Contractors in the slow lane

October 31, 2012 | 09:25
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Korean contractors for two major northern highway projects are facing serious penalties after dropping behind the Ministry of Transport deadlines.

The contractors at the $1.25 billion Noi Bai-Lao Cai project and the $476 million Hanoi-Thai Nguyen expressway have been urged by the ministry (MoT) to exert their best efforts to put the projects into operation before the end of 2013.

MoT Minister Dinh La Thang said these two expensive projects, once operational, could generate big socio-economic efficiency, and contractors failing to deliver good quality would incur sanctions.  

“The contractors need to review their entire workload and ... accelerate [construction] pace to reach the set progress target,” said Thang.

At the Noi Bai-Lao Cai expressway project, Keangnam is the first international contractor to subject to penalties from the MoT for its poor performance over the past two years since the project started.

Thang said 50 per cent  of the work at A4 tender package and 80 per cent at A5 tender package of this expressway project should be handed over to other contractors.

“If Keangnam continues to fail progress targets, the MoT will nulify its guarantee for the contract implementation,” said Thang.

Vietnam Expressway Corporation (VEC) report shows that by mid October,  Keangnam had completed only 9 per cent of the assgined contract at tender package A5. Event at tender package A1, where Keangnam has shown its best performance, the South Korean contractor has fulfilled only one-sixth of the contract.

“We saw no opportunity for Keangnam to complete A5 package on December 31, 2013 as scheduled,” said the project chief consultant Francisco Javie de Bonigaz at Spain-based consulting firm Gentisa.

Keangnam’s construction pace at A4 package was also at an alarming level with only 23.13 per cent of the workload done.

MoT Vice Minister Nguyen Hong Truong said Keagnam’s president had promised to provide more resources for for the project, but “little progress has been made at A4 and A5 packages in the past three months”.

A4 and A5 packages’ total contract value reached VND2.8 trillion ($133 million).

The Noi Bai-Lao Cai expressway project consists of eight tender packages. After two years, only packages A7 and A8 have been undertaken timely. The remaining six packages, all performed by Korean contractors, are assessed being weak in term of handling capacity. Furthermore, contractors are criticised for not seriously abiding by contract terms.

At the Hanoi-Thai Nguyen highway project, Project Management Unit 2 (PMU2) under the Directorate for Roads of Vietnam had to ‘shear’ a number of contractors due to their poor performances.

PMU 2’s general director Nguyen Ngoc Long said in the past three months, the authority had required the main contractor to replace 24 out of 84 sub contractors in the project.

Unlike the Noi Bai-Lao Cai expressway project, contractors at this 61km highway are all local firms. Just 58 per cent of the value of the four tender packages are expected to be fulfilled by the year end.

“Without significant improvements seen in their progress in the forthcoming months, we would propose the MoT slash part of the main contractor’s work to hand-over to other contractors,” said Long.

By Anh Minh

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