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.     

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.     

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.     

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.     

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.     

Determinants of International Architectural, Engineering, and Construction Firms’ Project Success in China

As China becomes a member of the World Trade Organization, many international architectural, engineering, and construction (AEC) firms are undertaking or expected to undertake projects there. This study identifies the significant factors that contribute to the successful performance of projects undertaken by international AEC firms in China. Data were collected using structured questionnaires from foreign (non-Chinese) AEC firms that have completed projects in China. Personal interviews with 27 experts were also conducted to supplement and test the survey findings. The findings reveal that the variable that affects the most number of success measures is the AEC firm’s ability to understand the client’s requirement. Achieving this brings about good project quality performance and owner satisfaction. Furthermore, firms that have superior product or service quality would also achieve better project performance. The interviewees also exhorted the importance of having core competencies as a critical success factor for projects in China. Practitioners may use the findings to help them manage their projects in China, so as to achieve higher levels of success.     

Models for Predicting Project Performance in China Using Project Management Practices Adopted by Foreign AEC Firms

China is a new market to many international architectural, engineering, and construction (AEC) firms and it is not known what would be the likely project outcomes, based on different project management (PM) practices adopted. This research developed and tested five models to predict the likely project success levels, based on PM practices adopted by foreign AEC firms in China. Based on data obtained from 33 projects, multiple linear regression (MLR) models for predicting the performance of foreign managed projects in China were constructed. The models were tested against 13 new cases, and the results show that they are able to predict project outcomes with some level of accuracy. The models show that certain scope management practices can be used to predict owner satisfaction, profit margin, and cost and quality performance of the project. Construction industry practitioners who are managing projects in China may benefit from the findings by focusing more on upstream management, like managing project scope, in order to ensure project success. It is recommended that construction industry practitioners use the MLR models to make preliminary assessment of the possibility of project success based on the type of PM practices they intend to adopt in China. From the results, they can then decide if they should change their practices or abort the project.     

Political, Economic, and Legal Risks Faced in International Projects: Case Study of Vietnam

The aim of this research is to investigate the political, economic, and legal (PEL) risks faced by foreign firms when undertaking construction projects in Vietnam. The specific objectives are to investigate the types of PEL risks faced and the risk response techniques adopted. The data collection instrument was a questionnaire with open ended questions. The data collection method was in-depth face to face interviews with 18 experts from France, Hong Kong, Malaysia, Singapore, and the United States who have managed construction projects in Vietnam. The major risks faced include corruption, termination of public projects, bureaucratic administrative system to obtain permits and approvals, changing and inconsistent regulations, inadequate legal framework, fluctuation of exchange, and interest and inflation rates. Ways to respond to these risks are recommended by the experts. Foreign firms undertaking construction projects in Vietnam may make use of these findings to identify their PEL risks and determine the appropriate risk response measures to give their projects a higher chance of success.     

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.     

Risk Assessment for Construction Joint Ventures in China

The construction industry in China is developing toward the international procurement practice, and such development has attracted many foreign firms into the Chinese construction market through the formation of Sino-foreign joint ventures. Joint venture has become an important sector in the Chinese construction industry. However, the difference in management systems, technological practice, and cultural background among the partners within joint ventures brings difficulties to the function of joint venture. A significant degree of risk is involved in joint venture investments. Thus, foreign firms increasingly intend to spend more effort in studying proper strategies of managing risks in their joint venture businesses. Based on a survey, this paper establishes a risk significance index to show the relative significance among the risks associated with the joint ventures in the Chinese construction procurement practice. Real cases are examined to show the risk environment faced by joint ventures. The paper also investigates practical applications of risk management in the business of joint ventures.     

Evaluation of Legal Risks for E-Commerce in Construction

E-commerce is steadily becoming a reality in the construction industry. However, despite the increasing rate of utilization by owners and contractors alike, the legal implications of using e-commerce in construction have not been studied in depth. This paper fills this gap in literature. It identifies and analyzes the different types of legal risks involved in the use of e-commerce in construction. It also outlines the risk that contractors and professionals may face in their e-commerce implementations. A classification of e-commerce legal risks is also introduced. The legal risks discussed include agency, jurisdiction, contract formation, validity and errors, authentication, attribution, nonrepudiation, privacy, conflict of laws, and conflict between law and technology.     

