In-House Delivery of Multiple-Small Reconstruction Projects

As compared with new construction, reconstruction of operational facilities exhibits a higher challenge, particularly when multiple projects are involved. For owner organizations involved in such projects, use of in-house resources versus outside contractors has been a major dilemma, with each approach having its potential benefits. This paper uses a real-life case study approach to investigate the delivery of 800 small reconstruction projects using in-house forces. Details are described related to the prioritization, budgeting, organization structure, and the mechanisms used for staff allocation. It was found that the main characteristics of projects that are best delivered by in-house forces include high urgency and inadequate scope definition. Outsourcing this type of projects exposes the owner to a large number of changes and their consequent cost overruns/delays. Based on the case study, the challenges facing in-house delivered projects and the factors that contribute to their success were investigated and outlined. To verify the findings a questionnaire survey among similar organizations is conducted and its results discussed.     

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.     

Empirical Study of the Risks and Difficulties in Implementing Guaranteed Maximum Price and Target Cost Contracts in Construction

Over the past few decades, both the guaranteed maximum price (GMP) and target cost contracting (TCC) arrangements have been regarded as alternative integrated procurement strategies for clients to mitigate risks, minimize claims, integrate the diverse interests of a complex construction project, and offer incentives to provide value-added services. However, the adoption of GMP/TCC contracts may also generate significant risks and difficulties that merit considerable attention. This paper aims to provide a concise review of the potential pitfalls of the GMP/TCC scheme in general and identifies the key risk factors and potential difficulties associated with GMP/TCC in comparison with other procurement strategies in construction in particular via an empirical survey of clients, contractors, and consultants in Hong Kong. The survey data gleaned from 45 valid replies were analyzed using the mean score ranking technique, Kendall’s concordance test, and Spearman’s rank correlation test. The survey results indicated that “involvement of inexperienced or claim-conscious contractors in a project procured by a GMP/TCC contract” was considered to be the most significant risk factor; while “design development must keep pace with main contractor’s program for tendering the domestic subcontractors’ works packages” as the major difficulty in implementing GMP/TCC projects. The research findings derived from this study are particularly essential in assisting the contracting parties to mitigate the detriments brought about by potential risks or difficulties when embarking on GMP/TCC contracts. It has also generated valuable insights into developing effective recommendations for alleviating the barriers to GMP/TCC success for future construction projects.     

Project Procurement System Selection Model

In the last two decades, there have been significant changes in the technical and economic conditions prevailing in the construction industry. To overcome the shortcomings of the traditional procurement methods, the construction industry has developed a large number of different procurement systems. A systematic approach for selection of the most appropriate system is now needed. This paper presents the development of the project procurement system selection model (PPSSM), which integrates the techniques of the analytic hierarchy process and Parker's judging alternative technique of value engineering into a multicriteria multiscreening system. A survey was conducted in Saudi Arabia with the aim of testing the PPSSM for effectiveness and efficiency and assisting the governmental agencies to select the most appropriate procurement system for implementation of their projects. For this purpose, a questionnaire was developed. On the basis of the synthesis process of the PPSSM, Saudi public clients selected design and build as the most appropriate procurement system for their projects, with an overall priority of 0.496. The outcome of the study demonstrates the effectiveness of PPSSM in helping the client in the construction industry to choose the procurement system that fulfills the needs of the client and the project requirements.     

Framework of Success Criteria for Design/Build Projects

Success has always been the ultimate goal of every activity, and a construction project is no exception. Due to the ambiguous definition of project success and the different perceptions of participants toward this concept, it may be difficult to tell whether a project is successful as there is a lack of consensus. Time, cost, and quality have long been the success criteria used to evaluate the performance of a construction project. However, such a list has been criticized as not being comprehensive. Even studies of the project success of a particular construction method, such as the design/build procurement system, are lacking in most previous research considering construction projects in general. This paper sets out to establish criteria for project success for a design/build project in construction, first by identifying relevant measures of project success for a construction project in past studies, with particular emphasis on design/build projects, and then by establishing a comprehensive assessment framework for project success for design/build projects. The significant impacts on the construction field of study, in terms of educational value and practical use, are also presented. With little research in the project success of design/build projects, the writers suggest a research focus for the study.     

One Company's Experience with Design∕Build: Labor Cost Risk and Profit Potential

This paper offers the data from one construction company's experiences with design∕build. Specifically, the paper presents an analysis of the company's labor cost risk based on a case study of two similar projects. One project was a typical design∕bid∕build job and the other was a design∕build job. The design∕build project experienced consistently greater fluctuations in the labor cost. These fluctuations seem to indicate that it is very difficult to accurately estimate labor costs for design∕build projects, thus adding to the risk of such projects. The second half of the paper presents an account of this same company's overall profit experience with design∕build work. Profit margins were analyzed using three categories—design∕build versus non-design∕build, client-specific design∕build, and design∕build construction types. The design∕build projects' average profit margin was 3.5 percentage points greater than that for the non-design∕build work.     

