Taking on a wider view: public value interests of construction clients in a changing construction industry

For financial and strategic reasons, public and semi-public construction clients increasingly depend on private parties to carry out public service delivery. They subcontract operational responsibilities to private parties while remaining socio-politically responsible for ensuring public values. Public administration literature mainly addresses the importance of procedural and performance values in safeguarding public values. However, safeguarding the quality of the built environment also requires a focus on product values. In this study, we aim to increase the understanding of the meaning and significance of public values in the daily practice of public construction clients and identify the challenges they face in commissioning these seemingly opposing values. A set of semi-structured interviews with the public administrators of a variety of public and semi-public construction client organizations in the Netherlands shows that both internal and external factors influence the collaborative practices between clients and contractors. This causes a value shift from an emphasis on procedural values to managing performance and product values, indicating that clients need to take on a wider view on public values. Six main public value dilemmas were found that complicate the task of developing an open, transparent and sustainable long-term client–contractor relationship. The current contractual system, however, lacks the flexibility to facilitate this product-based value view in construction.     

Collusion in the Dutch construction industry: An industrial organization perspective

Several investigations by parliament, cabinet, justice and antitrust authorities have shown a widespread use of cartels and structural bid rigging within the Dutch construction industry. The reputation of the Dutch construction industry has been dented with both the general public and clients. As a response, the Netherlands' parliamentary inquiry Committee on Construction Fraud adopted the guiding principle of ‘competition is good’ and urged the restoration of the proper functioning of the market. The proposed default approach to public sector procurement is design–bid–build with public tendering and selection of the lowest price. A concise overview of the investigations is provided, relating the collusions and their persistence to emerging insights from the field of industrial organization theory into underlying factors and causes. A tougher public sector procurement policy and the continued reliance on lowest bid prices may not contribute to the reform of the Dutch construction industry as intended. One-dimensional, price-oriented competition only provides a static, project-based efficiency. However, it neither addresses a number of organizational issues nor resolves the underlying pressures leading to collusion. An alternative approach allowing for a balance of competition and collaboration with a wider number of selection criteria variables would create a more dynamic, iterative competitive process over a longer timeframe and would develop an innovative, efficient and profitable industry. Although the inquiry committee acknowledges these new methods of procurement, it is expected that the overriding ambition to restore proper market function (through increased competition) will steer towards the more traditional procurement approaches.     

Challenges when implementing BIM for industry change

Public clients have been identified as drivers of architectural, engineering and construction (AEC) industry change through their implementation of building information modelling (BIM). Yet, little is known of this implementation process and the associated challenges. This study aims to increase the understanding of what intra- and inter-organizational challenges that arise when a large Swedish public infrastructure client implements BIM to change the work practices of the actors in the Swedish AEC industry. The IT business value model allows for understanding the public client’s implementation of BIM as an IT-supported change process and for understanding the associated intra- and inter-organizational challenges. The findings show nine categories of intra- and inter-organizational challenges related to, for example, demanding BIM in procurement and creating incentives for BIM implementation. The findings show that intra-organizational challenges related to a top-down implementation of BIM, while inter-organizational challenges related to a bottom-up implementation. The impact of these challenges on the public client’s ability to drive AEC industry change by implementing BIM is discussed. The findings contribute with the client perspective to studies on BIM implementation and with an increased understanding of the challenges associated with implementing IT-supported change processes.     

Reinforcing relationships for resilience – by embedding end-user ‘people’ in public–private partnerships

Public–private partnerships (PPPs) target overall benefits from mobilising private resources in delivering public infrastructure. Their longer time spans generate higher risks, hence the greater need for resilience in PPPs, compared to traditional procurement. PPP infrastructure outcomes should include both sustainable and resilient built infrastructure, as well as reliable and resilient service delivery. The public–private cross-sectoral relationships can be significant contributors to resilience. Previous research findings show that public–private relationships are still predominantly formal in PPPs. However, appropriate informal relationships can foster mutual trust and better teamworking that trigger self-adjustment mechanisms to overcome adversities and enhance resilience. Integrating relevant ‘people’ into PPPs to establish a public–private–people partnership (4P) is proposed to reinforce formal–informal relationships, while enhancing relevant ‘social infrastructure’, which could then lead to more resilient and better ‘value for money’ built infrastructure. Findings from another recent study demonstrate the value of 4P in pre-disaster planning. 4P also helps to develop resilient ‘social infrastructure’ for post-disaster reconstruction of sustainable built infrastructure. Conceptual diagrams are developed to summarise how the 4th P could reinforce public–private relationships and inject resilience into a potentially unstable PPP system.     