Integrating Management Breadth in Civil Engineering Education

At the beginning of the 21st century, there is a wider awareness that the civil engineering industry has become a global industry. The rapid increase in foreign ownership of firms in the United States along with the globalization of economic markets is reminding professionals that they must be aware of global events before they impact local operating conditions. In response to these developments, university programs must begin to broaden their focus to include subjects that address new economy realities. Specifically, the time to begin exposing students to management topics such as entrepreneurship, financial management, and global economics has arrived. If the civil engineering industry is going to evolve into a new economy business, it will require individuals who are as comfortable with the financial and technological components of the business as they are with design or construction fundamentals.     

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.     

Development Model for Competitive Construction Industry in the People’s Republic of China

This paper identifies and analyzes the open-policy trend of the Chinese construction industry, which is characterized by trade liberalization, the underlying principle of the World Trade Organization (WTO). Compared to the construction industries in the United States, Japan, and the U.K., the construction industry in China is less developed in its legal framework, industrial structure, technological level, and international market share. To develop a competitive construction industry, the Chinese construction industry needs not only to accommodate appropriate international practice, but also to adapt and adopt it according to the market environment in China. A model to enhance the performance of the Chinese construction industry is proposed. The model consists of six modules: defining government’s role, opening up the construction market and establishing a competitive mechanism, promoting design institutes’ services and empowering professional bodies, encouraging technological innovations, upgrading employees’ educational level, and adopting multiprocurement routes. Recognizing China’s recent accession to the WTO and the attendant boost to its economy and industry development, the paper gives a timely evaluation of the post-WTO Chinese construction industry and proposes a model for its development. The model may serve the needs of academics, Chinese construction policymakers, construction enterprises, design institutes, and foreign contractors.     

Comparison of Contract General Conditions between United States and China

In light of the fact that construction projects are expensive, complex, and time-consuming undertakings, a well-written contract that specifies each participant’s duties and obligations is required. Furthermore, a well-written contract with regard to business practice differences between the United States and China is unquestionably needed by American owners, design firms, and construction companies conducting business in China. In response to this industry need, general conditions of construction contracts commonly used in the United States (AIA-A201) and China (GF-1999-0201) have been analyzed and compared. The findings of this research reveal that the content of subclauses in AIA-A201 and GF-1999-0201 is different in several ways. These differences may have been caused by cultural, historical, geographical, political, and language variations that exist between the American and Chinese construction markets. Understanding these differences could help U.S. companies stay competitive and profitable in China.     

Legal Aspects of Information and Communication Technologies Implementation in the Turkish Construction Industry: Applicability of eLEGAL Framework

With increasing awareness of gains and importance of the strategic use of information and communication technologies (ICTs), the implementation rate of ICTs in the construction sector is increasing. However, these technologies have not been covered by legal and contractual practices. The industry needs to implement application frameworks and legal restructuring of the existing related laws and regulations to use ICT in a legal and contractually valid environment. The EU-funded eLEGAL project, which defined a legal framework for ICT uptake in construction, is selected as a model project to address legal and contractual issues regarding ICT use in the Turkish construction industry. The applicability of this project’s results are discussed by using real cases and defining the barriers, opportunities, methods, and tools to use ICT in a legally admissible manner in the Turkish construction industry.     

