International Expansion Decision for Construction Companies

There exist several reasons for construction firms to expand their business into international markets. But the complex international environment is affected by diverse factors and creates risks that are not well understood by companies that are active mostly in domestic markets. It is therefore essential for construction companies to follow a disciplined and well-informed strategy when deciding whether to enter international markets. Company strengths relative to conducting business in international markets, the threats and opportunities associated with overseas work, and the costs and benefits of undertaking construction projects in specific countries need to be considered in this decision. The interactions between the complex factors can be structured in a model that can help one to make a rational judgment. The International Expansion Decision Model developed in this study is based on the Analytic Hierarchy Process (AHP) improved by the addition of a Delphi survey. The main objective of this research study is to facilitate the entry decision into foreign markets and to highlight the importance of the factors involved in this decision. This study is of relevance to practitioners as it allows executives of construction companies to test if their company is ready for expansion into international markets in general and into a specific country in particular. It is also of relevance to researchers as it demonstrates the successful use of the combined Delphi and AHP methods.     

Performance and Strategy of Chinese Contractors in the International Market

The past decade has witnessed the steady growth of Chinese international contractors (CICs), who have become important and influential players in the international market. The enormous development demands worldwide, especially in developing countries, attract CICs to engage in the market. Similarly, the strong support from the Chinese government plays an important role for the expansion of Chinese contractors globally. Some leading CICs perform very well in certain fields and countries. This brings the competitiveness of CICs to the attention of the international community. The strengths, weaknesses, opportunities, and threats (SWOT) approach was adopted in order to analyze CICs’ strengths, weaknesses, opportunities and threats in international construction markets. Literature from various sources was reviewed in the first instance, which is followed by an interview survey with 42 CICs employees. A SWOT strategy matrix is used to establish a framework that can help CICs to select suitable business development strategies in overseas markets. The applicability of the strategy framework was tested through the case study of two CICs. The strategies to reinforce their positions in the international market were studied based on the SWOT analysis. The results indicate that CICs are on their way to becoming major competitors to other overseas contractors. In essence, the research results offer a valuable reference of practices that construction firms need to master in order to survive and grow in the international market.     

Fuzzy Intellectual Capital Index for Construction Firms

Construction firms are now operating in a new era. Gaining and sustaining competitive advantage in this era primarily depends on effective and efficient management of knowledge assets. This paper proposes a performance evaluation model called fuzzy intellectual capital index (FICI) that can guide construction business executives to effectively and efficiently manage their knowledge assets. FICI incorporates an intellectual capital performance measurement model with fuzzy set theory to adequately handle imprecision, vagueness, and uncertainty that prevail in this process. FICI uses the fuzzy-weighted average algorithm to compute the intellectual capital performance of architectural/engineering/construction (A/E/C) firms. It is an internal reporting model that can guide executives of A/E/C firms to evaluate their firm’s ability to achieve their strategic objectives and to pinpoint their firm’s strengths and weaknesses in order to neutralize threats and to exploit opportunities presented by today’s construction business environment. A real-world case study is presented to illustrate the implementation and utility of the proposed model. Implications for practitioners and directions for future research are discussed.     

Neural Network Model to Support International Market Entry Decisions

Bidding for international construction projects is a critical decision for companies that aim to position themselves in the global construction market. Determination of attractive projects and markets where the competitive advantage of a company is high requires extensive environmental scanning, forecasting, and learning from the experience of competitors in international markets. In this paper, a neuronet model has been developed as a decision support tool that can classify international projects with respect to attractiveness and competitiveness based on the experiences of Turkish contractors in overseas markets. The model can be used to guide decision makers on which type of data should be collected during international business development and further help them to prepare priority lists during strategic planning. Information derived from the model demonstrates that the most important factors that increase attractiveness of an international project are availability of funds, market volume, economic prosperity, contract type, and country risk rating. Similarly, level of competition, attitude of host government, existence of strict quality requirements, country risk rating, and cultural/religious similarities are the most important factors that affect competitiveness of Turkish contractors in international markets.     