The commercial currency of construction framework agreements

A critique is presented of construction client–main contractor framework agreements. In the midst of an unpredictable and volatile construction environment, the commercial currency of collaborative working practice, and by extension framework agreements, is being put under increasing management scrutiny. Drawing on a literature review, the guiding principles of framework agreements are examined. A dramatic downturn in construction demand has created considerable surplus in supply. Under such conditions the buyer–supplier interdependencies become imbalanced and commercial relationships fraught. Reports by construction industry analysts demonstrate a number of private sector clients rejecting framework agreements in favour of traditional competitive procurement practices. Drawing upon a neoclassical lens, three guiding principles embedded within economic orthodoxy are employed to examine business-to-business tensions within construction framework agreements, namely, individualism, instrumentalism and equilibrium. This neoclassical interpretation of construction framework agreements reveals a potential relational management bias within mainstream rhetoric. Notably, providing a complementary account of framework agreements practice should not be construed as a rejection of collaborative working practices. An alternative account of framework agreements is presented that does not rely upon the mainstream behavioural model of contemporary contracting.     

Pricing strategy in the US construction industry

This paper presents several issues related to pricing in construction. First, problems with current pricing strategy in construction are explored. Second, pricing strategies based on a market-based approach are proposed. Third, survey findings of the top 400 US contractors are presented regarding their current pricing practices and the applicability of the proposed pricing strategies. In conclusion, the belief that current pricing strategy in construction is predominantly cost-based is confirmed by the survey findings; indeed, in setting the markup, most contractors rely on their intuition after subjectively assessing the competition. The three internal pricing variables that have the largest statistically significant contingency coefficients with pricing strategy are ‘marketing intelligence capabilities’, ‘annual contract value’, and ‘the type of client in most projects’. ‘Owner's characteristics’, ‘competitors'characteristics’, and ‘market demand’ are statistically significant external variables in making pricing strategy decisions. A change of bidding procedure is proposed so that all parties in construction can maximize the benefits of market-based pricing strategies.     

Modeling relational transaction and relationship quality among team members in public projects in Hong Kong

Prior studies have found that relational contracting (RC) practices are helpful in nurturing good relationships among project team members. These empirical studies, however, did not differentiate by project type (i.e., public or private projects). In reality, the situation faced in public projects would be different from that of private projects since for example, some public sector participants may be indifferent to, concerned about or indeed opposed to, building close relationships with private sector counterparts. In the context of public construction projects, this study aims to develop models to explain the association between relationship quality and the extent to which RC practices are adopted. Data were collected via a questionnaire survey in Hong Kong, China. Using Multiple Linear Regression and Partial Least Square-Structural Equation Modeling (PLS-SEM), models for predicting the relationship quality among project team members were developed. The mathematical equations were validated by a case study. The models show that the relationship quality among project team members can be predicted by the extent to which these RC practices are implemented: (i) adoption of flexible strategies; (ii) readiness to compromise on unclear issues; (iii) willingness to commit on a long-term basis; (iv) attitude towards teamwork; (v) trust among team members; (vi) sharing of project information; (vii) understanding among team members; and (viii) alignment of the objectives of different parties. The models are recommended to public clients, consultants and contractors that aim to achieve good relationships in public projects.     

