On-Site Subcontractor Evaluation Method Based on Lean Principles and Partnering Practices

Subcontracting has greatly increased in the construction industry. It helps shift risk from the main contractor to the subcontractor and promotes specialization. Inadequate subcontracting management, however, may result in an adversarial relationship between main contractors and their subcontractors, uncoordinated on-site execution, and disappointing quality and schedule fulfillment. New subcontractor management methods and tools are being developed and tested as part of a collaborative research project led by the Catholic University Production Management Center with the participation of the Chilean Construction Chamber and several construction companies. The experience gained by testing prototype tools and methods on selected projects enabled us to develop an on-site evaluation method based on lean principles and partnering practices. This method allows main contractors to help subcontractors improve their performance by providing them with periodic feedback. It also supports subcontractor selection based on their previous performance, which helps foster collaborative relationships with those that consistently perform well. The results of the application of the method in two case studies are discussed.     

Subcontractor Evaluation and Management Framework for Strategic Partnering

Recently, main contractors have shifted their attitudes about subcontract procurement to more strategic and long-term partnering philosophies. The objective of this study was to present a framework for subcontractor evaluation and management to help main contractors develop more strategic and productive relationships with their subcontract partners. As the strategic performance feedback model, the balanced scorecard concept was adopted with modification. A case study was also conducted to evaluate the framework with subcontracting strategy, performance indexes, weighting, evaluation of subcontractor performance data, and feedback methods. The research results obtained can be useful as a guideline of subcontractor management for long-term partnering and also to enhance overall productivity within the construction supply chain.     

Integrated Project Delivery Case Study: Guidelines for Drafting Partnering Contract

This paper presents a case study through which a multinational contracting firm aimed to introduce integrated project delivery through strategic partnering into its industry operations. The study reports on a research carried out by the author on behalf of the firm to set out series of principles and guidelines to consider when drafting a standard partnering contract whereby the owner, contractor, suppliers, and manufacturers collaboratively work together under the same terms and conditions. A partnering contract would never, on its own, change the culture and environment of the construction process and thus, strategic partnering should be promoted not only at project specific activities but at all organizational activities. Based on this project, the paper presents a list of ten managerial and contractual issues to promote strategic partnering. The author hopes that the results of this case study would foster legal professionals toward drafting a modern partnering contract, which should help in developing a more effective and efficient contracting environment.     

DRB Enhanced Partnering on the Marquette Interchange: Case Study

Completion of the Marquette Interchange Reconstruction project by the Wisconsin Department of Transportation (WisDOT) under budget, ahead of schedule, and with no construction claims at the end of construction was a significant achievement and details of how it was accomplished provide valuable lessons for other public works projects. A standing Dispute Review Board (DRB) ensured that disputes did not linger and affect working relationships, use of partnering ensured effective communication between WisDOT and the contractor, and combining the two by having the DRB chair as an active participant in the partnering effort were identified as being vital to the success of the Core project. This paper describes the contractual establishment of the DRB, the formation and operation of the panel throughout the duration of the project, details of partnering participation requirements and utilization, and then identifies how the two programs were linked by mutual agreement between WisDOT and the prime contractor and worked jointly.     

Issues in Subcontracting Practice

Subcontractors are very important to the successful completion of most construction projects, yet the many issues involved in subcontracting practice are seldom acknowledged. A literature review indicates that these issues include the timeliness of payments by general contractors, the process of selecting subcontractors, subcontractor bonding, construction insurance, safety issues on the construction site, partnering arrangements with various parties, and productivity issues. A questionnaire survey was administered to subcontractors, general contractors, and construction owners to investigate these issues and to determine the differences in perceptions between the parties. The results confirm the existence of the issues identified in the literature and in addition indicate that (1) the practice of retainage withheld by general contractors seems to be acceptable to many subcontractors unless its magnitude is large relative to the size of the firm; (2) postaward bid shopping by general contractors is sometimes justified, particularly in cases where the scope of subcontract work is modified; and (3) current bonding and insurance practices are adequate unless the additional transferred risks are excessive. Recommendations are made on the basis of the findings to minimize the negative effects of said issues.     

