Tran Dinh Nam1,2, Dang Ngọc Duc1, Nguyen Van Duy3
1 National Economics University, Hanoi, Vietnam
2 Hanoi Metropolitan Railway Management Board, Hanoi, Vietnam
3 Viet Nam Quantitative Analysis Join Stock Company, Hanoi, Vietnam
Correspondence: Tran Dinh Nam, Organization & Training Division – Hanoi metropolitan railway management Board, No. 8 Ho Xuan Huong street – Hai Ba Trung district – Ha Noi city – Viet Nam.
This research aimed to develop and varify a model assessing factors affecting ODA project performance. The research adopted qualitative methods (one-on-one discussion, group discussion, 2-round expert network interview) to develop models and used quantitative methods (Cronbach Alpha test, EFA, CFA, and SEM) to varify the model. Research findings from 212 officers and staffs involved in urban railway projects in Vietnam showed that three factors among six factors that directly affected project performance were (1) management capacity; (2) adaptability and (3) financial capacity. Factors such as organization ability and risk management did not show an obvious influence on project performance.
Keywords: ODA, effective project management capacity, adaptability, financial capacity.
Official development assistance (ODA) plays an important role in socio-economic development of the less developed and developing countries. ODA is a source of additional investment funds, focusing on the development of basic infrastructure and other long-term development goals. Studies on the effectiveness of ODA utilization often focused on the assessment of its impacts on the economy (Hansen & Tarp, 2001; Karras, 2006), studies in Vietnam often focused on attracting ODA for the development of industries or localities (Nguyen Ngoc Vu, 2010; Ha Thi Thu, 2014). These studies were often specialized reports on assessment of ODA attration and utilization to devise solutions to attract ODA funds for industries or localities without focusing on the aspect of project management. Therefore, the current lack of studies that systematically assess factors affecting the performance in terms of project implementation. Therefore, this study was conducted to (1) establish a model and measurement indicators of project performance and influencing factors; (2) varify the model through research data in on-going urban railway projects in Hanoi.
2. Research overview
2.1 The concept of ODA
ODA began to take shape after World War II with the US Marshall Plan to assist allies. To the 1970s, United Nations General Assembly recommended the donor countries spend 0.7% of their GNP as grant sources for poor and developing countries. Definitions of ODA may differ on the wording but are agreed on the fact that ODA is the development assisstance resources with at least 25% of non-repayable funds. For example, the World Bank (WB) defined “ODA is a part of official development finance with non-refundable factor plus concessional loan which accounts for at least 25% of total funding, then termed ODA” (WB, 2001). Thus, ODA can be seen as supporting funds for intergovernmental or transnational organizations, or foreign governments characterized by concessional and refundable or non-refundable, in which the non-refundable funds must account for at least 25%.
2.2 ODA project performance and affecting factors
Performance is generally understood as the use of resources to achieve optimal goals. Research in business defined the concept of performance is to achieve strategic goals (Cyert & March, 1992; Hult et al, 2004, Keh et al, 2007). Similarly, project performance can also be seen as the achievement of project goals. From the angle of project implementation, performance could be seen as the overall effectiveness of each component. Important issues of the project performance always are: (1) quality; (2) progress; (3) costs and (4) other objectives. Therefore, in this study we defined: “The performance of ODA fund utilization is to achieve objectives of all components involved in project implementation, achieve strategic objectives of each component in terms of quality of work, costs, schedule and other objectives.”
There are a lot of factors that influence ODA project performance depending on diffent evaluation angles. From the angle of project implementation, there are six main factors affecting performance including (1) financial capacity; (2) organization capacity (3) operating capacity (4) adaptability and (5) risk management. In which:
Financial capacity: The ability in financial administration, creation of funds and financial flows to ensure works. Ensuring good financial capacity is an important factor affecting the performance results (Baral, 2005; Kouser et al, 2011).
Organization capacity: The ability to coordinate and combine implemtation activities to achieve the set objectives. The quality of organization and coordination is seen as a factor affecting implementation results (Becker & Gerhart, 1996). Besides, the quality of activity connection may also affect performance outcomes (Walter et al, 2006).
Management capacity: Is the management ability of leaders over subordinate units. Leaders’ good management inspires employees, creates links and control over work implementation. In relation to work implementation quality, management capacity has impacts on performance outcomes or the performance of the organization (Krasnikov & Jayachandran, 2008).
Adaptability: The ability to organize and coordinate to re-format resources to meet environmental changes (Zahra et al, 2006; Zhou & Li, 2010). Adaptability affects the viability and growth of the organization (Zhou & Li, 2010).
Risk management capacity: Is the anticipation and response to the risks incurred during project implementation (Ward & Chaman, 2003; Larson & Gray, 2011). Project risk management can be done through the forecast of potential project mishaps, from which appropriate decisions are taken to avoid or minimize potential damages to the project.
- Research Methodology
3.1 Development of research models and hypotheses
To set up research model, the author used in-depth method by unstructured interviews (Suanders et al, 2007; Cresswell, 2009). The experts selected were esearchers and managers having participated in the research, management and implementation of ODA projects. Topics for discussion focused on two groups of aspects (1) the concept of ODA utilization performance in terms of management and (2) factors affecting project performance.
The results after conducting interviews with 10 different experts came to an agreement that in terms of management, project implementation performance is to achieve objectives set out in all components involved in the project regarding quality, schedule, cost, and other objectives. Regarding the group of factors affecting project implementation performance, experts have quite different opinions. After the assessment and screening, these can be aggregated into six main groups include: (1) financial capacity; (2) organization ability (3) management capacity (4) adaptability and (5) risk management. Research models were proposed as follows:
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