Learning Mechanisms Employed by Construction Contractors

This paper introduces concepts of organizational learning and how they relate to construction contractors. It also presents the results of a survey conducted to establish the learning practices of construction contractors that operated in the United Kingdom and focuses on the use of learning mechanisms that help corporate establishments address their need for continuous improvement. The results show a low use of various forms of learning mechanisms and provide a general insight into learning practices of construction contractors surveyed. It also sheds light as to why construction contractors may be described as slow in adapting to their changing business environment. The paper urges construction contractors to move forward into a culture of learning to increase their ability to innovate and ensure continuous improvement demanded in today's dynamic business environment.     

Construction Contractors' Claim Process Framework

The management of construction claims is the greatest challenge that is facing contractors in today's vacillating business environment. Construction projects are becoming increasingly susceptible to a variety of factors that give rise to time extension and cost recovery. Although the construction business environment has moved toward partnering arrangements in recent years, the number of contractual difficulties continue to rise. Thus, the construction industry needs to develop methodologies for construction claim management that should overcome their current problems. While some practitioners have been using some kind of a procedure for claim management process framework measuring tool, a written exposition of such an instrument is not widely available in the literature. This paper presents the principles that underly construction claim process and gives a generic framework that aims at facilitating measurement of construction claim process as one of the strategies for improving construction business processes. It also presents a survey of Malawian construction contractors' performance on the construction claim process framework. The results show a low awareness of such a construction claim process-measuring instrument.     

Empirical Investigation of Construction Contractors' Organizational Learning

Conceptual frameworks dominate organizational learning literature with limited empirical assessments. This raises several questions about the validity and applicability of the various conceptual frameworks for how managers can build organizational learning capabilities. As such, lessons from the conceptual frameworks of organizational learning for addressing performance improvement that might have been used by construction contractors have been limited. This paper presents a quantitative analysis of organizational learning by construction contractors. The principles that underlie organizational learning and the factors that promote double-loop learning as a strategy for improving construction contractors’ business processes are presented. The paper has also established the learning orientations and focus of the surveyed construction contractors to determine their organizational learning dimensions as well as the factors that induced their double-loop learning, as rich lessons for organizations in the construction industry.     

Awarding Construction Contracts on Multicriteria Basis in China

China’s entry to the World Trade Organization (WTO) will allow both domestic and overseas construction firms to compete under the same market conditions. This development will lead to a more rigorous participation from overseas construction professionals in the Chinese construction market. Nevertheless, this participation can only be effective or successful when there is a proper understanding about the construction procurement practice in China. The Chinese construction practice has its own characteristics, such as governmental regulations, professional qualification systems, and procurement systems. These characteristics present a different practice in awarding construction contracts from that in the West. This paper investigates the characteristics of construction business environment in China and identifies the key parameters used in assessing contractors’ competitiveness for awarding construction contracts in the market. The parameters are useful tools for assisting contractors in identifying their strength and weakness, thus reengineering actions can be adopted for improving competitiveness. A case study is used to demonstrate how these multiple parameters are used in the process of awarding contracts in the local market.     

Modeling the Heterogeneity in Contractors’ Mark-Up Behavior

Individual contractors exhibit different bidding behaviors when confronted with a given set of project decision environment factors, i.e., heterogeneity in the population of contractors. In examining the tenability of the bidder homogeneity assumption, a linear mixed modeling approach is applied to two data sets obtained from Hong Kong and Singapore contractors via a bidding experiment. Two linear mixed models were developed by relating the contractors’ mark-up decision to four project decision environment factors, namely, (1) market conditions; (2) number of bidders; (3) project type; and (4) project size. The results show that not only is there a significant heterogeneity between the Hong Kong and the Singapore contractors in terms of both their preferences (intercepts) and responses (slopes) to the project decision environment factors that affect their mark-up decision, but also that the individual Hong Kong and Singapore contractors have different degrees of sensitivity toward the project decision environment factors (which is reflected in the varying individual-specific intercepts and slopes). These individual-specific parameter estimates have implications for managerial action in formulating a firm’s competitive strategies.     

