it is essential to complete business assessment targets in Traffic construction enterprises under Ministry of Transport

1

INTRODUCTION

1. The necessity of the disseration
In the context of competition and lack of the human resource, to firmly
stand in the market and to constantly develop, it is nescessary for enterprises
to effectively use its resources. In order to effectively use limited resources,
enterprises should assess efficiency of resource use. In other words,
enterprises must properly assess its own operational efficiency.
In order to strongly stand and to prevail with competitors, strategies
must be given by enterprises and every operations of the enterprises must be
focused on implementation of strategies. It is needed for the enterprises to
give Operational efficiency evaluation criteria in compliance with strategies
in successful implementation of the strategies.
Vietnam is a developing country; thus, transport and communications
play an important role in development of the country. Liking as enterprises in
other sectors, operational efficiency is the survival of the enterprises;
therefore, it is always cared by traffic construction enterprises. However,
through the field research, there are a lot of shortcomings in Operational
efficiency evaluation criteria. If applying the current assessment system, it is
very difficult for traffic construction enterprises to sucessfully perform
strategies and to firmly stand in fiercer and fiercer competition conditions.
Thus, “it is essential to complete business assessment targets in Traffic
construction enterprises under Ministry of Transport”.
2. Subject, scopes and objective in the disseration
Research subjects in the disseration are theoretical issues in
Operational efficiency evaluation criteria; real situation of Operational
efficiency evaluation criteria and method to complete the Operational
efficiency evaluation criteria in traffic construction enterprises under

Ministry of Transport.
Research scope in the dissertation is limited in Traffic construction
enterprises under Ministry of Transport (these enterprise mainly focus on 07
corporations)
The research purpose in this dissertation is to systematize basic
theoretical issues on operational efficiency and Operational efficiency
evaluation criteria associated with short-term and strategic objectives. Then,
the Operational efficiency evaluation criteria in traffic construction
enterprises under Ministry of Transport are evaluated and proposals are given
to complete Operational efficiency evaluation criteria in traffic construction
enterprises under Ministry of Transport that helps these enterprises to

2

correctly assess operational efficiency and to effectively perform strategic
objectives.
3. Research Methods
Theoretical research: Through mass media, internet, newspapers, books,
ebooks, etc.
Field research: applying Qualitative Research Methods such as survey
method, telephone interviews of managers and accountants in some
enterprises, directly survey in enterprises and using survey cards.
Data, material collecting and processing methods include: survey
method, group distribution method, rate method, etc. The methods are
applied to present research results: comparision method, analysis method,
synthetic method, induction method, etc.
4. Main new aspects in the disseration
Theoretically: Systematization and completion of theory of operational
efficiency and Operational efficiency evaluation criteria in traffic
construction enterprises in general, and Traffic construction enterprises under

Ministry of Transport in particular are associated with implementation of
business strategies to meet development requirements of the enterprises in the
globalization and economic integration period.
For field study: the dissertation has been considered and evaluated the
real situation of Operational efficiency evaluation criteria in traffic
construction enterprises under Ministry of Transport, then giving advantages
and shortcomings of Operational efficiency evaluation criteria in traffic
construction enterprises under Ministry of Transport. Basing on the field
study, the dissertation gave solutions to complete Operational efficiency
evaluation criteria in traffic construction enterprises under Ministry of
Transport in the economic development and integration.
5. Outline of the disseration
The Dissertation includes 132 pages, 17 tables, 10 charts, 7 pictures and
annexes; and is divided into 03 chapters, exclusive of the annex:
Chapter 1: Theoretical bases of Operational efficiency evaluation
criteria in traffic construction enterprises under Ministry of Transport
Chapter 2: Real situation of Operational efficiency evaluation criteria in
traffic construction enterprises under Ministry of Transport
Chapter 3: Solutions to complete Operational efficiency evaluation
criteria in traffic construction enterprises under Ministry of Transport


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CHAPTER 1
THEORETICAL BASES OF OPERATIONAL EFFICIENCY
EVALUATION CRITERIA IN TRAFFIC CONSTRUCTION
ENTERPRISES UNDER MINISTRY OF TRANSPORT

1.1. ROLES OF OPERATIONAL EFFICIENCY EVALUATION

CRITERIA IN ENTERPRISES
1.1.1. Operation efficiency and Operation efficiency eveluation
1.1.1.1. Viewpoints of operational efficiency
According to Enterprise Law 2005, business operation is: “constant
implementing one or some or every sections in investment, from production
to consumption of the products or service supply in the market to profit”
[21].
In the fiercer and fiercer competition and scarcer and scarcer wealth of
the society, enterprises and economists has been interested in evaluating
operational efficiency and finding out solution to increase operational
efficiency. Operational efficiency is a concept which has wide meaning and
is understood according to many different ways depending on each individual
and specific circumstance.
Through analysis of different viewpoints of operational efficiency, the
author concluded that: Operational efficiency reflects results on enterprises’
human resource use to achieve business objectives with the lowest expenses
or with defined expenses.
1.1.1.2. Measurement and evaluation of operational efficiency
Measurement of operational efficiency is to the enterprises’ quantify
operational result into specific criteria for evaluating operational efficiency.
Operational efficiency evaluation and measurement are closely related
together and impacts significantly on each other. In order to properly evaluate
operational efficiency, it is required to have reasonable operational efficiency
measurement criteria. In contrast, measurement criteria are depended on
purposes of operational efficiency evaluation. Therefore, in fact, operational
efficiency measurement and evaluation is one process. Operational efficiency
measurement criteria are considered operational efficiency evaluation
criteria.
Operational efficiency evaluation is comparison among Operational
efficiency measurement criteria and thier standard to give conclusion on

enterprises’ operational efficiency. The operational efficiency evaluation is
performed through Operational efficiency evaluation criteria. These criteria
can be relative criteria or absolute criteria.