Communication Patterns in Construction at Construction Manager Level

The procurement process of construction projects has been affected by developments in the field of Information Technology, as well as by the need to cope with growing technological challenges stemming from the integration of multiple building systems into tall and complex buildings. Furthermore, since the procurement phases are undertaken simultaneously, project complexity is increased, and increased integration among them is therefore required. These constraints have made the management of complex construction projects less of an architectural and engineering issue and more of a managerial one. In turn, this has led to an increasing use of the “construction management” concept in the procurement process. This study focused on communications in construction management procurement of building and residential projects in Israel. Communications between the construction manager and the design team were found to be vital in ensuring adherence to project objectives. Communication means were classified as “formal”—written technical information, and as “informal”—verbal communications. Construction managers in Israel still use informal communications in 50% of their interactions with their project counterparts. The study concludes that design capabilities should be one of the essential qualifications required of a construction management firm. In addition to the more traditional responsibilities, such as planning, scheduling, and coordination, the scope of the construction manager’s professional duties should emphasize the aspect of quality management.     

Empirical Comparison of Design/Build and Design/Bid/Build Project Delivery Methods

This study compares the performance of design/bid/build and design/build to see if one project delivery method is superior in regards to time and cost. Similar military buildings were used to identify two samples of projects delivered with each of the two delivery methods. These projects provide a meaningful comparison because they include buildings of the same typology (i.e., U.S. Navy Bachelor Enlisted Quarters) delivered using similar design models. Project duration, project duration per bed, project time growth, cost growth and cost per bed were statistically compared. Upon completion of the analysis, the hypothesis that design/build projects are superior to design/bid/build projects in regards to time and cost was tested. Design/build projects were proven superior in performance in almost every measure. Other findings, including recommendations to practitioners and researchers, will be provided as well.     

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。     

SIM-UTILITY: Model for Project Ceiling Price Determination

Before considering bids submitted by competing contractors for a public procurement project, the owner should determine a project ceiling price or cost estimate to use as a reference point for evaluating the bids. A high ceiling price conflicts with the owner’s interests in minimizing costs. Meanwhile, a low ceiling price can jeopardize the project if all bids exceed the ceiling price. This paper proposes a model for determining a reasonable project ceiling price. The model, called SIM-UTILITY, is based on a utility theory and facilitated by a cost simulation approach. The utility theory is applied to reflect the owner’s preferences regarding the determination criteria, while the simulation approach is used to generate more objective project cost data to support execution of the utility theory. The advantages of SIM-UTILITY are proven by its successful application to three construction projects in Taiwan. A computerized SIM-UTILITY is expected to be broadly applicable to public construction projects in Taiwan.     

Influence of Project Type and Procurement Method on Rework Costs in Building Construction Projects

While it is widely recognized that additional costs due to rework can have an adverse effect on project performance, limited empirical research has been done to investigate the influencing factors. The research presented in this paper aims to determine the influence of different project types and procurement methods on rework costs in construction projects. Using a questionnaire survey, rework costs were obtained from 161 Australian construction projects. The direct and indirect consequences of rework are analyzed and discussed. It is shown that, contrary to expectation, rework costs do not differ relative to project type or procurement method. In addition, it was found rework contributed to 52% of a project’s cost growth and that 26% of the variance in cost growth was attributable to changes due to direct rework. To reduce rework costs and therefore improve project performance, it is posited that construction organizations begin to consider and measure them, so that an understanding of their magnitude can be captured, root causes identified, and effective prevention strategies implemented.     

Web-Based Decision Support Systems: Case Study inProject Delivery

The decentralized nature of the construction industry contributes to difficulties in the implementation and dissemination of project management-based decision tools. The majority of decision support systems (DSS) are contained in-house with private developers and users, or on researchers stand-alone computers and academic journals. Current World Wide Web technologies provide the appropriate means for large-scale implementation and continued development of DSS for the architectural, engineering, and construction community. This paper documents a DSS developed specifically for design∕build project selection among United States public sector agencies. The system, the Design∕Build Selector (DBS), is Web enabled, allowing for easy access and large-scale dissemination. Design∕build project procurement is rapidly expanding throughout public sector agencies in the United States construction industry. As public agencies turn to design∕build, appropriate project selection is a primary consideration affecting successful delivery. Prior to the implementation of DBS, there was no systematic or formalized method for selecting projects appropriate for design∕build. Since 1997, the Web site that houses the DBS has been visited by over 4,000 people, and the DBS tool has been used on 102 projects representing over $4.8 billion in construction. This paper reports on the application and potential for Web-based DSS in civil engineering. The architecture of the program, data collection, model weighting, and output interface are explained.     

Strategic Positioning of Inventory to Match Demand in a Capital Projects Supply Chain

Industrial buyers of capital facilities have experienced and continue to experience pressure to reduce facility design and construction lead time. This pressure arises both internally (due to successes in manufacturing lead time reductions) and externally (due to competitive forces including narrowing product delivery windows). This paper presents a case study detailing one owner’s efforts to reduce the length and variability of delivery time for long-lead construction materials in order to improve overall project lead time. The owner adopted a long-term multiproject perspective, procuring material in advance of specific projects and holding it at a position in the supply chain selected to allow flexibility for customization. Reduction in lead time of 75% from order to delivery of the material resulted for individual projects within the owner’s capital plan. As a result, the material was available at the construction site well in advance of its need for erection. To study if holding material at alternative locations in the supply chain could provide a better match between delivery quantities and the demand for erection, the supply chain was simulated. In this case study, demand information was imprecise, allowing only the quantity of material delivered to be considered rather than matching specific items to specific locations. Nonetheless, the results demonstrate the utility of simulation in the capital projects supply chain and the value of improving demand forecasts.     