Constructability Rankings of Construction Systems Based on the Analytical Hierarchy Process

This paper uses the quantitative decision-making technique, the analytical hierarchy process, to derive prioritized scales for (1) the constructability factors; and (2) the relative contribution of common construction systems in a building superstructure comprising structural frames, slabs, envelopes, roof, and internal walls toward constructability. The identified constructability factors show that to enhance constructability design requirements should be easily visualized and coordinated by site staff, while designs should allow economic use of contractors’ resources and enable contractors to develop and adopt alternative construction details. The precast method is rated as the most constructible construction method, indicating its better performance in facilitating efficient and safe construction in the busy urban environment in Hong Kong. However, the methodology adopted in this study should be of international interest, especially for those desirous of improving constructability of designs with different contextual backgrounds.     

A Fuzzy Decision Framework for Contractor Selection

Contractor selection is the process of selecting the most appropriate contractor to deliver the project as specified so that the achievement of the best value for money is ensured. Construction clients are becoming more aware of the fact that selection of a contractor based on tender price alone is quite risky and may lead to the failure of the project in terms of time delay and poor quality standards. Evaluation of contractors based on multiple criteria is, therefore, becoming more popular. Contractor selection in a multicriteria environment is, in essence, largely dependent on the uncertainty inherent in the nature of construction projects and subjective judgment of decision makers (DMs). This paper presents a systematic procedure based on fuzzy set theory to evaluate the capability of a contractor to deliver the project as per the owner’s requirements. The notion of Shapley value is used to determine the global value or relative importance of each criterion in accomplishing the overall objective of the decision-making process. The research reported upon forms part of a larger study that aims to develop a fuzzy decision model for construction contractor selection involving investigating multiple criteria selection tendencies of construction clients, relationship among decision criteria, and construction clients’ preferences of criteria in the contractor selection process. An illustration with a bid evaluation exercise is presented to demonstrate the data requirements and the application of the method in selecting the most appropriate contractor for the project under uncertainty. The proposed model is not intended to supplant the work of decision-making teams in the contractor selection process, but rather to help them make quality evaluations of the available candidate contractors. One major advantage of the proposed method is that it makes the selection process more systematic and realistic as the use of fuzzy set theory allows the DMs to express their assessment of contractors’ performance on decision criteria in linguistic terms rather than as crisp values.     

Empirical Investigation into Factors Affecting Exporting Construction Services in SMEs in Singapore

The Singapore government is encouraging construction enterprises to venture abroad for exporting their services and become global players since the local construction pie is shrinking and the global market is growing. The Building and Construction Authority of Singapore has revamped the contractors registration system with the hope of bringing about merger and acquisition of companies for improving the local contractors’ standing in the global construction scene. To diversify into new markets in a new environment, which is very different from local environment, requires diversification vis-à-vis exporting strategy. This study examines the attitudes and views of contractors, operating in Singapore (excluding foreign contractors), on how the strategic move should be focused for diversification vis-à-vis exporting services. The aim of this study is to establish the survival skills necessary for Singapore’s construction small and medium sized enterprises (SMEs) to venture abroad. A postal questionnaire survey was conducted and the results show that local construction SMEs who have diversified have reaped the benefits derived from diversification into new markets abroad. The main conclusions are that construction SMEs have to export their services in order to survive and they can enhance their export capabilities by forming a consortium with the help of local government.     

Developing Structural Integrated Stressor–Stress Models for Clients’ and Contractors’ Cost Engineers

Estimation is not a purely scientific task. It requires cost engineers equipped with a wide knowledge of construction and a professional ability to make judgments. However, stress will deaden their use of knowledge and influence their professional judgment in estimating. In the construction industry, cost engineers can generally be divided into two main groups: clients’ cost engineers in consultant firms or in a development company who serve clients; and contractors’ cost engineers in construction companies working for the contractors. This study investigates the causal relationships between the stressors and stress of clients’ and contractors’ cost engineers. Two stressor–stress integrated models were developed for these two cost engineer groups by using the structural equation model. The findings revealed some stressors that affected both clients’ and contractors’ cost engineers: (1) poor environment, role conflict and work underload affect their stress positively; (2) social support and Type A behavior affect their stress negatively; and (3) work underload induces stress via the role conflict among cost engineers, their supervisors, and the organization. On the other hand, some deviations between these two groups of cost engineers also occur: (1) social support acts as a source of stressors of clients’ cost engineers; (2) a private life stressor only affects the stress of contractors’ cost engineers; and (3) a closed interactive looping relationship among role conflict, Type A behavior, and work underload affects contractors’ cost engineers. Based on the results of this study, some recommendations are suggested to manage cost engineers’ stress well.     