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1.1.2. Roles of operational efficiency evaluatoin in enterprises
Operational efficiency evaluation is one of three functions of
administrators in enterprises. According to Operational efficiency evaluation,
administrators can update operation situation of enterprises and working
situation of departments or employees, then the administrators will give
suitable adjustment to improve operational efficiency of the enterprises.
Operational efficiency evaluation criteria are applied by enterprises to
monitor and control particular operation, forecast enterprises’ situation in the
further to give proper strategic adjustment in Operational efficiency
evaluation.
Operational efficiency evaluation plays an important role for enterprises
in both short term and long term. In short term, an enterprise will not control
their activities if the enterprise does not have effective efficiency evaluation
system. Effective efficiency evaluation system helps enterprises not only
control their activities in short term, but also make motive and encourage
effective operation to achieve long-term objectives. In long term, operational
efficiency evaluation significantly impacts on improvement of competition
and implementation of strategies of the enterprises. If An enterprise has a
good strategy but ineffective operation, the enterprise cannot highly compete
and cannot obtain its strategic objectives.
Results on operational efficiency evaluation are widely applied in
encouragement, motivation, reward and punishment to abtain high efficiency
by enterprises. Apart from efforts of every department and every employees
in enterprises, the operationa; efficiency evaluation criteria plays an

important in controlling and encouraging to achieve strategic objectives.
1.2. OPERATIONAL EFFICIENCY EVALUATION SYSTEM
1.2.1. Principles of development of operational efficiency evaluation
criteria
An enterprise is a complex organization. To surve and develop in
competitive environment, the enterprise needs a proper operational efficiency
evaluation criteria. According to researches from many authors, it is required
for operational efficiency evaluation criteria to design basing on the
following principles to obtain success in short term and in long term:
- Operational efficiency evaluation criteria must be in compliance
with the enterprise’s strategy
- Operational efficiency evaluation criteria must be associated with
view, value, and factors constituting the enterprise’s success.
- Operational efficiency evaluation criteria must reflect history,
present and future associated with the enterprise’s operation.

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- Operational efficiency evaluation criteria must reflect demand of
customers, of shareholders and of employees.
- Operational efficiency evaluation criteria must be consistent and
closely associated among upper departments and lower department
in the enterprise.
- Operational efficiency evaluation criteria must be changed when the
enterprise’s strategy changes.
- Operational efficiency evaluation criteria must be reliable.
- Operational efficiency evaluation criteria must reflect the
enterprise’s specific objectives
- Operational efficiency evaluation criteria must constitute financial
and non-financial criteria

1.2.2. Factors impacting on enterprises’ Operational efficiency evaluation
criteria
Factors impacting on enterprises’ Operational efficiency evaluation
criteria are divided into two groups: internal factors and external factors.
Internal factors: include organizational structure, business strategies,
organizational culture, human resources, responsibility of individuals,
operational processes of enterprises, etc.
External factors: Business environment, business lines, policies, law,
market, etc significantly impact on enterprises’ selection of Operational
efficiency evaluation criteria.
Internal factors and external factors does not impact independently,
they interact and support together. When developing Operational efficiency
evaluation criteria, enterprises should analyze to select proper criteria in
order to operational efficiency of each department and of whole enterprise
is properly evaluated.
1.2.3. Business natures of Traffic construction enterprises impacting on
Operational efficiency evaluation criteria
Traffic works are infrastructure of nation, therefore, the state is the
investor of these works. To contract the works, enterprises often must ratisfy
bidding. One of standards to enterprises to participate bidding is execution
capacity and experience. The enterprises’ execution capacity and experience
are presented through works that completed on time with good quality and
was appreciated by the investor. In order to implement these requirements, it
is nescessary for enterprises to give evaluation criteria of work completion
time, initiatives in execution to save expenses and execution time, etc.
Each work is built in different places with different construction
conditions, thus, it is required different construction solutions. Therefore,

6

traffic construction enterprises must have creativity and efficiency evaluation
criteria in using construction solutions via operational efficiency evaluation
criteria to ensure quality of the works with the lowest expenses, operational
efficiency evaluation criteria
Traffic works are often far from enterprises’ office, thus, proper
solution in construction such as material supply, vehicle, construction
machines, human resouce supply, etc play an important role. Operational
efficiency evaluation criteria can effectively evaluate construction serving.
A popular phenomenon in enterprises is wrong construction in
comparison to the desgin, thus, criteria reflecting re-construction volume or
value are operational efficiency evaluation criteria. In construction,
enterprises are interested in organization of material supply system for
constant execution which constitutes in operational efficiency evaluation
criteria of material department.
1.2.4. Operational efficiency evaluation frameworks in enterprises
Changes of business environment, demand for information in enterprise
administration, awareness of managers and of researcheres, etc has a
significant influence on development of operational efficiency evaluation
criteria in enterprises. It can be divided into two stages as following:
Operational efficiency evaluation frameworks before 1980
Before 1980, Operational efficiency evaluation frameworks mainly
were based on accounting data with financial Operational efficiency
evaluation criteria such as profit, profit on investment, profit on asset, profit
on owner’s capital, etc [Neely, 2000:291]. In current period, some
Operational efficiency evaluation frameworks are based on proposed
financial measures.
Operational efficiency evaluation frameworks before 1980 mainly
focused on financial Operational efficiency evaluation criteria which are
commented by many researhers. Neely (1999) has synthesized financial
criterial as following:

- Promoting managers to concentrate on short-term objectives
- Not concentrating on strategies and quantity, punctuality and flexibility
- Promoting to increase efficiency such as much production to effectively
use human resource and machineries.
- Promoting managers to reduce deviation from standard because of
continuous improvement.
- Not providing information about customers’ demand and competitors’
operational efficiency [55]

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Proposed operational efficiency evaluation frameworks before 1980
tended to focus on financial criteria and for short-term Operational efficiency
evaluation. These criteria can help managers and individuals of interest to
easily evaluate Operational efficiency of enterprises, then make decision to
obtain short-term objectives. There are some shortcomings in applying
financial criteria in Operational efficiency evaluation. These shortcomings
are financial criteria along with a specific financial period, not combination
among objectives, success factors, strategies with operational efficiency
evaluation in the enterprises. Therefore, if basing solely on financial criterion
to evaluate operational efficiency, this criterion maybe accidentally become a
barrier in performing strategies, improving the competitiveness of
enterprises.
Operational efficiency evaluation after 1980
Limitations of operational efficiency evaluation before 1980 has not
been associated with strategies; thus, enterprises could not assess
implementation of strategies. In competitive environment, business strategies
become a guideline in every operation of the enterprise which helps the
enterprises to succeed in business world. To successfully implement
strategies, operational efficiency evaluation criteria must be attached with

strategies and can measure efficiency in strategy implementation. This
viewpoint is accepted by many scholars. Many evaluation frameworks were
proposed after 1980. Typical frameworks are matrix operational efficiency
evaluation framework by Keegan, Eiler and Jones in 1989 [Neely, 2007:
145]; SMART pyramid framework by Lynch and Cross (1991); Result and
Determinants Framework by Fitzgerald and his coworkers (1991),
Performance Measurement Questionnaire by Dixon and his coworkers
(1990), Efficiency prism framework by Neely (2001), etc, of which Balance
Scorecard by Kaplan and Norton in beginning the 90s (Bourne, 2008) is the
most typical framework in operational efficiency evaluation under many
different aspects.

CONCLUSION OF CHAPTER 1
In the context of scarcer and scarcer resources, fiercer and fiercer global
competition, it is required for enterprises to properly evaluate operational
efficiency of each department in enterprises as well as entire enterprise to
make correct decisions. Recently, viewpoint of operational efficiency in the
world has changed dramatically. While short-term operational efficiency was
paid attention previously, long-term operational efficiency is more cared
currently. Operational efficiency evaluation criteria also changed much;
while mainly financial criteria were applied to evaluate Operational

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efficiency, enterprises apply not only financial criteria, but also non-financial
criteria.
Operational efficiency evaluation criteria include financial criteria and
non-financial criteria, short-term Operational efficiency and long-term
Operational efficiency, etc which can be applied to not only evaluate
Operational efficiency in short term but also assess implementation of

strategic objectives of enterprises.
A viewpoint of Operational efficiency evaluation is changed in
appreciting strategic operation and objectives rather than short-term
Operational efficiency. Operational efficiency evaluation is combined with
strategy and implementation of strategic objectives of enterprises.
Contents in chapter 1 are focused on study of basic theorical issues of
Operational efficiency and Operational efficiency evaluation in enterprises to
clarify theory of Operational efficiency and Operational efficiency evauation
criteria for business administration.



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CHAPTER 2
REAL SITUATION OF OPERATIONAL EFFICIENCY
EVALUATION CRITERIA IN TRAFFIC CONSTRUCTION
ENTERPRISES UNDER MINISTRY OF TRANSPORT

2.1. GENERAL INFORMATION OF TRAFFIC CONSTRUCTION
ENTERPRISES UNDER MINISTRY OF TRANSPORT
2.1.1. Establishment and development
The opening and converting the economy into market economy in
Vietnam has created a strong change in structure of economic sectors that
create conditions for Vietnamese enterprises to gradually develop and
integrate into regional and international market. Along with delopmet of
economic sectors, enterprises in the transport sector in general and
enterprises in traffic construction enterprise under Ministry of Transport in
particular also has a great growth in both quantity and quality.
Recently, transport and communications sector has made effort and

overcome many difficulties and challenges, actively perform objectives and
duties, as well as more effectively perform management function on transport
and communications. Besides obained achievement, enterprises under
Ministry of transport also exist many shortcomings: scale is small, structure
exists many irrationalities, operational efficiency and competitiveness are
low, debt-liabilities are high, etc.
Although there are some shortcomings, effort of Ministry of Transport
in limiting and reducing traffic accidents is apprepriated. Order and traffic
safety are enhanced in both institutional and synchronization solutions, etc.
2.1.2. Business production organizational structure and business
production management structure
Traffic construction corporations are organized according to model of
Board of directors, General director, functional departments and member
units. Lower-level enterprises are organized according to independent
accounting enterprises as limited companies or joint stock companies and
dependent accounting enterprises. Under a corporation are member firms
including one member limited companies and joint stock companies. One
member limited companies are organized according to structure of board of
directors, the Board of Directors will select a CEO and vice directors.
Departmets and divisions will assist director. Production units are organized
into plants or execution groups.
Traffic construction joint stock companies under Ministry of transport
mainly are state enterprises which are in difficult in privatized finance. When
changed into joint stock companies, these enterprises are organized according

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to structure of board of directors, Genreral director, vice general directror
and functional departments. Production units are organized into plants or
execution groups.

