Strategic Management in Construction

The traditional philosophy of management in construction, both in academia and in industry, places great emphasis on the ability to plan and execute projects. In contrast, a similar emphasis on strategic management has received less attention in the construction industry. Although the pressures of project performance can often obscure the broader social, economic, and professional context in which strategic management is undertaken, it is these broad contextual areas that make strategic management an essential issue for construction organizations. Rapidly changing social and technological issues are creating a professional environment that will look very different in the coming decades from that experienced in today's organizations. This paper introduces a study of the current strategic management practices of construction organizations. This paper also introduces the concept of strategic management and the areas that organizations must address to compete in the global marketplace. A summary of an industry survey is documented together with the background research that prompted the investigation of these topics.     

Cost and Schedule Impacts of Information Management on EPC Process

As with most industries operating in a worldwide business environment, engineering and construction companies have a need to quantify the business impact of information management strategies and the associated investment in information technology. The prevailing assumption that corporate investment in information technology will immediately result in more efficient business operations and inevitably improve the standard measures of business performance is now highly suspect in many U.S. industries. It is not uncommon for companies to be dissatisfied with their information technology investments, and to be frustrated over their inability to objectively quantify the anticipated process benefits. These issues raise two important questions: (1) how can companies objectively measure the potential benefit of information management investments?; and (2) what information management strategies can be successful in construction engineering? This paper summarizes a research project designed to specifically answer these two questions. A methodology is provided to objectively predict the project schedule and cost impacts of process changes that may result from strategic investment. The methodology is then used to identify the potential impact of three proposed information management strategies on the construction engineering process should the strategies by implemented successfully. The research concluded that substantial cost and schedule reductions result from improving internal information exchange and integrating project-based information across organizational boundaries.     

Stakeholder Management during Project Inception: Strategic Needs Analysis

The project inception stage has been the focus of intense research activity for a number of years. The need to establish the project parameters and performance requirements has been an imperative in many organizations. Predesign processes and activities are being instituted that work through client strategic and organizational issues, needs, and requirements before the design team is involved. The participation of stakeholders in predesign workshops is a common feature of these project inception approaches. These approaches prepare a clear and workable statement of the project requirements in performance terms that the client group has agreed and committed itself to. This document can then provide a sound basis for the development of the design. One approach to these early stages of the project is strategic needs analysis. This approach uses a workshop setting to focus stakeholder involvement in proposing and identifying a range of strategic options for the proposed project. A case study of strategic needs analysis involving university faculty relocation to a new site is presented. The developments of organizational strategic options are described with the development of user performance indicators to guide the design development process.     

Dynamic Prediction of Project Success Using Artificial Intelligence

The purpose of construction management is to successfully accomplish projects, which requires a continuous monitoring and control procedure. To dynamically predict project success, this research proposes an evolutionary project success prediction model (EPSPM). The model is developed based on a hybrid approach that fuses genetic algorithms (GAs), fuzzy logic (FL), and neural networks (NNs). In EPSPM, GAs are primarily used for optimization, FL for approximate reasoning, and NNs for input-output mapping. Furthermore, the model integrates the process of continuous assessment of project performance to dynamically select factors that influence project success. The validation results show that the proposed EPSPM, driven by a hybrid artificial intelligence technique, could be used as an intelligent decision support system, for project managers, to control projects in a real time base.     

Construction Coordination Activities: What Is Important and What Consumes Time

Coordination is an important function in the building process. Recent research has shown that poor or inadequate coordination is the best that is achieved on construction sites. Nevertheless, many authors of textbooks on construction project management have not discussed this vital topic. A literature review carried out in this present study revealed that there is a lack of formal understanding on how day-to-day coordination is actually achieved on a construction project. This research was directed at identifying what activities are performed to achieve coordination and, which among those are the most important and more time-consuming for a construction coordinator. In the absence of previous research, texts on the duties and responsibilities of project managers, clerks of works, construction engineers, etc., were reviewed from the contractor's project manager's perspective during the building phase of a construction project, and an array of issues relevant to achieving coordination were identified. Initially, the array included 64 coordination issues; a questionnaire was developed for construction project managers to indicate the relative importance and time consumed on a 3 point scale (i.e., high, mid or low). Thirty-three responses received from practitioners in the Hong Kong and Singapore construction industries indicate that identifying strategic activities and potential delays and ensuring the timeliness of all work are the most important activities. Conducting regular meetings and project reviews and analyzing the project performance, detecting variances and dealing with their effects (16th and 17th, respectively in order of importance) appear to be the most time-consuming activities.     

