Marketing Practices of U.S. Contractors

The construction industry possesses characteristics of the production and service industries. This uniqueness requires marketing practices tailored specifically to match the construction market. A questionnaire survey of 65 U.S. contractors was conducted to determine the extent to which they are implementing a modified marketing mix theory that is compatible with the construction industry. The modified marketing mix theory recommends that contractors confront marketing from five perspectives, known as the five P’s of marketing: product, price, promotion, place, and people. This study showed that the five P’s of marketing are used by U.S. contractors in this decreasing order: product, price, place, promotion, and people. According to the survey results, U.S. contractors allocate about 1.5% of their annual revenue to marketing, but they may be spending more than they report. There seem to be only few differences between contractors that negotiate their contracts versus contractors who competitively bid their contracts, larger versus smaller companies, and contractors with a higher success rate in getting new contract awards versus contractors with a lower success rate.     

Exploratory Study on Value of Information Systems to Electrical Construction Companies: Resource-Based View

Many practitioners and researchers believe that the application of information systems in the construction industry lags behind that of other industries such as the manufacturing industry, because the construction industry is mainly composed of small to medium size companies. Besides, to many people, the value of information systems to their business is vague and elusive. Existing studies on the value of information systems are not specifically focused on small to medium size specialty contractors such as electrical contractors. In addition, with an intention to demonstrate the value of information systems to the improvement of operations or business of all relevant companies, those studies typically do not look into the impact of information systems on the competitive advantage of individual companies. This paper argues that such a generalization of the value of information systems, although valuable to both practitioners and researchers, may have overlooked the fact that the value of information systems needs to be reflected through improved competitive advantage of a company and the competitive advantage is company specific. Thus, the examination of different effects of information systems on individual companies can generate useful insight into the value of information systems because such a strategy leads to a better understanding of the relationships between information systems and the competitive advantage of individual companies. With such a perspective, this study applies a case study strategy to study five small to medium size electrical construction companies based on the resource-based view theory. The case studies show that the observed electrical construction companies are well equipped in terms of physical information infrastructure in relation to their business objectives regardless of company size. However, their capabilities of strategically integrating information systems with their business plans and with their external business partners are general lacking, compared with their physical information system infrastructure. This is partly because many electrical contractors do not fully understand that there are many different forms of information systems that have different impacts on gaining and sustaining competitive advantage. This paper then conjectures that the existing imbalanced application of information systems may not lead to the improved competitive advantage of electrical construction companies, which in turn prevent many contractors from clearly seeing the value of the information systems. Thus, the paper further points out that a plan for the systematical implementation of information systems in a company is very important. However, the successful development of such a plan depends on a better understanding of electrical contactors on the concepts of information system capabilities, competitive advantage, and their relationships.     

Performance and Strategy of Chinese Contractors in the International Market

The past decade has witnessed the steady growth of Chinese international contractors (CICs), who have become important and influential players in the international market. The enormous development demands worldwide, especially in developing countries, attract CICs to engage in the market. Similarly, the strong support from the Chinese government plays an important role for the expansion of Chinese contractors globally. Some leading CICs perform very well in certain fields and countries. This brings the competitiveness of CICs to the attention of the international community. The strengths, weaknesses, opportunities, and threats (SWOT) approach was adopted in order to analyze CICs’ strengths, weaknesses, opportunities and threats in international construction markets. Literature from various sources was reviewed in the first instance, which is followed by an interview survey with 42 CICs employees. A SWOT strategy matrix is used to establish a framework that can help CICs to select suitable business development strategies in overseas markets. The applicability of the strategy framework was tested through the case study of two CICs. The strategies to reinforce their positions in the international market were studied based on the SWOT analysis. The results indicate that CICs are on their way to becoming major competitors to other overseas contractors. In essence, the research results offer a valuable reference of practices that construction firms need to master in order to survive and grow in the international market.     

Craft Jurisdiction Impact on Construction

Construction craft jurisdiction, normally exercised by unions, includes both territorial and technological claims to certain categories of work. Jurisdiction is important to unions in maintaining membership, negotiating wages and benefits, defining apprenticeship programs, and establishing work rules. This paper reports on a research project that had three main objectives: (1) Collect and analyze statistics on the incidence of jurisdictional disputes; (2) evaluate existing jurisdictional dispute settlement mechanisms; and (3) survey contractors and owners to determine the impact of craft jurisdictional practices (not only disputes) on costs and schedules. The paper concludes that there is inadequate statistical information at present to support informed decision‐making on jurisdictional problems. Most dispute settlement mechanisms are antiquated and ineffective, but there are good plans in some local areas. The survey revealed that there are serious cost and schedule impacts on construction projects from observing craft jurisdictional practices.     

