The effect of experience on contractors' competitiveness in recurrent bidding

This paper considers the relationship between bidding competitiveness, organizational learning and experience and it measures the effect of contractors' bidding experience on competitiveness in recurrent bidding, a notion that conceptualizes a continuous decision-making process in which experiential learning plays a key role. The data analysis demonstrates that contractors who bid more frequently over a six-year period are more competitive than contractors who bid occasionally. It is found that greater bidding competitiveness is positively correlated with the frequency of bidding attempts. An analysis of contractors' bidding performance on a pairwise basis supports this finding. Not only does the pairwise analysis show that the bidding competitiveness of experienced contractors who bid frequently is greater, but also that experienced contractors' bidding attempts fall within a relatively small competitiveness range when compared with that of contractors who only bid occasionally. A key finding of this paper is the existence of some experienced contractors, who may be perceived as being ‘experienced market players’, having the attribute of a more competitive and consistent bidding performance. This research should be useful to procurers looking to prequalify contractors on the basis of experience and to contractors in analysing their bidding performance and/or their competitors' bidding performance.     

Learning from project monitoring feedback: A case of optimizing behavior of contractors

Monitoring is an essential part of construction project management and has typically been devised to guard against non-compliance. When contractors are subjected to regular performance feedback, instead of just taking remedial action, they may take the opportunities to enhance their operations in the light of the feedback. Thus, it has been advocated that responding to performance feedback has a learning element. This study takes on this notion and examined the performance change pattern of contractors that have been subjected to regular performance feedback. Longitudinal performance scores were fitted against five well established learning curve models using the Least Square Curve Fitting Analysis (LSCFA). It was found that the 3-parameter hyperbolic model is the ‘best-fit’ model in terms of effectiveness and stability. The LSCFA results also suggested that the contractors in the sample can be arranged in four clusters: Competent Learners, Incidental Learners, Indifferent Learners and Optimizers. The majority of them fall into the optimizing cluster. This suggests that these contractors may adjust their resources to maintain their performance at an acceptable level which do not deprive their future opportunities. With due caveat to the constraints and limitations of working sample, this finding is thought provoking for project managers in exercising project monitoring.     

Towards understanding the contractor's response to carbon reduction policies in the construction projects

Policies like the carbon tax and tightened building regulations have been advocated as the effective drivers of carbon reduction strategy adoption. Few however, have acknowledged that project environment strategy adoption is a matter of organisational culture (OC). This paper reports a study that aims to examine the effect of some key drivers on the contractors' adoption of carbon reduction strategies in OC perspective. A conceptual model which depicts the hypothesised relationship among OC, carbon reduction drivers and strategy adoption is presented. The model is tested with data collected by a survey conducted in New South Wales, Australia. To test the conceptual model, Pearson correlation analysis and multiple moderated regression (MMR) analysis were employed. The results suggest that the respondents may not adjust their attitudes in carbon reduction strategy adoption for the sake of avoiding ‘penalty’. The findings may be thought provoking for those who believe that levies on carbon emissions would lead to a behavioural drift.     

Assessing risk management capability of contractors in subway projects in mainland China

Contractor's risk management capability (RMC) reflects the sophistication of contractor's understanding of risk portfolio and how to manage those risks. This paper aims to develop a RMC assessment model for subway project contractors and to assess the current overall RMC of subway project contractors in mainland China. To achieve the objectives, a questionnaire survey was conducted and data were collected from 58 respondents. The empirical research findings showed that the overall RMC of subway project contractors can be regarded as between “low” and “medium”. In addition, currently in subway projects' area, contactor's risk analysis capability is relatively more mature than other capabilities. However, contractors' risk management attitude is relatively less mature than other capabilities. Assessing the current RMC of subway project contractors can be used to identify the priority or weakest areas needed for improvement.     

When will we learn? Improving lessons learned practice in construction

Purpose

The aim of the research is to improve lessons learned practices within construction contractor organisations. This will result in contractors' project teams having access to the most relevant lessons at the most appropriate time, in the most appropriate format.