Relating Cost Growth from the Initial Estimate to Design Fee for Transportation Projects

Intuitively, there should be a relationship between the size of the design fee for a transportation project and the quality of the resulting design. This study sought that relationship by looking at the fee expressed as a percentage of the construction cost and the final construction cost growth from the engineer’s initial estimate of the construction cost at the time the design contract was awarded. The research team analyzed 31 projects from the Oklahoma Turnpike Authority with a total construction value of $90 million. The projects were divided into road and bridge projects. Based on the results of the analysis, it seems that as the design fee decreases, the absolute percentage of construction cost growth from the engineer’s early estimate increases. The relationship is strongest for bridge projects, which tend to be more technically complex to design than roadway projects. This confirms for U.S. projects the result of an earlier study in Saudi Arabia. This paper concludes that the design fee should be viewed as an investment at a point in time where the ability to impact the project is the highest and can accrue the benefit of reduced cost growth.     

浅谈工程总承包项目采购风险管理工作

EPC工程总承包模式有利于整体方案不断优化,能有效克服设计、采购、施工相互制约和脱节的矛盾,有利于项目管理在设计、采购、施工各阶段工作的合理深度交叉。本文以采购管理人员角度,以国内工程总承包项目采购执行阶段的风险管理为研究对象,以风险识别、风险控制的研究思路,提出风险控制措施,降低产生损失的可能性,促进项目达成预定目标。     

State of Utah Performance Information Procurement System Tests

The state of Utah has experienced problems in the procurement of construction. Similar to other states using low-bid, Utah historically has not had construction projects delivered on time and within budget. Faced with critical projects to prepare for the 2002 Olympics, overworked construction project managers, and construction litigation caused by low-bidding contractors, the Division of Facilities Construction and Management tested the Performance Information Procurement System (PIPS) in the fall of 1998 on the University of Utah Housing Project Phase II for the 2002 Olympic Housing. Five other tests were conducted. This article analyzes the differences between the PIPS and the Utah low-bid procurement system, the results of the state of Utah tests, problems, and modifications to the PIPS, and recommendations to future users of the PIPS. Major contributions of this article include the PIPS, Kashiwagi’s Information Measurement Theory, and Zeleny’s Displaced Ideal Model. The objective of this article is to use an information-based business process to procure contractors who deliver on time and on budget and meet quality expectations.     

Single versus Multiple Prime Contracting

Policies regarding public building construction affect the interests of taxpayers, construction authorities, general contractors, specialty contractors, and other stakeholders. At the state level, the debate as to the optimal form such policies should take has become an ongoing struggle among competing interests. This study presents a systematic analysis of the main issues regarding single versus multiple prime contracting with the purpose of providing objective data to illuminate the debate. A statistical analysis of project bids and final costs from a national sample of state construction projects reveals that public construction projects organized with multiple prime contracts tend to have 5% less direct costs than projects using a single prime contractor. Moreover, approximately 80% of these savings are attributable to lower bid costs for multiple prime projects. The results of this study are in agreement with theoretical bidding models and efficient risk allocation models. Theoretical bidding models suggest that, in the absence of disruptions, multiple prime projects should have lower direct costs than single prime jobs. Efficient cost allocation models suggest that when specialty contractors do not bear the risks associated with the single prime contracting method (e.g., bid shopping and payment delays) they are willing to lower their bids, and forego the premium they would normally charge in response to such risks, as seems to be the case in multiple prime jobs.     

Innovation in Construction Engineering Education Using Two Applications of Internet-Based Information Technology to Provide Real-Time Project Observations

Improvements in construction engineering education result when innovative information technologies are incorporated into academic curricula. Through the use of internet-based communication technologies, no longer must students physically travel to a construction project site to observe and hear construction operations. This paper discusses two applications of internet-based, audio and video technologies currently being piloted at Iowa State University (ISU) and at the University of Calgary (UC) for the purpose of bringing live construction projects into the university classroom. Virtual Project Tours have been piloted at Iowa State University in which real-time video and audio are delivered from active construction projects to a remote classroom through the internet. The second application discussed in this paper, Virtual Supervision, is being piloted at the University of Calgary and consists of the monitoring and analysis of construction projects by using imagery gathered by web-enabled, digital cameras of fixed location transmitting video through the internet. This paper also presents a vision of a globally networked organization of engineering and construction education institutions each sharing the unique engineering and building techniques of their respective part of the globe with design and construction students located around the world. This exchange of construction project observations among the institutions will be enabled by the internet-based applications of virtual project tours and virtual supervision systems described in this paper.