Subcontractor Schedule Control Method

Trade coordination and claims documentation is a challenge on any project, particularly for specialty subcontractors. The writers introduce a schedule control method initiated by the subcontractor, which facilitates coordination and communication between a subcontractor and other project participants as well as documentation to the prime contractor. A case study illustrates the preparation of a trade-specific critical path method (CPM) schedule, which is updated on a regular basis. The writers also address the interrelationship between the CPM schedule, internal reporting, schedule of values, and labor tracking. It is difficult to ensure that all subcontractor-produced documentation is complementary, but it is well worth the effort when it comes to supporting a claim. Monthly schedule updates and narratives communicate the conflicts, issues, and schedule constraints the subcontractor experiences or anticipates on a project, thereby providing contractually required notice to the prime contractor during the project. This increases the likelihood of resolving issues during the project, while simultaneously protecting a subcontractor’s position if change order requests are denied or if back charges are levied prompting a subcontractor to enforce its rights, execute a claim, or proceed to litigation.     

Concurrent Delays and Apportionment of Damages

This paper focuses on the subject of concurrent delay from a general contractor (GC)-subcontractor perspective. When there is a concurrent delay by multiple subcontractors, or between the GC and other subcontractor(s), there has not been a uniform approach as to how the liquidated damages are apportioned. Previous research seems to ignore this issue. This paper first reviews some relevant court cases. Using a warehouse project as a case study, it then examines different practices that the GC could take in apportioning damages of concurrent delays to both himself/herself as well as to the responsible subcontractors. Results are very inconsistent between and within the apportionment practices. This supports an alternative hypothesis that apportionment is an important issue. Practitioners should specify which apportionment practice will be used and under what circumstances it will be applied in their subcontracts. Researchers may develop a more consistent and reliable approach for this type of apportionment.     

A Fuzzy Decision Framework for Contractor Selection

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

Relative Importance of Subcontractor Selection Criteria: Evidence from Singapore

Subcontractors carry out a large portion of the work done in construction projects. Thus, selecting the right subcontractor essentially contributes to the project’s success. We designed a choice-based conjoint experiment to examine the relative importance of four criteria in the subcontractor selection process of main contractors from Singapore: price, technical know-how, quality, and cooperation. Although main contractors adopt a multicriteria selection process and perceive all four criteria to be important for their choice decision, the actual choice situation reveals that price is still by far the most important selection criterion, followed by quality, cooperation, and technical know-how. Main contractors are not willing to compromise on price but accept a lower performance of a known subcontractor on the remaining criteria.     

Optimal Strategy Modeling for Price-Time Biparameter Construction Bidding

In the price-time biparameter construction bidding system, each contractor submits a bid price and construction time to complete the project, which are then aggregated to a total combined bid (TCB) by the client, and the contractor with the lowest TCB is awarded the project. Since bid price can be set as construction cost plus an appropriate markup and construction cost usually depends on construction time, TCB can be expressed as a function of time. By minimizing such a TCB function, the optimal construction time can be obtained, from which the optimal construction cost and bid price and hence the optimal price-time bidding strategy can be sequentially decided. While examining the whole optimal bidding process, this paper focuses on three aspects to enhance the key ideas: discussing the properties of the general and the quadratic time-cost functions, deducing the optimal bidding formulas with quadratic time-cost relationship, and illustrating the procedures for estimating the quadratic time-cost function using a few experience data and the linear regression method. The in-depth examination of the price-time biparameter bidding model in the paper can suggest ideas and methodologies to construction bidding or contractor selection with more criteria.     

Contractor Performance Prediction Model for the United Kingdom Construction Contractor: Study of Logistic Regression Approach

An accurate prediction of contractor potential is of vital importance during contractor selection and evaluation process. Such prediction enables identification and classification of contractor performance to ease the selection process. This paper outlines the use of clients' tender evaluation preferences for predicting a contractor performance via a logistic regression (LR) approach. A total of 31 clients’ tender evaluation criteria were selected to develop a LR model for predicting contractor performance. The proposed model was developed based on 48 of United Kingdom public and private construction projects and validated in 20 independent cases. It was found that 75% of the cases correctly and the model statistically accurate for contractor performance prediction, where the input variables consist of nominal and interval data. The paper summarized techniques and advantages of LR analysis and discussed literature findings of contractor selection and evaluation methodologies undertaken by construction researchers and commentators from the United Kingdom and Northern America.     

