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.     

Efficacy of Using Support Vector Machine in a Contractor Prequalification Decision Model

Contractor prequalification is basically a nonlinear two-group classification problem. A robust contractor prequalification decision model should include the ability of handling both quantitative and qualitative data. Support vector machine (SVM) is a set of related supervised learning methods which can handle data in a high dimensional feature space for nonlinear separable problems. A new contractor prequalification decision model using SVM is proposed to assist clients to identify qualified contractors for tendering in this study. A case study was used to validate the proposed decision model and the classification ability was compared with neural networks (NNs) and principal component analysis (PCA). The results show that the proposed SVM model outperforms NN and PCA and the merits of using SVM to mitigate the limitations of using NN are elaborated. The proposed decision model is an ideal alternative for supporting clients to perform contractor prequalification decision making.     

Fuzzy Preference Relations Consensus Approach to Reduce Conflicts on Shared Responsibilities in the Owner Managing Contractor Delivery System

This paper proposes a fuzzy preference relations consensus (FPRC) approach that helps owners and contractors reach consensus on their responsibilities and reduce conflicts in shared tasks. A fuzzy similarity consensus (FSC) model was developed to aggregate experts’ opinions on roles and responsibilities in the owner managing contractor (OMC) project delivery system. The FSC model categorized 324 generic OMC tasks into three responsibility task lists: owner, contractor, and shared. In a consensus-reaching process, the FPRC approach is applied to shared tasks, where expert opinions on responsibility conflict are expressed, to achieve an aggregated responsibility decision for each task. Experts compare the three responsibility alternatives in pairs by using linguistic preferences, defined on a fuzzy preference scale, to select a preferred responsibility alternative for each of the conflicting tasks. A computed linguistic consensus degree guides the experts on their level of consensus in every round of the process. The quality of experts is defined with a fuzzy expert system–determined importance weight factor for each expert. The FPRC approach is relevant to the construction industry, as it incorporates consistency in decision making by allowing experts to measure and reach an adequate level of consensus linguistically when deciding on responsibilities. The proposed approach provides a method of reducing conflicts in the assignment of task responsibility between the owner and its contractors as early as the project initiation phase; thus, the project teams can concentrate on the work to be done rather than deal with responsibility conflicts during project execution.     

Fuzzy Similarity Consensus Model for Early Alignment of Construction Project Teams on the Extent of Their Roles and Responsibilities

A fuzzy similarity consensus (FSC) model is presented for alignment of construction project owner and contractor project teams to their roles and responsibilities, identifying and reducing fundamental problems of conflicts, duplication, and gaps in roles and responsibilities as early as the project initiation stage. The model achieves its objective by incorporating consensus and quality of construction project teams in aggregating their opinions to decide on the party responsible for every standard task of a construction project. The roles and responsibilities of the owner and contractors are described to different extents using seven linguistic terms defined by triangular membership functions and constructed using a three-step Delphi approach, which allows experts to develop common understanding of the meaning of the terms by determining their overlap on a fuzzy linguistic scale. A modified similarity aggregation method (SAM) aggregates experts’ opinions in a linguistic framework using a consensus weight factor for each expert that is based on the similarity of his or her opinion relative to the other experts to ensure that the experts’ final decision is a result of common agreement. A fuzzy expert system (FES) determines an importance weight factor, representing expert quality for each expert; opinions are aggregated using this factor and the consensus weight factor. The FSC model contributes to the construction industry by solving a fundamental problem for project owners who want to identify and reduce potential conflicts between their project teams on the extent of their roles and responsibilities prior to the construction stage. Also, the FSC model provides an improvement over previous consensus-based approaches, which rely on a subjective assessment of experts’ important weights in aggregating their opinions, and it modifies the SAM to adapt it to a linguistic environment.     