‘Filling the mattress’: Trust development in the governance of infrastructure megaprojects

The development of trust is a major challenge for the governance of public private infrastructure megaprojects. Contractual pre-arrangements should provide a blueprint for collaborative behavior and trust development but the characters of megaprojects challenge such arrangements. This longitudinal study explores practices of trust development in the collaboration of commissioner and contractor consortia in the Dutch road infrastructure megaproject ‘Schiphol, Amsterdam and Almere’ (SAA). The findings show that six different types of workshops have been used to intervene in the collaboration of project partners in order to develop trust. The study contributes to the debate on governance in megaprojects showing how governance arrangement are enacted in the daily practice in megaprojects. To buffer the potential loss of trust through conflicts, project partners negotiated for a balanced reciprocal relationship, which is the simultaneous exchange of equivalent resources without delay.     

An evaluation of current collaborative prototyping practices within the AEC industry

‘Collaborative working’ and ‘prototyping’ have both been identified by many within the industry as two methods of working that can help organisations become more profitable and productive. However, when used collectively the potential exists to bring improvements to the Architectural, Engineering and Construction sectors through the eradication of waste and re-work. The concept of ‘Collaborative Prototyping’ provides a process that challenges existing cultural attitudes and working processes and advocates a change in the way conventional projects are managed, in order to achieve a more competitive industry. This paper presents the results of a study on the evaluation of current Collaborative Prototyping practices within the Architectural, Engineering and Construction industry. It reviews existing collaborative methods of working along with current developments. An evaluation of the role of 3D modelling and prototyping practices has also been conducted, and the current levels of the industry's use are established. This paper concludes that the industry makes little use of Collaborative Prototyping, and therefore at present does not maximise the potential that prototyping and collaborative working offer in improving working practices.     

Analysis of pre‐qualification criteria in contractor selection and their impacts on project success

While construction industry practices are reasonably well developed, construction projects still witness widespread failures of many contractors due to varied reasons such as financial problems, poor management, over‐commitment and or conflicts and disputes associated with construction activities. Pre‐qualification of contractors is a common practice across projects, yet the investigation on the ability of the selected contractors in successful delivery of projects is not widespread. In an attempt to understand these pre‐emptive qualification criteria and their links in contractors’ performance in projects, a total of 43 influencing technical attributes were identified through a systematic research approach. The relative significance and impacts of the attributes have been determined based on a structured questionnaire survey in selected construction projects. By performing the factor analysis, a total of seven factors significant to contractors’ performance were extracted, namely (1) soundness of business and workforce; (2) planning and control; (3) quality management; (4) past performance; (5) risk management; (6) organizational capability; and (7) commitment and dedication. Multiple linear regression models reveal that technical expertise, past success, time in business, work methods and working capital significantly impact on contractors’ performance across time, cost and quality success. With a clear understanding of a contractor’s performance, these findings could potentially contribute to development of a company’s procedures or enhance existing knowledge in relation to the pre‐qualification practices in contractor selection in projects.     

Drivers and barriers to adopting relational contracting practices in public projects: Comparative study of Beijing and Sydney

When contracting parties adopt relational contracting (RC) as opposed to formal contracting stance, the construction project may achieve good outcomes. However, public projects usually face more constraints in adopting RC, as close relationships may lead to allegations of corruption. The aim of this study is to undertake a comparative analysis of drivers and barriers to adopting RC practices in public construction projects in two different markets viz. a centrally planned economy and a free market economy by investigating practices in Beijing and Sydney. The survey research design was adopted and data of public construction projects in Beijing and Sydney were collected using a structured questionnaire. The results revealed that relationship quality and level of harmony among contracting parties are significantly good in both cities. In Sydney, the level of inter-personal relations between contractors and consultants is significantly higher than in Beijing. It was found that the same 18 factors drive contracting parties in Beijing and Sydney to adopt RC practices, and in 6 instances, these are significantly greater drivers in Sydney. The barriers to adopting RC practices are totally dissimilar in both cities. Contracting parties in Beijing could not adopt more RC practices because of a lack of training in relational arrangement and public clients lack initiative in adopting RC practices. The conservative industry culture that encourages preservation of the status quo is also prevalent in Beijing. In Sydney, the only significant barrier is public sector accountability concerns. To cultivate readiness to embrace RC practices, it is suggested that industry professionals and the government adopt recommendations highlighted in this study according to the type of market structure.     

