Management issues in mth Vietnam - Bac Giang drainage and sanitation project

ger; South East Asia Manager - Purpose of the assignment: By analyzing management issues of a real company, this assignment is to help the students and readers: To get to know about the functional processes of management To understand the environmental factors that affect the implementation of the project and how to deal with those factors in order to improve the efficiency of studied project. To apply the lesson learnt from the assignment to real cases Description of the Company 2. DESCIPTION OF THE COMPANY 2.1. Background Information MT Hứjgaard (MTH) is an Denmark building and construction company, which was established in 1918. This company has left its mark on a multitude of building projects in Denmark and abroad. Bac Giang Drainage and sanitation Project has the building period of 2007-2009 with the investment capital of 22 million USD. This project is to carry out a wastewater treatment plant and a drainage system in Bac Giang city. The existing drainage system is to be renovated and extended to service seven wards in the city. Number of Employees in Bac Giang Project: 42 staffs (excluding the workers of Sub-contractors) 2.2. Business Strategy VisionMTH aims to be Denmark’s leading building and construction company. The company maintains and develops this position by being the best in key areas. This applies to its professional competences and its development of existing and new forms of collaboration – both those that are directly targeted to its clients and those regarding optimization of its building processes. Mission MTH creates space for people’s activities and achieve building and construction visions by systematizing and combining knowledge and craftsmanship. The company acts according to its six values: Customer-minded; Value-adding; Innovative; Trustworthy; Good employer and Sound financial base. Objectives of the Project Refurbishing and expanding the sewer system; building a new purification treatment plant in the scheduled time with highest quality at provided capital. Solving the existing flooding problem and the increasing environmental pollution caused by both domestic and industrial wastewater for better health and better opportunities for economic growth Creating jobs for local engineers and construction workers Strengthening the diplomatic relationship between Denmark and Vietnam 2.3. Environmental Factors Affecting the Company Social factors In the project, a total of 40 km of pipes with dimensions varying from 300 mm to 2000 mm are to be laid within Bac Giang city. Most of the pipes go through areas that people are living, working and doing business. Before laying the pipes, workers must dig and excavate the pavement in front of inhabitants’ houses or shops, which cause difficulties for them to travel or to sell the goods. Some people prevent MTH staff from continuing the project and MTH representative have to explain the huge benefit for the city after the project is finished. When the citizens understand clearly about the purpose, they are willing to create good conditions for the company to carry out the construction. In this case, it is obvious that the management of relationship to the outsider play an important role in the success of the project. Legal factors MTH is a foreign contractor and Bac Giang is the very first project that this company carries out in Vietnam. The company has not understood deeply about Vietnamese construction law and the habit of doing business of Vietnamese subcontractors. Moreover, there are also differences between Vietnamese and international law in related issues. Therefore, sometimes, MTH face problems in applying the law to manage the project, which lead to difficulties in inspection and arrange payment among main contractor and subcontractor. Economics MTH implement drainage and sanitary project over the period that the international and Vietnamese economy is facing with finance crisis. The effect of this chaos is: - Firstly, materials price increase remarkably in comparison with the time when the contract was signed and cost estimation was generated. The company has to re-calculate the expenses and make some corrective items in order to prevent the project from the loss. - Secondly, it is more difficult to mobilize and transfer more capital for the project because parent company in Denmark also has to deal with the shortage of capital to overcome the hard time in crisis. Due to this fact, MTH Vietnam has to tighten the expenditure and re-allocate some costs as well as to cut down a few unnecessary items. Political: By implementing this project sponsored by loan from Danish government, the relationship between Vietnam and Denmark is strengthened. Leaders of Bac Giang People Committee promise to make the most convenient conditions for the company to finish the project on time. They help to persuade citizens to follow the contractor’s instructions and plan. However, there are quite many parts participate in to the project: - Vietnamese side includes Project Management Unit (representing Investor), Consultant (responsible for supervising the project) and sub contractors (responsible for carrying out each construction item) - Danish side: MTH In some case, this fact may make the procedure slow down. Subcontractors are working under a number of supervisors. Decision making process going through multi-level system will be less effective. Technical: The advantage for MTH Vietnam in the project is that it can acquire the advanced technology in wastewater treatment and building water drainage system. Fifty percent of the pipes are High Density Polyethylene (HDPE) and the other fifty percent is concrete pipes, which are very durable and long-lasting. The company also applies really new methods in building the wastewater treatment plant. In short, there are 5 main environmental factors which have both positive and negative effects on the project. The company should recognize all of those factors and find out the right approaches to deal with problems it faces. 