D-SUB: Decision Support System for Subcontracting Construction Works

Letting work to subcontractors is a very common practice in construction industry. Subcontractors help contractors overcome problems including the need of special expertise, shortage in resources, and limitation in finances. The decision to subcontract involves designating work items to be subcontracted and making assignments to subcontractors. Generally, work assignments to subcontractors can be for the total quantity of a work item or a proportion thereof. This paper presents a decision support system that makes assignments to subcontractors of the work items designated for subcontracting. Moreover, the system calculates and plots the overdraft profile based on the financial terms of the contract and project schedule. The ultimate goal of the system is to make work assignments to subcontractors under constraints economical and predict the expected profit at the end of the project. The system encompasses four basic components including project data, linear programming module, sensitivity analysis module, and financial analysis module. The sensitivity analysis adds strength and flexibility to the system by allowing the user to experiment with different scenarios. Finally, the developed system that represents a structured method for making subcontracting decisions is demonstrated through an illustrative example project.     

Issues in Subcontracting Practice

Subcontractors are very important to the successful completion of most construction projects, yet the many issues involved in subcontracting practice are seldom acknowledged. A literature review indicates that these issues include the timeliness of payments by general contractors, the process of selecting subcontractors, subcontractor bonding, construction insurance, safety issues on the construction site, partnering arrangements with various parties, and productivity issues. A questionnaire survey was administered to subcontractors, general contractors, and construction owners to investigate these issues and to determine the differences in perceptions between the parties. The results confirm the existence of the issues identified in the literature and in addition indicate that (1) the practice of retainage withheld by general contractors seems to be acceptable to many subcontractors unless its magnitude is large relative to the size of the firm; (2) postaward bid shopping by general contractors is sometimes justified, particularly in cases where the scope of subcontract work is modified; and (3) current bonding and insurance practices are adequate unless the additional transferred risks are excessive. Recommendations are made on the basis of the findings to minimize the negative effects of said issues.     

Total Quality Management Implementation in the Egyptian Construction Industry

Total quality management (TQM) has been recognized as a successful management philosophy that can be successfully implemented in the construction industry. By examining the Japanese contractors working in Egypt and comparing their managing systems to the local ones, a comparative analysis of the two contractors working in the Egyptian field is presented in this paper to illustrate how TQM can be implemented effectively in the Egyptian construction industry. Bearing in mind the location bound nature of the production process, the competitive bidding, which emphasizes cost and the absence of the quality culture of the clients, subcontractors and site operatives are some of the constraining factors for implementing the quality policy. Based on the research findings, the paper presents some features of the Japanese construction industry that could be implemented in the Egyptian field in addition to a new model for TQM implementation that appropriates the Egyptian construction industry.     

General Contractors' Management: How Subs Evaluate IT

A large set of criteria by which top quality subcontractors evaluate the managerial performance of general contractors under whose management they have worked during the construction process and by which they may differentiate their bids to different generals for the same future project are listed and described. These criteria can also be seen as the intrinsic managerial, cost‐and time‐sensitive factors by which general contractors or any manager of construction could improve performance, competitiveness and profitability. It also describes separate, “most important” and “super‐important” subsets of the foregoing criteria∕factors for office and site staff, etc., and the range of effects of the generals' good and bad managerial performance against these criteria∕factors on the costs and duration of the subcontractors' work. The cost and duration effects, etc., that each lump sum bidding general contractor and appointed construction management agent has on the subcontractors' work are compared, and the carefully formatted research process which produced these results is outlined.     

On-Site Subcontractor Evaluation Method Based on Lean Principles and Partnering Practices

Subcontracting has greatly increased in the construction industry. It helps shift risk from the main contractor to the subcontractor and promotes specialization. Inadequate subcontracting management, however, may result in an adversarial relationship between main contractors and their subcontractors, uncoordinated on-site execution, and disappointing quality and schedule fulfillment. New subcontractor management methods and tools are being developed and tested as part of a collaborative research project led by the Catholic University Production Management Center with the participation of the Chilean Construction Chamber and several construction companies. The experience gained by testing prototype tools and methods on selected projects enabled us to develop an on-site evaluation method based on lean principles and partnering practices. This method allows main contractors to help subcontractors improve their performance by providing them with periodic feedback. It also supports subcontractor selection based on their previous performance, which helps foster collaborative relationships with those that consistently perform well. The results of the application of the method in two case studies are discussed.     