An analysis of success factors and benefits of partnering in construction

Partnering is increasingly being used on construction projects. Partnering involves the parties to a construction project working together in an environment of trust and openness to realise the project efficiently and without conflict. Using a UK-wide postal questionnaire survey, the opinions of different types of organisation — consultants, contractors, and clients were assessed in relation to the success factors and benefits of partnering. The study shows that UK contractors and clients are more positive about partnering than consultants. The research also indicates that certain requirements must be met if partnering is to succeed. In particular, trust, communication, commitment, a clear understanding of roles, consistency and a flexible attitude are necessary. It is recognised that nothing will change without considerable effort from all parties. Respondents believe that partnering can bring significant benefits, including fewer adversarial relationships and increased end-customer satisfaction, to the construction industry if all parties involved in a project strive for its success.     

The UK building education recruitment crisis: a call for action

There is a growing urge for a shift from ‘lowest-price wins’ to ‘multi-criteria selection’ practices in the contractor selection process. The rationale is to achieve best value (for money) for the client. Earlier investigations have found that the tender price (i.e. capital cost) still dominates the final selection decision despite increased emphases on the need for contractor selection based on ‘value’. This paper provides insights into the evaluation of contractors' attributes, particularly for project-specific criteria (PSC), that is, criteria against which tendering contractors may be considered. The importance attached by clients to the ‘lowestprice wins’ philosophy is also reported. The perceived importance of PSC (i.e. their influence on final selection choice) is determined through a structured questionnaire survey of UK construction clients. The results show an increasing use of PSC. It is also found that ‘lowest-price’ is not now necessarily the client's principal selection criterion, but rather, the realization that cost has to be tempered with evaluation of PSC in any attempt to identify value for money.     

Design-and-build contractors' service quality in public projects in Singapore

In the construction industry, total quality comprises corporate service quality, project service quality and quality of the constructed facility. This study investigates the project service quality of design-and-build (D&B) contractors when undertaking projects for public sector clients in Singapore. Service quality is operationalized into five determinants: reliability, responsiveness, assurance, empathy and tangible. From these, 34 attributes that may affect project service quality in D&B projects are identified. A questionnaire is used to ascertain clients' service quality expectations of these 34 attributes. The clients were also asked the extent to which D&B contractors achieve project service quality. It is found that D&B contractors did not meet clients' expectations in all the five dimensions of service quality. This means that D&B contractors are not giving clients the satisfaction that they hope for. This study offers D&B contractors feedback relating to clients' expectations of their service delivery and the areas of service that need to be improved in order to provide quality service that will satisfy public sector clients.     

The challenge of change for innovation in construction: A North Cyprus perspective

A vision of change for innovation within the perspective of revaluing the construction industry is essential to develop a culture of self-sustaining improvement, mutual recognition, respect and support in the long term in North Cyprus. The research attempts to put forward a case for a restructuring of the construction sector in order to deliver a step in change in quality of output and to realise maximum value to all clients, stakeholders and end users. The main objective of this study is to (1) determine current innovation practices and identify key issues that contribute to successful implementation (2) assess the existence and severity of barriers to change for innovation (3) propose solutions for overcoming barriers to change for innovation in construction industry and develop a framework to revaluate the construction industry. The research includes an extensive literature study, interviews with managers on the challenge of change for innovation in construction, analysis of this information to develop findings, and extending these to present the key strategic issues that could be targeted for revaluing the construction industry. The paper commences on understanding the firms’ own processes and detecting their weaknesses and strengths, determining the strategies and actions that should be made in the short term to adopt innovation practices and helping the North Cyprus construction industry to learn as a whole. The paper concludes how the drivers of change for innovation can offer benefits to construction firms in North Cyprus if appropriate strategies are adopted.     

