Factors Affecting International Construction

A construction company’s decision to expand into international markets must be based on a good understanding of the opportunities and threats associated with international business, as well as the development of company strengths relative to international activities. These factors were evaluated in this study by surveying the executives in charge of international construction of large United States based contractors. The information was collected by means of two rounds of a Delphi survey, the results of which were used as input in an analytic hierarchy process (AHP). The findings indicate that track record, specialist expertise, project management capability are the most important company strengths; loss of key personnel, shortage of financial resources, and inflation and currency fluctuations are the most important threats relative to international markets; and increased long term profitability, the ability to maintain shareholders’ returns, and the globalization and openness of the markets are the most important opportunities available in international works. This study is of relevance to practitioners as it systematically highlights the factors that affect international construction for the benefit of executives of medium-to-large size construction companies who are considering expanding into overseas markets. It is of relevance to researchers too as it demonstrates the successful use of the combined Delphi and AHP.     

Enablers That Help Foreign Architectural, Engineering, and Construction Firms Win Construction Contracts in China

With China’s fast economic growth and entry into the World Trade Organization (WTO), more foreign architectural, engineering, and construction (AEC) firms are expected to venture into this huge and attractive market. This paper explores the important strategies to help foreign AEC firms clinch construction projects in China. Using a questionnaire survey approach complemented by in-depth interviews, it was found that firms need to pay more attention to the market and working conditions in China and to strengthen their own capabilities. To win projects in China, foreign AEC firms should also be able to offer project financing services. The findings are useful to foreign AEC firms because it may help them win projects in the Chinese construction industry.     

Internationalization of Chinese Construction Enterprises

Thirty-five international contractors from China were included by the Engineering News Record in the list of the Top 225 International Contractors in 2000. Although Chinese international contractors are increasingly playing a significant role in the global construction market, relatively few studies have been completed on their historical background and foray into the international arena. Apart from seeking to fill this lacuna, this paper also provides an analysis of the these 35 Chinese international contractors to evaluate their achievements using the following performance indicators: International Revenue/Total Revenue, International Business Distribution, Overseas Management Structure, Involvement in Specialized Fields, and Overall Index of Internationalization. The analysis identified the top ten Chinese international contractors who are truly global in outlook. The study also suggests that the traditional multinational enterprise theories may not explain the development of Chinese international construction firms adequately.     

Global Legal Issues for Engineers and Constructors

When performing engineering and construction (E&C) throughout the world E&C personnel need to be aware of the differences in legal systems and how contracts are enforced in different countries. This paper provides information on some of the international legal conventions, regional legal issues, and comparative legal systems. Next the paper addresses international engineering and construction contracts by providing a discussion on the clauses that could differ in contracts throughout the world and which clauses are important to include in international contracts. Specific contract clauses are examined in relation to how their inclusion or exclusion might impact global engineering and construction projects. The next section presents issues related to claims and change orders along with a brief discussion of dispute resolution techniques including international arbitration and contract clauses related to dispute resolution techniques. Anticorruption legislation is mentioned along with kidnapping and ransom insurance because both of these issues are increasing in importance in the global E&C arena. Liability issues that firms might face in the global E&C marketplace are explained along with risks associated with currency valuations and local labor conditions. A table of clauses pertinent to global E&C contracts is provided to help firms prepare for projects in foreign nations.     

Contractor Selection Criteria: Investigation of Opinions of Singapore Construction Practitioners

The construction industry has witnessed the failure of many contractors due to varying reasons such as financial problems, poor performance, or accidents arising from the lack of adequate safety consideration at worksites. All these incidents have led to the impression that the current system of awarding the contracts is inefficient in selecting the contractor capable of meeting the demands and challenges of present times and hence needs to be reviewed accordingly. Therefore, in an attempt to investigate the current situation of the Singapore construction industry a questionnaire survey was conducted for accruing the data required to identify the important contractor selection criteria (CSC) and to draw upon construction practitioners’ opinions regarding the importance of those CSC in assessing the capabilities of the candidate contractors during the selection process. The research reported upon forms part of a larger study that aims to develop a computer-interactive multicriteria decision system for contractor selection involving identification of CSC for inclusion in the system, investigation of CSC preferences of construction practitioners, and establishment of weights for those CSC from their perceived importance determined through the questionnaire survey of Singapore construction practitioners. The study highlights that there are statistically significant differences in opinions regarding the degree of importance assigned to some CSC among public clients, private clients, and contractors. Findings from the study may act as an aid in improving the Singapore construction industry by helping construction clients identify multiple CSC apart from cost which should always be considered when assessing the capability of candidate contractors during the selection process, by assisting contractors in improving their attributes in line with clients’ preferences and by facilitating Singapore construction clients and researchers to develop a contractor selection system capable of assessing multiple attributes of the candidate contractors so that the risk of the project failure due to the selection of an inappropriate contractor is minimized.     