3. INDENTIFICATION AND DISCUSSION OF CURRENT MANAGEMENT PRACTICES AND ISSUES: 3.1. Management Practices In general, the organizational structure of MTH company is not much different from a normal organization. Leading the project is the Project manager – Mr Sứren Rib VaalakldjfCer Carlsen, who is supported by a Deputy manager – Mr Micheal Kolbe. The company is divided into some functional Departments: + Sewer Department + Pipe-line department + Wastewater pumping stations & Wastewater treatment Plants + Quality Assurance + Admin and Coordinators Each department has a manager who reports to project manager or deputy project manger. The management of the company including the 4 issues: planning, organizing, leading and controlling is as followed: Planning The contractor makes the plan and submits to Project management Unit of Bac Giang city who are the representatives of the Client or Investor) to get approval. The plan is generated based on analyzing existing resources such as: financial resource, human resource, technical resource… Each item of the project is a part of completed and consistent system. In the plan, the building of all the parts such as pipe-line system, wastewater pumping stations, flooding water pumping stations & waste water treatment plant… has the connection to each other and can be executed at the same time if possible in order to save time and work scientifically. Organizing Based on the general plan, a detail project schedule is made in which each item is given to each Department. The schedule is even detailed to every week/month/quarter. The capital is also allocated for each item in this schedule. On executing the project, when the company comes up with some problems, occasionally makes the project to be in “freeze mode” for several days (eg. Difficulties in land clearance, bad weather…), the manager must be very flexible and quick-minded in taking the corrective actions to rush up with project schedule. Leading Mr. Sứren sets up a number of measurements to access the performance of his staff, most important of which is fulfilling the task (the construction item) not later than the time in schedule at quality requested. Moreover, the company offers rather high salary to staff, not only for Danish engineers but also Vietnamese staff. In addition, MTH has good policies for Vietnamese staff who works far from their home such as: paying for the apartment rent, buying some housing equipments (air-conditioners, washing machines…) to motivate the employees to concentrate on their work.. The manager use the code of conduct in the company which include business conduct, societal relations and human rights. Controlling: MTH is the contractor with main responsibilities of instructing the subcontractors to implement building items and control their quality, therefore the manager required that: site supervisor and inspectors always on site to follow up the work in actual condition and to deal with problems occurred. The manager reviews the project schedule every week by having meetings internally or meetings with representatives from related sides such as subcontractors, PMU & consultant… to solve the problems. Management issues Problems in the co-operation among the parties: MTH company did not request consultant to give detailed instructions about the legal steps in related issues such as land clearance, responsibilities dividing… from the beginning. Moreover, MTH company – the main contractor does not apply restrict control on subcontractors because it is not familiar with the way of doing business in Vietnam. For example, MTH did not provide a clear penalty or bonus if subcontractors complete part of an item behind or exceed the time schedule. In Vietnam, this matter is really important because the bonus may motivate subcontractors to work harder while the penalty forces them to meet the requirements of time and quality agreed from the start. Problems in giving responsibilities to departments and building team work: In this project, the responsibilities each department has to bear is too clear, team working spirit is not good enough so to some tasks that need the co-operation among the departments, the progress seems to be slow down. For instant, if site related departments do not work in coherence with Quality assurance department, the effectiveness in work will not be gained. In addition, the relationship between Vietnamese staff and Danish managers is not close enough. In some cases, they do not understand each other which lead to conflict and inefficient team working. Problems in employee motivation: Although staff are paid high salary and get much social care, some employees do not feel satisfied with the policies of the company. There are very little opportunities for the staff to be promoted because MTH just appoints Danish staff to important positions like department managers and project managers. Besides, MTH managers do not organize small parties or picnic to fill in the gap between Vietnamese and Danish, to make them closer and to build up team working spirit. Enterprise culture takes a significant task in deciding the productivity of working in group and the effectiveness of the whole company. Therefore, if the company is not a united organization, the benefit of the whole company will be badly affected. 