Chinese Contractors in Africa: Home Government Support, Coordination Mechanisms, and Market Entry Strategies

Africa is a traditional overseas market for Chinese contractors. Since the launch of “going out’ national strategy in the new century, and with the support and control of the government and subordinate agencies, associations and banks, and innovative approach such as Angola Mode, Chinese contractors’ presence in the emerging African market continues to grow. Based on original empirical data collected through interview and questionnaire surveys, this paper analyzes the mechanisms the Chinese government has established to facilitate Chinese contractors’ entry into Africa and the perspectives of Chinese contractors about the African market in terms of opportunities and threats. Regression analysis based on existing datasets indicates that despite perceived opportunities and threats, Chinese contractors’ performance in Africa in terms of business revenue actually hinges upon the availability of construction capital. The study also reviews the market entry modes used by Chinese contractors, concluding that they prefer to establish a long term presence and opt to commit large resources. Overall, the paper summarizes evidence about the status and innovative approaches of Chinese contractors in penetrating the African construction market, and also characterizes the potential of the African construction market for Chinese contractors.     

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.     

Consistency and Reliability of Construction Arbitration Decisions: Empirical Study

While construction arbitration is analyzed in a plethora of information, there is a paucity of hard data about the consistency and reliability of the construction arbitration decision. The assumption that an industry familiar adjudicator will provide a reliable and consistent decision in comparison with the expectation of the industry as a whole has not been tested. This paper presents the results of a study on the reliability and consistency of construction arbitration through the examination of a variety of arbitrators’ decisions on the same construction dispute scenario. Data was collected from attorneys, owners, owner representatives, contractors, and subcontractors. Compilation of the survey results finds little consistency in the arbitrator’s awards, but with much thoughtful care in award consideration. The results suggest that the arbitrator’s industry background does not influence the arbitrator’s award. There is also no significant award bias due to the arbitrator’s education level or years spent in construction business. The results also indicate that previous arbitration experience does not predict the award outcome. This paper concludes that construction arbitration is wholly unpredictable. However, the result will be a well-reasoned and unbiased decision.     

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.     

Transportation Agency Use of Owner-Controlled Insurance Programs

Controlled insurance programs are highly efficient risk control mechanisms. With a controlled insurance program, the interest of the owner, designer, construction manager, contractors, and consultants are covered by one insurance arrangement. This paper describes the current state of practice regarding the use of owner-controlled insurance programs by transportation agencies. Departments of transportation that have used controlled insurance programs for their major projects (construction costs greater than $100 million) report that they were satisfied with the results. But contractors are cautious because, when an owner’s controlled insurance program administrator fails to perform, it is the contractor who incurs the residual consequences of increased business cost, and those consequences can extend far into the future.     

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.     

Association of Risk Attitude with Market Diversification in the Construction Business

In construction, many large firms are diversified, and their diversification is recognized as a corporate strategy for growth and risk management. Diversification indicates extended competition into a different market sector. It is a departure from a firm’s experience base, and it can be riskier than improving performance in the currently operating market. Then, contractors’ diversification and their aggregate pattern in the market, if there is any, are realized outcomes through competition among contractors over different market sectors. The competing contractors may have different risk attitudes, which are the subconscious but critical basis of their risk-taking behaviors in competition. This study investigates the association of contractors’ organizational risk attitudes with their diversification on the basis of simulated competition among multiple contractors. The simulation replicates the actual diversification pattern of large U.S. construction contractors. The results provide new insight on the relationship between contractors’ risk attitude and their diversification as well as their competitive success.     

Labor Productivity Drivers and Opportunities in the Construction Industry

The study of labor productivity in the construction industry is gaining increasing attention as the industry faces multiple problems related to its workforce. This paper presents the results of a survey instrument applied to determine the relative level of relevance of construction labor productivity drivers and opportunities. Owners, general contractors, electrical contractors, mechanical contractors, consultants, and others participated in this survey. Management skills and manpower issues were identified as the two areas with the greatest potential to affect productivity according to survey respondents. Surprisingly, external factors, which are often cited as a major cause for reduced productivity in the construction industry, were considered to be one of the least relevant productivity drivers. These results suggest that respondents consider the improvement of labor productivity within their reach and control rather than determined by external conditions.     