Neurofuzzy Genetic System for Selection of Construction Project Managers

Choosing a project manager for a construction project—particularly, large projects—is a critical project decision. The selection process involves different criteria and should be in accordance with company policies and project specifications. Traditionally, potential candidates are interviewed and the most qualified are selected in compliance with company priorities and project conditions. Precise computing models that could take various candidates’ information into consideration and then pinpoint the most qualified person with a high degree of accuracy would be beneficial. On the basis of the opinions of experienced construction company managers, this paper, through presenting a fuzzy system, identifies the important criteria in selecting a project manager. The proposed fuzzy system is based on IF-THEN rules; a genetic algorithm improves the overall accuracy as well as the functions used by the fuzzy system to make initial estimates of the cluster centers for fuzzy c-means clustering. Moreover, a back-propagation neutral network method was used to train the system. The optimal measures of the inference parameters were identified by calculating the system’s output error and propagating this error within the system. After specifying the system parameters, the membership function parameters—which by means of clustering and projection were approximated—were tuned with the genetic algorithm. Results from this system in selecting project managers show its high capability in making high-quality personnel predictions.     

Contractor’s Opportunistic Bidding Behavior and Equilibrium Price Level in the Construction Market

The competitive bidding system has been to blame for abnormally low bids, which are considered as one of the main causes of poor project quality. Previous studies have regarded the pricing of bidders as an optimum decision based on contractor’s cost and market competition level. However, the sell to produce characteristic of construction projects may induce contractors to offer a low bid and then make up the amount initially sacrificed from beyond-contractual reward (BCR) gained through cutting corners and claims. System dynamics was adopted in this study to develop a contractor’s pricing model with consideration of the dimensions of cost, market competition, and BCR. The model was then examined by statistical analysis of data collected from 44 highway projects in Taiwan. It was found that the equilibrium market price is significantly associated with BCR, which is assumed to be determined by the strictness of the owner’s construction management, including both soundness of contract and tightness in construction supervision. Research results suggest that contractors divide the market into different segments according to the owner’s strictness of construction management and the equilibrium price level of each market segment varies. The price level for projects with a strict owner is remarkably higher than for those with relatively less strict owners. Improvement in the construction management system of projects is crucial to lower the possibility that contractors gain BCR and do opportunistic bidding, and to further enhance project quality.     

Valuing Flexibility in Architecture, Engineering, and Construction Information Technology Investments

When investing in information technology (IT) applications, construction managers implicitly account for the value of adding future applications to the original investment as the business and technical environment changes. A real option model links uncertainty to the value of an underlying traded asset, providing an objective measure of this managerial flexibility. A case study that investigated the value of options to extend a general contractor’s software platform showed that it is possible to construct a real option model which measures the value of this flexibility, since the major risk (the architect’s adoption rate) is external to the investing organization. In another case study, a contractor evaluated the value of the pilot project in view of the information it is expected to generate. Since the risks are internal, a decision analysis model is used instead of a binary option model. The results show that it is possible to quantify the value of managerial flexibility for IT investments in the architecture, engineering, and construction industry, but that the proper method to use is contingent on the nature of the investment project.     

Web-Based Client Advisory Decision Support System for Design–Builder Prequalification

The design–build procurement route is gaining popularity and being extensively used by many clients. Scrutinizing the capabilities of design–build “candidate” organizations (who submit proposals for prequalification/short listing), is a complex task that demands the evaluation of several quantitative and qualitative attributes. The crucial task of design–builder prequalification needs multidisciplinary expertise that often poses tough challenges to many construction clients. A Hong Kong based cross-sectional research study of various international clients’ design–builder selection approaches unveiled several selection strategies and criteria used; and benchmarked some best practices. Based on such consolidated knowledge, a structured design–builder selection model was developed. The conceptualized frameworks for design–builder prequalification are described in this paper. An overview of the development and preliminary validation of a prototype web-based decision support system for design–builder prequalification is also presented in this paper.     

Here Comes the Judge—Duties and Responsibilities of Design Professionals When Deciding Disputes

Frequently during the progression of a construction project, the design professional is forced into the role of a judge of project disputes between the owner and contractor. These disputes generally involve substantial claims for extra compensation or extra time and have significant impact on the owner and contractor’s financial position on the project. The architect or engineer will be pressured by the owner, who controls whether the design professional gets paid. The contractor, however, may threaten to pursue legal claims against design professionals if they make the contractor’s job more expensive or fail to give it the appropriate time extension. In many cases, design professionals must admit or deny whether their services were defective in some nature. In addition to these pressures, the design professional is not necessarily trained or comfortable with acting as a judge and interpreting the meaning of contract terms. Generally, when an architect or engineer performs this judicial function, they are immune from any liability for the results of decisions. However, the design professional must make the decision in good faith and with impartiality. In addition, design professionals must only decide those matters that their contract obligates design professionals to decide. This paper will address the nature of the designer’s role as judge and the limits of the designer’s immunity with respect to the designer’s contract obligations and good faith and impartiality requirements.     