A Dutch public-private strategy for innovation in sustainable construction

Influenced by the sustainable construction policy of the authorities, organizations in The Netherlands are developing, designing and building sustainable areas and objects. The actions of the authorities, authority-related organizations and commercial organizations in the Dutch construction industry and the interaction between them contribute to the realization of goals that fit with the sustainability policy of the government. Research in the house building sector of the Dutch construction industry, covering a 10-year period, has found that action by and interaction between public and private organizations directed towards innovation in sustainable construction is part of a sector-wide strategy. In this strategy public and private organizations interactively develop and adopt sustainable construction innovations.     

Effects of interpersonal relations on public sector construction contracts in Vietnam

Public owners and private contractors and consultants are expected to maintain arm’s length relationships with each other to avoid any accusation of corruption. In the context of public construction projects in Vietnam, this study examines: the relational contracting (RC) related behavioural patterns that lead to better interpersonal relations during the construction stage and at the end of the project among public project owners, and private contractors and consultants; and the extent to which better interpersonal relations affect project performance. Using a questionnaire survey, data were collected from public owners and private contractors and consultants in Vietnam. Correlation analysis shows that there exist several behavioural patterns that significantly affect interpersonal relations among project team members during the construction stage and at the end of the project, and the general harmony during the construction stage. It was also found that cost performance is significantly correlated with project harmony level. Schedule performance is significantly correlated with interpersonal relations between project team members during the construction stage, and at the end of the project. The findings indicate the important role that interpersonal relations play in project outcomes and vice versa. The behavioural patterns that are found to be significantly correlated with harmony during the construction stage and/or relationships among project team members suggest that concrete actions may be taken by owners, consultants and contractors to improve relationships, and thereby improve cost and schedule outcomes. It is recommended that owners, consultants and contractors adopt some of the behavioural patterns identified.     

Clients’ needs,wants and expectations from contractors and approach to the concept of repetitive works in the Northern Cyprus construction market

Intense competition existing in the construction market creates an industry that is dominated by the client groups. This paper provides insights into private clients’ needs, wants and expectations from contractor firms in the Northern Cyprus building construction market, by presenting survey findings of 91 clients regarding this issue. Moreover, it presents their perspective related to doing repetitive works with the same contractors in possible future works. The study has clearly confirmed the fact that the clients in the specified market place high emphasis on a wide variety of factors. The importance assigned to these factors varies according to the categories or characteristics of the clients within the private building construction sector. Another striking finding was the responding clients’ willingness to do possible repetitive works with the same contractors assuming that they are fully satisfied with the existing or past projects. This opportunity, if used properly by the contractor firms in this market, may be the key to beating the competition and lead to the easy path to increase a contractor firm's market share. Furthermore, it was found that the responding clients expect much more than quality, finishing on time and within budget for full satisfaction and continuing to do repetitive works. The importance and hence the contribution of a set of criteria related to achieving full client satisfaction, and leading to possible repetitive works is presented. Although it would not be reasonable to determine general strategies on just a single study, the contractor firms in the Northern Cyprus construction market will benefit from the framework given within this paper by recognizing what is important and essential to private building construction clients in particular situations and hence present the capabilities of the contracting or potential contracting organizations in ways that meet this to best advantage. Although the results given are based on input from the Northern Cyprus construction market, we believe that the contractor firms in other countries, who specialize in building works for private sector may also benefit from the findings or at least the approach of this research as well.     

Market structure of the construction industry in Hong Kong

This study examines the market structure of four different sectors within the construction industry in Hong Kong. Market concentrations, expressed in terms of Herfindahl-Hershamann indices (HHIs) and number equivalents (HNEs), are calibrated for the top five contractors and compared with those of the local property industry. The study reveals the following ascending order of market concentrations: private building, public building, property development, and civil engineering. Our explanation is that technological and capital requirements have imposed a strong barrier to entry into the civil engineering sector, resulting in a concentrated market. Conversely, the lack of technological demand and supply in the private building sector has led to easy market entry and exit. Building contractors thus compete intensely on cost reduction rather than technology improvement, leading to poor construction safety and product quality. The paper concludes that the Government, being a major client of construction works and regulator of the industry, can assume a more active role in promoting the overall competitiveness of indigenous local contractors in Hong Kong.