Scope

The research was based on the responses of 41 large UK contractor organisations to a questionnaire survey, detailed interviews with nine companies and three focus groups. The respondents were senior and middle managers variously involved in business improvement, knowledge management, and technical services.

Results

The questionnaire survey identified methods, tools and processes used to collect lessons learned. The interviews and the focus groups uncovered the diverging requirements of corporate vs. site-based staff. The data contributed to the development of a project learning model and a conceptual model from which a Project Learning Roadmap was derived to support business leaders to improve their project lessons learned processes. This will enable organisations to develop individual solutions tailored to stakeholders' needs.     

Critical stressors influencing construction estimators in Hong Kong

The main task of contractors' estimators is to predict the likely costs involved in executing a future project. This is an onerous job as any errors made can undermine project success and ultimately reduce the contractors' profit margins. The inherent uncertainty of most construction work, however, together with the often very short time periods involved, make errors unavoidable. Unsurprisingly, therefore, estimation is considered to be a very stressful business. To identify the nature of the stress involved, a survey of construction estimators in Hong Kong was conducted. Using correlation analysis, regression analysis and structural equation modelling, the relationships amongst the causes (stressors or stress factors) and effects (stress) were examined and a causal structural model developed. The results indicate work overload, role conflict, job ambiguity, and working environment to be the most critical stressors, with work underload and distrust being the main indirectly influencing factors. These results are similar to those of a previous study with site managers, suggesting that job ambiguity and work overload are the common problem in the construction industry. The study of the manageability of stress is expected to inspire other similar research involving other professionals in the construction industry. This is expected to be of particular significance in the long‐term development of stress management in the industry in general.     

Start-up and steady-state learning in recurrent bidding

Is contractors' bidding competitiveness under the governance of the adaptive learning mode? The adaptive learning model suggests contractor organizations would regulate the use of a bidding strategy, which is deemed optimal in response to recurring and similar bidding situations. A data set on open tendering by a select group of contractors was gathered over six years by the Hong Kong government and used to test this premise. The behaviour of the eight newly listed contractors indicates that an upward trend of bidding competitiveness in initial bidding attempts is not a generic phenomenon. The theoretical construct of bidding behaviour in the start-up phase is therefore dubious. Data lend only partial support to the existence of rapid learning during the start-up phase. However, the five more experienced contractors (indicated by the largest number of bidding attempts) show high and consistent bidding competitiveness. This provides evidence that contractors display behavioural regularity when the optimal bidding strategy has been reached. Construction organizations are, therefore, urged to treat organizational learning strategically in their attempts to maintain high competitiveness in the bidding process.     

Organisational culture profiles of construction enterprises in China

The vast economic growth in China in the past decade has brought forth opportunities for the development of its construction industry. However, the construction industry in China has been criticised for poor performance and low effectiveness in terms of quality and profitability in the face of challenges and uncertainties resulting from the fast changing economic environment. Given that organisational culture plays a significant role in work performance and effectiveness, the apparently low effectiveness of the construction industry may be related to the culture of the contractors' organisations. The culture–effectiveness (C‐E) relationship has received increased attention in organisational research and the aim of the study is to develop a culture–effectiveness model of the contractors' motivated behaviour towards performance. Results of cluster analysis of the culture profiles of Chinese construction enterprises show that hierarchy and clan cultures are dominant and that culture profiles of Chinese contractors may vary in different geographical regions.     

Risk assessment on contractors' pricing strategies

TIn a competitive tender, pricing strategies are often used by contractors to facilitate their cash flows. Usually, the decisions are based on contractors' experience, intuition, and personal bias. The existing mark-up or cash-flow forecasting models simulate the pricing strategies in a simplified manner which may depart from real situation and therefore could lead to inaccurate cash-flow forecasting. There is a lack of practical models that could quantify risks associated with pricing strategies. For construction projects, the quantity values of break-down cost items are random variables. A new approach to the risk assessment of contractors' pricing strategies is presented. By using the quantities as random variables, the approach developed in this paper enables the contractor to find the global optimal pricing through the stochastic programming model. The risks caused by contractors' pricing strategies are then assessed in a quantitative manner. A real case analysis using the approach is demonstrated.     

