Exploiting Knowledge Management: The Engineering and Construction Perspective

Construction companies have always relied on their knowledge assets to provide services to clients. In recent years the terminology “knowledge management” has been introduced. Knowledge management (KM) seeks to formalize the manner in which companies exploit their knowledge assets by harnessing organizational knowledge, promoting greater collaboration between groups with similar interests, capturing and using lessons learned on previous projects, etc. This paper investigates how major United States engineering design and construction firms are implementing knowledge management initiatives in order to identify best practice. It adopts a case study methodology to investigate companies’ strategy and implementation, people aspects, and metrics for performance. The study finds that there is a clear distinction between the knowledge management activities undertaken by large engineering design firms and those of construction firms. There is also a much greater emphasis on knowledge sharing, which is just one component of knowledge management. Moreover, some companies have specific KM initiatives while others have activities that are part of their normal business processes.     

Empirical Assessment of Internationalization Strategies for Small and Medium Construction Companies

In the wake of increased globalization, more small and medium construction companies (SMCCs) are expanding into the global market. However, the international construction industry is different from the domestic with respect to resource, regulations, culture, entry strategies, and risk levels among other factors. This paper explores various ways and modes of internationalization for SMCCs under 13 key hypotheses that are relevant to the issues of internationalization from the perspective of SMCCs. To verify these hypotheses, this study used actual data from 560 cases of SMCCs’ overseas projects performed between 1990 and 2007. It was found that SMCCs’ entry scheme as prime contractors was more rewarding than in the case of subcontractors. Moreover, SMCCs are likely to evolve from subcontractors engaged with home-country contractors to subcontractors engaged with foreign contractors. Also, cultural distance is positively related to performance, but the effects of cultural properties are not as strong compared to the international manufacturing industry. The results are expected to help SMCCs build internationalization strategies by determining promising entry modes, proposing possible evolutionary paths to enter overseas projects, and assessing cultural effects in reference to SMCCs’ successful performance.     

Using Analytic Network Process to Predict the Performance of International Construction Joint Ventures

Strategic collaborations such as joint ventures (JVs) have become an important way of exploiting business opportunities for construction companies. However, such entities are difficult to manage due to their composite structures, which entail diverse organizational cultures, styles, and objectives. Therefore, measurement of JV performance has been an interesting research topic although there is no consensus on the definition, measures, and variables of performance yet. Considering the inherent complexities of the construction projects, only an adequate combination of criteria allows assessing the international construction joint venture (ICJV) performance. Within this study, an analytic network process model is developed to examine the links between the determinants of performance and to observe the influences of these factors on the ICJV performance. As a result, interpartner relations, structural factors and interpartner fit are found to be the most important determinants of ICJV success. Effectiveness of conflict resolution and control mechanisms contribute significantly to ICJV performance. Cultural fit is the most important fit that should be attained between the partners. The performance of the model is tested on eight real construction projects and satisfactory results are obtained.     

International Expansion Decision for Construction Companies

There exist several reasons for construction firms to expand their business into international markets. But the complex international environment is affected by diverse factors and creates risks that are not well understood by companies that are active mostly in domestic markets. It is therefore essential for construction companies to follow a disciplined and well-informed strategy when deciding whether to enter international markets. Company strengths relative to conducting business in international markets, the threats and opportunities associated with overseas work, and the costs and benefits of undertaking construction projects in specific countries need to be considered in this decision. The interactions between the complex factors can be structured in a model that can help one to make a rational judgment. The International Expansion Decision Model developed in this study is based on the Analytic Hierarchy Process (AHP) improved by the addition of a Delphi survey. The main objective of this research study is to facilitate the entry decision into foreign markets and to highlight the importance of the factors involved in this decision. This study is of relevance to practitioners as it allows executives of construction companies to test if their company is ready for expansion into international markets in general and into a specific country in particular. It is also of relevance to researchers as it demonstrates the successful use of the combined Delphi and AHP methods.     

Strengths, Weaknesses, Opportunities, and Threats for Architectural, Engineering, and Construction Firms: Case Study of Vietnam

After Vietnam became a member of the World Trade Organization, Vietnamese architectural, engineering, and construction (A/E/C) firms face competition from not only their domestic competitors but also from foreign A/E/C firms. As most Vietnamese firms are used to operating under a protected setting, they may face difficulties competing in the globalized environment. This study undertakes a strengths, weaknesses, opportunities, and threats (SWOT) analysis of Vietnamese A/E/C firms, investigates how they respond to opportunities and threats, and recommends how foreign A/E/C firms operating in Vietnam could respond. Using semistructured interview questions, face-to-face interviews were conducted with Vietnamese and foreign A/E/C firms. The SWOT analysis reveals that Vietnamese A/E/C firms are lagging behind foreign firms in financial capacity, experience in complex projects, knowledge in advanced design and construction technology, and management ability. Industry practitioners from outside Vietnam who are contemplating entering the Vietnamese market can leverage on Vietnamese firms’ strengths by forming joint ventures with strong and reputable private Vietnamese firms. To improve their competitive advantage, it is recommended that foreign A/E/C firms offer superior products and services and familiarize themselves with local culture and regulations. They should be mindful of corruption and set up surveillance systems to curb wasteful spending.     