New Project Procurement Process

In the United Kingdom, partnering was proposed by Sir Michael Latham as a means of achieving 30% cost savings in a suitable organizational climate. How this is achieved within the construction industry involves not only a mutuality of purpose between project personnel, but appropriately applied methods of process. This paper addresses the issues surrounding the way forward in partnering. By applying systematic processes to selecting partners on a short-term construction project, a case study demonstrates that cooperative working can be developed and conflict can be avoided. A unique and rigorous selection methodology known as the project delivery process was adopted for the Forton Lake Opening Bridge Millennium project in the United Kingdom, and demonstrates how significant improvements may be achieved in line with worldwide improvement targets.     

Partnering on Defense Contracts

Contracting on government construction projects has historically been structured and adversarial. The decade of the 1990s saw the advent of a new attitude in government contracting that emulated success stories from the private sector. After witnessing several high-profile success stories such as constructing the Atlanta Olympic Park, the government embraced the concept of partnering as a primary method of contract administration. The private sector consistently demonstrated an ability to contract for services while realizing a marked decrease in claims and litigation costs with partnering. Their success was founded in the building of trust within the project team by creating a common bond between previously dissociated parties. This was achieved through developing a mutual understanding of the other parties’ interests and goals in the project while maintaining a team focus on the ultimate goal of a successful project. The government espied partnering as a way to improve its relationships with contractors and reduce the volume of litigation that seemed to only be increasing in the industry. The government began a paradigm shift by instilling a new attitude of openness and communication with contractors as well as implementing several broad contract administration changes. This paper examines the process of partnering, its key elements and core competencies, and how various agencies apply these principles in their construction management. The paper further researches stakeholder goals and important issues when entering into a partnering relationship on government contracts and what barriers are perceived that preclude the process from working as effectively as possible.     

Contractor as Trust Initiator in Construction Partnering—Prisoner’s Dilemma Perspective

Partnering has been advocated for use in construction as a project-delivery approach to curb dispute and enable a cooperative contracting environment. Successful construction partnering is perceived to derive benefits to both developers and contractors. In view of significant implications to successful project delivery, there has been a surge of research and studies on construction partnering. These studies typically focus on the partnering process as well as the identification of critical success factors. Among the various success factors that underpin partnering success, establishing trust among partners is considered the most important. Moreover, skeptics have been swift to point out that establishing trust in construction is daunting. A better understanding of the role of trust and its manifestation in partnering efforts is therefore of both academic and practical value. In this study, motivating trust in construction partnering is described within the classic framework of “the prisoner’s dilemma,” which suggests the trust cycle can be kick-started if construction partners put cooperation before competition and self-interest. This paper reports a study that is designed to suggest a suitable candidate for the trust initiator. As such, the critical trust factors for two groups of construction partners in Hong Kong—developers/consultants and contractors—are first identified. It is found that “performance” and “permeability” of partners are the two most critical trust factors. “Performance” describes the partner’s competence and problem-solving ability as perceived by their counterpart. “Permeability” reflects the partner’s openness in sharing information. The result of a multiple-regression analysis further suggests that the contractor is in a position to initiate trust through competent performance and maintaining effective communication with the client. In this manner, the trust cycle can expand with reciprocal trustworthiness from the client.     

Modeling Interfirm Dependency: Game Theoretic Simulation to Examine the Holdup Problem in Project Networks

Subcontractor selection strategies used by contractors can significantly affect short-term project and long-term organizational success. Existing research on subcontractor selection strategy implicitly assumes that the evaluation of subcontractors depends on current conditions. We extend this perspective by integrating an agent-based simulation model with game theory to examine whether precontract partner selection strategies that do not consider subcontractor selection as a repeated game may lead to a version of the holdup problem. The holdup problem we investigate focuses on relationship-specific investments in learning after the introduction of an innovation or organizational change across a project network. A minimum total cost strategy may decelerate the rate of adaptation to an innovation or organizational change, thereby proving that the holdup problem can exist in project networks. The findings contribute to subcontractor selection strategy literature by simulating the impact of the holdup problem in project networks, distinguishing task interdependence as a moderating variable, and identifying that the minimum total cost strategy can be a suboptimal strategy for project networks adapting to systemic changes.     

