Reasons for behind schedule construction projects and cost overruns, according to Ministry of Transport

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Hanoi urban railway project, Cat Linh - Ha Dong route is one of the projects that is behind schedule and has increased the total investment.Photo: Internet

Six key construction projects are behind schedule

Reporting to the National Assembly on the implementation of key construction and projects, the Ministry of Transport (MOT) said that besides remarkable results, there are several difficulties in implementing key construction and projects. Accordingly, insufficient investment capital, complex disbursement mechanism, limited clearance compensation, manyobstacles andcomplexregulations in selecting investors and contractors, a lackof many specific mechanisms applied to key or urgent projects are the most frequent, severe and important causes forthis delay. Besides, projects from the initial estimate of VND 10,000 billion must approved by the National Assembly when adjusting total investment due to they may contain important information of the country. As a result, many ongoing and to be implemented projects have beenaffected seriously.

Specifically, at present, there are sixkey projects behind schedule including the Ben Luc - Long Thanh Expressway project and other fiveurban railway projects. The implementation of some new ones are still very slow like the construction of T3 station of Tan Son Nhat Airport, Long Thanh International Airport, and projects of the North - South Expressway in the form of PPP.

The projects which are behind schedule and have increased total investment include Ben Luc - Long Thanh Expressway and fiveother urban railway projects (threeprojects invested by Hanoi and Ho Chi Minh City are urban railway projects of line No. 3 Nhon - Ga in Hanoi, the urban railway project of Line 1 Ben Thanh –SuoiTien, Line 2 of Ben Thanh –ThamLuong and two projects invested by the Ministry of Transport are the Hanoi urban railway project of Cat Linh route - Ha Dong, Hanoi urban railway project on line No. 1 Yen Vien - Ngoc Hoi).

Seven major traffic infrastructure projects have fallen behind schedule and increased budgets are: Ben Luc- Long Thanh expressway, along with five urban railways (threeare invested by Hanoi and Ho Chi Minh City: line No. 3 Nhon – Hanoi station railway project; Line No. 1 Ben Thanh –SuoiTien; Line No. 2 of Ben Thanh –ThamLuong, 2 others are invested by the Ministry of Transport: the Cat Linh- Ha Dong urban railway project in Hanoi; line No. 1 Yen Vien- Ngoc Hoi urban railway project).

Reasons for capital increases

Most of the key projects arelarge-scale requiring well-qualified management capacity and complex construction technologies, especially those which were first implemented in Vietnam (urban railway projects). Meanwhile, we employedinvestorswith no management experience; capacity of investors, project management boards, general contractors, contractors, consultants were still limited andnot really professional leading to difficulties and obstacles that were not handled thoroughly. Thus, projects had to be adjusted, departing significantly from initial plans sothe estimated time wasdelayed and the capital increased so much.

In addition, there are other objective reasons such aslarge fluctuations in input prices for construction works were fluctuated strongly, exchange rate changes increasedtotal investment of the project technical handling andflood settlement were prolonged; complex geological conditions, unfavourable weather affected the progress of projects.

The Ministry of Transport also said the cause of the slow progress and cost overruns in numerous projects recently were mainly due to irresponsible investors and other subjective factors such as: increasing total investment compared with initial data, but other subjective factors are also the main cause of the slow progress and budget increasessuch as: Slow clearance, prolonged resettlement, lack of clean ground and handing over to construction contractors is the main cause of slow progress in many projects, especially urban railway projects.

Infrastructure planning in some localities wasnot implemented effectively so it took a lot of time for specialized consulting firms to evaluate the projects. In reality, some projects such as: Yen Vien - Ngoc urban railway project; detailed planning of 1/500 of Hanoi National stations; Giap Bat and Gia Lam Station, the planning of 1/2000 ofHanoi station subdivision, the plan for the bridge over the Red River, are also behind schedule due to this weak capacity in building investment plans and evaluating projects

Referring to the main cause of budget increases, the Ministry of Transport determined there are numerous reasons for these unexpected incidents. Weak capacity in building investment plans and evaluating the projects is the main reason behind budget increases. Especially, forsuch new typeslike urban railway projects, due to a lack of experience, consultancy firms failed to calculate exact investment capital compared to real demand as well as necessary infrastructure works. Thus, projects had to be adjusted, departing significantly from the initial plan.

At the same time, the mechanism for implementing projects (especially ODA projects) is also one of the main reasons to the slow progress. The annual ODA capital plan was not allocated sufficiently leading to late payment to contractors, the prolonged shortage of reciprocal capitalaffected the progress of the project. The work of bidding or selecting contractors encountered many difficulties due to complexconstraints on the bidding regulations of donors;a number of projects that form an important national factor with total investment of more than VND 10,000 billion along withproject appraisal, approval and adjustment process, often took a long time because they must be reported to the Congress before approving adjustments.