2.1.3. Business line
In the development trend of society, in order to take advantages of
buysiness benefits and roduct diversification, aprt from main business line as
construction of traffic works, traffic construction enterprises also gradually
enlarge business lines in many different fields such as real estate investment,
import-export, production of materials and fertilizer, transport trading, travel,
etc. Main business activities of traffic construction enterprises include:
- Construction of traffic works: this is the main business operation and
nature of tradition in traffic construction enterprises
- Construction of civil and industrial works: investment and
construction of industrial zones, residential areas and urban areas, etc.
- Expoilting and processing construction materials, producing precast
concrete components.
- Other activities.
2.1.4. Organization of accounting machinery and accounting system in
Traffic construction enterprises under Ministry of Transport
2.1.4.1. Organization of accounting machinery
Because traffic construction enterprises must execute traffic works far
from head office of the enterprises, accounting machinery is organized
according to model of semi-concentration and semi-dispersion.
At the enterprises, the company accounting department plays a central
role in collecting, processing accounting documents submitted by member
units, and in investing and accepting works, items, in making financial
statement of holdings company and making united statement.
2.1.4.2. Organization of accounting system in Traffic construction
enterprises
Traffic construction enterprises under Ministry of Transport is applying
the accounting regime promulgated under the Decision No. 15/2006 QĐ-
BTC dated 20/03/2006 by Minister of Finance and under the Circular No.
244/2009TT-BTC dated 31/12/2009, the Circular No. 106/2008 and the

Circular No. 206/2009 guiding to adjust and to complete accounting
machinery of the enterprises.
Due to regulatory requirements, and due to the nature of accounting
work in construction enterprises, most of traffic construction enterprises
applied common diary accounting machinery. Currently, accounting is
performed by computers through accounting softwares.

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2.2. REAL SITUATION OF OPERATIONAL EFFICIENCY
EVALUATION CRITERIA IN TRAFFIC CONSTRUCTION
ENTERPRISES UNDER MINISTRY OF TRANSPORT
To study on the real situation of operational efficiency evaluation
criteria in traffic construction enterprises, the author performed field survey
in these enterprises and the authors has obtained 84 survey cards from 41
traffic construction enterprises. Survey subjects are directors, heads of
business departments, masters of construction team, some chief accountants
and accountants in these enterprises. The results reflect the following aspects:
- Structure of subjects answering the survey cards
- Number of employees in surveyed enterprises.
- Organization form of the enterprises participating in the survey
- Charter capital of the enterprises participating in the survey
- Operation time of the enterprises participating in the survey
Actually, the research on operational effeciency evaluation criteria
system of traffic construction enterprises shows that most companies use
operational efficiency evaluation criteria as follow:
2.2.1. Operational efficiency evaluation criteria of businesses under
Government’s regulation
Most traffic construction enterprises under Ministry of Transport are
owned by State or State –owned-enterprise accounts for dominant share,

therefore, they are objects applying the operational efficiency evaluation
criteria of State-owned enterprise, the operational result of Board of
Directors, Board of Managers is under regulation in Article 12 Supervision
regulations issued with Decision No 224/2006/QD-TTg dated 06/10/2006 of
Prime Minister and Clause 2, Section II, Circular No 115/2007/TT-BTC
dated 25/9/2007 of Ministry of Finance.
Enterprises evaluate the operational efficiency under criteria regulated
in Clause 1, Article 12 Regulations, accompany with Decision No
224/2006/QD-TTg, including:
a. Revenue and other income: This criteria is identified based on the
business opreational result report
b. Implementation profit and profit margin on State capital: Include net
profit from business operation and other profits reflecting on business
operation result report.
c. Overdue liabilities and due debt payment ability : is liabilities which
overdue of payment commitment for creditor.

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d. Situation of executing mode, legal policy: include tax policy, budget
apply, credit, insurance, environment protection, labor, salary, financial
mode, accounting, auditing, financial statement mode and other report.
e. Situation of implementing the product, public service: based on
directly implementing the national defense and military duty, production,
public service supplying as State’s policy through procedure method or
accept orders or accept duty assigned by State.
2.2.2. Other efficiency evaluation criteria
Beside the efficiency evaluation criteria regulated by management
agencies to State-owned enterprise and Joint Stock Company which State
holds dominant shares, traffic construction enterprises under Ministry of

Transport use other efficiency evaluation criteria serving for management
and specific evaluation of their units, include:
a. Evaluation criteria of profitability: The dissertation has investigated
actual criteria on gross profit margins; Return on sales (ROS); Return on
assets (ROA); ROTA; Return on equity ( ROE); Return on investment
(ROI).
b. Assets use efficiency evaluation criteria: rounds per minute of assets;
production capability of fixed assets, rounds per minute of short term asset;
time of a round of short term asset; rounds per minute of inventory, rounds
per minute of receivables liabilities of customer; average collection period.
c. Efficiency evaluation criteria of loan use: Coefficiency of profitability
of borrowed interest.
d. Cost using efficiency evaluation criteria and other criteria: Return of
capital price of selling goods; return of sale cost, return of business
management cost; return of total cost, etc.
e. Non-financial criteria
Recognizing the important role of non-financial crieria and using these
criteria in actual operational efficiency of traffic construction enterprises
under Ministry of Transport are so limit. Originated from old business
perspective, enterprises have not really focused on customer. They still have
perspective that sector’s products are single, so they have not paid attention to
keep customer who has come to them, or they have not known the important
role of training and enhancing business culture for employee, especially those
who hand over the construction, therefore, expenditure for these works has not
reasonable.
The writter gave a lot of survey questions to evaluate the effectiveness
of the operational efficiency evaluation criteria to business administration,
construction evaluation of the operational efficiency evaluation criteria of
departments in enterprise, conformity and relationship of evaluation criteria