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.     

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.     

Performance Modeling for Contractor Selection

This paper proposes a contractor selection system that incorporates the contractor’s performance prediction as one of the criteria for selection. This research was developed working with an owner organization that was interested in developing a framework for evaluating contractors for future work. A modeling framework, developed in previous research, was used to develop a conceptual model of a project that depicts a causal structure of the variables, risks, and interactions that affect a contractor’s performance for a specific project from the owner’s point of view. The conceptual model helps to identify information needed for a comprehensive evaluation; some information can be readily available from historical records, while other can be unavailable and can be replaced by estimates based on experience. Ideally, over time, the owner should collect most of the information required for future evaluations. A mathematical component of the model can generate predictions of multiple project performance outcomes for each contractor under evaluation; these predictions and a contractors’ bid prices are then used for contractor evaluation purposes.     

Explaining Cooperative Behavior in Building and Civil Engineering Projects’ Claims Process: Interactive Effects of Outcome Favorability and Procedural Fairness

Cooperation is fundamental to successful procurement and delivery of building and civil engineering projects. This study explores the role of perceived fairness as a motivator of cooperative behavior in the process for administering project claims. The objective is to investigate how a contractor’s perceptions about fairness of the procedure for administering project claims would interact with the outcome received from the claims to influence the contractor’s cooperative behavior in terms of conflict intensity and potential to dispute. The data collection instrument was a structured questionnaire. Face-to-face interviews were conducted with 41 contractors’ personnel regarding their experience with claims on 41 completed projects in Singapore. The data were analyzed using the structural modeling approach. The results indicate that on projects where contractors did not receive a favorable outcome from claims, there was lower intensity of conflict and lower potential to dispute when contractors perceived that the procedure for administering the claims was fair than when the procedure was perceived to be unfair. The findings suggest that, in construction, cooperative behavior is a combined function of the outcome and procedure leading to that outcome. It also suggests that enhancing cooperative behavior goes beyond formal contract provisions but rather how the contract is administered in practice. It is recommended that employers’ project management team whose actions of rejecting invalid claims may be misinterpreted and disputed pay greater attention to how decisions on claims are reached. A fair procedure could cushion the effect of an unfavorable decision and thereby reduce a contractor’s uncooperative attitude.     

Contractual Approach for Facilitating the Resolution of Dispute over a Contractor’s Failure to Comply with Time Limit for Notice of Delays

The enforcement of a contractor’s notice of delays and claims as “a condition precedent” to a contractor’s claims is a controversial issue among practitioners, researchers, and legal scholars. Strict enforcement or liberal interpretations (no enforcement) of time limit for a contractor’s notice have some implications for the success of projects and for the construction industry. This paper examines and compares the different views regarding enforceability of notice provisions. The paper evaluates those views and thereafter proposes an alternative contractual approach for dealing with a contractor’s noncompliance with the provision. The applicability of the proposed approach is evaluated vis-à-vis legal principles. The proposed approach appears to be practical and equitable. It could facilitate early resolution of disputes relating to notice. It could also make the outcome of notice-related dispute more predictable. Considering the contractual, legal, and practical problems that could arise from a strict enforcement and a liberal interpretation (no enforcement) of time limit for a contractor’s notice, the paper highlights the benefits of the proposed approach to the employers (project owners), contractors, and the construction industry at large.     

SuretyAssist: Fuzzy Expert System to Assist Surety Underwriters in Evaluating Construction Contractors for Bonding

In construction, many owners mitigate the risk of unforeseen contractor default by accepting only bonded contractors who must endure a rigorous evaluation process by surety brokers and surety underwriters. This evaluation process includes a financial analysis and a review of work on hand and past performance, all of which have reliable structured methods for their evaluation. Additionally, a number of subjective criteria are considered that are more difficult to capture and assess objectively but which can be modeled effectively using fuzzy logic. The purpose of this paper is to illustrate how fuzzy logic and expert systems can be combined to provide a structured approach to evaluating contractors for surety underwriting purposes. Fuzzy logic is used to model both the objective and subjective factors considered in contractor evaluation using linguistic terms, and expert rules are used to capture the surety experts’ reasoning process. A fuzzy expert system, SuretyAssist, is presented that can be used to provide an initial evaluation of general contractors as well as periodic reviews to determine whether or not to accept them as clients for bonding. SuretyAssist was validated using 31 actual cases of contractor evaluation and found to be accurate in 81% of the cases.     