Flow of estimating data in Sri Lankan building contractor organizations

When an estimator prices a bill of quantities, s/he collects, generates and assembles data (estimating data) for the purpose of establishing the cost of constructing the project. The data generated could be used by the contractor's subsequent management functions, and the use of estimating data in the contractors' post-tender management worthy of attention. Drawing information from ten case studies of the organization of Sri Lankan building contractors, this paper identifies the contractors': management functions; management tasks; and management groups. It also establishes the flow of estimating data within and between the management functions. These flows highlight the substantial burden of re-work in the post-tender use of data. It is argued that the current format and presentation of estimating data in Sri Lanka are the major causes for such re-work. However, it was found that any revolutionary change to the conventional format would not be welcomed by the industry. Any new proposal should be developed within the limitation of acceptability to conventional practice. The recommendation is that the ‘unit rate’ is broken down to its cost components of material, labour and plant. The breakdown of the unit rate would supply all the necessary data for direct use, thus reducing the re-work. Further research should be addressed to investigate the best format and structure of this breakdown.     

Contractor financial prequalification using simulation method based on cash flow model

Although construction contractor prequalification highly prioritizes the financial capacity of the construction contractors, a special assessment of contractors' financial capacities has seldom been performed in the construction industry. Cash flows largely reflect a contractor's capacity to meet its financial obligations, this study assesses the credit qualities of construction contractors by using a cash flow based credit model (CFB credit model). The model uses historical continuously free cash flow to firm of construction contractors to simulate possible future cash flow paths. The credit quality scores of construction contractors are then assessed using the CFB credit model. The results demonstrate the effectiveness of assessment of the credit quality of construction contractors, and recommend the clients to adopt it in prequalification of the contractors' financial abilities.     

Modeling the Dynamics of an Infrastructure Project

Abstract:   Contractors frequently encounter various problems during project construction, even when properly employing traditional project management techniques and tools. These problems result in low project performance and poor project outcome. A dynamic simulation model is proposed to capture the dynamics of construction projects in the construction phase. Eight key feedback structures from previous models of project dynamics and the unique characteristics of construction projects are identified as dynamic hypotheses. They include the structures of labor, equipment, material, labor and equipment interaction, schedule, rework, safety, and quality. Subsequently, a formal simulation model is mathematically formulated in terms of stock and flow diagrams. The model is then calibrated into a real project under construction. Part of testing indicates that the simulated behavior of the model and the actual behavior of the project are similar. This implies that the model is able to simulate the dynamics of the project and, consequently, to enhance project monitoring and control.     

Farsighted project contract management: incomplete in its entirety

The purpose of project organization is to create a cooperative environment. Contracts are the method by which the owner creates a project organization to employ resources to achieve their development objectives. Contracts should aim to produce a cooperative organization, aligning the contractors' objectives with the owners. A three‐dimensional vector (reward, risk, safeguard), adapted from the Transaction Cost Economics literature, is used to analyse the efficacy of contract types to do this. Contracts are also unavoidably incomplete. They need to respond to unforeseen circumstance. A four‐dimensional vector (incentive intensity, adaptiveness, reliance on monitoring and control, reliance on the courts), also from the Transaction Costs Economics literature, is used to analyse the governance efficacy of contract types. The results are used to develop a contract selection strategy, depending on whether the uncertainty is controlled by the client or the contractor, the project is simple or complex, and the uncertainty is in the project's product, method of delivery or both.     