13

system of current operational efficiency to enterprise’s strategy, efficiency of
the operational efficiency evaluation criteria system to the strategic
implementation of enterprise, and evaluating the neccessary of completing
the operational efficiency evaluation criteria system to help administrator to
complete and implement the strategy. However, the questions are rather
difficult. Besides, due to the limitation on awareness and result’s proven
ability of the system, it is difficult to answer this question. Answering this
question depends fully on subjective evaluation of respondent.
2.3. Comment on the operational efficiency evaluation criteria in traffic
construction enterprises under Ministry of Transport
2.3.1. Advantage
Traffic construction enterprises under Ministry of Transport have applied
the operational efficiency evaluation criteria of State–owned enterprise, operation
result of Board of Directors, Board of Managers implement as regulation. Beside
using criteria under regulation in Decision No 224/2006/QG-TTg, some
enterprises use other criteria to reflect the operational efficiency under business
administration’s requirement such as criteria to reflect profitability efficiency,
assets using efficiency, borrowed capital using efficiency, etc. Some enterprises
use some non-financial criteria to evaluate the operational efficiency of enterprise
such as material waste rate compared to the norm, etc.
The calculation of above criteria is suitable for practice and general trend
of enterprises. Data resource using to gather and calculate above criteria base
on financial statement of enterprise, so it is rather reliable.
Using rather full efficiency evaluation criteria with suitable
determination method based on reliable information source partly help
enterprises to supervise and evaluate the operational efficiencyof departments
in enterprise as well as whole enterprise.
2.3.2. Shortcomings

Compared to the trend and efficiency evaluation pratice which
international enterprises are applying, the operational efficiency evaluation
criteria system of traffic construction enterprises under Ministry of Transport are
disclosuring some following shortcomings:
Evaluation criteria system is not comprehensive and full. Most
enterprises comply with the efficiency evaluation criteria under regulation in
Decision No 224/2006/QD-TTg dated 06/10/2006 of Prime Minister and
Clause 4, Section III, Circular No 115/2007/TT-BTC dated 25/9/2007 of
Ministry of Finance. However these criteria only reflect partly the business
efficiency, not reflect comprehensively all enterprise’s operation.
Criteria used by enterprises outside the management agency’s
regulation have reflected the operational efficiency of enterprise in respect of

14

profitability. However, this is only short term operational efficiency
evaluation criteria, not associated with long term strategic and target of
enterprise. Compared to standard of the efficiency evaluation criteria system
which must have, targets in the efficiency evaluation criteria system of
enterprise also have some following inadequacies:
The operational efficiency evaluation criteria system of traffic
construction enterprises under Ministry of Transport also focuses on
financial criteria and bases on previous information. Because they base much
on previous information and have not contained elements affected
importantly to the success of enterprise, the operational efficiency evaluation
criteria which is used by these enterprises has little forecast ability for the
enterprise’s success in the future.
The operational efficiency evaluation criteria is used by traffic
construction enterprises under Minitry of Transport aslo mainly focuses on
short term criteria. Using short term criteria to evaluate the operational

efficiency of enterprises and departments in the enterprises will lead
administrator to care only short term result and improve action perspective for
short term target. This perspective can cause difficulty for enterprise in
implementing the strategy and long term plan to enhance the competitive
ability and position of the enterprise.
Efficiency evaluation criteria has not accompanised with the
enterprise’s strategy: many enterprises have not strategy. Enterprises who
have strategy however the efficiency evaluation criteria has not
accompanished with the strategy as well as the view, value and main
successful elements and specific target of the enterprise.
In the operational efficiency evaluation criteria system of enterprises,
there is little non-financial criteria reflecting internal business, it has not
reflection criteria of customer aspect, awareness and development aspect.
The operational efficiency evaluation criteria is only constructed to
evaluate the operational efficiency of whole enterprise, it has not criteria
reflecting operation efficiency of lower department of enterprise.
Criteria used by traffic construction enterprises under Ministry of
Transport have not strong mutual relationship. Therefore, administrator can
not see how to do to improve the operational efficiency of the enterprises.
Criteria used in the enterprises mostly based on the previous information,
it has not predicted effect. Therefore, it has reduced partly the effect of criteria
to enterprise adminstration operation.
Some enterprises use so much criteria, of which, there is unimportant
criteria, sometimes, duplicated leading to reduce the concentration on criteria
affected imporatantly to the success of the enterprise in the market.

15


CONCLUSION OF CHAPTER 2

Investigating the actual use of operational efficiency evaluation criteria
of traffic construction enterprises shows that most enterprises concentrate on
the operational efficiency evaluation of enterprises under Government’s
regulation and some evaluation criteria of operational efficiency reflecting
the view, strategic of enterprises as well as creteria reflecting the demand of
customer and shareholder. The operational efficiency evaluation criteria
system of some enterprises contain so much criteria, therefore it will reduce
the concentration of enterprise on important criteria. Above limitation has
reduced the role and effect of the operational efficiency evaluation criteria
system of entrprises to enterprise’s administartion operation in specific and to
user in general. Therefore, it is necessary to complete the operational
efficiency evaluation criteria system in traffic construction enterprises .
Chapter 2 has evaluated the advantage and limitation of actual
operational efficiency evaluation criteria use in traffic construction
enterprises . Above evaluation is important base to help the writter to give
feasible recommendation, suiting for practice of traffic construction
enterprises .