Capturing Knowledge in Construction Projects: Knowledge Platform for Contractors

Managing knowledge effectively is critical to the survival and advance of a company, especially in project-based industries such as construction. However, capturing knowledge in construction projects is a tedious task, as knowledge is usually experience based, tacit, and hard to pass on to others. In this study, a survey was carried out among eight leading Turkish construction contractors that are operating within the international construction market. The specific objectives of this survey are to find out how the tacit and explicit knowledge are captured, stored, shared, and used in forthcoming projects, as well as major drivers and barriers for knowledge management. Based on the survey, it was determined that most of these firms do not have a knowledge management strategy and a systematic way of capturing and storing tacit knowledge. A conceptual framework is proposed to formalize the knowledge-capturing process within construction companies. To demonstrate how the conceptual framework can be implemented in practice, a Web-based system, namely, Knowledge Platform for Contractors (KPfC) is presented. It is hypothesized that KPfC can be used to manage both tacit and explicit knowledge effectively in construction projects.     

Enablers That Help Foreign Architectural, Engineering, and Construction Firms Win Construction Contracts in China

With China’s fast economic growth and entry into the World Trade Organization (WTO), more foreign architectural, engineering, and construction (AEC) firms are expected to venture into this huge and attractive market. This paper explores the important strategies to help foreign AEC firms clinch construction projects in China. Using a questionnaire survey approach complemented by in-depth interviews, it was found that firms need to pay more attention to the market and working conditions in China and to strengthen their own capabilities. To win projects in China, foreign AEC firms should also be able to offer project financing services. The findings are useful to foreign AEC firms because it may help them win projects in the Chinese construction industry.     

Implications of Culture in the Performance of International Construction Joint Ventures

Joint ventures have become popular because of their importance as a strategic alternative in global competition. One of the reasons why international joint ventures (IJVs) are difficult to manage is because the cultural distance between IJV partners has significant impact on alliance performance. Since construction projects are highly sensitive to external risks, the effect of the culture in the location in which the IJV operates is also significant. In this study, the effect of cultural similarity/difference relative to the national and organizational characteristics of partner companies on IJV performance is examined through a questionnaire survey. The impact of the cultural similarity/difference between an IJV partner and the host country is also assessed. The results of the study suggest that differences in organizational culture have a greater impact on IJV performance than differences in national and host country culture. The findings also reveal that similarity between the national cultures of IJV partners has a negative effect on IJV performance. The analysis of the data failed to provide evidence that IJV performance is affected by differences between the culture of the host country and the culture of an IJV partner.     

Evolution of Collaboration in Temporary Project Teams: An Agent-Based Modeling and Simulation Approach

As construction projects get larger and more complex, it has become clear that no single entity can have complete knowledge of or the abilities to handle all matters. Therefore, collaborative practices among heterogeneous individuals, which are temporarily congregated to perform a project, are required to accomplish common project objectives. On the basis of this premise, this paper introduces an agent-based simulation of the evolution of collaboration within interorganizational networks of construction project teams from game theory and social network perspectives. The simulation confirmed that the fewer individuals are familiar with others in the network, and thereby aware of networks they are involved in, the more time it takes for networks to reach stable states. It was also found that the tendency of cohesion increased as the effort to form relationships with outside partners rose. Furthermore, the results indicated that the more effort needed to form relationships with those from other organizations, the less efficient the networks were. The model of organizational processes developed in this study explicitly incorporated a representation of individual decision makers and their interactions from both active and dynamic standpoints. This model represents a contribution to enhancing the understanding of the affect of organizational aspects on project management and to facilitating the development of tools for investigating organizations in construction.     

Strategies Adopted by International Architectural, Engineering, and Construction Firms in Southeast Asia

There are many business opportunities for international architectural, engineering, and construction firms to work in Southeast Asia (SEA) due to its high volume of construction demand and its growing economy. Before entering the region, these industry practitioners need to decide on the appropriate market entry modes and business strategies. The objectives of this research are to investigate the effective market entry modes and business management strategies that industry practitioners can adopt for SEA projects. The research method is based on a structured questionnaire. The study found that the most effective market entry modes are: setting up wholly owned foreign subsidiaries and forming project joint ventures with local firms. The most effective business strategies are: providing a superior product or service and paying great attention to client satisfaction. It is recommended that industry practitioners place emphasis on customer satisfaction by considering all aspects of the client’s requirements and the proposed project’s usage throughout its intended life cycle, to differentiate itself from its competitors.     