Empirical Assessment of Internationalization Strategies for Small and Medium Construction Companies

In the wake of increased globalization, more small and medium construction companies (SMCCs) are expanding into the global market. However, the international construction industry is different from the domestic with respect to resource, regulations, culture, entry strategies, and risk levels among other factors. This paper explores various ways and modes of internationalization for SMCCs under 13 key hypotheses that are relevant to the issues of internationalization from the perspective of SMCCs. To verify these hypotheses, this study used actual data from 560 cases of SMCCs’ overseas projects performed between 1990 and 2007. It was found that SMCCs’ entry scheme as prime contractors was more rewarding than in the case of subcontractors. Moreover, SMCCs are likely to evolve from subcontractors engaged with home-country contractors to subcontractors engaged with foreign contractors. Also, cultural distance is positively related to performance, but the effects of cultural properties are not as strong compared to the international manufacturing industry. The results are expected to help SMCCs build internationalization strategies by determining promising entry modes, proposing possible evolutionary paths to enter overseas projects, and assessing cultural effects in reference to SMCCs’ successful performance.     

Strategies Adopted by International Architectural, Engineering, and Construction Firms in Southeast Asia

There are many business opportunities for international architectural, engineering, and construction firms to work in Southeast Asia (SEA) due to its high volume of construction demand and its growing economy. Before entering the region, these industry practitioners need to decide on the appropriate market entry modes and business strategies. The objectives of this research are to investigate the effective market entry modes and business management strategies that industry practitioners can adopt for SEA projects. The research method is based on a structured questionnaire. The study found that the most effective market entry modes are: setting up wholly owned foreign subsidiaries and forming project joint ventures with local firms. The most effective business strategies are: providing a superior product or service and paying great attention to client satisfaction. It is recommended that industry practitioners place emphasis on customer satisfaction by considering all aspects of the client’s requirements and the proposed project’s usage throughout its intended life cycle, to differentiate itself from its competitors.     

International Labor Productivity Factors

The construction industry is increasingly involved with international projects requiring the services of nonskilled and skilled workers throughout the world. Data concerning the productivity of these workers, therefore, is a critical need for the industry. The purpose of this article is to present national labor productivity factors for 47 various countries in Central and South America, Europe, the Middle East, and Asia. In addition, specific variables affecting national and international productivity are reviewed.     

Impacts of Obstacles in East Asian Cross-Border Construction

In the light of the rapidly growing investment in infrastructure over the past 10 years, East Asia has developed into one of the most dynamic construction markets in the world. Despite progress in market-oriented reforms in some countries of this region, considerable obstacles in the form of varying technical standards and local preference policies still can lead to significant cost increases. Five categories of obstacles are identified in this paper: business environment risk, regulatory restrictions, contractual arrangements and differences in standards and in culture. The likelihood of occurrence of these obstacles as well as their impact on the profitability of cross-border construction are uncertain. The degree of their effect also varies across East Asian countries. Through an industry survey of top international construction firms based in Singapore, the significant obstacles or cost growth factors and their impact on cost growth in tendering, construction, and overheads are determined. In particular, the risk situations in China and Singapore are compared.     

Implications of Culture in the Performance of International Construction Joint Ventures

Joint ventures have become popular because of their importance as a strategic alternative in global competition. One of the reasons why international joint ventures (IJVs) are difficult to manage is because the cultural distance between IJV partners has significant impact on alliance performance. Since construction projects are highly sensitive to external risks, the effect of the culture in the location in which the IJV operates is also significant. In this study, the effect of cultural similarity/difference relative to the national and organizational characteristics of partner companies on IJV performance is examined through a questionnaire survey. The impact of the cultural similarity/difference between an IJV partner and the host country is also assessed. The results of the study suggest that differences in organizational culture have a greater impact on IJV performance than differences in national and host country culture. The findings also reveal that similarity between the national cultures of IJV partners has a negative effect on IJV performance. The analysis of the data failed to provide evidence that IJV performance is affected by differences between the culture of the host country and the culture of an IJV partner.     

