Project Management in the Chinese Construction Industry: Six-Case Study

Originating from the West, project management was introduced into China after the country’s economic reforms in the 1980’s and has since spread quickly throughout the whole country, particularly in the construction industry. However, despite the wide adoption of project management practices by construction organizations and the growing recognition of the importance of project management as an enabler of organizational success, empirical studies on project management in the context of the Chinese construction industry have been inadequate. This paper presents the results of an empirical study of six Chinese construction organizations in order to come to a more comprehensive and sophisticated understanding of project management practices in the Chinese construction industry. The findings revealed: (1) a good appreciation of the role of projects and project management and satisfaction with current project management practices; (2) 11 key aspects of project management implementation; (3) 12 resultant value and benefits; and (4) five aspects of the main challenges facing the organizations. Meanwhile, variations in project management practices and the resultant organizational value were identified, first between the three owner- and the three contractor-case study organizations, then between the two construction contractor organizations and the one design contractor organization.     

Fuzzy Approach to Prequalifying Construction Contractors

Construction contractor prequalification (CCPQ) is a crucial decision making process to select capable potential bidders and ensure the success of construction projects. The purpose of CCPQ is to guarantee a contractor’s characteristic to meet the construction project’s requirements, which has been established worldwide as a standard practice. However, existing methods, i.e., marking method, subjective judgment method, etc., for contractor prequalification have been inadequate because it is difficult for decision makers to investigate contractor’s capabilities against inexact, vagueness, and qualitative criteria. The objective of this paper is to propose a fuzzy framework-based fuzzy number theory to solve construction contractor prequalification issues, which include decision criteria analysis, weights assessment, and decision model development. Finally, a case study for a tunnel construction project was used to demonstrate the feasibility of fuzzy approaches.     

Contractual Incentives

Contract incentives are the means by which an owner intends to secure certain project goals through the contracting process. Incentive contracting is designed primarily to reduce cost in negotiated contracts through profit sharing ratios, which should improve on the efficiency of cost reimbursable contracts. In the process, financial risk and control are shared by the owner and contractor, according to a ratio which is established in the early stages of project design. Contractual incentives are used frequently in construction to reduce overall project time. However, there is a lack of published research on the theory and consequences of the use of incentives in construction. Studies in government research and development contracts using incentives shows that contractors may not always behave in the fashion intended by owners designing such contracts. The apparent reason is that the risk a contractor assumes under conditions of limited scope and design information biases the setting of targets, so that overruns∕underruns are more dependent on where targets are set, rather than on sharing ratios. In the construction industry this is apparently recognized, and targets are not fixed until design is approximately 40%–60% complete. Moreover, as the contractor and owner attain more knowledge of the project, both parties should attempt to reduce owner risk and control.     

Causes of Delay in Building Construction Projects in Egypt

Delay in construction projects is considered one of the most common problems causing a multitude of negative effects on the project and its participating parties. This paper aims to identify the main causes of delay in construction projects in Egypt from the point of view of contractors, consultants, and owners. A literature review was conducted to compile a list of delay causes that was purged based on appropriateness to Egypt in seven semistructured interviews. The resulting list of delay causes was subjected to a questionnaire survey for quantitative confirmation and identification of the most important causes of delay. The overall results indicated that the most important causes are: financing by contractor during construction, delays in contractor’s payment by owner, design changes by owner or his agent during construction, partial payments during construction, and nonutilization of professional construction/contractual management. The contractor and owner were found to have opposing views, mostly blaming one another for delays, while the consultant was seen as having a more intermediate view. Results’ analyses suggest that in order to significantly reduce delay a joint effort based on teamwork is required. Furthermore, causes of project delay were discussed based on the type and size of the project.     

Discriminant Analysis for Predicting Ranges of Cost Variance in International Construction Projects

Unanticipated market conditions as well as project-related risks can easily lead to cost overruns in international construction projects. For a contractor to be financially successful in international projects, a careful examination of the project is a prerequisite to understanding the cost variance characteristics. Based on the reasonably accurate characterization of the cost performance, the markup or contingency amount is determined to ensure both a decent level of profit and a good chance of winning the contract. This paper presents a classification model to categorize international construction projects, particularly faced by Korean contractors, into five cost-variation classes: extreme cost overrun, moderate cost overrun, neutral, moderate cost saving, and extreme cost saving. The model is able to characterize an international project for its cost performance prediction in comparison to the contractor’s initial cost estimate. A linear discriminant analysis is utilized to develop the predictive classification model with the support of the bootstrap method. Tests show that the proposed model is able to help cost estimators determine a proper level of cost contingency before bidding on an international project.     

