viewpoints in the field of bidding, the author proposes the

concept of competitiveness in construction bidding as follows: Competitiveness in

construction bidding of an enterprise is the ability and capacity of the enterprise to build, maintain and develop its advantages for winning many bidding packages compared to other enterprises in the same competitive market, ensuring its goal of maintenance, development and achieving the targeted profit These advantages can be

the experience, financial capacity, technical capacity, human and equipment capacity, management capacity, ability of joint venture with related parties, etc

1.3.2 The role of improving competitiveness in construction bidding of company

Enhancing the competitiveness in construction and installation bidding of a construction company is the continuously utilization, maintenance and development of existing competitive advantages, creation and development of new competitive advantages through which win over the competitors and achieve the business goals, gain a stable position in the market at all times and become the market leader

Improving competitiveness in construction bidding has the following roles:

- Create conditions to increase the competitive position of companies

- Create conditions for companies to make the best use of existing competitive advantages

- Create conditions for companies to create, maintain and develop new competitive advantages

- Create conditions for companies to win over competitors in the market

- Create conditions for companies to develop into the top of the best companies, leading the market

- Create conditions for companies with a high probability of winning bids, earning a lot of profits, contributing to the State, participating in sponsorship activities

for the society, increasing the prestige and brand of companies in the market

1.3.3 Methods of evaluating competitiveness in construction bidding

Because there are many different approaches to competitiveness, methods and tools for evaluating the competitiveness of companies are also very rich and diverse Good methods should help the analyst to make comparisons and contrasts the functions and activities of the company with the respective functions and activities of the competitors

1.3.3.1 Method of evaluating competitiveness according to the resource-based approach

A competitive company must have a competitive advantage Evaluating competitiveness with this approach requires the analyst to answer four basic questions (four criteria) in order to identify the resources and capabilities of the company which lead to a sustainable competition advantage or not These criteria and their contents are summarized in Table 1.1

Table 1.1: Criteria to test the resources and capabilities of companies to identify

sustainable competitive advantage

1 Valuable

Do resources/capabilities help company develop and implement strategies to exploit opportunities, reduce risks in the external business environment, and create value for target customers?

2 Scarcity

Are resources/capabilities owned only by the company or a few current or potential competitors? This question leads to a fundamental question: how many competitors have the same resources/capabilities as the company? If there are many such companies, that resource and ability cannot become a

competitive advantage of the company

Is there any resources/capabilities with equivalent value, easy

to imitate, and non-scarce to substitute for resources/capabilities of the company? Two resources are considered to be strategically equivalent if they can be used in isolation to carry out the same strategies

(Reference: Enhancing the competitiveness of businesses in the process of

international economic integration - Dr Vu Trong Lam (2006) - National Political

Resource/

Hard to copy and imitate

Resource/

Irreplace ability

Conclusion Meaning

Disadvantage in competition

Profit rate lower than average profit

Competitive equality (no advantage

or disadvantage)

Average rate of profit

Momentary competitive advantage

Rate of profit above or equal to average

Sustainable competitive advantage

Rate of profit above average

(Reference: Enhancing the competitiveness of businesses in the process of

international economic integration - Dr Vu Trong Lam (2006) - National Political

Publisher)

1.3.3.2 Method of evaluating competitiveness using competitive profile matrix

The competitive profile matrix (CPM ) is a useful tool that allows the analyst to simultaneously study the company in relation to its direct competitors to discover the relative advantages and disadvantages compared to competitors The information obtained from the competitive image matrix is important to the strategy formulation and implementation process Table 1.3 is a sample of the competing image matrix

Table 1.3 Competitiveness profile matrix

Company Competitor 1 Competitor 2

Classific ation

Evaluat ion score

Classific ation

Evaluatio

n score

Classific ation

Evaluati

on score

Summary =1,0

Applying a competitive profile matrix requires the following steps:

- Select direct competitors you want to do comparative research The most basic criteria to choose a direct competitor is that the competitor must be in the same business scope as the company This means that competitors offer similar products to the company's products to satisfy the same needs and requirements of customers, or apply similar business strategies of the company

- Select important factors that determine the competitiveness of companies and competitors as evaluation criteria

- Give the important coefficient for those factors in order to satisfy:

+ Coefficient from 0,0 to 1,0

+ A higher coefficient means that the respective factor is more important for creating and enhancing the competitiveness of the company

+ Total coefficient equal to 1,0

- Classification levels are scored from 1 to 4 (or 5) corresponding to the level of the strategy to take advantage of opportunities and limit threats in the external environment A score of 4 (or 5) implies the strategy that best responds to external environmental conditions, a score of 1 means the strategy that responds the worst The classification levels are scored for the company and each competitor in the matrix, respectively