Effect of Specifications Type on the Quality of Paving Contracts in New Brunswick

Construction specifications are used by transportation agencies to define the client’s requirements of the final product. The primary motivation of adopting the newer end result specification (ERS) or performance related specification over method-based specification (MBS) is to reduce clients’ costs, encourage contractors’ innovation, and improve overall quality. However, some transportation agencies have been reluctant to fully implement ERS due to lack of demonstrated evidence on whether they achieve comparable level of quality or performance. This paper investigates if the specification type has any effect on quality. The case study presented is based on data from New Brunswick Department of Transportation (NBDOT) from years 2003–2007. NBDOT generally uses ERSs to call paving contracts equal to or larger than 8,000 t. MBSs are used for all other smaller paving contracts. The most prevalent indicator variables for accepting asphalt paving jobs in North America [that is, percent theoretical maximum relative density, asphalt binder content, air voids, voids in mineral aggregates, percent passing 4.75 mm (No. 4), and 75?μm (No. 200) sieves] were investigated. Statistical analysis was performed to compare the deviation of the quality indicator variables from their respective job mix formula values for paving projects that used MBS or ERS. ANOVA results revealed that there were no significant differences between the qualities achieved from the two specification types. Also, no significant differences were found from within-specification comparisons over the time frame examined. Given the possible cost advantages from agency’s point of view, the flexibility of the contractors to innovate and the fact that this study demonstrates quality is not compromised, there is an opportunity for agencies to expand or fully adopt the use of ERS specifications.     

Marketing Practices of U.S. Contractors

The construction industry possesses characteristics of the production and service industries. This uniqueness requires marketing practices tailored specifically to match the construction market. A questionnaire survey of 65 U.S. contractors was conducted to determine the extent to which they are implementing a modified marketing mix theory that is compatible with the construction industry. The modified marketing mix theory recommends that contractors confront marketing from five perspectives, known as the five P’s of marketing: product, price, promotion, place, and people. This study showed that the five P’s of marketing are used by U.S. contractors in this decreasing order: product, price, place, promotion, and people. According to the survey results, U.S. contractors allocate about 1.5% of their annual revenue to marketing, but they may be spending more than they report. There seem to be only few differences between contractors that negotiate their contracts versus contractors who competitively bid their contracts, larger versus smaller companies, and contractors with a higher success rate in getting new contract awards versus contractors with a lower success rate.     

Fuzzy Similarity Consensus Model for Early Alignment of Construction Project Teams on the Extent of Their Roles and Responsibilities

A fuzzy similarity consensus (FSC) model is presented for alignment of construction project owner and contractor project teams to their roles and responsibilities, identifying and reducing fundamental problems of conflicts, duplication, and gaps in roles and responsibilities as early as the project initiation stage. The model achieves its objective by incorporating consensus and quality of construction project teams in aggregating their opinions to decide on the party responsible for every standard task of a construction project. The roles and responsibilities of the owner and contractors are described to different extents using seven linguistic terms defined by triangular membership functions and constructed using a three-step Delphi approach, which allows experts to develop common understanding of the meaning of the terms by determining their overlap on a fuzzy linguistic scale. A modified similarity aggregation method (SAM) aggregates experts’ opinions in a linguistic framework using a consensus weight factor for each expert that is based on the similarity of his or her opinion relative to the other experts to ensure that the experts’ final decision is a result of common agreement. A fuzzy expert system (FES) determines an importance weight factor, representing expert quality for each expert; opinions are aggregated using this factor and the consensus weight factor. The FSC model contributes to the construction industry by solving a fundamental problem for project owners who want to identify and reduce potential conflicts between their project teams on the extent of their roles and responsibilities prior to the construction stage. Also, the FSC model provides an improvement over previous consensus-based approaches, which rely on a subjective assessment of experts’ important weights in aggregating their opinions, and it modifies the SAM to adapt it to a linguistic environment.