Integrated Project Delivery Case Study: Guidelines for Drafting Partnering Contract

This paper presents a case study through which a multinational contracting firm aimed to introduce integrated project delivery through strategic partnering into its industry operations. The study reports on a research carried out by the author on behalf of the firm to set out series of principles and guidelines to consider when drafting a standard partnering contract whereby the owner, contractor, suppliers, and manufacturers collaboratively work together under the same terms and conditions. A partnering contract would never, on its own, change the culture and environment of the construction process and thus, strategic partnering should be promoted not only at project specific activities but at all organizational activities. Based on this project, the paper presents a list of ten managerial and contractual issues to promote strategic partnering. The author hopes that the results of this case study would foster legal professionals toward drafting a modern partnering contract, which should help in developing a more effective and efficient contracting environment.     

Risk Allocation by Law—Cumulative Impact of Change Orders

Change, defined as any event that results in a modification of the original scope, execution time, or cost of work, is inevitable on most construction projects due to the uniqueness of each project and the limited resources of time and money available for planning. There are many factors that may cause a change such as design errors, design changes, additions to the scope, or unknown conditions in the field. For each change, contractors are entitled to an equitable adjustment to the base contract price and schedule for all productivity impacts associated with the change. The focus of this paper is to outline the types of changes that can occur on a construction project and also to spell out the financial recovery possibilities that exist for the contractor for each type of change. There are many historical and current court decisions that shape the outcomes of such claims and determine who holds the risks associated with various project changes. Also, an effective cumulative impact claim contains certain vital elements upon which the final outcome will be determined by the legal system. Last, there are certain actions that a contractor and owner can do to either enhance or mitigate the effectiveness of a potential cumulative impact claim.     

Case Study in Engineering History Education: Robert Stephenson’s “Last Great Work”—The Victoria Bridge in Montréal

The Victoria Bridge across the St. Lawrence River at Montréal is one of the great engineering achievements of the 19th century. At the time of its construction it was the largest bridge project in the world. It was also the last major project of the last of the “legendary” engineering figures of the “Victorian” era of engineering, Robert Stephenson. There were many doubters as to the ability of the engineers of the day to construct a project of this size given the physical conditions of the site. The story of the construction of the Victoria Bridge is one that combines business imperatives, engineering design skills, and construction ingenuity with the enormous challenges presented by one of the world’s great, fast flowing rivers and with the severity of Canadian winters and the massive “ice shoves” that occur as a result. Following its completion controversy raged as to who deserved the most credit for the conception and design of the bridge. The bridge was constructed between 1854 and 1860 and was formally opened by the Prince of Wales in the summer of 1860. Starting in 1897, the original Tubular Superstructure was replaced by pin-connected through trusses designed to carry two rail tracks with a roadway and sidewalk cantilevered out on each side. The bridge was formally reopened on October 16, 1901 and renamed the “Victoria Jubilee Bridge.” It continues to serve rail and road traffic to the present day.     

Contractors’ Views of the Potential Causes of Inconsistencies between Design and Construction in Saudi Arabia

The study identifies the causes of inconsistencies between the design and construction of large building projects. To achieve the study objectives, a questionnaire survey was carried out to collect information on potential causes of inconsistencies at the project design and construction interface. Responses from 27 contractors were analyzed. The results suggest that the involvement of designer as consultant, communication gap between constructor and designer, insufficient working drawing details, lack of coordination between parties, lack of human resources in design firm, lack of designer’s knowledge of available materials and equipment, and incomplete plans and specifications were considered as the most important causes of the project design and construction interface inconsistencies. On the other hand, project management as a professional service, weather conditions, nationalities of participants, involvement of the contractor in design conceptual phase, unforeseen problems, involvement of the contractor in design development phase, and government regulations were the least important causes of inconsistencies between professionals at the project design and construction interface in large building projects.     

Risk Allocation and Risk Handling of Highway Projects in Taiwan

Risks always exist in construction projects and often cause schedule delay or cost overrun. Risk management is a key issue in project management. The first step of risk management is risk identification. It includes the recognition of potential risk event conditions in the project and the clarification of risk responsibilities. We conducted multiple-case studies using a systematic analytical procedure to identify risks in highway projects in Taiwan, to recognize risk allocation by contract clauses, and to analyze the influence of risk allocation on the contractor’s risk handling strategies. The results show that the owner allocates risks by stipulating specific contract clauses into five kinds of risk allocation conditions. If a risk is more controllable by the contractor, the owner has a greater tendency to allocate the risk to the contractor. Risk allocation determines which kinds of risks the contractor would take and influences the contractor’s risk handling decisions. The analysis furthermore indicates that, if the probability of a certain risk event condition is uncontrollable, then with the increasing possibility of taking the risk, the contractor’s tendency of risk handling changes from actively transferring the risk to passively retaining the risk. In contrast, if a risk is controllable and certainly allocated to the contractor, the contractor tends to take the initiative to reduce the impact caused by the risk event rather than retain the risk.     