- Rating = important coefficient x classification score and then cumulative A higher total rating in general reflects the respective company's stronger competitiveness (in overall ) However, that does not mean that the company with the high score will have absolute strong competitiveness compared to the company with the lower score because that total number obscures the significance of each evaluation score term Studying competitiveness requires attention to individual factors and their implications for creating and enhancing competitiveness The meaning of the competitive profile matrix does not lie in providing a single, specific number that reflects the competitiveness of a company, it is a convenient and scientific analysis tool to provide useful information for strategic decisions to improve the competitiveness of companies

(Reference: Enhancing the competitiveness of businesses in the process of

international economic integration - Dr Vu Trong Lam (2006) - National Political

Publisher)

1.3.3.3 Method of using value chain to analyze competitiveness

Each company can be modeled as a sequence of value-creating activities in the value chain When conducting a competitive analysis of a company, it is necessary to analyze in detail each of the nine groups of activities in the value chain of that company See what specific activities each activity group includes? Cost of implementing them? How do they contribute to make your product different? Among

those activities, what are the outstanding strengths and weaknesses of the company? How are the activities coordinated? How can companies better coordinate those activities to reduce costs and increase product differentiation? All those issues need

to be analyzed in detail and recorded the strengths and weaknesses of the company on the value chain model

Conduct a corresponding analysis of the company's largest and most direct competitors to get an idea of the competitor's value chain Compare two value chains

to know in which activities and functions the company has an advantage over competitors and which activities and functions the company has disadvantage This information is very important for companies to develop strategies to promote their advantages, overcome disadvantages and increase their competitiveness

Porter’s value chain (1985) with 9 main activities (Source: Enhancing the competitiveness of businesses in the process of international economic integration - Dr Vu Trong Lam (2006) - National Political Publisher)

1.3.3.4 Using the SWOT analysis model

The SWOT analysis model is a useful tool used to understand the Strengths, Weaknesses, Opportunities and Threats of a business Through SWOT analysis, companies will clearly see their goals as well as factors inside and outside the organization that can positively or negatively affect the goals set by the company SWOT is a useful tool when it is applied to solve problems in many different

situations The structure of the SWOT is as shown in Table 1.4 below:

Table 1.4 Swot matrix

STRENGTH (S)

Strategy Strength (S)/ Opportunity (O)

Strategy Strength (S)/ Threat (T)

WEAKNESS (W)

Strategy Weakness (W)/ Opportunity (O)

Strategy Weakness (S)/ Threat (T)

SWOT is presented in the form of a matrix consisting of 2 rows and 2 columns and divided into 4 parts Each section corresponds to Strengths, Weaknesses, Opportunities and Threats From the above model, we have:

- Strengths are factors inside the company that are positive or beneficial to help the company achieve its goals

- Weaknesses are factors inside the company that are negative or make it difficult

to achieve the goals of the company

- Opportunities are factors outside the company (business market, society, government, ) that are positive or beneficial to help the company achieve its goals

- Threats are factors outside the company (business market, society, government ) that are negative or cause difficulties in achieving the company's goals

It can be seen that the purpose of SWOT analysis is to determine the strengths that the company holds as well as the limitations that need to be overcome In other words, SWOT shows companies where they can attack and where they need to defend Finally, the SWOT results need to be applied reasonably in making a smart and effective Action plan, helping construction companies improve their competitiveness in construction bidding The using SWOT model to analyze and evaluate the competitiveness of enterprises has been applied in a number of previous researches, for example:

In the research work “Solutions to improve competitiveness in construction bidding of Construction and Foundation Engineering Joint Stock Company 20 - Licogi 20”- Master's Thesis in Construction Management, the author Tran Van Vinh has pointed out the company’s main competitors in the same field of the business, established a competitive

profile matrix and use Swot analysis model to come up with solutions to improve the competitiveness of the enterprise Thereby, the author had a clear realistic view and overview of the enterprise’s strengths, weaknesses, opportunities and threats to offer solutions to improve competitiveness in construction bidding appropriately

Within the scope of the thesis, the author has applied the competitive image matrix method to analyze and evaluate the competitiveness of the researched company (Song Da 6 Joint Stock Company) compared with some competitors in the same market segment, applying the SWOT analysis model to analyze the strengths, weaknesses, opportunities, and threats to the Company's competitiveness, thereby proposing some solutions to improve the Company's bidding competitiveness

1.3.4 Factors affecting the competitiveness in construction bidding of construction company

1.3.4.1 Internal factors of construction company

a) Business strategy of the company

Business strategy affects the creation and enhancement of the competitiveness of companies On the one hand, the strategy is built on the basis of competitive advantages, bringing into play the strengths of the company in order to compete with the weak points of the competitors, thereby winning the competition On the other hand, through strategies, companies can create, maintain and develop new competitive advantages and thus their competitiveness is enhanced The key issue here is that companies must develop, select and effectively implement appropriate strategies to best exploit the external and internal business environment conditions

b) Financial capacity of the company

The financial capacity of the company is shown in:

- Scale of core capital and borrowed capital, ability to raise capital for production and business of companies

- Effective use of those resources

- Reasonable structure between fixed capital and working capital

These factors help businesses ensure the correct implementation of the contract signed with the investor

A company with abundant financial capacity, able to participate in bidding for many projects in a year, has many opportunities to invest in equipment and machinery

to meet the requirement of construction and modern technology At the same time, always maintain the reputation for material suppliers and credit institutions Financial capacity has a positive effect on the bidding process It is considered in two aspects:

- For the archived bids, strong financial capacity helps companies complete the construction tasks, ensuring good quality and construction progress of the projects, ensuring the reputation and trust for the investors In addition, the average annual profit from construction contracts performed in the last few years represents the business efficiency of the company, which is also an important factor for the company

to be able to mobilize external capital from banks and other investors

- In construction bidding, financial ability is one of the criteria to evaluate contractors What is more important is a business with strong financial capacity, allowing reasonable bid decisions to be made

c) Human resource capacity of the company

Human resources of companies are considered as important assets of companies, directly affecting the efficiency of production and business activities Thereby, affecting the competitiveness of companies Assessing the resources of the business, Employer pays special attention to these issues:

- Senior managers (Board of Directors): Those who make policy and organize the implementation of the Company's development strategy, are knowledgeable and have deep expertise They decide the success or failure of the business and are responsible for those decisions One of the main functions of the Board of Directors is to formulate the action and develop strategy of the company When evaluating the leadership apparatus, investors are often interested in the criteria of leadership experience, the capacity of business activities, the qualities of the company and relationships with others Moreover, they appreciate the spirit of solidarity and consensus of officials, workers as well as leaders This not only increases the strength of the business itself, but also creates a reputation for investors

- Intermediate-level managers: The intermediate-level leadership team stands

above the junior managers and below the senior managers They are construction team leaders, chief engineers, and heads of departments In this position, they both manage the grassroots level under their authority and control other employees at the same time

At this level, the administrator has the function of implementing the plans and policies

of the organization by coordinating the work done towards the accomplishment of a common goal

To assess the strengths and weaknesses of the management team, the investor usually approaches on the following aspects:

+ Professional qualifications, work experience, understanding about business and legal of each member of the management team

+ The structure of specialized training by level will show the ability to specialize

as well as the ability to diversify of the company

- Junior managers, workers: This is a group of managers at the bottom level in the apparatus of a company Usually they are often called foreman, team leader, shift leader Their task is to guide, urge and control workers in specific daily tasks to accomplish the overall goals of the company This management team leads the workforce directly, creating the synergy of the business in aspects such as quality, construction progress

The team leader must have administrative qualifications (organize to coordinate labor and reasonable equipment, avoid waste in order to reduce costs, increase profits but still ensure quality), have a deep understanding of the work which is implementing, knowing how to take care of the interests of employees will create support and enthusiasm from their side However, it is not enough to have a good team leader, but also to have a team of workers with high skills, creativity and honesty in work They are the ones who directly implement the ideas, strategies and business tactics of the superior leadership team, who create the quality of the work and the competitiveness of the business

The above factors play an important role when companies participate in bidding, they must present to the investor If the company has good resources, reasonable structure, meets the requirements of the investor, it will be highly appreciated

- Direct employees in the company (workers): When assessing the capabilities of

the company, the bid solicitor often pays a lot of attention to the direct labor force of the company, they are technicians and workers on site Skilled, experienced and reasonable workforce is an advantage of companies in bidding competition Therefore, recruiting, training, employing, and taking care of employees' lives is a top concern in order to create stability, enhance the reputation and capacity of the company

d) The capacity of machinery and equipment

Machinery and equipment is the main and most important part of the fixed assets of the company It is a measure of technical level, showing existing production capacity, is an important factor contributing to increasing competitiveness of companies in bidding

The capacity of machinery and equipment is highly appreciated by the employer, because it is closely related to the quality and progress of construction The evaluation

of equipment and technology can be based on the following characteristics:

- Modernity of equipment and technology: This feature is expressed in criteria such as manufacturer, year of manufacture, capacity, residual value

- Synchronization: Synchronous equipment is a condition to ensure the compatibility between equipment, technology and production methods; between the quality and complexity of the products produced by that technology

- Efficiency: Shows the efficient use of equipment of the company Thereby, affecting the production and business efficiency and the ability to maximize the resources of available equipment for competitive purposes

- Innovation: It is the response to the requirements of production and business activities and is also one of the factors that enhance the competitiveness of companies