Theoretical comparison of alternative delivery systems for projects in unpredictable environments

A project delivery process simulation is presented based upon empirical studies in the design‐build environment of semiconductor fabrication facilities (‘fabs’). The model captures key tasks and decisions in design, procurement and construction, as well as design criteria changes along the delivery of a R&D fab utility system. Simulation shows that to involve the specialty contractor from the project start on average expedites project delivery since it prevents delays caused by bidding and by contractors' unfamiliarity with the design product definition. Yet, in unpredictable project environments – environments in which design criteria are likely to change irrespectively of the project progress status – simulation reveals that the averages of construction rework and waste increase if design is prematurely frozen. Assuming that work methods do not change and design criteria remain uncertain, results indicate that a system that combines early contractor involvement with judicious postponement of the design start reduces the average duration of the fab utility delivery in relation to the expected duration if competitive bidding was used, with limited increase in the averages of construction rework and waste. Additional efficiency is gained when specialty contractors relax conservative assumptions on anticipated site conditions. An economic model uses simulation results to assess the tradeoffs between alternative project delivery systems for the case of R&D fabs.     

Sources of competitive advantage of Turkish construction companies in international markets

Michael Porter's diamond framework, a relatively recent attempt to improve our existing knowledge on the sources of competitive advantage, is applied to the Turkish construction industry. The results of this undertaking challenge a common approach that attributes Turkish contractors' success in international markets to labour cost advantages and geographic and cultural proximity to several promising markets. In the light of the diamond framework, Turkish contractors' advantages are found not to be limited to these ‘factor conditions’ and ‘chance’ events. There are other important advantages behind their success, such as the existence of a dynamic home market, favourable entrepreneurial variables, and pressures to upgrade stemming from intense domestic rivalry. The analysis also points to the areas in which they face troubles, including problems induced by the government, financing difficulties and the weak international position of the Turkish design engineering and consultancy services industry.     

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.     

土木类工程测量课程教学质量控制法研究

工程测量是工程项目建设中一项重要的基础工作,工程测量课程也是土木类专业重要的专业基础课,其教学质量直接关系着学生的培养质量。文章利用质量控制论的事前、事中、事后控制法,对课堂教学质量控制的课前准备、课堂教学和课后反馈三个环节的具体做法作了介绍,重点就课前学情分析、教学计划制定、课程内容准备和上课状态准备;课堂教学中学习氛围的创设、学习兴趣的培养、教学方法的采用、学生动手能力的培养;课后反馈控制意识的建立、评价体系和前馈控制进行了探讨。     

The guaranteed maximum price contract as call option

Due to increasing constraints on project duration and costs, together with the increasing implication of contractors in the design process, guaranteed maximum price (GMP) contracts are likely to become common in the future. This paper explores a new approach for evaluating the remuneration of the contractor. The GMP contract is considered as a hybrid arrangement consisting of a cost reimbursement contract and a call option on a fixed price contract. The option pricing theory is used as a conceptual framework to assess the GMP contract and the contractors' remuneration.     

Performance of US contractors in foreign markets

The international construction market shrank considerably in the period 1980–88. US contractors' performance in this period was less than satisfactory. This paper first discusses briefly the principal causes for this decline in international construction (the reduction in oil prices, an increase in Third World countries' external debts, local companies becoming more competitive, and governments' barriers to foreign contractors). It then uses published statistical data to identify the common features of US construction companies that undertake work overseas. Finally, it attempts to explain the factors such as financing, taxing, the Foreign Corrupt Practices Act, and foreign competition that may have affected US competitiveness abroad.     

Construction project risks: further considerations for constructors' pricing in Hong Kong

Construction project risks affect contractors' tender price. A host of factors influencing tender prices were identified and the importance of these factors evaluated by making use of the data collected in a postal questionnaire survey conducted to the ‘Buildings’ contractors in Hong Kong. Out of 60 factors identified, the availability of required cash, uncertainty in costs estimates, urgent need for work, past experience in similar projects and contract size are considered most important. The need for work and the amount of experience are similar to those factors affecting bidding decisions of top UK contractors. The findings suggest that in the upward adjustment of tender prices, the large‐size contractors are more concerned with the uncertainty in costs estimates while the medium‐ and small‐size contractors care more about no past experience. In the downward adjustment of prices, the large size of the contract is the main factor affecting the pricing of the large‐ and medium‐size contractors while the urgent need for work is the main drive for the small‐size ones. There are significant differences between the contractors' perceptions of the importance of the risk factors. This is consistent with differing attitudes towards bid mark‐up decisions of the large‐ and medium‐size contractors in Singapore.