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, many people were taken by surprise. With a total floor area of 115,000 m2, 90,000 m2 of tunnels, 75 m deep foundations, using more than 100,000 m3 of concrete and 80,000 tons of steel… it takes 3.5 days to finish a floor.
Later, the VinFast factory (Hai Phong) with an area of more than 500,000 m2 took only 18 months to complete. Super-fast construction work in Vietnam is appearing more and more often. Few people know that, they all share a model called “fast track”.
What is fast track?
The fast-track model is not strange, since in the 1930s, when the world economy was in a serious crisis, the then tallest building in the world in the US – Empire State – was built using this method in just 18 months.
This is the way to deploy the project when the Investor (Investor) wants to accelerate progress, shorten the time to market, respond quickly to customer needs, or respond to the consumer trend that at home at that time.
Normally, traditional construction start from concept design, sales research, then design, build, acceptance and finally commissioning.
However with the express train model , to save time and costs, people will design, build and accept… in parallel. That is, the project starts as soon as the investor finalizes the concept design and sales plan, then the contractor starts construction at the time when the design drawings are not yet completed.
Fast-track coordinates design and construction to minimize overall construction time. For example, the investor may allow the contractor to begin foundation work and build 4 stories before completing many details in the architectural, structural, and mechanical drawings. By accepting the contract without waiting for the design to be 100% complete, the contractor can start construction 6 months to 1 year early.
Fast track – One arrow hits 3 targets
The first advantage that fast-track brings is that customers can take ownership of the building/project quickly and on schedule. For investors , fast-track helps to shorten the construction time and save costs such as: land rent, personnel costs, equipment management… When the project is completed quickly, the investor will have a quick income. For example, the case of The Landmark 81, according to research, the investor has a source of income after just over 1 year. The VinFast office building was built in just 5 months, the total factory complex is 18 months, instead of 2.5-3.5 years as usual.
And even if a building’s bulk sales aren’t a big deal, fast-tracking can help the construction industry reduce inflation-induced costs. Just try to do the math, if inflation is 7-10%/year, reducing the time to just 6 months saved 3.5-5%. In addition, rapid construction also helps investors to reduce project management risks as they are all compressed in a short period of time rather than spread out.
In terms of contractors , fast-track helps reduce bad debt risk and generate sustainable revenue. It is known that construction under the general contractor model usually requires a contract performance guarantee, which accounts for approximately 8-10% of the total contract value. The contractor will have difficulty with this guarantee if the project is not permitted. The risk is that if the project execution time is extended, it will lead to progress failure, resulting in a higher price/inflation of materials and construction materials compared to the initial contract price. And all that cost loss will put pressure on the contractor.
With the accelerated model the payment between the investor and the contractor will be approved based on the actual construction volume in the field. Risk of missing volume, lack of work is almost unlikely. At the same time, with the rapid progress of the project, the contractor reduces the risk of costs incurred due to inflation, rise in material prices, etc.
However, the biggest benefit of fast-track for contractors is likely to be sustainable revenue generation. Large-scale projects are often divided into several phases, such as VinFast, Hoa Phat, Lego factories, etc. Contractors who do well in the first phase are awarded more jobs by the investor in subsequent phases. In addition, large investors with strong cash flow are executing the projects according to the fast-track model.
Why is that? Consider the project The Landmark 81, with a total construction capital of approximately USD 300,000,000 and payout in just over 1 year, which means that the average investor has to spend approximately USD 20,000,000 each month. Or in the VinFast factory project, the turnover 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 hardship, enabling them to reduce the risk of bad debts, recover debts quickly, and generate sustainable revenues and profits.
However, fast-track is still not a perfect building 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 errors can cause the construction budget to “bulge out” 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 have the wrong dimensions, because during the construction of the accelerated model, the drawings are regularly updated. Requiring both investors and contractors to have sufficient capacity, experience and fast-track is therefore often seen as a separate game for large contractors.