Factors Affecting Absenteeism in Electrical Construction

Construction contractors continue to be faced with the challenge of improving productivity in order to remain successful in an increasingly competitive industry. One factor that contributes to lower productivity is absenteeism. Yet, little is known or understood about the reasons electricians miss work, and very few studies have been conducted on absenteeism in the construction industry. As a positive step to reduce the problems associated with voluntary and involuntary absences, a study was initiated to identify why workers miss work and what steps should be taken to minimize absenteeism. The main objectives of the study were to learn the reasons for absenteeism and to quantify the impacts so that solutions can be developed to help contractors improve their productivity. The study determined that managers and electricians agreed that illnesses and medical appointments were two common reasons workers missed work. However, managers also believed workers were absent because of a lack of interest or irresponsibility, while electricians reported injuries and unsafe working conditions as reasons for missing work. Furthermore, a quantitative analysis of the data revealed that when the absenteeism rate was between 0 and 5%, there was no loss in productivity. However, when the absenteeism rate was between 6 and 10%, a 24.4% loss in productivity was experienced. By understanding what causes electricians to miss work, and the effect of absences on productivity, a company can manage and control absenteeism on electrical construction projects.     

Factors Affecting Construction Project Outcomes: Case Study of Vietnam

Due to the demand for built products from foreign investors and the growing economy, Vietnam’s construction industry experiences strong growth. While some of the construction projects are successfully executed, others faced difficulties. The aim of this study is to examine the factors that lead to successful outcomes in construction projects in Vietnam. Using the case study research design, three successful projects and another three unsuccessful projects were investigated. Data were collected from face-to-face interviews with several project participants in each project and archival data. The results show that major enablers that lead to project success are foreign experts’ involvement in the project, government officials inspecting the project, and very close supervision when new construction techniques are employed. A factor which leads to poor performance is the lack of accurate data on soil, weather, and traffic conditions. The findings may be useful to construction professionals operating in Vietnam to put in place factors that can lead to good project performance. For foreign practitioners entering Vietnam’s market, the study may assist them in focusing on the more important factors to achieve good project outcomes.     

Legal Framework for Alternative Dispute Resolution: Examination of the Singapore National Legal System for Arbitration

Effectiveness of any alternative dispute resolution (ADR) method depends on the national legal system to which it is subjected. In Singapore, the increasing growth in the use of ADR methods may be adduced to developments in the Singapore legal environment. This paper reviews the characteristics of the Singapore national legal system for arbitration. It examines how the legal system facilitates effective use of ADR. By its features, the Singapore national legal system ensures parties’ autonomy but deters parties from taking opportunistic advantage of the voluntary nature of ADR. It enables procedural flexibility, and confidentiality of arbitration proceedings. It insulates the arbitration process from intervention from the Singapore courts and from corruption; and it provides maximum judicial support in the arbitral process. Hence, it ensures that disputes can be brought to a conclusion within a reasonable amount of time, at a reasonable cost, as well as preserving business relationships. The Singapore legal system insures the integrity of arbitration and the independence of arbitrators and arbitral institutions by immunity provisions. In addition, the legal system enhances the use of mediation and conciliation in a sequential tier with arbitration by providing a time limit for mediation or conciliation to terminate should they fail to produce a mutually acceptable settlement. In Singapore, the court system is generally known to be efficient; hence, ADR faces the practical challenge of becoming lengthier than court proceedings. The continuing search for and use of expedited arbitration procedures by arbitral institutions such as the Singapore International Arbitration Centre should reduce this challenge. This paper provides useful information on how a national legal system may be designed to support the use of ADR methods and facilitate their effectiveness.     

Factors Affecting the Success of a Construction Project

Different researchers have tried to determine the factors for a successful project for a long time. Lists of variables have been abounded in the literature, however, no general agreement can be made. The aim of this paper is to develop a conceptual framework on critical success factors (CSFs). Seven major journals in the construction field are chosen to review the previous works on project success. Five major groups of independent variables, namely project-related factors, project procedures, project management actions, human-related factors, and external environment are identified as crucial to project success. Further study on the key performance indicators (KPIs) is needed to identify the causal relationships between CSFs and KPIs. The causal relationships, once identified, will be a useful piece of information to implement a project successfully.     

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.     

