The Coasian market-firm dichotomy and subcontracting in the construction industry

This is a contribution to the debate on the contractual nature of subcontracting in the construction industry by arguing, contrary to certain views in the literature on institutional and construction economics, that the Coasian firm-market dichotomy is not blurred or pointless. By reference to the type and number of contracts, the study offers a way to distinguish the firm from the market as well as the precise nature of subcontracting in terms of such distinction. Subcontracting is shown to be a nexus of Coasian firms interacting through the main contractor with a monopsony consumer in a Coasian market.     

Mitigating the health and safety influence of subcontracting in construction: The approach of main contractors

Subcontracting is noted for its adverse health and safety (H&S) influence in construction. Using interviews with five of the top 20 UK contractors and one medium-sized contractor, this study explored how main contractors manage the H&S influence of subcontracting with a focus on their in-house measures. Some in-house measures found are: restricting the layers of subcontractors on projects; working with a regular chain of subcontractors; implementing a H&S reward scheme for subcontractors; and insisting on non-working subcontractor foremen who have direct responsibility for the safety of workers in their trade. These measures appear to be influenced by clients, industry peer groups, and the moral justification for occupational H&S, and they offer inter-organisational learning opportunities for contractors in devising measures to mitigate the H&S influence of subcontracting. These findings should also allay concerns that removing some of the legislative hurdles in connection with on-going red tape debate will result in poorer H&S.     

Matching housing supply and demand: an empirical study of Hong Kong's market

This paper has the objective of improving on the issue of forecasting new housing construction, and highlights differences between space demand and investment demand in housing markets. Further, it indicates how these differences will affect construction decisions. The first step is to identify the factors associated with estimating residential property prices in Hong Kong, based on a demand-supply adjustment process. Specifically, this study examines the role of population growth, transaction volume, inflation and interest rate in determining house prices. Second, based on these estimations, a methodology is developed to estimate the investment demand schedule and new construction of residential property.     

The internationalization of British construction companies 1990-96: an empirical analysis

The internationalization of British construction companies is not a new phenomenon. A recent stated aim of some of the larger companies has been to increase their overseas activities in an attempt to counteract some of the problems within the domestic construction market. This paper examines the international performance of British construction firms during the period 1990–1996, and is based on a questionnaire survey of senior executives of the largest British construction companies in an attempt to analyse their perceptions of the overseas market. The survey was concerned with the companies' general views, reasons, objectives, conditions, location and future expectations with regard to their overseas operations. The principal findings indicate that British firms had increased their overseas activities during the study period. However, despite theory to the contrary and relatively high levels of construction demand in some developing countries, they had tended to conduct the major share of their overseas work in developed countries. The reasons given for this bias were that developed countries provided: a secure environment in which to evaluate risks; financial security; and less corruption. The results suggest further that shareholder influence is an important factor affecting the respondent companies location overseas. It was concluded that while market demand is a factor for overseas location by British construction companies, it is only one of many.     

A process approach in measuring quality costs of construction projects: model development

One of the most effective tools for evaluating the success of a quality management programme is the measurement of quality costs (prevention, appraisal and failure costs). The application of the concept of quality costs originated in the manufacturing industry in the early 1950s. As increasing attention has been given to improving the overall quality in the construction process since the early 1980s, the application of total quality management (TQM) practices in the construction industry has gained much popularity. A systematic approach is needed for measuring quality costs, especially in the construction industry, due to the great number and complexity of activities involved in a typical project. This paper describes how a simple methodology can be used to capture quality costs in construction projects. Pre-existing models for capturing construction quality costs, by Davis, by Abdul-Rahman, by Low and Yeo and by others, recognize quality cost components but do not address the causes or sources of unwanted deviations. This paper proposes an alternative approach, based on the process cost model and in conformance with BS6143 (1992), which is thought to better facilitate the fundamental goal of TQM, i.e. continual process improvement. A number of professionals involved in construction quality management were interviewed and responded favourably to the practicality of the proposed framework in the construction context.     