Owner’s Role in Construction Safety

Despite dramatic improvements in recent decades, the construction industry continues to be one of the industries with the poorest safety records. Recent improvements are due, in part, to the concerted efforts of owners, contractors, subcontractors, and designers. While past safety studies have investigated the roles of contractors, subcontractors, and designers, the owner’s impact on construction safety has not been previously investigated. This paper will present the results of a study on the owner’s role in construction safety. Data were obtained by conducting interviews on large construction projects. The relationship between project safety performance and the owner’s influence was examined, with particular focus on project characteristics, the selection of safe contractors, contractual safety requirements, and the owner’s participation in safety management during project execution. By identifying practices of owners that are associated with good project safety performances, guidance is provided on how owners directly impact safety performance.     

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.     

Partnering: Why Project Owner-Contractor Relationships Change

Over the last decade, research in the construction industry has explored the owner-contractor relationship in project management resulting in a different paradigm called partnering. Partnering is a relationship characterized by cooperation and collaboration in contrast to the adversarial relationship more commonly experienced between owners and contractors. This study utilized data collected from 276 construction projects to examine the stability in the owner-contractor relationship. Owner-contractor relationships were classified as being adversarial, guarded adversarial, informal partners, or project partners. Fifty-eight percent of the projects experienced some fundamental change in working relationship—either positive or negative. Projects that began as formal partnerships were the most stable with over two thirds ending as they began. Guarded adversarial was the least stable with fewer than 30% maintaining this kind of relationship at the end of the project. Content analysis of the reasons stated for the change revealed factors that contribute to an improvement or deterioration in working relationships. The writers use this analysis to make recommendations for sustaining and improving partnerships between owner and contractors.     

Contractors’ Competition Strategies in Bidding: Hong Kong Study

Selecting an appropriate competition strategy in bidding is the ambition of most contractors. The multiple requirements of clients encourage contractors to consider other strategies to deliver additional benefits besides offering a low-price bid. Offering low bids will reduce contractors’ profits and potentially make development less attractive. Contractors need to understand their specific resources that generate competitive advantage and accordingly develop strategies to win contracts. This paper reports the findings from a recent survey on competition strategies in the Hong Kong construction industry. Thirteen typical bidding strategies, their used frequency in bidding, and their effectiveness for winning contracts of different types and between different groups of contractors are studied. The analysis of findings is explored to provide local contractors and clients with new insights into competition strategies in bidding.     

Construction Claims and Disputes and the Business Culture of Construction in Japan

Increasing attention is today being focused on the issue of dispute resolution in the Japanese construction sector. Disputes were infrequent under the traditional contract agreement system. However, against the background of a shrinking construction market, owners, contractors, builders, engineers, subcontractors, and suppliers are seeking higher profits and are increasingly asserting their rights, resulting in the creation of an adversarial environment in the industry. It is not generally known outside Japan that the term “claim” has traditionally been used in the nation’s construction industry with an entirely different meaning to its use in other countries. This paper discusses unique characteristics of the implementation of construction work in Japan that are representative of this different use of terminology. These unique characteristics are considered as the result of a business culture that has developed through a combination of historical circumstance and the specific characteristics of Japan’s construction market. The paper also examines the mechanism of dispute resolution, and considers specific details and changing trends in construction disputes using relevant statistical data.     

