In 2018, when The Landmark 81 building – the top 10 tallest buildings in the world at that time was inaugurated after just over a year of construction, surprised many people. With a total floor area of 115,000 m2, 90,000 m2 of tunnels, 75m deep foundation, using more than 100,000 m3 of concrete and 80,000 tons of steel…, the new symbol of Saigon becomes the world’s fastest building tower when it only takes 3,5 days to complete a floor.
Later, the VinFast factory (Hai Phong) with an area of more than 500,000 m2 only needed 18 months to complete. Super fast construction works in Vietnam are appearing more and more. Few people know that, all of them share a model called “fast-track”.
What is fast track?
The fast-track model is not strange since the 1930s, when the global economy was in a serious crisis, the world’s tallest building at that time in the US – Empire State – was built in just 18 months based on the by this method.
This is the way to deploy the project when the Investor (Investor) wants to speed up the progress, shorten the time to bring the product to the market, promptly respond to customer needs or to match the consumer trend right at home at that moment.
Normally, traditional construction will start from concept design, sales research, then design, construction, acceptance and finally put into operation.
However, with the fast-track model , to save time and costs, people will carry out design, construction and acceptance… in parallel. That is, the project starts as soon as the investor finalizes the concept design and sales plan, then the contractor will start construction at the time the design drawings have not been completed.
Correlation between the traditional model and the Fast-track model
With fast-track, design and construction are coordinated to minimize total construction time. For example, the investor may allow the contractor to start the foundation and build 4 floors before many details in the architectural, structural and mechanical drawings are completed. Accepting the contract without waiting for the design to be 100% complete helps the contractor to start construction from 6 months to 1 year earlier.
Fast track – One arrow hits 3 targets
The first benefit that fast-track brings is that for customers, they can own the building/project quickly and on schedule. For investors , fast-track helps to shorten construction time and save costs such as: land rental, personnel costs, apparatus management… When the project is completed soon, the investor will quickly have revenue. For example, the case of The Landmark 81, according to research, after just over 1 year, the investor has a source of income. VinFast office building was built in just 5 months, the total factory complex is 18 months, instead of taking up to 2.5-3.5 years as usual.
And even if a building’s massive sales aren’t a big deal, fast-tracking can help the construction industry reduce costs caused by inflation. Try to do the math, if inflation is at 7-10%/year, shortening the time to only 6 months has saved 3.5-5%. Moreover, fast construction also helps investors reduce project management risks because all are compressed in a short time instead of being spread out.
VinFast factory complex completed after 18 months
In terms of contractors , fast-track helps to reduce the risk of bad debt and generate sustainable revenue. It is known that construction under the general contractor model will usually require a contract performance guarantee, accounting for about 8-10% of the total contract value. The contractor will have difficulty with this guarantee if the project has not been licensed. The risk is that if the project implementation time is prolonged, it will lead to progress failure, which will result in the price/inflation of materials and construction materials that will increase compared to the initial contract price. And all of that cost loss will be the pressure on the contractor.
With the fast-track model, the payment between the investor and the contractor will be approved according to the actual construction volume in the field. Risk of missing volume, lack of work is almost unlikely. At the same time, with the fast progress of the project, the contractor reduces the risk of costs incurred due to inflation, increase in material prices, etc.
However, the biggest benefit that fast-track brings to contractors is probably generating sustainable revenue. Large-scale projects are often divided into several stages, such as VinFast, Hoa Phat, Lego factories, etc. Contractors who do well in the first phase will continue to be assigned more jobs by the investor in the next stages. Moreover, large investors with strong cash flow implement the projects under the fast-track model.
Why is that? Let’s do the math at The Landmark 81 project, with a total construction capital of about 300,000,000 USD and disbursed within just over 1 year, which means that each month, the average investor has to spend about 20,000,000 USD. Or in the VinFast factory project, the revenue of Coteccons alone – the contractor participating in all 3 phases of building factories in Hai Phong – is more than 10,000 billion VND.
Therefore, for contractors, fast-track is the safest form of construction in the context of economic difficulties, helping them reduce the risk of bad debt, quickly recover debts and generate sustainable revenue and profit.
However, fast-track is still not a perfect construction solution. The faster the construction, the more overlap of work. And the biggest risk is the possibility of design flaws. Instead of helping investors save millions of dollars in costs, design-construction mistakes can cause the construction budget to “bulge” compared to the original estimate. Many parts of the building were demolished and rebuilt. Or the investor will have to spend a large budget to pay for dozens of materials that are wrongly sized because during the construction of the fast-track model, the drawings will be regularly updated. Therefore, requiring both investors and contractors to have sufficient capacity, experience and fast-track are often still considered a separate game of large contractors.
Source: CafeF
Source: Vietnam Insider