Emergence and Role of Cultural Boundary Spanners in Global Engineering Project Networks

Engineering project networks are increasingly global in scope and outsourcing is increasingly common. Along with globalizing trends in project delivery, the workforce is also globalizing. It is common for engineers to move to other countries as expatriate workers or as emigrants to pursue job opportunities in other firms. Where much is known about global networks of engineers collaborating on projects, little is known about the mediating role played by individuals that share the same nationality as an international partner on a project. In this paper, we examine two project teams executing complex, reciprocally interdependent design projects in India. One team was comprised of Indians and Americans. The other team was identical, but also contained an Indian national who had studied and worked in the United States. Both teams worked on similar design schedule optimization problems. Over the duration of three days, we examined the interactions of the teams assembled to finalize their designs. Through quantitative network analysis and qualitative observations of the cross-cultural interactions, we found the Indian expatriate to play a cultural boundary spanning role resolving cross-cultural knowledge system conflicts and increasing collaboration effectiveness. We induce a propositional theoretical model of cultural boundary spanning in global engineering project networks.     

Relationship between Governance Structure and Financial Performance in Construction

Although corporate governance has emerged as an issue of considerable importance in shaping the organizational structure and the vision of the firm, this entity has yet to receive sufficient scrutiny in the construction industry. The purpose of this study is to determine the extent by which the configuration of corporate governance may impact on the financial performance of construction firms. The investigation utilizes 100 companies of differing sizes. The analysis reveals that a critical mass of outside independent directors and the dissociation of the roles of CEO and Chairmanship of the board do translate into superior financial market returns for the firms. Other corporate governance variables have no apparent impact on the financial performance of the firms. These findings are significant to construction firms that are already established or in the process of being formed.     

Strengths, Weaknesses, Opportunities, and Threats: Case Study of Consulting Firms in Shenzhen, China

After China became a member of the World Trade Organization, Chinese architectural, engineering, and project management consulting firms faced competition from not only their domestic competitors but also from foreign firms. As most Chinese consulting firms are used to operating under a protected setting, they may face difficulties competing in the globalized environment. This research involves a strengths, weaknesses, opportunities, and threats (SWOT) analysis of Chinese consulting firms based in Shenzhen; investigates how they respond to opportunities and threats; and recommends how foreign firms can respond to Chinese consulting firms’ SWOT. The case study research design is adopted. Using semistructured interview questions, face-to-face interviews were conducted with 23 Chinese consulting firms based in Shenzhen. Foreign firms’ responses are investigated through a case study of a U.S.-based consulting firm operating in China. The SWOT analysis reveals that Chinese consulting firms are lagging behind foreign firms in design and technical capability; experience in international projects; general and project management ability; and financial capacity. Industry practitioners from outside China who are contemplating entering the Chinese market can leverage on Chinese firms’ strengths by forming joint ventures with them. Foreign industry practitioners can take advantage of Chinese firms’ weaknesses by offering superior products and services which would improve their competitive advantage.     

Risk Management Model for International Construction Joint Ventures

The current Asian financial crisis has put the role of risk management in the construction business into focus. For firms engaging in the international construction business, one of the most effective means of mitigating financial risks is through a joint venture (JV) with a local partner. There are, however, risks associated with an international construction JV. Based on a study by the writers on the risk factors and their mitigating measures, the most effective risk mitigating measures were categorized into eight groups. These are partner selection, agreement, employment, control, subcontracting, engineering contract, good relationship, and renegotiation. In this paper, a risk management model incorporating these measures was proposed. Three cases of international construction JVs were analyzed from the perspectives of the execution of these measures. It is hoped that this model would help construction firms in improving their decision-making process for their overseas ventures.     

Performance and Strategy of Chinese Contractors in the International Market

The past decade has witnessed the steady growth of Chinese international contractors (CICs), who have become important and influential players in the international market. The enormous development demands worldwide, especially in developing countries, attract CICs to engage in the market. Similarly, the strong support from the Chinese government plays an important role for the expansion of Chinese contractors globally. Some leading CICs perform very well in certain fields and countries. This brings the competitiveness of CICs to the attention of the international community. The strengths, weaknesses, opportunities, and threats (SWOT) approach was adopted in order to analyze CICs’ strengths, weaknesses, opportunities and threats in international construction markets. Literature from various sources was reviewed in the first instance, which is followed by an interview survey with 42 CICs employees. A SWOT strategy matrix is used to establish a framework that can help CICs to select suitable business development strategies in overseas markets. The applicability of the strategy framework was tested through the case study of two CICs. The strategies to reinforce their positions in the international market were studied based on the SWOT analysis. The results indicate that CICs are on their way to becoming major competitors to other overseas contractors. In essence, the research results offer a valuable reference of practices that construction firms need to master in order to survive and grow in the international market.     