Strengths, Weaknesses, Opportunities, and Threats: Case Study of Consulting Firms in Shenzhen, China

After China became a member of the World Trade Organization, Chinese architectural, engineering, and project management consulting firms faced competition from not only their domestic competitors but also from foreign firms. As most Chinese consulting firms are used to operating under a protected setting, they may face difficulties competing in the globalized environment. This research involves a strengths, weaknesses, opportunities, and threats (SWOT) analysis of Chinese consulting firms based in Shenzhen; investigates how they respond to opportunities and threats; and recommends how foreign firms can respond to Chinese consulting firms’ SWOT. The case study research design is adopted. Using semistructured interview questions, face-to-face interviews were conducted with 23 Chinese consulting firms based in Shenzhen. Foreign firms’ responses are investigated through a case study of a U.S.-based consulting firm operating in China. The SWOT analysis reveals that Chinese consulting firms are lagging behind foreign firms in design and technical capability; experience in international projects; general and project management ability; and financial capacity. Industry practitioners from outside China who are contemplating entering the Chinese market can leverage on Chinese firms’ strengths by forming joint ventures with them. Foreign industry practitioners can take advantage of Chinese firms’ weaknesses by offering superior products and services which would improve their competitive advantage.     

Predicting Construction Company Decline

The main goal of this research is to develop a model that construction company executives can use to determine whether their company is healthy, whether decline is setting in, or whether decline has reached an advanced stage. The construction company decline model is a statistical model that was developed by making use of nonfinancial data collected from construction companies that have filed bankruptcy under Chapter 11 and construction companies that have been functioning without bankruptcy protection. The company profile survey provided information about 21 organizational, human capital, and strategic posture characteristics of construction companies. Factor analysis was used to reduce the number of variables. The factors obtained by performing factor analysis were regressed against decline ratings using multinomial logistic regression. The model allows a user to determine the condition of a company relative to decline. The model was validated by testing it using randomly selected data from the sample. The paper is of relevance to researchers because it contributes to the rather slim body of research in this area. It is of relevance to practitioners too as it provides them with an early warning tool that allows them to conduct a timely turnaround in case their company is in decline.     

Risks in Chinese Construction Market—Contractors’ Perspective

With China’s entry into the World Trade Organization (WTO), the Chinese construction market will be increasingly open and finally become part of the international market. Because of different social and economic systems, as well as different historical and cultural backgrounds, contractors are likely to encounter different risks in different markets. Based on questionnaires and case studies, this paper adopts an importance evaluation index and makes an importance evaluation of various risks encountered by Chinese contractors when contracting for projects in Chinese markets. This paper also makes comparisons between and analyses of the research findings and related available investigation results. The Cox–Stuart trend increase test method is applied in the current research, the results indicating that the variance corresponding to the importance index value tends to increase as the risk event importance decreases. This tendency shows that those investigated tend towards unanimity in terms of higher importance risk events. This paper also examines the reliability of the questionnaires by means of Cronbach’s Alpha Coefficient. The research shows that the main risk currently encountered by Chinese contractors in domestic markets includes owner’s irregular behavior and government departments’ interference in construction markets. China’s accession to the WTO has provided greater opportunities for international contractors to enter the Chinese construction market. Therefore the research results described in this paper can provide valuable data enabling international contractors to gain a better understanding of the potential risks in the environment of the Chinese construction market.     

Situation and Competitiveness of Foreign Project Management Consultancy Enterprises in China

At the end of the World Trade Organization transition period for China in 2006, the foreign project management consultancy sector entered a new era. Massive construction project development in China created a huge demand for various project management consultancy services, which has attracted an increasing number of foreign project management consultancy enterprises (FPCEs). Using the strengths, weaknesses, opportunities, and threats (SWOT) analysis framework, this paper identifies the FPCEs’ SWOT in China. A multifacet qualitative approach including a literature survey, statistical data review, regulation and policy studies, and semistructured interviews is adopted to investigate these factors. A total of 26 SWOT factors are identified. A SWOT strategies matrix is proposed to assist FPCEs in forming appropriate strategies.     

Forms of Collaboration and Project Delivery in Chinese Construction Markets: Probable Emergence of Strategic Alliances and Design/Build

Changes in regulations to allow foreign contractors to qualify as wholly foreign-owned “construction enterprises” came into effect in September 2002 as one of the steps taken by the Chinese government to honor its World Trade Organization commitments. Emerging markets have a significant impact on the strategic planning of contractors; based on an electronic survey covering foreign contractors, clients (foreign investors), and design institutes, the design/build procurement route in conjunction with strategic alliances has been found to enable foreign contractors to enter the Chinese marketplace. The writers present a strengths, weaknesses, opportunities, and threats (SWOT) analysis to inform readers where opportunities for development might be found and to warn of threats to entry. The research also found that mutual trust, synergistic strengths and complementarities, market demand for services, flexibility for both parties, and minimum change of top managers were ranked as the top five critical success factors for strategic alliances between foreign contractors and design institutes. Finally, medium-sized, state-owned, and large-sized design institutes were ranked as the first, second, and third preferences, respectively, for strategic partnering by foreign contractors.     