The aging decision maker: Cognitive aging and the adaptive selection of decision strategies.

Are older adults' decision abilities fundamentally compromised by age-related cognitive decline? Or can they adaptively select decision strategies? One study (N = 163) investigated the impact of cognitive aging on the ability to select decision strategies as a function of environment structure. Participants made decisions in either an environment that favored the use of information-intensive strategies or one favoring the use of simple, information-frugal strategies. Older adults tended to (a) look up less information and take longer to process it and (b) use simpler, less cognitively demanding strategies. In accordance with the idea that age-related cognitive decline leads to reliance on simpler strategies, measures of fluid intelligence explained age-related differences in information search and strategy selection. Nevertheless, both young and older adults seem to be equally adapted decision makers in that they adjust their information search and strategy selection as a function of environment structure, suggesting that the aging decision maker is an adaptive one. (PsycINFO Database Record (c) 2010 APA, all rights reserved)     

Learning Mechanisms Employed by Construction Contractors

This paper introduces concepts of organizational learning and how they relate to construction contractors. It also presents the results of a survey conducted to establish the learning practices of construction contractors that operated in the United Kingdom and focuses on the use of learning mechanisms that help corporate establishments address their need for continuous improvement. The results show a low use of various forms of learning mechanisms and provide a general insight into learning practices of construction contractors surveyed. It also sheds light as to why construction contractors may be described as slow in adapting to their changing business environment. The paper urges construction contractors to move forward into a culture of learning to increase their ability to innovate and ensure continuous improvement demanded in today's dynamic business environment.     

Implications of Even Flow Production Methodology for U.S. Housing Industry

Production building in the residential sector is often described as the portion of the construction industry that is most like the manufacturing sector. In modern tract construction in the United States, a small number of models are generally repeated several times in a relatively confined area, using specialized trade contractors to complete each phase of each home. Management of the handoffs between predecessor and successor trade contractors is therefore a critical component in the successful completion of a residential project. In order to bring more reliable planning to this process, a workflow-leveling strategy known as even flow production has come into use in the industry in recent years. Even flow production is a strategy intended to reduce the variability in the workflow for trade contractors in the process, thereby gaining production efficiencies. In practice, different operational definitions are in use. This paper describes a series of simulation experiments to identify the management implications of two common strategies (activity-based versus start-based). A special-purpose simulation template was built for the Simphony environment for this purpose. The pace chosen for the flow of activities was found to significantly affect the speed at which the subdivision was completed. The even flow strategy was found to affect the subdivision completion time only slightly, but to have a significant impact on workflow variability and management effort. Control of the pace of starts of only the first activity exhibited nearly the same degree of variability as if the pace of starts were matched to a sales pace.     

Contractors’ Competition Strategies in Bidding: Hong Kong Study

Selecting an appropriate competition strategy in bidding is the ambition of most contractors. The multiple requirements of clients encourage contractors to consider other strategies to deliver additional benefits besides offering a low-price bid. Offering low bids will reduce contractors’ profits and potentially make development less attractive. Contractors need to understand their specific resources that generate competitive advantage and accordingly develop strategies to win contracts. This paper reports the findings from a recent survey on competition strategies in the Hong Kong construction industry. Thirteen typical bidding strategies, their used frequency in bidding, and their effectiveness for winning contracts of different types and between different groups of contractors are studied. The analysis of findings is explored to provide local contractors and clients with new insights into competition strategies in bidding.     

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.     

Adoption Patterns of Advanced Information Technologies in the Construction Industries of the United States and Korea

The results of a survey conducted by the ASCE Wireless Construction Committee are presented. The goal of the effort is to better understand how much construction contractors have advanced in adopting information technologies in general and wireless communications in particular. Responses were collected from 152 U.S. and 31 Korean firms. It was found that, overall, the strongest interest among the responding contractors is in document and content management applications. Differences between Korean and U.S. contractors are discussed. The data indicate that the use of information technology by contractors is generally higher in Korea than in the United States. Both practitioners and scientists will be able to use the presented study because the data reveal the managers’ perceptions of the most promising opportunities for and highest barriers to implementation of advanced communication systems in construction. With the information provided, interested readers of this journal will be able to focus their attention on pursuing specific opportunities and removing barriers to future adoptions.     