CHAPTER 3
SOLUTIONS TO COMPLETE OPERATIONAL EFFICIENCY
EVALUATION CRITERIA IN TRAFFIC CONSTRUCTION
ENTERPRISES UNDER MINISTRY OF TRANSPORT

3.1. DEVELOPMENT ORIENTATION OF VIETNAM
TRANSPORTATION SECTOR
In the transportation development strategic from now to 2020, Ministry
of Transport aslo specify: “ Transportation is an important part in economic-
social infrastructure, it should be priority to develop more than one step with
high and stable speed to make prequisite for economic- social development,
supporting the defense- military, serving for country industrialization-

modernization” [6].
About constructing Transportation infrastructure, the social- economic
development strategy of Party from now to 2020 is: “ Concentrating
investment sources to construct South- North highway, enhance available
railway, construct urban railway system in big cities. On planning base,
prepare conditions to construct step by step South- North high-speed rail with
suitable route, construct some seaports and modern airports; enhance and
improve urban infrastructure in Hanoi and Ho Chi Minh City. Establish

16

gradually synchrously South- North traffic road, West- East corridor to
ensure link with transportation method; construct external roads reaching
international standard”. In order to implement this strategy, Party and State
have given the target from now to 2020 is : improve available works, newly
construct some important works serving for social- economic development of
Center and local.
3.2. THE NECESSITY IN COMPLETING OPERATIONAL
EFFICIENCY EVALUATION CRITERIA IN TRAFFIC
CONSTRUCTION ENTERPRISES UNDER MINISTRY OF
TRANSPORT.
Traffic construction enterprises have important role in creating the
traffic infrasture for country. Using huge investment capital in transport
sector requires traffic construction enterprises to control the business
operation and use efficiently these assets. Enterprises want to have good
operational efficiency evaluation criteria system because good system not
only helps enterprises to see important elements affecting to implement
successfully strategy, but also focuses on important aspects in strategic
implementation process, encouraging all human resources in enterprises to
attend to strategic implementtion.

3.3. VIEW ON COMPLETING OPERATIONAL EFFICIENCY
EVALUATION CRITERIA IN TRAFFIC CONSTRUCTION
ENTERPRISES UNDER MINISTRY OF TRANSPORT
The completion of operational efficiency evaluation criteria in traffic
construction enterprises should follow views and orientation as below:
- The system should help the enterprise evaluate the operational efficiency
both in short term and long term
- The system should adhere to the enterprise’s strategies.
- The system should reflect important aspects in business as well as impact
factors which decide the success of the enterprise.
- The system should allow of operational efficiency evaluation of various
managerial levels of the enterprise.
- The system should create motivations, encourage individuals and groups
of the enterprise to well performance in order to reach the strategic targets
of the enterprise.
- The evaluation system is supposed not to result in negative effects of
tested individuals, which prejuidice the enterprise.
- The built system should be feasible and appropriate to strategies and
implementing capacity of the enterprise.

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3.4. REQUIRMENTS AND PRINCIPLES OF COMPLETING
OPERATIONAL EFFICIENCY EVALUATION CRITERIA IN
TRAFFIC CONSTRUCTION ENTERPRISES UNDER MINISTRY OF
TRANSPORT
3.4.1. Requirements for operational efficiency evaluation criteria
The operational efficiency evaluation criteria should explain the strategies of
traffic construction enterprises in specific goals.

- The operational efficiency evaluation criteria should reflect aspects and
principal factors affecting strategic implementation of traffic
construction enterprises.
- The system should help enterprises anticipate the future, figure out the
feasibility of realizing strategic targets of the enterprise.
- The criteria should balance between factors related to the enterprise’s
operation
- Benefits from the evaluation criteria system should outnumber
implementing expenses
3.4.2. Principles to perfect the operational efficiency evaluation criteria
in traffic construction enterprises.
- Accomplishment of the evaluation system should conform to the
enterprise’s strategies.
- The criteria should link together in a cause and effect relationship.
- Not use far to criteria, which affects the concentration in the operation
of the enterprise.
- It is necessary to have balance between criteria in the operational
efficiency evaluation criteria.
- It raises a need to have proper criteria for each department, individual.

3.5 USING THE BALANCED SCORECARD TO COMPLETE
OPERATIONAL EFFICIENCY EVALUATION CRITERIA IN
TRAFFIC CONSTRUCTION ENTERPRISES UNDER MINISTRY OF
TRANSPORT
The operational efficiency evaluation criteria in traffic construction
enterprises of Ministry of Transport can be completed by many different
ways. However, when studying the model of assessing the operational
efficiency of enterprises, the model of balanced scorecard of Kaplan and
Norton proposed in 1992 proves to have the most advantages and being
widely used by many enterprises in the world.