Political Risks: Analysis of Key Contract Clauses in China's BOT Project

The reforms introduced by the International Monetary Fund in Asia will bring about greater transparency in the economies and innovative approaches in procurement of contracts. China has taken new initiatives in build, operate, and transfer (BOT) infrastructure projects. It is, however, important to analyze and manage the unique or critical risks associated with China's BOT projects. This is especially so after new policies were introduced in late 1996 when the first state-approved BOT project, the U.S. $650,000,000 2 × 350 MW coal-fired Laibin B Power Plant (Laibin B), was awarded. These include the competitive tendering process and 100% foreign ownership of the operating company. An international survey on risk management of BOT projects in China was conducted to seek the views of practitioners. The overall objectives of the survey are (1) to identify the unique or critical risks associated with China's BOT projects; (2) to evaluate the effectiveness of measures for mitigating these risks; (3) to examine the key contract clauses used in Laibin B's concession agreement; and (4) to provide a risk management framework for investing in future BOT projects in China. This paper discusses the adequacy of key contract clauses in Laibin B's concession agreement related to the political and force majeure risks in China, from the perspective of foreign developers, lawyers, and lenders. The contract clauses discussed include changes in law, corruption, delay in approval, expropriation, and force majeure. Areas for further improvement in the clauses are suggested.     

Strengths, Weaknesses, Opportunities, and Threats for Foreign-Invested Construction Enterprises: A China Study

China has been attracting overseas construction enterprises with its vast expanding business market. The country is further opening its construction market to overseas businesses as the result of its accession to the World Trade Organization in 2001. In line with this development, there are an increasing number of foreign-invested construction enterprises (FICEs) entering into the market. Using Porter’s competitiveness factor analysis method, this paper identifies the FICEs’ strengths, weaknesses, opportunities, and threats in the Chinese construction market. Data used in the analysis stem from multiple sources including statistical reports, literature review, regulations and policies, and interviews with construction professionals. These findings should provide a valuable reference for overseas construction enterprises who are interested in developing business in the Chinese construction market.     

Empirical Study of Risk Assessment and Allocation of Public-Private Partnership Projects in China

Earlier research studies on public-private partnership (PPP) indicated that an objective, reliable, and practical risk assessment model for PPP projects and an equitable risk allocation mechanism among different parties are crucial to the successful implementation of these PPP projects. However, actual empirical research works in this research area are limited. This paper reports the first stage of a research study, which aims to identify and assess the principal risks for the delivery of PPP projects in China and to address their proper risk allocation between the private and public sectors. An empirical questionnaire survey was designed to examine the relative importance of different risk factors and to analyze the allocation of risk factors to different parties in PPP projects. A total of 580 questionnaires were sent out, and a total of 105 valid responses were obtained for data analysis. The Mann-Whitney U test is employed to investigate whether significant difference in perception existed first between the private and public sectors and second between industrial practitioners and academics in China. The empirical findings show that the three most important risk factors for PPP projects in China are (1)?government intervention; (2)?government corruption; and (3)?poor public decision-making processes. These findings reveal that the Chinese government intervention and corruption may be the major obstacles to the success of PPP projects in China. A major cause for these risks may be attributed to inefficient legislative and supervisory systems for PPP projects in China. After conducting the Mann-Whitney U test on the 105 survey respondents, the empirical findings indicate that the perceptions of all 34 risk factors in China between the private and public sectors were not significantly different. Similarly, there were no significant differences between academics and industrial practitioners except that the former perceived the problem of government corruption to be more severe than did the latter. For risk allocation, the empirical results indicate that the public and private sectors were in general consensus with most of the risks identified. The major risks that the public sector preferred to accept are within the systematic risk category, especially political, legal, and social risks. The private sector preferred to retain the principal risks within the specific project risk category, especially construction, operation, and relationship risks, in addition to economic risks within systematic risk category. The remaining risk, environment risk, is preferred to be shared between the two sectors. This research study enables international construction companies to better understand how risks should be assessed and allocated for PPP projects in China. It also assists in risk response planning and control for future PPP projects in China.     

Multicriteria Financial Portfolio Risk Management for International Projects

While opportunities for international construction firms have been growing with globalization, the risks involved with international construction projects are increasing significantly. However, due to the complex skein of various risks, it is difficult to evaluate the severity of risk variables at the corporate level and to examine key success factors in an attempt to maximize a firm’s value under the challenging global business environment. This paper focuses on a financial portfolio risk management for international projects to integrate the risk hierarchy of both individual projects and at the corporate level, which applies a multicriteria decision making method to maximize the total value of firms. To demonstrate the approach, a case study is conducted based on real projects collected from a multinational general contractor. Finally, we present lessons learned as well as guidelines for the application of these lessons to future projects through a workshop with industry practitioners.