4. ANALYSIS AND ACCESSMENT 4.1. Positive sides in MTH management approaches: - Professional management skills: MTH was established 90 years ago. Therefore the managers has a lot of management skills that can be applied in establishing plan and organizing the schedule. The plan execution is taken steps by steps at most effective way. The more detailed schedule is, the more efficient the project will be. When generating the plan in details, the plan makers can think of the problems that may occurs and appropriate solutions for that. All parts of the plan has the links with each other, which is very close to the reality. This will make the mechanism run more smoothly and save time. In addition, reviewing the performance of the project is a good approach to make sure that it is executed in the right way, at the right period of time and not behind the schedule. This also helps to recognize the problems in the process and take necessary corrective actions. - MTH has applied some right policies to the employees which can motivate staff: MTH gives high salary to employees. It is a expression of recognition from the employers to the employees’ experience and skills. In fact in Vietnam, salary still plays an important role in employees’ decisions when they choose a job beside the work itself and other working conditions. Moreover, when the company provides equipments to the rented apartment for staff living far from home and support the expenses for them, the staff feel that they are cared about. High living standard can also contribute to improve employees’ health. Code of conduct that MTH applies has outstanding results. It ensures that all staffs comply with the law, directives and its own policies. There is a fact that MTH managers and staff are not allowed to receive any kinds of gift which can be perceived as a bribe or they will be heavily punished if the bribery is revealed. This fact gains the respect from the society and other partners. To the citizens, MTH always requires the staff to carry out activities based on responsibility, dialogue and realistic mutual expectations. 4.2. Negative sides in MTH management approaches - When the contractor do not have the proper understanding about the legal issues in executing the project while consultant does not give full instructions, it can lead to the incorrect progress when MTH implements the project and have to spend more time and money to fix the errors. Sometimes, it takes even longer to amend the mistake than to execute. - One of the motivators to the employees is responsibilities. It is nature that: employees would feel more self-confident and contributive to the company’s success if they can take some responsibilities at work. If not, they may feel useless and aimless. Taking responsibilities is somehow like overcoming challenges, which energizes staff to work harder. In MTH company, only managers take responsibilities and report to the project manager. However, the staff are quite free in their work and not given the strict responsibilities. Some employees can become un-selfactive and depend on other colleagues and department when they have to fulfill their tasks. When there is an items that need many departments to take part in, some staff do not want to take responsibilities or try their best effort and surely, the result is not as good as expected. - Little chances to grow and make advancement will make the staff work less hard. When the employees think that: all their effort just lead to the same result and the same position, they will be limited to finish their tasks, not to express their ability and performance to get promotion. The project only takes 2-3 years, which is not long enough for the employees to become really excellent staff and promoted to higher position. - Enterprise culture: In the current business environment, as science and technology develop and products have good quality, what differentiates one enterprise from others is the corporate culture. A good culture may encourage and make staff come up with possible initiative and innovation. If people in the company usually have conflict and do not get on well with each other, the team work will not be effective. Managers can improve the enterprise culture by encourage staff to exchange information. Updating and improving professional knowledge, foreign languages and informatic technology become essential demands. Knowledge gained is promptly applied to daily work and exchanged with colleagues. Mutual understanding between leaders and employees should be established and developed through activities, professional discussions, scientific and technological conferences of ages.... Besides professional business, members in the company should a close relation in cultural and sport activities, exciting games. Accordingly, there is no distance between leaders and employees. 5. RECOMMENDATIONS - Relating to management skills, although Danish managers has a lot of experiences but they need to get to know and understand the way of working in Vietnam. MTH should take the techniques from other foreign companies in Vietnam to get more information and experiences. - Relating to motivation skills: company managers should know how to delegate the work to each staff and to give responsibilities to each department. In building some items, managers ought to declare that: related departments must take the responsibilities in the result and there should be clear bonus/punishment if the tasks are not fulfill completely. - Relating to enterprise culture: managers ought to strengthen the team work ability and make good conditions for the staff to closer to each other to build an united organization in which people all put the interest of the company above individual’s interest, strive for the development of MTH company. 6. REFENRENCES - Website: - MTHojgaard’s annual report 2007 - Some of the Vietnam MTHojgaard’s site minutes in 2008. - Some weekly/monthly reports submitted to project managers. ._.