Applying the balanced scorecard to complete the operational efficiency
evaluation criteria in enterprises has the following advantages:

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- Avoid excessive focus on unnecessary targets and distracts the focus on
the goals of the enterprise which having the importance in success of
the strategy.
- Create the balance between the internal and external factors, between
short-term and long-term objectives, between the financial and non-
financial criteria, etc.
- Create the link between criteria under the causal relation, thus enable
the administrators to forecast the operating results in the future.
- Traffic construction enterprises implement missions about building the
high-quality transportation infrastructure to serve for the socio-
economic development of the country. To carry out the missions, the
enterprises must have appropriate business strategies to improve the
operational efficiency and increase their competiveness in the market in
the condition of international economic integration.
3.5.1 Vision, Mission, and business strategy of trafffic construction
enterprises under Ministry of Transport
Currently, beside some traffic construction enterprises identified their vision,
mission, many other ones have not noticed this issue. Similarly, the
Enterprises have not identified their own business strategy. However, doing
business in the highly competitive and deeper integration economy into the
regional and international economy, the enterprises expect to be enhanced the
competitiveness to stabilize and develop in the market. Achieving this
strategic target requires the enterprises to increase the quality of goods, hand-
over the works in time, efficiently use the execution techniques, save the
costs, reduce the price, and increase the profits. These are short-term

objectives of the enterprise. To assess the implementation of these targets, the
enterprise needs to have operational efficiency evaluation system for the
whole enterprises as well as for each department.
3.5.2. Building the balanced scorecard to apply in traffic construction
enterprise under Ministry of Transport.
To assess the operational efficiency in traffic construction enterprise, it is
necessary to build a balanced scorecard for traffic construction enterprises
under Ministry of Transport. These are the operational efficiency evaluation
criteria in the long-term and short-term period together with the link criteria
under the casual link; which are classified into four following groups:
3.5.2.1. Criteria assessing the awareness and development aspects
Criteria assessing the awareness and development often use the criteria
including the annual trained employee number, the number of employees
participating in the new execution training course, the number of employees
participating in the responsibility training course between the enterprise and
the society, the number of employees participating in the training course of

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business culture, the number of employees participating in the training course
of labor safety, etc.
3.5.2.2. Criteria assessing the internal process
These criteria reflect that how the enterprise is improved to bring the
expected values of the customers. Basing on the knowledge and skills of the
employees through training and education courses, the enterprise improves
the execution methods to reduce the completion time, save the costs and
improve the quality of construction. Thanks to good coaching, spirit and
attitudes of employees when communicating with the customers are
improved. The customers feel comfortable when received attentive services
together with proper behavior of the employees. The criteria assessing the

internal processes of the enterprise can be: Criteria on innovations and
creativity in execution method; criteria on cost savings, criteria for quality
improvement, hand-over project time, and criteria on attitude to customers,
etc.
3.5.2.3. Evaluation criteria on the aspect of customers
The customers of these enterprises are investors. Investors of transport
constructions can be the Government (Ministry of Transport), People’s
Committee of provinces, owners of industrial zones, etc. The investors
usually establish project management board to directly sign the contract,
supervise the progress, and manage the quality of constructions. Investors
concern about time of construction, price, and quality of construction. Thus,
to satisfy these investors, the enterprises building the transport constructions
have to handover the construction in time with competitive price and high
quality. Criteria which need to be used to evaluate the satisfactory of
customer are as follow:
The enterprises are evaluated as successful ones when the number of
loyal customers is increased, annually the enterprises have new customers,
and the number of leaving old customers is decreased. The evaluation criteria
on the aspect of customers will include: the increasing number of new
customers; the decreasing number of leaving old customers; the rate of
satisfactory customers of the quality of construction; the rate of satisfactory
customers of the price of the construction; the rate of satisfactory customers
of time of handing over the construction; the rate of satisfactory customers of
serving attitudes of staffs, etc
3.5.2.4. Criteria to assess financial aspect
Finance factor reveals the final operation results of the enterprise. These
results are expressed via financial efficiency criteria namely: revenue, profit, return
on assests (ROA), return on equity (ROE).

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Aspects Targets Meassure
Finance
A rise in revenue
and profit
Net profit, ROI, ROA, ROE



Customers
- Retain existing
customers
- Add new clients
- The proportion of satisfied customers;
proportion of satisfied customers on
construction price; time of handing over the
construction; serving attitude, quantity of
contracts signed with customers
- Upgrade
executing methods

- Number of methods, initiatives applied on
execution

- Shorten
completion time
- Proportion of early construction hand-
over; punctual construction hand-over;
overdue hand-over; troubleshooting time

(repair damaged construction)
- Save expenses

- Ratio of successful decrease of
construction charge year-on-year
- Decrease selling
price
- Ratio of decreasing selling price compared
to previous year for 1 unit.
- Foster
construction
quality
- Ratio of redone- works (counting on m
2
)
- Ratio of construction repairing costs out of
executing costs
Internal
process
- Boost serving
quality
- The number of customers’ complaints
against serving attitude.
-Improve
qualifications and
skills; equip staffs
with necessary
knowledge, skills
- The quantity of staffs is trained annually. -
The Quantity of staffs takes part in training

courses on new executing techniques.

- Equip staffs with
business culture

- The number of staffs participates in
training courses on reponsibility toward the
corporate and society; courses on business
culture; labour safety
Perception
and
development

- Attract, retain
good labour
- Quantity of staffs whose scale, salary and
average salary are increased, etc

3.5.2.5. The casual relation between the targets
Criteria linked together base on the causal relation. A change in one criterion
will be followed by a change of other criteria. The relation among four
criteria can be illustrated in the following balanced transcript:

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Customer’s satisfaction
of construction time
( + )
( + )
Shortening of

construction transfer
( - )
( - )
Shortening of
construction time
( - )
ROA, ROS,
Increase in revenue
( + )
Decrease in expense
( - )
labor contract ( + )
Increase in number of
ROE, ROI…
Customer’s satisfaction
of work quality
Labour’s high salary
( + )
Decrease in the number of
complaints about service attitude
Decrease in the proportion
of technical errors
( + )
Number of employees Number of employees
with signed labor contract
are educated business culture
Increase in the number of
initiatives and innovations
Customer’s satisfaction
of service attitude