Site Management of Work-in-Process Buffers to Enhance Project Performance Using the Reliable Commitment Model: Case Study

Buffers have been commonly used as a production strategy to protect construction processes from the negative impact of variability. Construction practitioners and researchers have proposed several buffering approaches for different production situations and contexts. However, these solutions have been impractical for managing buffers. To overcome this, this study proposes a new site methodology for managing work-in-process (WIP) buffer in repetitive projects, on the basis of the reliable commitment model (RCM). RCM is a decision-making tool based on lean principles, which uses statistical models to develop more reliable work plans at the operational level. RCM helps to manage WIP buffer in work plans by using site information and planning reliability indicators that result in improved project performance, such as labor productivity and process progress. A repetitive building project was used as a case study. The main finding was that labor productivity, process progress, and waiting times improved when using larger WIP buffers than those typically used among crews. This shows the potential of RCM as a practical tool to manage WIP buffer sizes and to promote the use of lean production strategies at the operational level.     

Project Management and Green Buildings: Lessons from the Rating Systems

Building sector is the largest source of greenhouse gas emissions around the globe. Being green, or sustainable, is one pressing issue coming from both internal and external drivers for construction and engineering companies. Green building has experienced rapid growth in the past several years. To assess how green, or sustainable, the building is, several green rating systems have been developed. Among these rating systems, more similarities exist than differences. One noteworthy difference—project management—serves as the motivation behind this investigation. To identify the role of project management that is less related to technology and engineering in developing green building rating systems, this research centers on a comparison between the LEED, the Green Globes, and the BCA Green Mark to obtain an understanding of current practices, and more importantly, to address the significance of project management in achieving green or sustainable construction. The findings suggest that project management adopted in green building construction involves both the practice and the process. Although the practice—mainly represented through the project management body of knowledge—is currently the focus of green building construction, the importance of the process, such as managing people, organizational structure, building commissioning, performance documentation, and so on, cannot be neglected, as can be seen from the evolution of the green rating systems. It is recommended that the construction and engineering companies take project management in terms of both the process and the practice into consideration when fulfilling requirements of being green.     

Quality-Based Contractor Rating Model for Qualification and Bidding Purposes

A quality contractor on every construction project would make project management simpler for Department of Transportation (DOT) project engineers and strategic planning more accurate for DOT executives. A qualification model that includes the quality of a contractor’s past work would be invaluable in assuring that each project had a quality contractor. Including the quality of past work in the bidding process would further help in this goal. Implementation of such a model for both its potential uses would require business process reengineering for the DOT in two important areas: qualification of contractors and contract award procedures. The research team has produced an innovative model, called the Quality-Based Performance Rating (QBPR) system. This model receives inputs from traditional subjective sources and integrates them with totally objective data input from the results of tests of the project’s materials and workmanship, then uses these inputs to produce a score for each project that is further used by the system to generate an index for each contractor reflecting that contractor’s quality of work over a specified time frame.     

Decision Making in Flexible Mine Production System Design Using Real Options

Large multifaceted capital projects, such as those in the mineral resource industry, are often associated with diverse sources of both internal and external risks and uncertainties. Risks can cause delays to the planned schedule of a project, add a significant cost, and greatly influence its profitability. Uncertainties can be associated with project risks, as well as with opportunities that can develop throughout the project’s lifecycle. Having the ability to plan for these uncertainties, by incorporating flexible alternatives into the system design, is increasingly recognized as critical to long-term corporate success. This paper advances the knowledge needed to incorporate flexibility in systems engineering and management for both practitioners and researchers. Flexibility is defined in this paper as the ability of a system to sustain performance, preserve a particular cost structure, adapt to internal or external changes in operating conditions, or take advantage of new opportunities that develop during a mine’s life cycle by modifying operational parameters. By engaging in planning for flexible production systems, the effects of risk on a particular project value can be examined, project volatility can be calculated, and potential flexible mining alternatives can be evaluated. Once identified, a real options valuation provides a strategic decision-making tool for mine planners to determine the value of incorporating flexible alternatives into the mine plan. This paper demonstrates that flexibility can become an equal partner among the parameters controlling the decision-making process for underground engineering construction systems, followed by industry practitioners. It presents a methodology in mine production system design by introducing flexibility into design through the application of real options valuation techniques. Real world case studies related to flexible planning and design of construction and production systems in underground hard rock mines are presented.     