The contracting system in the French construction industry: actors and institutions

An overview is presented of development in the French construction industry responding to economic, regulatory and legal changes over the last 20 years. As the French industry moved into recession in the early 1980s, the large French construction corporations increasingly moved upstream taking greater responsibility for design, and downstream becoming increasingly concerned with concessions for public works and services. The public sector clients' reactions to these developments is analysed, in particular the passing and implementation of the law on the public sector client. This safeguards a larger role for the architect in the construction process and tends to favour a shift back from general contracting to seperate trades contracting. The analysis is presented in terms of a struggle between the different actors in the French contracting system for predominance, and shows how the balance of relationships in the system is dynamic. Dans cette communication, l'auteur fait une presentation generale de l'evolution du secteur de la construction en France face aux modifications economiques, reglementaires et juridiques qui ont vu le jour au cours de ces 20 dernieres annees. Alors que dans son ensemble l'industrie francaise entrait dans une periode de recession au debut des annees 1980, les grandes entreprises du secteur de la construction se sont de plus en plus deplacees en amont pour prendre de plus grandes responsabilites en matiere de conception et, en aval, pour se preoccuper de plus en plus des concessions pour des travaux et des services publics. L'auteur analyse ensuite les reactions des clients du secteur public face a ces developpements, notamment l'adoption et la mise en oeuvre de lois sur les clients du secteur public. Ces lois prevoient un role plus important de l'architecte dans le procede de construction et ont tendance a favoriser un retour de l'enterprise generale vers l'entreprise specialisee. Cette analyse s'inscrit dans les termes d'un combat entre les differents intervenants en vue de dominer le systeme contractuel francais et montre comment l'equilibre des relations de ce systeme est dynamique.     

南区高层住宅剪力墙建筑节能的优化与施工管理

本文通过一个工程案例高层住宅混凝土剪力墙保温措施的优化与施工管理,说明剪力墙节能优化的重要性及南区采用无机内保温的适用性。     

Institutional arrangements and construction safety in China: an empirical examination

Previous studies merely attempted to identify factors affecting safety performance from the micro perspective of project management, while they never questioned why those factors, such as lack of the top‐management support and training, existed. A macro perspective, informed by the corollary of the Coase Theorem, was adopted here to show that suitable institutional arrangements are essential for better safety performance in a construction industry. Province‐level construction safety records in China from 1994 to 2000 were used to test the effects of institutional arrangements on construction safety in China. Major factors affecting construction safety were found to be the implementation of construction safety laws, the rate of subcontracting, while neither the extent of using temporary workers, nor the availability of resources, nor the level of per capita GDP have any effects.     

Stakeholder management in construction: An empirical study to address research gaps in previous studies

This paper concentrates on identifying gaps in the scope of previous studies on stakeholder management, and starting to address those gaps by conducting an empirical study. To complete these research objectives, literature review, interviews, questionnaire survey, and a case study were used in this study. Four gaps regarding critical success factors, stakeholder management process, methods for stakeholder management and stakeholder relationship management were identified. Based on an empirical study, a framework for effective stakeholder management is proposed, and the application of a Social Network Analysis technique, as a means of determining the influence of stakeholders on decision making, is illustrated and validated by a case study. These findings can serve as initial references towards a more systematic approach for stakeholder management. Since the empirical study was conducted only in Hong Kong and Australia, further studies should be conducted in other regions to validate and compare with the finding in this paper.     

Regional development and construction in Italy: an input-output analysis, 1959-1992

Using two sets of input-output tables, this paper analyses the role of the construction sector in the North and South regions of Italy, from 1959 to 1992. As expected, the sector has had differing impacts on the two regional economies over the years. In the highly developed North its importance has been declining, similarly to the case of other highly developed countries. In the less developed South, instead, construction has a relatively higher propulsive role in the creation of goods and income. This role is significantly diminished since most of the construction inputs are imported. Some differences are reported in the sector's input and output profiles of the two regions. From the technological and organizational points of view, in the South construction projects appear to be less complex than those in the North.     