Developing a Performance Index for Relationship-Based Construction Projects in Australia: Delphi Study

Over the past decade, an increasing trend of client organizations has been observed to adopt relationship-based approaches to run their building and construction projects internationally. Since there are numerous benefits of adopting relationship-based projects in construction, it is important to conduct research in the area of key performance indicators (KPIs) because it can help set a benchmark for measuring the performance of relationship-based projects. Nevertheless, few, if any, comprehensive and systematic research studies in this area have been conducted. This paper reports an empirical study which applies the Delphi survey technique to formulate a model to assess the success of relationship-based construction projects in Australia. Four rounds of Delphi survey questionnaires were conducted with 22 construction experts in Australia. The Delphi survey selected eight KPIs to evaluate the success of relationship-based projects in Australia. These KPIs included: (1) client’s satisfaction; (2) cost performance; (3) quality performance; (4) time performance; (5) effective communications; (6) safety performance; (7) trust and respect; and (8) innovation and improvement. A statistically significant consensus on the eight selected KPIs was also obtained from the Delphi experts. A formula for calculating a performance index for relationship-based projects in Australia has been finally derived. Construction senior executives and project managers can use the index to measure, monitor, and improve the performance of their individual relationship-based projects. It also broadens the existing body of knowledge of both academics and practitioners in the construction industry because the research method could be replicated in other geographical locations to create similar indices for international comparisons, thus assisting in the understanding of managing relationship-based projects across different countries.     

Analytical Framework for the Choice of Dispute Resolution Methods in International Construction Projects Based on Risk Factors

International construction projects provide opportunities for developing countries to advance in the global economy and for international construction and design firms to increase their profit and market share. Despite the attractive opportunities that international construction offers, international contractors are faced with many challenges and difficulties when moving into international markets. Many risks are associated with international construction, whether external or project-specific risks. Those risks affect how contract clauses are written, including the dispute resolution clause. This paper discusses the different dispute resolution methods employed in international construction contracts and develops an analytical framework (DRM-Risk matrix) suggesting the use of specific dispute resolution methods depending on the risks expected in the project. The matrix may eventually help international contractors in the selection of the appropriate dispute resolution method during contract formation depending on the risks involved in a project.     

Success of Supplier Alliances for Capital Projects

Energy sector capital projects typically cost hundreds of millions and even billions of dollars. Managing the engineered equipment is important not only because of their high dollar value but also because the long manufacturing lead times often drive the overall project schedules. In recent years, several supplier alliances have been successfully implemented on such projects leading to initial price savings in the range from 6 to 10%. This paper presents the result of a study to assess the opportunities and barriers with such partnerships. Interviewed company executives perceived that time savings and quality improvements, mostly due to the suppliers’ specialized expertise, are of much greater value than a lower bid price. Most surprisingly, very few companies use metrics to measure performance, thus leaving them in the dark on the question of how well an alliance worked or why it failed. The relevance of the presented work is in the amount of actual field data that has been generated and processed.     

Using Gaussian and Hyperbolic Distributions for Quality Improvement in Construction: Case Study Approach

The Gaussian distribution and the 6σ principle have been widely used in the field of construction quality management with great success. This paper proposes a theoretical study on a new hyperbolic distribution using the 6σ principle to improve quality in construction management. The hyperbolic and Gaussian distributions are then numerically compared by estimating their important statistical properties, such as population in range, number of defects, yield percentage, and defects per million opportunities. The impacts of these factors are briefly discussed to give guidance to organizations in the construction industry on how to lower cost and improve project quality by prevention. A case study showing the cost data of a construction consultant company is presented. The data’s population in range and defects per million opportunities are estimated using Gaussian and hyperbolic distributions. In this particular case study, the hyperbolic distribution is shown to be more effective in quality improvement by prevention than the Gaussian distribution. This also validates the hyperbolic distribution as a suitable distribution for construction quality management.     