Awarding Construction Contracts on Multicriteria Basis in China

China’s entry to the World Trade Organization (WTO) will allow both domestic and overseas construction firms to compete under the same market conditions. This development will lead to a more rigorous participation from overseas construction professionals in the Chinese construction market. Nevertheless, this participation can only be effective or successful when there is a proper understanding about the construction procurement practice in China. The Chinese construction practice has its own characteristics, such as governmental regulations, professional qualification systems, and procurement systems. These characteristics present a different practice in awarding construction contracts from that in the West. This paper investigates the characteristics of construction business environment in China and identifies the key parameters used in assessing contractors’ competitiveness for awarding construction contracts in the market. The parameters are useful tools for assisting contractors in identifying their strength and weakness, thus reengineering actions can be adopted for improving competitiveness. A case study is used to demonstrate how these multiple parameters are used in the process of awarding contracts in the local market.     

Chinese Contractors in Africa: Home Government Support, Coordination Mechanisms, and Market Entry Strategies

Africa is a traditional overseas market for Chinese contractors. Since the launch of “going out’ national strategy in the new century, and with the support and control of the government and subordinate agencies, associations and banks, and innovative approach such as Angola Mode, Chinese contractors’ presence in the emerging African market continues to grow. Based on original empirical data collected through interview and questionnaire surveys, this paper analyzes the mechanisms the Chinese government has established to facilitate Chinese contractors’ entry into Africa and the perspectives of Chinese contractors about the African market in terms of opportunities and threats. Regression analysis based on existing datasets indicates that despite perceived opportunities and threats, Chinese contractors’ performance in Africa in terms of business revenue actually hinges upon the availability of construction capital. The study also reviews the market entry modes used by Chinese contractors, concluding that they prefer to establish a long term presence and opt to commit large resources. Overall, the paper summarizes evidence about the status and innovative approaches of Chinese contractors in penetrating the African construction market, and also characterizes the potential of the African construction market for Chinese contractors.     

Diffusion of Network Planning in Construction

The history of the use of network analysis in the construction industry is reviewed. The difficulties encountered in the diffusion process from country to country, from industry to industry, and from company to company are examined. Differences between industrialized and developing countries are also considered. It is found that: (1) Research and development activities in the construction industry are inadequate whereas implementation problems in network applications require thorough investigation; (2) the diffusion of networks in developing countries is taking place with a delay when compared to the diffusion in industrialized countries, mainly because of the smaller sizes of companies and projects, limited resources, and because of the inherent higher uncertainty in the construction industry; (3) most civil engineering curricula have recently been revised and incorporate new management topics; and (4) successful introduction of network planning into construction companies, and therefore the rate of diffusion, seem to be directly dependent on the reasons why they were introduced initially.     

Inter- and Intraorganizational Trust in International Construction Joint Ventures

International joint ventures in construction often face a highly complex and dynamic environment because, in most instances, they are formed to build large-scale engineering projects. One can distinguish two organizational levels that together constitute the joint venture system: (1) the interorganizational level formed by the partners and (2) the intraorganizational level of the joint venture. The partners seek to reconcile their different interests on the interorganizational level, as each of them follows the goal of profit optimization. Here, formal control mechanisms are more important than trust. Actors on the intraorganizational level face the construction task. One of the primary requirements is to reduce the project complexity. Within the joint venture, many international construction joint ventures disentangle their responsibilities by functional separation and delegation of work. In a social group, delegation of work requires trust in the capability and willingness of others to perform their duties without supervision. Especially during the initial phase, international construction joint ventures are high-pressure environments without established teams. Trust is a mechanism that allows to reach goals efficiently within this setting. As a consequence, we can find a special form of trust in international construction joint ventures: necessitated general trust that is extended to everyone even without prior knowledge. These findings are new and have high practical relevance as trust proves to be a most important success factor.     

Determinants of International Architectural, Engineering, and Construction Firms’ Project Success in China

As China becomes a member of the World Trade Organization, many international architectural, engineering, and construction (AEC) firms are undertaking or expected to undertake projects there. This study identifies the significant factors that contribute to the successful performance of projects undertaken by international AEC firms in China. Data were collected using structured questionnaires from foreign (non-Chinese) AEC firms that have completed projects in China. Personal interviews with 27 experts were also conducted to supplement and test the survey findings. The findings reveal that the variable that affects the most number of success measures is the AEC firm’s ability to understand the client’s requirement. Achieving this brings about good project quality performance and owner satisfaction. Furthermore, firms that have superior product or service quality would also achieve better project performance. The interviewees also exhorted the importance of having core competencies as a critical success factor for projects in China. Practitioners may use the findings to help them manage their projects in China, so as to achieve higher levels of success.