In production and business, this factor determines the selection and calculation of reasonable solutions in construction organization

In bidding, the capacity of machinery and equipment is one of the evaluation criteria of the employer A contractor with strong machinery and equipment capacity will increase competitiveness and especially in the construction of bid prices Many times, machine capacity (for special equipment) is a mandatory condition to participate

in the bid and win the bid

e) Reputation and experience in the field of construction

When evaluating construction companies to select contractors, the project investor is not only based on the technical proposals and bidding prices offered by the company, but the investor also considers the reputation and experience of the company in the process of implementing similar projects before The reputation of the contractor is expressed through criteria such as: brand reputation, construction capacity reputation, financial capacity and skilled workers Those are very important factors affecting the ability

of companies to win contracts, so businesses always consider developing their brand and reputation in the market as a very important factor in their development strategy

f) Ability of joint venture, association

A joint venture, association is a combination of two or more economic legal entities to create a new legal entity with synergy in terms of experience and financial capabilities This is one of the factors that evaluate the ability of a business In order to increase its capacity in the competitive market, the problem of expanding the association and relationships in appropriate forms is an important and appropriate solution Through which construction companies can comprehensively meet the requirements of large-scale and high-complexity projects

Joint ventures and associations with construction companies include:

- Joint ventures and associates to participate in bidding

- Joint venture with other legal entities to form a new legal entity with stronger potential, better competitiveness

g) Tender document preparation:

Bid preparation time is usually short, including many related jobs, prepared by many people from different departments in the construction company (directly & indirectly involved) Tender document must best meet the requirements of the bidding documents Therefore, this is a significant factor to help improve the ability of companies to win bids

Competitiveness in bidding directly depends on the level of bid preparation, which may be rejected in the first round because the tender documents do not meet the requirements of the bid solicitor

Organizing tender documents requires going through steps such as studying

bidding documents This job requires meticulousness, seriousness, full understanding

of the content and requirements of the bidding documents Investigate the bidding environment, investigate bidding projects, survey the construction site, make construction plans, set prices and decide on bidding prices

- Bidding environmental investigation: It is an investigation of the construction, natural, economic and social conditions of the project, which directly affects the construction method and the cost of the project Investigate the location of the construction site such as geographical location, topographical conditions, geology, transportation, communication, conditions of supplying materials, prices, and ability to exploit raw materials on-site, conditions for providing professional subcontractors and common labor, and the ability to provide food The above data and information needs

to be investigated in a short time, which requires the organizational and professional of the staff to prepare the bid Competitiveness in bidding will be higher if the company has a plan to supply materials with abundant quantity, right type, ensuring quality for construction works, … Doing this will help businesses reduce unnecessary costs, reduce project costs, making bid prices lower than competitors while still ensuring profits

- Investigation of bidding projects: requires understanding the nature, scale, scope of bidding, technical complexity, progress requirements, time limit for works completion and overall completion of the project, capital source, payment method, reputation…

- Making a construction method: is an important step that has a decisive influence on the bid price Having a reasonable construction method will ensure safety

of the construction work, ensure high quality, and will reduce unnecessary costs

- Determining and deciding on the bid price: is a complicated step with strict requirements to comply with, this is one of the deciding factors for winning the bid This work requires a professional department to perform with close and timely coordination of different specialized departments Besides internal factors such as the expected cost to complete the bidding package, the company's expected profit for the bidding package, before deciding on the bidding price, the company must investigate

and evaluate external factors such as: expected price of the Investor, bid attended competitors in order to decide the most suitable bidding price

Organizing bids is a very complex job and requires a very limited time The quality of the bid is one of the basic criteria to decide whether the contractor will win the bid or not

1.3.4.2 External factors of the construction company

a) Situation of competitors and the ability to react quickly and flexibly of competitors

The quantity and quality of competitors directly affects the competitive activities

of construction companies To win the bidding, companies must show their superiority against competitors Therefore, the research and understanding of competitors has a great impact on deciding the bidding price and proposing construction solutions of the contractor When researching competitors, there are some factors need to be paid attention to:

- Competitor's capacity:

+ Financial capacity

+ Human resources capacity

+ Equipment, technology capacity

+ Ability to organize, manage, operate a business, operate production

- Construction experience of the competitor

- Forecast the relation aspects of competitors (for a particular bid)

- Forecast construction progress

- Forecast opponent’s technology

- Bid price range (highest bid, lowest bid) that competitors can propose

In addition, in the long run, construction companies also have to find out if competitors have the ability to quickly adjust their strategies, give up commitments to the old strategy to switch to a new strategy to imitate the successful lessons of the company The advantages of companies tend to be temporary, the competitiveness of companies is not sustainable If on the contrary, the company is more likely to maintain its competitive advantage and have stronger and more sustainable competitiveness