( + )
( + )
( + )
( - )
in the construction
( + )
training skills
F
I
N
A
N
C
E
C
U
S
T
O
M
E
R
I
N
T
E
R
N
A
L

P
R
O
C
E
S
S
AWAE
NESS
&
DEVE
LOP
MENT

Figure 3.1: Proposed balanced diagram for traffic construction
enterprises


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3.5.3. Establish operational efficiency evaluation criteria for key
departments in the Enterprise
Traffic construction enterprises usually are organized into departments
such as technical department, finance – plan department, material
department, department of personnel organization, finance – accounting
department, and executive units. According to the functions, the departments
take over advisory works related to different fields, thus it is necessary to
develop the criteria to evaluation the effectiveness of operation in accordance
with functions, duties of these departments. As mentioned, the highest
expression of business’s effectiveness is performance. Therefore, the

dissertation has developed specific criteria for each functional department in
the enterprise, including:
3.5.3.1. Efficiency evaluation criteria of technical department
- The number of staffs attended in training courses
- The number of technical solutions which are suggested
- ……
3.5.3.2. Efficiency evaluation criteria of material department
- The rate of saving the price of selling materials
- Number of days to stop the production due to lack of materials
- ……
3.5.3.3. Efficiency evaluation criteria of economy – plans department
- The value of signed contracts
- The rate of cost savings in comparison with estimates
3.5.3.4. Efficiency evaluation criteria of personnel department
- The number of staffs who are trained
- The rate of saving the costs of recruitment, training and costs of
operation in comparison with estimates
3.5.3.5. Efficiency evaluation criteria of financial accounting department
- Number of days to be stopped the operation due to lack of capital
- Number of days when wage are delayed
- ……
3.5.3.6. Efficiency evaluation criteria of executive units
- The number of initiatives, technical improvements are applied
- The number of days when the construction is took over before term.

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3.6. NECESSARY CONDITIONS TO PERFORM SOLUTIONS TO
PERFECT OPERATIONAL EFFICIENCY EVALUATION CRITERIA
IN TRAFFIC CONSTRUCTION ENTERPRISES UNDER MINISTRY

OF TRANSPORT OF VIETNAM
3.6.1. On the business side
In term of perception: the leaders of the enterprises need to consider
operational efficiency evaluation criteria as a tool to help enterprises to
control and implement strategy targets rather than to report the achievements.
This awareness will help the enterprises to evaluate the substance of
performance, to avoid formalism.
In term of organization: the enterprises need to well organize the
information system to manage the enterprise, especially in accounting
system. It is necessary to organize management accounting system of the
enterprises well, especially in responsible accounting to supply the suitable,
dependable, and timely information to the administrators. The enterprises
need to build scientific and reasonable ascertaining and estimating systems.
Analysis of gap between estimates and costs controlling should be respected.
The companies need to care to train, improve the knowledge of managing the
businesses to administrators and staffs.
3.6.2. On the government side
It is necessary to change operational efficiency evaluation criteria
which are suitable with general global tendencies. The criteria should be stick
with strategy targets of the enterprises. Need to avoid criteria of performance
which are not stick with business strategy or can lead to damage to the
enterprises. The government should have supporting policies to improve the
knowledge about management and business to strengthen the competiveness
of the enterprises.

CONCLUSION OF CHAPTER 3
Due to orientation of development of transport sector and necessity of
successfully performing the strategies of the traffic construction enterprises,
this dissertation has specified the point of views and suggested the solutions
to perfect operational efficiency evaluation criteria in these enterprises under

Ministry of Transport. To implement these solutions, necessary conditions to
perfect operational efficiency evaluation criteria have been suggested in this
dissertation.
Due to the difference in business strategies, the perfection and
developing the general efficiency evaluation criteria of the enterprises is very
difficult. However, the general targets of these enterprises are building the
high quality traffic construction with lower price in shortest time; the

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development of operational efficiency evaluation criteria for these enterprises
can be done.

CONCLUSION
To implement developing strategies of transport to the year of 2020, in
the vision to 2020, the traffic construction enterprises have to use effectively
existing limited resources. Evaluation criteria not only helps to evaluate the
situation and performance in the past but also to estimate the success of the
enterprise in the future. Spontaneously, evaluation criteria not only helps the
enterprises evaluate and find out the solutions to improve the short term
performance, but also to achieve the long term success and implement
successfully the strategic targets of the companies. Based on these targets,
this dissertation has achieved some following results:
Firstly, the dissertation has mentioned the theoretical base of
performance and evaluation of performance in the enterprise. Thus, firstly the
dissertation has clarified the performance and evaluation of performance in
the enterprises; then, the roles of evaluation of performance in the enterprises
and evaluation criteria system in the enterprise.
Secondly, the dissertation has conducted a survey of status of using
operational efficiency evaluation criteria of the traffic construction

enterprises. Basing on the results, the dissertation has evaluated the
advantages as well as the limitations of the real situation of using operational
efficiency evaluation criteria of these enterprises. The author realized that the
perfection of evaluation criteria of performance in these enterprises is
necessary.
Thirdly, due to the urgent demand of perfection of operational
efficiency evaluation criteria in traffic construction enterprises under the
Ministry of Transport, the dissertation has specified the point of views and
suggestion of the solutions to perfect operational efficiency evaluation
criteria in these enterprises. The solutions suggested by the author are
feasible, but it is necessary to have some conditions to perform the solutions.
Thus, the author also has mentioned the conditions which help to perform the
solutions of perfecting operational efficiency evaluation criteria in the
dissertation.