工程总承包在湘钢燃气电厂项目建设中的应用

业主要求总承包商在超短工期条件下,用10个月的时间完成从合同签订、设计、采购、施工到投产运行全过程。该文详细分析与总结了总承包商是如何运用工程总承包项目管理模式来完成这项工作的。其成功经验可在同类工程中应用。     

Cumulative Effect of Project Changes for Electrical and Mechanical Construction

Change is inevitable on construction projects, primarily because of the uniqueness of each project and the limited resources of time and money that can be spent on planning, executing, and delivering the project. Change clauses, which authorize the owner to alter work performed by the contractor, are included in most construction contracts and provide a mechanism for equitable adjustment to the contract price and duration. Even so, owners and contractors do not always agree on the adjusted contract price or the time it will take to incorporate the change. What is needed is a method to quantify the impact that the adjustments required by the change will have on the changed and unchanged work. Owners and our legal system recognize that contractors have a right to an adjustment in contract price for owner changes, including the cost associated with materials, labor, lost profit, and increased overhead due to changes. However, the actions of a contractor can impact a project just as easily as those of an owner. A more complex issue is that of determining the cumulative impact that single or multiple change orders may have over the life of a project. This paper presents a method to quantify the cumulative impact on labor productivity for mechanical and electrical construction resulting from changes in the project. Statistical hypothesis testing and correlation analysis were made to identify factors that affect productivity loss resulting from change orders. A multiple regression model was developed to estimate the cumulative impact of change orders. The model includes six significant factors, namely: Percent change, change order processing time, overmanning, percentage of time the project manager spent on the project, percentage of the changes initiated by the owner, and whether the contractor tracks productivity or not. Sensitivity analysis was performed on the model to study the impact of one factor on the productivity loss (%delta). The model can be used proactively to determine the impacts that management decisions will have on the overall project productivity. They may also be used at the conclusion of the project as a dispute resolution tool. It should be noted that every project is unique, so these tools need to be applied with caution.     

Analytical Framework for the Choice of Dispute Resolution Methods in International Construction Projects Based on Risk Factors

International construction projects provide opportunities for developing countries to advance in the global economy and for international construction and design firms to increase their profit and market share. Despite the attractive opportunities that international construction offers, international contractors are faced with many challenges and difficulties when moving into international markets. Many risks are associated with international construction, whether external or project-specific risks. Those risks affect how contract clauses are written, including the dispute resolution clause. This paper discusses the different dispute resolution methods employed in international construction contracts and develops an analytical framework (DRM-Risk matrix) suggesting the use of specific dispute resolution methods depending on the risks expected in the project. The matrix may eventually help international contractors in the selection of the appropriate dispute resolution method during contract formation depending on the risks involved in a project.     

Owner–Contractor Work Structures: Process Approach

This paper describes a process to assist project managers, within owner companies, define work relationships between owners and their contractors for capital project development, and execution. The owner–contractor work structure process was developed by the Construction Industry Institute as a step-by-step process for making rational decisions about the most appropriate owner–contractor work structure for capital projects. A work structure is described by a set of project competencies and the extent of involvement of the owner and contractor in performing, leading, and/or providing input with respect to those project competencies. The process is described using a formal process modeling technique. Three case studies, conducted to validate the owner–contractor work structure process, are discussed. The results from these case studies suggested some basic changes to the process that would enhance its use in practice. A modified owner–contractor work structure process is then presented.     

Predicting Construction Contractor Default with Option-Based Credit Models—Models’ Performance and Comparison with Financial Ratio Models

Construction contractor evaluation is a critical issue in successfully completing a project. It is important for project owners and other stakeholders to identify potentially failing contractors and to avoid awarding them contracts. Previous studies developed construction contractor default prediction models incorporating managerial or economic variables into traditional financial ratio models to enhance predicting power. However, managerial variables are subjective and qualitative, and both economic variables and financial ratios are only available periodically and may not provide the necessary information in time. This study predicts contractor default by employing three option-based credit models (BSM, CB, and BS) based on stock market information, and the empirical results show that all of the models have strong discriminatory power in ranking contractors from riskiest to safest. The misclassification rates of the three models are BSM: 10%, CB: 10%, and BS: 12.7%, all of which are smaller than that of the enhanced ratio model developed by Russell and Zhai (22%), and two of which are smaller than that of the model developed by Severson and colleagues (12.5%). The results show that option-based credit models are good alternatives for construction contractor default prediction.     

DRB Enhanced Partnering on the Marquette Interchange: Case Study

Completion of the Marquette Interchange Reconstruction project by the Wisconsin Department of Transportation (WisDOT) under budget, ahead of schedule, and with no construction claims at the end of construction was a significant achievement and details of how it was accomplished provide valuable lessons for other public works projects. A standing Dispute Review Board (DRB) ensured that disputes did not linger and affect working relationships, use of partnering ensured effective communication between WisDOT and the contractor, and combining the two by having the DRB chair as an active participant in the partnering effort were identified as being vital to the success of the Core project. This paper describes the contractual establishment of the DRB, the formation and operation of the panel throughout the duration of the project, details of partnering participation requirements and utilization, and then identifies how the two programs were linked by mutual agreement between WisDOT and the prime contractor and worked jointly.     

