Koreans contractors hit bumpy roads

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Leading Korean contractor brands like Posco, Keangnam and Doosan are currently not standing for quality and progress at several key highway projects in Vietnam.

The message was delivered by Minister of Transport (MoT) Dinh La Thang in a meeting hosted by the MoT which reviewed the progress of key highway projects with foreign contractors climbing onboard.

The meeting focused on major delayed highway projects  Noi Bai-Lao Cai, Hanoi-Haiphong and Ho Chi Minh City-Long Thanh-Dau Giay, which have South Korean contractors.

For instance, at the VND20,000 billion ($952 million) Noi Bai-Lao Cai expressway reports by developer Vietnam Expressway Corporation (VEC) showed that completed work volume of Korean contractors Posco (handling A1, A2 and A3 bidding packages), Keangnam (executing A4, A5 packages), and Doosan (A6 package) lags far behind the project’s average pace.

After 20 months construction, the completed volume at Keangnam’s A5 package only reached 4.9 per cent of the contract value.

At the VND15,010 billion ($714 million) southern Ho Chi Minh City-Long Thanh-Dau Giay expressway developer VEC had to select another contractor after South Korean contractor consortium of Pumyang-Sungjee went bankrupt.

Korean contractors’ weaknesses were shown in not only construction sites, but also in their failure to observe contract terms such as the capacity in mobilising machinery and equipment.

These Korean contractor representatives attributed delayed site hand-over and highly volatile input costs to the delays.

In fact, the key reason behind Korean contractors’ underperformance was reportedly excessively low bidding prices.

“Too low bid prices deterred Korean contractors from hiring quality contractors which could help them keep abreast of progress targets,” said VEC’s general director Mai Tuan Anh.

Thang said Korean contractors should pump money to make up for the shortfall and accept a dent on their profits to rescue progress targets since if they were ousted from  projects, it would be big losses to their prestige.

“Since the MoT insists it will not extend these projects progress, VEC will have to ‘trim’ some underperformed contractors against expectations if there were no improvements,” said Anh.