Globalization and construction industry development: implications of recent developments in the construction sector in Asia

Recent developments in the construction sector in the Asian region demonstrate three trends: (1) larger private sector participation in infrastructure projects, (2) increasing vertical integration in the packaging of construction projects, and (3) increased foreign participation in domestic construction. This paper attributes the trends to the globalization and deregulation of markets necessitated by fiscal, technological and managerial constraints. Although these trends present intra-Asian opportunities, there are also areas of concern. The trends have helped polarize the financial and technical superiority of the developed countries and the corresponding inferiority of the developed countries in the region of the developing ones. In the long term, this gap could be filled through technology transfer. In the short term, however, there are concerns that imported construction services could grow at the expense of the indigenous sectors of the developing countries. This paper illustrates this dilemma with the case of Japan as a world leader in international construction services. Its dominance has apparently come through the orchestration of industrial and corporate policies, implemented in a highly regulated and protected domestic market. However, construction industries in other Asian economies (such as China) will have to leapfrog in technology, finance and management know-how (e.g. through joint ventures with developed countries' construction companies) before they can become formidable powers in an environment that has become much more global, more de-regulated, more open and more competitive than before.     

Innovativeness in British and French construction: the evidence from Transmanche-Link

This paper addresses the ‘innovativeness’ (the extent to which the design of the organization facilitates or inhibits innovation) of French and British project organizations. Following a review of the literature on organization design and innovativeness, data from a comparative organizational assessment of the British and French approaches to managing the Channel Tunnel construction project by Transmanche-Link are presented. These show that the British approach could well have less capacity for innovation than the French. The available evidence on the relative levels of innovation on the two sides of the Channel Tunnel are reviewed, showing that the predicted effects are found.     

Not really an aftermath. The role of actual construction in the design process of the Sydney Opera House roof

For the past 50 years, the Sydney Opera House has been the subject of a prodigious hagiography of the personalities involved in its realization and their legendary querelles. Yet it remains paradoxically unexplored when it comes to its operative construction decisions, particularly those that relate to the erection of its renowned superstructure. Through the analysis of a newly discovered set of shop drawings prepared for the innovative formwork system of the iconic roof sails, the paper contributes to the construction history of the building whilst shedding light on the hitherto unacknowledged role of the general contractor in the design process. In doing so, it questions the validity of conventional assumptions about the technical division of labour in complex projects, where construction and project management tend to be kept separate from architectural and structural design, furthermore suggesting the need for broader design exegeses, combining project-based and production-based concerns. In reflecting on its import for contemporary practice, the study suggests that the revealing picture of the Sydney Opera House project, as it emerged from the cumbersome archive-based cross-analysis of the manual documentation produced for it, is in principle much easier and perhaps important to obtain today. This is due, on the one side, to availability and diffusion of digital project collaborative platforms; on the other side, to the merging and the blurring of professional and non-professional design contributions.     

Evaluating the performance of combining neural networks and genetic algorithms to forecast construction demand: the case of the Singapore residential sector

In recent years, forecasting demand for residential construction in Singapore has become more vital, since it is widely perceived that the next trough of the real estate cycle is approaching. This paper evaluates the use of a combination of neural networks (NNs) and genetic algorithms (GAs) to forecast residential construction demand in Singapore. Successful applications of NNs, especially in solving complex non-linear problems, have since stimulated interest in exploring the capabilities of other biological-based methods such as GAs, and in exploiting the synergy of these two techniques to create more problem-solving power. In the study, a basic NN model is used as a benchmark to gauge the performance of the combined NN-GA model. A relative measure of forecasting accuracy, known as the mean absolute percentage error (MAPE), is used for the comparison. The models are checked also for internal validity by allowing each to be trained twice and having a set of forecasts generated after each training. Both models are found to produce accurate forecasts, because their MAPE values consistently fall within the acceptable limit of 10%. However, the combined model out-performs the basis model remarkably by reducing the average MAPE from about 6% to a mere 1%. For each model, the marginal difference in the MAPE values (i.e., 0.5% for the NN model and 0.06% for the NN-GA model) of its two forecasts indicates consistency in performance, hence establishing internal validity as well. The findings reinforce the reliability of using NNs to model construction demand and reveal the benefit of combining NNs and GAs to produce more accurate models.     