Risk Allocation and Risk Handling of Highway Projects in Taiwan

Risks always exist in construction projects and often cause schedule delay or cost overrun. Risk management is a key issue in project management. The first step of risk management is risk identification. It includes the recognition of potential risk event conditions in the project and the clarification of risk responsibilities. We conducted multiple-case studies using a systematic analytical procedure to identify risks in highway projects in Taiwan, to recognize risk allocation by contract clauses, and to analyze the influence of risk allocation on the contractor’s risk handling strategies. The results show that the owner allocates risks by stipulating specific contract clauses into five kinds of risk allocation conditions. If a risk is more controllable by the contractor, the owner has a greater tendency to allocate the risk to the contractor. Risk allocation determines which kinds of risks the contractor would take and influences the contractor’s risk handling decisions. The analysis furthermore indicates that, if the probability of a certain risk event condition is uncontrollable, then with the increasing possibility of taking the risk, the contractor’s tendency of risk handling changes from actively transferring the risk to passively retaining the risk. In contrast, if a risk is controllable and certainly allocated to the contractor, the contractor tends to take the initiative to reduce the impact caused by the risk event rather than retain the risk.     

Analysis of Owner’s Design and Construction Quality Management Approaches in Design/Build Projects

This paper explores and classifies current approaches to evaluating quality in design/build (DB) proposals. It does so by a thorough content analysis of 78 requests for proposal (RFPs) for public DB projects with an aggregate contract value of over $3.0 billion advertised between 1997 and 2002. In most DB projects, the owner requires the DB contractor to establish a firm-fixed price on a project that has not yet been designed. Usually, the owner also fixes the project delivery period. In the traditional design/bid/build (DBB) system, quality is fixed through the plans and specifications. Thus, in DBB, with schedule and quality fixed, the cost of construction is the factor in which the owner seeks competition. Conversely, in DB, with cost and schedule fixed, the scope and hence the level of quality is the main element of competition. This paper identifies the six owner approaches to articulating DB quality requirements in their RFPs. The six approaches are quality by qualifications, evaluated program, specified program, performance criteria, specification, and warranty. These are important for DB contractors to understand so that they can craft their proposal in a manner that is both responsive to the owners’ requirements and consistent with the owner’s system to make the best value contract award decision.     

Multiple-Criteria Evaluation for Value Management in Civil Engineering

This paper presents a fuzzy set-based approach for representing and synthesizing information about the different kinds of variables involved in the evaluation of a project’s value. The variables considered can be quantitative crisp or fuzzy as well as qualitative ordinal. The information is given either by a single expert or by a team of experts. The proposed methodology for summarizing and normalizing values aims at contributing to decision-making analysis in the context of multiple-criteria evaluation and group decision making. The conditions that the aggregation function to be used must satisfy are also discussed. The weighted sum is characterized under quite restrictive assumptions, presenting a theorem based on Cauchy’s functional equation. The aggregation function proposed is the weighted sum, with weights computed by a well-known analytic hierarchy process. A design is given of a fuzzy system for evaluating a project’s value in the context of construction in civil engineering.     

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。     

Project Management in the Chinese Construction Industry: Six-Case Study

Originating from the West, project management was introduced into China after the country’s economic reforms in the 1980’s and has since spread quickly throughout the whole country, particularly in the construction industry. However, despite the wide adoption of project management practices by construction organizations and the growing recognition of the importance of project management as an enabler of organizational success, empirical studies on project management in the context of the Chinese construction industry have been inadequate. This paper presents the results of an empirical study of six Chinese construction organizations in order to come to a more comprehensive and sophisticated understanding of project management practices in the Chinese construction industry. The findings revealed: (1) a good appreciation of the role of projects and project management and satisfaction with current project management practices; (2) 11 key aspects of project management implementation; (3) 12 resultant value and benefits; and (4) five aspects of the main challenges facing the organizations. Meanwhile, variations in project management practices and the resultant organizational value were identified, first between the three owner- and the three contractor-case study organizations, then between the two construction contractor organizations and the one design contractor organization.