Making Successful Procurement of IT Systems - An Experience from Vietnam

Ba Liu Nguyen,
Procurement Specialist, World Bank

Ulle Lohmus,
Sr. Financial Sector Specialist; World Bank

Procurement of information management system always represents huge challenges due to its: (i) inherent technical complexity; (ii) risk of technology changes; (iii) and the resulting needs of change management and coordination effort.

Despite this the World Bank's experience in financing IT system development in Vietnam shows that with strong leadership and determination on the part of the beneficiary, appropriate institutional arrangements, efficient coordination mechanism and joint efforts by the stakeholders project implementation can go smoothly. This story shares the successful experience of a project aimed at modernization of the financial sector information management system for the State Bank of Vietnam (SBV).

The Financial Sector Modernization and Information Management System Project (FSMIMS) was designed to assist SBV, its Credit Information Center (CIC) and the Deposit Insurance of Vietnam (DIV) to improve delivery of their main functions through the development of: (i) a centralized and integrated system of advanced business processes; (ii) a modern information technology architecture; (iii) through this strengthening their institutional capacity in carrying out their operations.

In the first few years of implementation the project experienced delays due to inactive participation by the beneficiary agencies and inefficient management of the technical consultancy services. SBV management at that time instructed the concerned departments, agencies, beneficiaries/end users to closely work with the project implementing agencies (SBV PMU and DIV PIU). The World Bank team also provided hands-on technical and procurement support, delivered training, shared knowledge/advice and provided inputs to assist the SBV to facilitate the finalization of system design, bidding documents as well as provide assistance with contract administration.

The Bank team worked closely with the Government's implementing units throughout the procurement and contract management process.  The total number of the Government staff participations in preparation/appraisal of bidding documents, bid evaluation and contract management, and user testing and acceptance of the 7 major IT contracts is about 6,000. The main IT contracts were successfully awarded in 2013 and 2014. It took on average 4.8 months for completing a single-stage procurement activity (from bidding documents issuance to contract award) and 9 months for a two-stage bidding.

Having Hanoi based strong procurement specialists made a huge impact in completing the procurement process effectively and efficiently. The following years 2015 and 2016 witnessed the efficient contract implementation and management with successful "go-live" of the critical packages on Core Banking, CIC data management, Document Management, Data management & data warehouse, DIV information and communication system. No cost overruns were incurred and time extensions for some packages were made mainly for the purposes of system tuning. Such timely and efficient contract implementation resulted from the determination, commitment and engagement of the whole organization from the top management to each staff member of the implementing agencies. Mr. Nguyen Linh Nam, DIV PIU Director indicated that DIV and Supplier staff worked together full time at DIV office during the 22-month implementation period and more than 60 DIV staff participated in the contract management, while the testing period involved about 80 staff from all departments and branch offices. 

The 6 major IT packages originally included in the Procurement Plan were awarded at prices lower than their estimates with a total saving of more than 6 million USD (about 13% of their total cost estimates and 11% of the IDA credit amount) which was utilized for the procurement of additional equipment for the SBV's new data center, helping further strengthen SBV's management network and database.

"The Project helps modernize operations of the central bank, DIV and CIC using advanced information technology, bringing practical benefits to the beneficiaries from about 30 departments and entities of SBV, 63 SBV municipal and provincial branches, 123 credit institutions, nearly 1,200 Credit Funds and 3 micro financial institutions. We highly appreciate the WB's support in helping us efficiently manage the Credit fund and strengthen our capacity. Besides having a modernized system in place, we have accumulated significant experience in implementation and management of international contracts," said Mr. Le Manh Hung, Director of SBV PMU.

At the launching ceremony for the new reporting system developed under the "Data management and data warehouse" contract, held in Hanoi on April 18, 2017, the SBV Deputy Governor thanked the WB experts for their close support to the SBV in the progress of the banking modernization in general and the implementation of the FSMIMS Project in particular.