Given that potential incentives are the drivers to encourage participants to develop a partnership, a thorough understanding about them would help to widely propagate the innovative concept of partnering. Moreover, given that performance is a core aspect in partnering research and practice, a better understanding of the elements related to performance such as problematic factors and success factors would definitely contribute to the current knowledge on construction partnering. The results could also be used by construction professionals for the guidance of partnering operation and management in practice, since partnering becomes popular and seems suitable in current construction market in Vietnam. Therefore, this research is conducted to fill in the gap to explore the incentives, problems, and success factors in partnering implementation in Vietnam.
1.2 Characteristics of the construction industry in Vietnam
The construction industry plays an important role in the socio-economic development of the country with the fast speed development to meet the infrastructure demands and the urbanization. However, it has been criticized for its inefficiency and weakness. Even though there is a quite long
neighbouring countries (Ho et al. 2007). A number of works have been analyzed the context of Vietnamese construction industry. These works’
results presented several distinct characteristics of the construction sector in Vietnam.
It is similar to other developing countries that human-related problems received many criticisms. One of the prominent features of the industry is labour redundancy (Ho et al. 2007) but low-productivity (See Table 1.4). The lack of competency and skill of the labour force was blamed in some researches (Long et al, 2004; Le-Hoai et al, 2008). There is little or no training activity for personnel from construction companies. The Ministry of Construction has developed a strategy of human resource development.
According to this plan, till 2020 human resource of the industry will meet its demands.
< Table 1.4 > Number of construction workers and productivity
Number of workers Output productivity Year
(thousand workers) (million
VNDs/worker) 2004 1,923 23.2 2005 1,999 26.7 2006 2,137 30.2 2007 2,268 35.1 2008 2,394 40.0
Finance and technology are the inherent barriers of the Vietnamese firms.
Competition in Vietnamese market greatly depends on the capability of capital supply. The important or large scale projects, which need high technology, mostly depend on foreign sector due to domestic sectors’ lack of supply capability (Luu et al, 2008). There is little expenditure on research
and development in construction industry. Vietnamese entrepreneurs’
demands for technological innovation are relatively low with average expenditure accounted for only 0.2% - 0.3% of total revenue (Nguyen et al, 2008).
The number of construction entrepreneurs is very large. There is no official definition of construction firms by size in Vietnam. They can be subjectively grouped into very small, small, medium, big, and very big groups according to their capital. The five group sizes and grouping criteria are presented in Table 1.5. Although the number of operating firms is large, the domestic market is mainly controlled by medium and bigger firms (Luu et al, 2008) and they tend to operate independently. A major part of the industry originated from State-owned enterprises that are eligible to the State’s policies. They receive strong supports from their governing body and get easy to access to resources (Nguyen et al, 2008).
< Table 1.5 > Structure of construction entrepreneurs in Vietnamese
market
Very small Small Medium Big Very Big
Year < 1 billion
VNDs
1 - 10 billion VNDs
10 - 50 billion VNDs
50 - 500 billion VNDs
> 500 billion VNDs
2000 1,343 1,735 637 274 10
2001 2,019 2,602 713 343 16
2002 2,503 3,997 854 471 20
2003 2,831 5,898 1,019 540 29
Note: 2004 – 2008 period, data from government are not available; firms were grouped according to firms’ capital
Bureaucracy significantly influences the Vietnamese organizations and
regulations and formality (Nguyen et al, 2009). Bureaucracy is identified as one of the critical problems in the construction industry in Vietnam (Long et al, 2004). Inertia forces are still strong in the Vietnamese culture. The directive style is the common style of the Vietnamese thinking. The supportive and the achievement-oriented styles are not emphasized. Change of think is not willing to be accepted in the near future.
The legal and institutional framework causes many problems for the industry. According to JETO (2007) uncertain and unclear policy management of local government, and arbitrary legal management and application appear in the top five problems of investment environment in Vietnam. The complexity of the framework is a challenge with practitioners.
Complying with the global integration, the Vietnamese construction industry has faced many new challenges such as increased competition from foreign sector, more exacting quality standards, rapid development of new technologies and increased risks of globalization. The necessary infrastructure system has developed very fast. Construction projects’ scope has been growing larger and more complicated. The adversarial relationships between project parties from the traditional contract arrangement have caused many difficulties. The construction firms are trying to improve the competency and competitive advantages. They are searching for a new arrangement sufficient with their current context.