Cross-Cultural Understanding of Construction Project Managers’ Conceptions of Their Work

In recent reforms of the Chinese construction industry, significant efforts have been made toward the introduction of Western project management theories and practices. However, little is known about the extent to which Western project management concepts have been supported by the Chinese culture. Because of certain differences between the two cultures, Chinese managers’ conceptions of their work are likely to be different from their Western counterparts. This paper reports an interpretive comparison of Chinese and U.K. construction project managers’ conceptions of their work. The findings reveal three of the most similar and five of the most different aspects between the two cultural sets of conceptions. The identified similarities reflect some key characteristics inherent in the construction project management profession. Two of the identified differences, namely Chinese emphasis on commercial awareness and U.K. emphasis on health and safety, arise from social structural differences in the two nations, whereas the other three differences, namely Chinese attention to relationships, Chinese concern for their company, and U.K. attention to project contract, are due to the cultural differences between the two nations.     

Legal Risks Faced by Foreign Architectural, Engineering, and Construction Firms in China

The extensive opportunities in China’s construction industry are expected to attract many foreign architectural, engineering, and construction (AEC) firms to her shores. However, these foreign firms may face many legal risks and obstacles, mainly because of the differences in culture and operating environment from their home countries. This study investigates the legal risks that foreign AEC firms encounter when operating in China, and how these risks are managed. Data were collected from 21 foreign (non-Chinese) AEC professionals who have extensive experience in China. Legal risks faced by foreign AEC firms in China include: difficulty in complying with the innumerable laws and regulations at the central, provincial, and local levels of the government; keeping up with new laws and regulations that are constantly being enacted; seeming reluctance of Chinese business associates to enter into binding contracts; and lack of sanctity of contracts and contractual obligations not being carried out fully, leading to disputes. Based on the research findings, a framework for managing legal risks is proposed for use by industry practitioners. The framework recommends to practitioners several measures to manage the legal risks. These include relationship-based strategies like establishing close relationships with the Chinese government officials and Chinese business associates and careful selection of Chinese business partners. It is recommended that foreign AEC professionals adopt the mindset that in China, the contact is to be continuously negotiated and reinterpreted. To achieve this, industry practitioners should provide a substantial contingency sum. It is also important to emplace permanent staff in China so that they can understand the local environment and monitor the changes taking place there.     

Stimulating Construction Innovation in Singapore through the National System of Innovation

This paper examines the national approach to the stimulation of innovation in construction. Based on a qualitative systems thinking approach, a model of the National System of Innovation (NSI) is structured with five main NSI actors: local contractors; suppliers; national research institutions; government; and foreign contractors. This model, established by the assumption that local contractors’ key motivation for innovation is based on profit maximization, highlights two main driving forces of construction innovation within the NSI: profit incentives and the social desirability of higher construction productivity and quality. The research findings indicate that high profit levels provide a higher number of growth momentums compared to the social desirability of innovation. Additionally, although social desirability of construction innovation is associated with a number of obstacles, high profit levels do not impose any significant hindrances. Based on the research findings, it is concluded that innovation policies should be focused on sustaining higher profit levels of contractors. The social desirability of innovation can be more efficiently utilized by regular reviews of national policies as the industry develops.     

MAUT-Based Dispute Resolution Selection Model Prototype for International Construction Projects

Disputes are common in international projects because of contractual, cultural, and legal factors. The dispute resolution methods currently adopted in international projects are varying, including litigation, arbitration, adjudication, mediation, expert-determination, dispute resolution board, and minitrial. The problem in question is on how to select the most appropriate resolution method that can fit nicely in the nature of the dispute and the disputing parties’ needs. A dispute resolution selection prototype (Model) based on the analytical hierarchy process and multiattribute utility technique (MAUT) is presented in this paper. The Model developed consists of five components: Selection factors, dispute resolution methods, utility factors, relative importance weightings, and user’s preferred weightings. These were based on the quantitative data provided by 41 experts in the field, who were barristers, arbitrators, mediators, and project managers. The Model is considered beneficial to the industry, as it provides construction professionals with a systematic and objective approach in the management of international project disputes.     

2000 Peurifoy Lecture: Construction Practices in Developing Countries

Many contractors are expanding into global markets. Further, many owners procure construction services to build facilities in developing countries. The construction practices in these countries differ in important respects from practices in industrialized countries. This paper reviews some of the more significant differences in construction practices in developing countries. Five primary factors are discussed: cost of labor, cost of money, technology and methods, infrastructure, and role of the design professional. The hypothesis is presented that the main driving factors affecting construction practices are the cost of labor and the cost of money. These two factors place speed of construction as a secondary objective. Low labor costs lead to construction practices being labor-intensive. There is a distinct absence of construction equipment, especially small lifting devices used for material handling. Additionally, the lack of infrastructure means that many materials commonly purchased in the United States from a vendor are fabricated using on-site labor in developing countries.