Strengths, Weaknesses, Opportunities, and Threats for Architectural, Engineering, and Construction Firms: Case Study of Vietnam

After Vietnam became a member of the World Trade Organization, Vietnamese architectural, engineering, and construction (A/E/C) firms face competition from not only their domestic competitors but also from foreign A/E/C firms. As most Vietnamese firms are used to operating under a protected setting, they may face difficulties competing in the globalized environment. This study undertakes a strengths, weaknesses, opportunities, and threats (SWOT) analysis of Vietnamese A/E/C firms, investigates how they respond to opportunities and threats, and recommends how foreign A/E/C firms operating in Vietnam could respond. Using semistructured interview questions, face-to-face interviews were conducted with Vietnamese and foreign A/E/C firms. The SWOT analysis reveals that Vietnamese A/E/C firms are lagging behind foreign firms in financial capacity, experience in complex projects, knowledge in advanced design and construction technology, and management ability. Industry practitioners from outside Vietnam who are contemplating entering the Vietnamese market can leverage on Vietnamese firms’ strengths by forming joint ventures with strong and reputable private Vietnamese firms. To improve their competitive advantage, it is recommended that foreign A/E/C firms offer superior products and services and familiarize themselves with local culture and regulations. They should be mindful of corruption and set up surveillance systems to curb wasteful spending.     

Emotional Intelligence and Leadership Behavior in Construction Executives

The study documented in this paper builds upon the concept of multiple intelligences by examining the need for a greater concept of intelligence within the construction profession. Specifically, the paper documents the study of 130 construction executives for their emotional intelligence (EI) as measured by their emotional quotient. In this study, the writers analyze the relationship between EI and leadership behaviors, specifically examining the relationship between EI and transformational leadership behaviors. The paper outlines the strengths and weaknesses found in executives in relation to developing transformational leadership behaviors. Through the use of established testing procedures, the researchers identify five specific components of EI that are related to transformational leadership behavior at a convincing level of statistical significance. Of particular importance is the identification of interpersonal skills and empathy as key EI behaviors that need additional attention during the development of construction industry executives. The writers contend that these traits are as important as classical traits of intelligence and experience in developing the leaders of tomorrow’s construction organizations.     

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.     

Development Strategies for Chinese Design Institutes

China is gradually opening up its engineering construction services sector to overseas contractors and consultants as part of its move towards joining the World Trade Organization (WTO). Traditionally, design institutes have operated as state-owned enterprises (SOEs), and for them, China’s accession to the WTO in 2001 presents both a threat as well as an opportunity. Given the market conditions in China, most of the design institutes are restructuring their organizations to cope with the increasing competition. Through a pilot investigation, the strengths, weaknesses, opportunities, and threats of the Chinese design institutes are identified. Based on the analysis, this paper proposes development strategies for the sustainable growth of Chinese design institutes and suggests approaches for collaboration with foreign contractors and consultants. A case study is presented to demonstrate the practical application of these strategies.     

Fuzzy Analytical Hierarchy Process Risk Assessment Approach for Joint Venture Construction Projects in China

Research and practice show that construction joint venture (JV) activities in China are opportunities that can bring potential benefits but at the same time may generate many risks. While research has studied these risks and presented useful advice for managing individual risks, the methodologies used to analyze the risks were mainly qualitatively based, and there is a gap in using the quantitative method that can integrate a risk expert’s knowledge to assess the risks associated with JV projects. This paper sets up a hierarchy structure of the risks and then develops a fuzzy analytical hierarchy process (AHP) model for the appraisal of the risk environment pertaining to the JVs to support the rational decision making of project stakeholders. An empirical case study is used to demonstrate the application of the proposed fuzzy AHP model. It is concluded that the fuzzy AHP model is effective in tackling the risks involved in JV projects. The information presented in this paper should be shown to all parties considering JV business opportunities in China, and the proposed approach should be applicable to the research and analysis of risks associated with any type of construction projects.     

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.     

Using Analytic Network Process to Predict the Performance of International Construction Joint Ventures

Strategic collaborations such as joint ventures (JVs) have become an important way of exploiting business opportunities for construction companies. However, such entities are difficult to manage due to their composite structures, which entail diverse organizational cultures, styles, and objectives. Therefore, measurement of JV performance has been an interesting research topic although there is no consensus on the definition, measures, and variables of performance yet. Considering the inherent complexities of the construction projects, only an adequate combination of criteria allows assessing the international construction joint venture (ICJV) performance. Within this study, an analytic network process model is developed to examine the links between the determinants of performance and to observe the influences of these factors on the ICJV performance. As a result, interpartner relations, structural factors and interpartner fit are found to be the most important determinants of ICJV success. Effectiveness of conflict resolution and control mechanisms contribute significantly to ICJV performance. Cultural fit is the most important fit that should be attained between the partners. The performance of the model is tested on eight real construction projects and satisfactory results are obtained.