Union and Open Shop Labor Cost Differences

One area within the construction industry that has dramatically changed is the growth of open shop construction. This growth suggests that open shop general contractors may have a competitive advantage over union general contractors. This paper investigates productivity and wage rate variances between Colorado open shop and union general contractors on projects completed since January 1981. Though there is little productivity variance, a significant variance of wage rates indicate the Colorado open shop general contractor presently has a clear overall labor advantage. The productivity and wage rate variance of 29 individual project job tasks were investigated. Data was collected from 35 union and 20 open shop contractors' project labor costs reports. Additional information was collected during interviews with representatives of eleven general contractors. The productivity and wage rate variances are described by individual job tasks; by the union craft jurisdictions of laborers, carpenters, ironworkers, and cement finishers; and by an overall comparison between open shop and union general contractors.     

Competitiveness of Inexperienced and Experienced Contractors in Bidding

This paper tests the assertion that experienced contractors are more competitive than inexperienced contractors by measuring the effect of experience on bidding competitiveness for building contracts procured by a regular client. Contractors are grouped into experienced and inexperienced contractors, and two levels of contractors’ experience are identified: (1) bidding experience only and (2) bidding plus construction experience. Results of two-sample t tests show that experienced contractors are more competitive than inexperienced contractors. Contractors’ competitiveness in respect of school contracts and other contracts are further compared in evaluating the relationship between the project type and experience effect. Experienced contractors are, on average, more competitive in competing for school contracts. It emerges that the factor of project type familiarity amplifies the experience effect. A comparison of experienced contractors’ competitiveness in bidding for (1) new building works and (2) alteration and extension works shows that the effect of experience would be more significant when contract works packages are highly standardized.     

Measuring Safety Climate of a Construction Company

Safety climate can benefit contractors, specialty contractors, and owners of industries by providing them with the knowledge of attitudes and perceptions that can help to consistently achieve better safety performance. The objective of this research was to determine safety climate that would enhance safety culture and positively impact perceived safety performance on construction projects. A safety climate questionnaire survey was conducted on the construction sites of a leading construction company and its subcontractors in Hong Kong. Approximately, 1,500 hard copy questionnaires were distributed and the response rate was excellent, resulting in 1,120 valid questionnaires being collected from 22 construction projects. By means of factor analysis, two underlying safety climate factors were extracted, accounting for 43.9% of the total variance. Multiple regression analysis confirmed that these climate factors, “management commitment and employee involvement” and “inappropriate safety procedure and work practices” were significant predictors of workers’ perceptions of safety performance. The findings indicated that the relationship between perceived safety performance and “inappropriate safety procedure and work practices” was inversely correlated. The results suggest that safety climate can be used as an effective measure of assessing and improving site safety for projects under construction. The findings of this study and the methodology might be useful for research at other construction sites in other regions and countries. This work provides useful information for project managers and safety practitioners who desire to improve safety climate and safety performance on construction sites.     

Analysis of the United States Department of Transportation Prompt Pay Provisions

In recent past the United States Department of Transportation has implemented a number of changes in regulations regarding federal-aid transportation projects. Some of these regulations are designed to help the disadvantaged business enterprise (DBE) firms and subcontractors in general, by requiring the general contractors to pay their subcontractors in a timely manner. Further, these regulations require that general contractors pay their subcontractors’ retainage after the subcontracts are completed, even if they have not received their own retainage from the owner. This paper reviews these new regulations and introduces a financial model for quantifying the effect of these new regulations on the contractors’ profit and the cost of transportation projects. The analysis is done using a spreadsheet-based cash flow model that takes into consideration the expenditure curve, the owner and general contractor’s payment and retainage policies, front money, finance charge on negative cash flow, and interest income on positive cash flow, and final payment and return of retainage policies. A survey was conducted among contractors in Massachusetts and their input was used to run the cash flow model. The results of the analysis for eight different projects are presented and it is shown that the new regulations, on average, reduced the contractor’s profit by 4.35%. It is also shown that the average potential cost increase for transportation projects is 0.14%.     

Duties and Responsibilities of Construction Managers: Perceptions of Parties Involved in Construction

This paper reports the findings of a study conducted by researchers at Illinois Institute of Technology under the direction and supervision of the ASCE Committee on Management Practices in Construction to investigate the expectations of the parties involved in the construction process, including designers, owners, general contractors, subcontractors, construction managers, and educators, relative to construction managers’ duties. The findings suggest that while there is some consensus among parties to a construction project relative to CM duties particularly in the construction phase, there is also some disagreement, most of which appear to be between contractors and designers. Most disagreements are related to CM duties performed in the bidding and postconstruction phases of projects.     