Improved SWOT Approach for Conducting Strategic Planning in the Construction Industry

Strength, weakness, opportunity, and threat (SWOT) analysis has been in use since the 1960s as a tool to assist strategic planning in various types of enterprises including those in the construction industry. While still widely used, the approach has called for improvements to make it more helpful in strategic management. The project described in this paper aimed to study whether the process to convert a SWOT analysis into a strategic plan could be assisted with some simple rationally quantitative model, as an augmented SWOT analysis. By using the mathematical approaches including the quantifying techniques, the “maximum subarray” method, and fuzzy mathematics, one or more heuristic rules (HRs) are derived from a SWOT analysis. These HRs bring into focus the most influential factors concerning a strategic planning situation, and thus inform strategic analysts where particular consideration should be given. A case study conducted in collaboration with a Chinese international construction company showed that the new SWOT approach is more helpful to strategic planners. The paper provides an augmented SWOT analysis approach for strategists to conduct strategic planning in the construction industry. It also contributes fresh insights into strategic planning by introducing rationally analytic processes to improve the SWOT analysis.     

Development of Causal Model of Construction Accident Causation

Accidents occur in all types of construction activities. The accident causation process is complex. Accident prevention requires a comprehensive understanding of this complex process. This paper proposes a conceptual, but practical, model of accident causation for the construction industry, highlighting the underlying and complex interaction of factors in the causation process. The model describes the constraints and responses experienced by the parties involved in project conception, design, and construction, which may affect accident causation. This paper details theoretical findings of research currently being conducted at UMIST. Both proximal and distal factors are considered (for example, operative factors, site environment and systems of work, and project management and organizational issues). A study of 500 accident records provided by the U.K. Health and Safety Executive shows that accidents in construction projects involve inappropriate construction planning (28.8%), inappropriate construction control (16.6%), inappropriate construction operation (88.0%), inappropriate site condition (6.0%), and inappropriate operative action (29.9%). Data currently available are, in some respects, inadequate and will need to be supplemented, in the future, by extended accident investigations.     

Hybrid Model Incorporating Real Options with Process Centric and System Dynamics Modeling to Assess Value of Investments in Alternative Dispute Resolution Techniques

Project-specific dispute resolution ladders (DRLs) are typically implemented in construction projects to resolve issues arising between the project participants. The DRL typically consists of single or multiple alternative dispute resolution (ADR) techniques to address construction issues at the three levels of escalation: conflicts; disputes; and claims. However, a DRL requires significant investments to cover the direct costs incurred in-house by the project participants or, externally, if construction specialists and lawyers are recruited to assist in the resolution. Thus, the benefits of the DRL implementation in a construction project must outweigh its costs for the implementation to be worthwhile. This paper presents a methodology to study the effect of different resolution strategies on the value of the investment in a DRL using option/real option theories from financial engineering, process centric modeling, and system dynamics methodology. Of particular interest in this paper is the integration of these research methodologies into a computer model to support the evaluation of the DRL investment in a particular construction project by taking into account the characteristics of (1) the project and (2) the different ADR techniques chosen for the DRL implementation. Finally, an example is presented to illustrate the application of the computer model in a real construction project. The results of the simulation serve two main purposes. First, the results of the simulation are used to verify the intended model behavior in terms of proper integration of the three methodologies (i.e., real options, process centric, and system dynamics) in one computer system. Second, the model application to a real construction project using actual project data illustrates the potential of the model in providing the project participants with information related to the expected number of claims and change orders resolved at each level of the DRL, the change in the expected savings during the construction phase, and finally the value of the investment from the perspective of the project owner.     

Strategic Management Practices in Turkish Construction Firms

This paper presents a study that aims to define the present position of Turkish construction companies in terms of strategic management. It is based on a survey measuring strengths and weaknesses in the “strategic management” practices of Turkish construction companies, and thus reveals potential opportunities and threats in a generalized manner. The results highlight the current strategic management practice of construction firms for designing their own future. Toward this aim, a detailed questionnaire was administered to 52 construction companies. The culture of companies and their perceptions of strategic management were shown to have serious shortcomings. However, specialization on different project types through joint venture companies established by their partners was found to be a major strength of many companies. These companies also pointed out the developing and unstable nature of both the political and economic structure of Turkey as their most significant threat. This disadvantage has inclined many firms to choose investment in the private sector as a response.     

