A research study submitted in partial fulfillment of the requirements for the degree of Master of Business Administration, School of Management

Research Studies Project Report (M.B.A.) - Asian Institute of Technology, 2001

The construction industry is an important sector for economic growth of all countries. In Vietnam, the construction industry has contributed 5 to 7 percent to the Gross National Product. According to the "opening" of the Vietnam economy, as other industry, the construction industry has developed with the rapid appearance of the foreign competitors. The domestic construction companies suffer the fiercely competitive environment with the lacking of advance technologies, managerial Site capability and funding sources. In attempts to solve these problems, the most important thing that the construction should concern is finding a framework to understand clearly about the company operation, get better or more accurate information in order to make right decisions and adapt quickly with the environment changing. However, with a very big structure, large and high complexity projects, it is very difficult for the manager of construction firm to understand and get accurate information about the firm's operation. Hence, the research used Activity based Costing (ABC) as a tool to investigate cost behavior of projects' execution, find the linkages between these cost behaviors with the strategic management of the construction company. The research is carried out in the SD-Nol Building Company of the SONODA Corporation, in Hanoi, Vietnam. Basing on the result from ABC application, the research found out a significant difference between using the traditional costing method and ABC that can leads to company to make the wrong product decisions if it is still using the traditional costing method. The analysis also obtained a chain of activities executed in the organization and how these activities contributed or costed to the operation result of the company. Given above analysis, some recommendations are suggested to improve the current operation of the SONODA Corporation and SD-Nol Company in Building business.