工程总承包在湘钢燃气电厂项目建设中的应用

业主要求总承包商在超短工期条件下,用10个月的时间完成从合同签订、设计、采购、施工到投产运行全过程。该文详细分析与总结了总承包商是如何运用工程总承包项目管理模式来完成这项工作的。其成功经验可在同类工程中应用。     

Exploring Critical Success Factors for Partnering in Construction Projects

The construction industry is a very competitive high-risk business. Many problems, such as little cooperation, lack of trust, and ineffective communication resulting in adversarial relationships between contracting parties, are facing the construction industry. Partnering is perhaps one of the most innovative developments in delivering a project efficiently and reducing construction disputes. It provides a sound basis for a “win-win” climate and synergistic teamwork. Project partnering in the Hong Kong construction industry has gained in popularity since 1994. A number of potential factors contributing to partnering success have emerged and deserve further study. This paper presents a review of the development of the partnering concept in general and identifies critical success factors for partnering projects from the Hong Kong perspective in particular. Through a postal questionnaire survey geared toward project participants with hands-on partnering experience, the opinions of various parties—clients, consultants, and contractors were sought and evaluated in relation to partnering success factors. The relationship between the perception of partnering success and a set of success factors hypothesized in the study was derived using factor analysis and multiple regression. The results indicated that certain requirements must be met for partnering to succeed. In particular, the establishment and communication of a conflict resolution strategy, a willingness to share resources among project participants, a clear definition of responsibilities, a commitment to a win-win attitude, and regular monitoring of partnering process were believed to be the significant underlying factors for partnering success. Such an identification of success factors could well formulate effective strategies for minimizing construction conflicts and improving project performance.     

Quality-Based Contractor Rating Model for Qualification and Bidding Purposes

A quality contractor on every construction project would make project management simpler for Department of Transportation (DOT) project engineers and strategic planning more accurate for DOT executives. A qualification model that includes the quality of a contractor’s past work would be invaluable in assuring that each project had a quality contractor. Including the quality of past work in the bidding process would further help in this goal. Implementation of such a model for both its potential uses would require business process reengineering for the DOT in two important areas: qualification of contractors and contract award procedures. The research team has produced an innovative model, called the Quality-Based Performance Rating (QBPR) system. This model receives inputs from traditional subjective sources and integrates them with totally objective data input from the results of tests of the project’s materials and workmanship, then uses these inputs to produce a score for each project that is further used by the system to generate an index for each contractor reflecting that contractor’s quality of work over a specified time frame.     

Whole Life Performance Assessment: Critical Success Factors

Whole life costing (WLC) has become the best practice in construction procurement and it is likely to be a major issue in predicting whole life costs of a construction project accurately. However, different expectations from different organizations throughout a project’s life and the lack of data, monitoring targets, and long-term interest for many key players are obstacles to be overcome if WLC is to be implemented. A questionnaire survey was undertaken to investigate a set of ten common factors and 188 individual factors. These were grouped into eight critical categories (project scope, time, cost, quality, contract/administration, human resource, risk, and health and safety) by project phase, as perceived by the clients, contractors and subcontractors in order to identify critical success factors for whole life performance assessment (WLPA). Using a relative importance index, the top ten critical factors for each category, from the perspective of project participants, were analyzed and ranked. Their agreement on those categories and factors were analyzed using Spearman’s rank correlation. All participants identify “Type of Project” as the most common critical factor in the eight categories for WLPA. Using the relative index ranking technique and weighted average methods, it was found that the most critical individual factors in each category were: “clarity of contract” (scope); “fixed construction period” (time); “precise project budget estimate” (cost); “material quality” (quality); “mutual/trusting relationships” (contract/administration); “leadership/team management” (human resource); and “management of work safety on site” (health and safety). There was relatively a high agreement on these categories among all participants. Obviously, with 80 critical factors of WLPA, there is a stronger positive relationship between client and contactor rather than contractor and subcontractor, client and subcontractor. Putting these critical factors into a criteria matrix can facilitate an initial framework of WLPA in order to aid decision making in the public sector in South Korea for evaluation/selection process of a construction project at the bid stage.