Scorecard Approach to Benchmarking Organizational Safety Culture in Construction

This paper promotes adopting the balanced scorecard tool to benchmark organizational safety culture in construction. It argues that this tool has the potential to provide a medium to translate the organization’s safety policy into a clear set of goals across four perspectives: management, operational, customer, and learning. These goals are then further translated into a system of performance measures that could effectively communicate a powerful strategic focus on safety to the entire organization. Four perspectives have been developed to represent all stakeholders, thereby ensuring that a holistic view of safety is used for strategic reflection and implementation. The paper argues that by selecting and evaluating the appropriate measures, in each perspective, requirements can be identified, and actions to the identified goals can be aligned and facilitated. The proposed balanced scorecard approach should therefore enable construction organizations to pursue incremental safety performance improvements. Work-in-progress is briefly reported to give insight into the potential applicability of this approach.     

Job Performance Dimensions for Improving Final Project Outcomes

Job performance is argued to be substantially influential to project performance. However, existing construction management literature pays less attention to job performance issues, not to mention exploring the relationship between job performance and project performance. This study therefore aims at examining the effects of job performance on project performance. Four categories (task, behavior, management, and self) of job performance dimensions were extracted by means of an exploratory factor analysis. A hypothesized model is developed, which specifies the relationships between the four job performance categories (independent variables) and overall project performance (the dependent variable). The model was tested using path analysis. Results indicate that the task category of job performance (consisting of nine dimensions) is significantly related to final project outcomes. Specifically, for the success of a project, a construction company must consider how to ensure employees are equipped with such attributes as responsibility, quality of work, ability, job knowledge, experience, efficiency, accuracy, judgment, and initiative.     

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.     

Integrated Resources Management Structure for Facilities Provision and Management

The primary focus of this paper is the physical resource base that supports any business: corporate operational real estate assets. In order to achieve the much-needed alignment between business strategic direction and its real estate infrastructure, the organization’s strategic intent must clearly reflect its facilities requirements in its strategic business plans. The significance of the strategic role of real estate assets to corporate performance can be seen in a recent influential research report by The Industrial Development Research Foundation in which corporate real estate assets are termed the fifth resource, after the traditional resources of people, technology, information, and capital. Based on a comprehensive survey of published literature and a series of in-depth interviews of corporate real estate/facilities managers, an integrating resource management framework was developed to model the nature of interactions between strategic business planning and operational asset management in an organizational setting. The proposed framework is grounded on an understanding of the nature and demands of core business requirements from which the requirements for real estate and facility services provisions are derived. The study supports the view that research efforts aimed at improving management effectiveness of the operational real estate asset base should be channeled to provide models or frameworks that promote understanding of all parties involved in the process.     

Strategic Management in Design Firms

The traditional philosophy of management in the architecture-engineering-construction (AEC) industry, both in academia and in industry, places great emphasis on the ability to plan and execute projects. In contrast, a similar emphasis on strategic management has received less attention in the AEC industry. Although the pressures of project performance can often obscure the broader social, economic, and professional context in which strategic management is undertaken, it is these broad contextual areas that make strategic management an essential issue for AEC organizations. Rapidly changing social and technological issues are creating a professional environment that will look very different in the coming decades than that experienced in today's organizations. This paper introduces a study of the current strategic management practices of design-based firms. The paper introduces the concept of strategic management and the areas that organizations must address to compete in the global marketplace. A summary of an industry survey is documented together with the background research that prompted the investigation of these topics.     

Project Organizations as Social Networks

High-performance teams achieve outcomes that exceed the expectations of the project and often demonstrate unique or innovative approaches within a final solution. The foundation of this high performance is the ability to focus on the success of the team over individual objectives. However, the recognition of this emphasis is based on the establishment of professional trust and strong communications between the team members. The social network model of construction introduced a dual-focused approach to enhancing these elements and creating high-performance project teams. The approach emphasizes balancing both a traditional project management emphasis on efficiency of communications with a focus on the social factors that move the project team from efficient to effective. In this paper, the model is extended to present the results of four studies of organizations that are full-service engineering companies that also provide construction oversight services. The paper presents the results of these studies in terms of the social network model and the achievement of high performance in the project teams. Analytical and graphical results are presented based on social network analysis techniques to provide a multiperspective analysis of the project teams.