Mental maps of entrepreneurs and location factors: an empirical investigation on Italy

The Annals of Regional Science - The explanatory factors of firms’ location have been largely studied by the location theory, and by the large amount of empirical studies on the revealed...     

Evolution of an automated crack sealer: a study in construction technology development

Demographic, regulatory and competitive forces impose increasing pressures on the construction industry. Automated pavement crack sealing is a typical example of the technology developments that are emerging in response to these industry pressures. Development of automated construction technology such as the crack sealer involves several issues including the design cycle, economic feasibility analysis, financing, and implementation. An examination of these issues, using the development of the crack sealer as a case study, leads to the conclusion that revolutionary construction technology developments are feasible and that in the United States (US) they will be financed and carried out in the form of a variety of industry, government, and academic consortia.     

Trust-building in construction contracting: Mechanism and expectation

Trust is defined as the willingness of a trustor to become vulnerable to a trustee whose behavior is beyond his control. The efficiency of a project team can be enhanced should its members trust each other. There have been notable efforts in promoting trust in the construction industry through the use of a variety of trust building mechanisms. However, the reciprocating trusting behaviors that could be expected (identified as trust expectations in this study) has not been elaborated. This study aims to investigate such relationships. For this, trust building mechanisms and trust expectations are identified and then operationalized for the development of their respective measurement scales. With data collected from practitioners, four and three taxonomies of trust-building mechanisms and trust expectations are developed respectively through the use of principal component factor analysis. The former includes: networking, procedural measure, credit rating and calculativeness. The latter consists of self-awareness, responsiveness and value congruence. Their inter-relationships were then examined by structural equation modeling. Networking and calculativeness generally relate positively to most types of trust expectations. Nevertheless, trust-building mechanisms like procedural measure and credit rating are not so related to trust expectations and may even lead to trust deterioration. The findings prompt to further research on the versatility of or the conditions conducive for certain trust-building mechanisms in terms of the trusting behaviors that can be reciprocated.     

A qualifications trap in the German construction industry: changing the production model and the consequences for the training system in the German construction industry

German construction companies traditionally rely on qualified workers. This has influenced both their production model (work organization on site) and their policy towards training and education. Due to the massive inflow of workers from countries with low labour costs, firms may fundamentally change this model to a new one which is distinguished by the combination of less qualified workers with a larger number of managers for instruction, supervision and control. This change is initially likely to have a considerable knock-on effect on the training system. However, what is even worse is that the new model is not likely to work in the long run. To date the construction industry has acquired its site managers and supervisors directly from the pool of qualified workers. By reducing training it produces a shortage of the very resource inevitably needed to be able to reduce training. The industry will fall into a qualifications trap. What is more significant is that this trap is shown as a first step towards lowering corporate image, quality of human resources, productivity and, in the end, competitiveness.     

Modelling profitability and effectiveness of Greek-listed construction firms: an integrated DEA and ratio analysis

Existing research on construction performance measurement is dominated by project level studies, and the firm stakeholders require the development of models that compare performance in terms of efficiency. A new framework that integrates data envelopment analysis (DEA) and ratio analysis using a two-step approach is described to evaluate performance in terms of profitability and effectiveness of a sample of construction firms listed on the Athens Exchange. In the first step, profitability and effectiveness are assessed by employing DEA and by using the profit margin (i.e. income-to-sales ratio), respectively. In the second step, a Tobit and an ordinary least squares model are used in order to identify the drivers of profitability efficiency and effectiveness, respectively. Results do point out positive links between profitability efficiency and effectiveness. Profitability inefficiency can be explained by the size and expenses-to-total revenue ratio, whereas effectiveness can be explained only by the latter explanatory variable. The research framework may benefit not only Greek construction firms, but also firms in other countries to quantify their performance and improve their competitive advantages.