Procurement Effects on Coopetition in Client-Contractor Relationships

Client-contractor relationships are often criticized for being competitive and adversarial, rather than cooperative. The main purpose of this paper is to examine how construction clients’ procurement procedures affect the balance between cooperation and competition (i.e., coopetition) in client-contractor relationships. The empirical results, based on a survey to 87 Swedish construction clients, show that clients’ procurement procedures facilitate a focus on competition. It was also found that clients’ earlier experience of a certain procedure heavily affects their procurement choices, thereby preserving old behaviors. Although two-thirds of the clients wish to increase cooperation with contractors, this does not affect their procurement decisions. This study therefore concludes that the theoretical framework, based on transaction cost economics, is correct in prescribing more cooperation than is empirically observed in the construction sector. The theoretical framework can increase clients’ awareness of how procurement affects cooperation and competition, thereby serving as a basis for more unbiased and systematic procurement decisions, facilitating cooperation-based coopetition.     

Benchmarking Productivity Indicators for Electrical/Mechanical Projects

Labor-intensive industries such as the electrical and mechanical trades are considered high risk due to the high percentage of labor costs. Because of this high risk, it is important for contractors in these industries to closely track labor costs on projects and compare these costs to industry benchmarks. In this paper, benchmark indicators for these industries are established on the basis of actual project data. These benchmarks include the relationship between the percent complete or percent time and cumulative work hours or cost, project size and duration, project size and average man power, project size and peak man power, and average versus peak man power. These relationships were developed using regression analysis. Man power loading charts and the related S-curves were developed from actual project data. The man power loading charts and the related S-curves are useful for resource planning and for tracking progress on a construction project. They can be used to show the cause-and-effect relationship between projects impacted by outside factors and normal labor productivity.     

Construction Site Safety Roles

A survey of design engineers, general contractors, and subcontractors indicates there is not uniform agreement on the site safety responsibilities that should be assumed by each of these groups. Possible explanations for this lack of shared expectations regarding site safety roles are discussed. It is suggested that specific site safety responsibilities be assigned on future projects based on each group’s ability to control the factors needed to prevent eight root causes of construction accidents.     

Implementing Total Quality Management in Construction Firms

As building projects get larger and more complex, clients are also increasingly demanding higher standards for their delivery. Total quality management (TQM) has been recognized as a successful management philosophy in the manufacturing and service industries. TQM can likewise be embraced in the construction industry to help raise quality and productivity. Two case studies of construction companies showed how TQM can be successfully implemented in the construction industry. The benefits experienced include reduction in quality costs, better employee job satisfaction because they do not need to attend to defects and client complaints, recognition by clients, work carried out correctly right from the start, subcontractors with proper quality management systems, and closer relationships with subcontractors and suppliers. TQM performance measures were also reflected through top management commitment, customer involvement and satisfaction, employee involvement and empowerment, customer–supplier relationships, and process improvement and management. Finally, a framework for implementing TQM in construction is recommended.     

Conceptual Planning Process for Electrical Construction

The competitive nature of the construction industry has motivated many specialty contractors to search for ways to improve efficiency by increasing their quality and decreasing their costs in order to strengthen their market share. As a result, contractors are turning to “better planning” as a method for improving their efficiency and, consequently, increasing their profitability. In fact, a consensus exists in the construction industry that more formalized preconstruction planning is necessary to remain successful in an increasingly competitive industry. This paper presents a model electrical preconstruction planning process that was crafted from outstanding processes used on several successful electrical projects. Furthermore, a method to evaluate the effectiveness of planning, by comparing actual planning to the model process, is briefly introduced. From this assessment, “effective planning” was correlated to project outcome, and evidence is provided that better planning is, indeed, related to successful performance.