Predicting Performance of Design-Build and Design-Bid-Build Projects

Design-build (DB) and design-bid-build (DBB) are two principal project delivery systems used in many countries. This paper reports on models constructed to predict performance of DB and DBB projects on 11 areas, using project-specific data collected from 87 building projects. The study included collecting, checking, and validating industry data, and the statistical development of multivariate linear regression models for predicting project performance. Robust models are developed to predict construction and delivery speeds of DB and DBB projects. Gross floor area of the project is the most significant factor affecting speed. Besides this, for DBB projects, contractors’ design ability, and adequacy of plant and equipment would ensure speedy completion of the projects. For DB projects, if the contract period is allowed to vary during tender evaluation, this would slow down the project. Robust models to predict turnover and system quality of DB projects are also constructed. A DB contractor’s track record is an important variable. They must have completed past projects to acceptable quality and have ability in financial, health and safety management.     

Contractual Approach for Facilitating the Resolution of Dispute over a Contractor’s Failure to Comply with Time Limit for Notice of Delays

The enforcement of a contractor’s notice of delays and claims as “a condition precedent” to a contractor’s claims is a controversial issue among practitioners, researchers, and legal scholars. Strict enforcement or liberal interpretations (no enforcement) of time limit for a contractor’s notice have some implications for the success of projects and for the construction industry. This paper examines and compares the different views regarding enforceability of notice provisions. The paper evaluates those views and thereafter proposes an alternative contractual approach for dealing with a contractor’s noncompliance with the provision. The applicability of the proposed approach is evaluated vis-à-vis legal principles. The proposed approach appears to be practical and equitable. It could facilitate early resolution of disputes relating to notice. It could also make the outcome of notice-related dispute more predictable. Considering the contractual, legal, and practical problems that could arise from a strict enforcement and a liberal interpretation (no enforcement) of time limit for a contractor’s notice, the paper highlights the benefits of the proposed approach to the employers (project owners), contractors, and the construction industry at large.     

Contractor Selection Criteria: Investigation of Opinions of Singapore Construction Practitioners

The construction industry has witnessed the failure of many contractors due to varying reasons such as financial problems, poor performance, or accidents arising from the lack of adequate safety consideration at worksites. All these incidents have led to the impression that the current system of awarding the contracts is inefficient in selecting the contractor capable of meeting the demands and challenges of present times and hence needs to be reviewed accordingly. Therefore, in an attempt to investigate the current situation of the Singapore construction industry a questionnaire survey was conducted for accruing the data required to identify the important contractor selection criteria (CSC) and to draw upon construction practitioners’ opinions regarding the importance of those CSC in assessing the capabilities of the candidate contractors during the selection process. The research reported upon forms part of a larger study that aims to develop a computer-interactive multicriteria decision system for contractor selection involving identification of CSC for inclusion in the system, investigation of CSC preferences of construction practitioners, and establishment of weights for those CSC from their perceived importance determined through the questionnaire survey of Singapore construction practitioners. The study highlights that there are statistically significant differences in opinions regarding the degree of importance assigned to some CSC among public clients, private clients, and contractors. Findings from the study may act as an aid in improving the Singapore construction industry by helping construction clients identify multiple CSC apart from cost which should always be considered when assessing the capability of candidate contractors during the selection process, by assisting contractors in improving their attributes in line with clients’ preferences and by facilitating Singapore construction clients and researchers to develop a contractor selection system capable of assessing multiple attributes of the candidate contractors so that the risk of the project failure due to the selection of an inappropriate contractor is minimized.     

Causes, Effects, Benefits, and Remedies of Change Orders on Public Construction Projects in Oman

Change orders are usually issued to cover variations in scope of work, material quantities, design errors, and unit rate changes. This paper discusses variations in public construction projects in Oman by investigating causes of variations, studying their effects on the project, identifying the beneficial parties, and suggesting remedies to alleviate related problems. Tasks included an analysis of four actual case studies and conducting a field survey via a questionnaire. It was determined that the client’s additional works and modifications to design were the most important factors causing change orders, followed by the nonavailability of construction manuals and procedures. The most important effects of change orders on the project were found to be the schedule delays, disputes, and cost overruns. The contractor was found to be the party most benefiting from the change orders followed by the consultant and then the client. A set of remedial actions were suggested and respondents viewed that the revision of registration of consulting offices would be the most important action followed by establishing standard documents for design procedures and building a national database about soil conditions and services.