钢铁企业营销决策中的信息收集

钢铁企业营销决策需要信息支持。分析了信息收集的基本出发点;确定了经济环境、产品、价格、渠道、用户、竞争对手（3P3C）为影响企业营销决策的基本因素;明确了营销人员围绕其影响因素所应提供的信息内容。     

Chinese Contractors in Africa: Home Government Support, Coordination Mechanisms, and Market Entry Strategies

Africa is a traditional overseas market for Chinese contractors. Since the launch of “going out’ national strategy in the new century, and with the support and control of the government and subordinate agencies, associations and banks, and innovative approach such as Angola Mode, Chinese contractors’ presence in the emerging African market continues to grow. Based on original empirical data collected through interview and questionnaire surveys, this paper analyzes the mechanisms the Chinese government has established to facilitate Chinese contractors’ entry into Africa and the perspectives of Chinese contractors about the African market in terms of opportunities and threats. Regression analysis based on existing datasets indicates that despite perceived opportunities and threats, Chinese contractors’ performance in Africa in terms of business revenue actually hinges upon the availability of construction capital. The study also reviews the market entry modes used by Chinese contractors, concluding that they prefer to establish a long term presence and opt to commit large resources. Overall, the paper summarizes evidence about the status and innovative approaches of Chinese contractors in penetrating the African construction market, and also characterizes the potential of the African construction market for Chinese contractors.     

Neural Network Model to Support International Market Entry Decisions

Bidding for international construction projects is a critical decision for companies that aim to position themselves in the global construction market. Determination of attractive projects and markets where the competitive advantage of a company is high requires extensive environmental scanning, forecasting, and learning from the experience of competitors in international markets. In this paper, a neuronet model has been developed as a decision support tool that can classify international projects with respect to attractiveness and competitiveness based on the experiences of Turkish contractors in overseas markets. The model can be used to guide decision makers on which type of data should be collected during international business development and further help them to prepare priority lists during strategic planning. Information derived from the model demonstrates that the most important factors that increase attractiveness of an international project are availability of funds, market volume, economic prosperity, contract type, and country risk rating. Similarly, level of competition, attitude of host government, existence of strict quality requirements, country risk rating, and cultural/religious similarities are the most important factors that affect competitiveness of Turkish contractors in international markets.     

Simulation-Based Decision Support System for Economical Supply Chain Management of Rebar

The economics of a materials management system is defined by the size of the shipments, the scheduling strategy that allows contractors to handle uncertainty and variability in the supply chain, and the timing of the shipments, which in turn depend on the environment in which the project is taking place. This study presents a simulation-based decision support system to assist contractors in selecting the most economical rebar management system prior to the start of construction by recommending lot sizes (large, small), a scheduling strategy (optimistic, neutral, pessimistic), and buffer sizes (large, medium, small) given the conditions of the project. This model is of benefit to contractors and researchers because it generates the probable cost of inventory of 18 alternative rebar management systems ranging from just in case (JIC) to just in time (JIT) and including different variations in between. It allows contractors to select the alternative with least cost of inventory at the planning stages of a project. The simulation model was tested by using actual data obtained from a trade center project in Istanbul, Turkey. As expected, the test indicated that JIC was the most economical rebar management system in a case study conducted in a developing country, as it generated a savings of 4.8% over JIT.     

Decision Support System for Microtunneling Applications

Microtunneling is a trenchless technology method used for installing new pipelines. The inherent advantages of this method over open-cut trenching have led to its increasing use since its first introduction into North America in the early 1980s. With this technology, surface disruption can be minimized, especially in urban areas, and high accuracy of installation (usually less than 2?cm over 100?m) can be achieved in both line and grade. But microtunneling machines are very expensive and few contractors have extensive experience with this technology. Microtunneling can also be risky when unexpected obstacles or soil changes occur. Careful constructability analysis is needed, and an appropriate microtunneling method should be selected in order to achieve successful completion of microtunneling projects. A computerized decision support system (DSS) for microtunneling was developed to support decision making for contractors who want to bid on microtunneling projects. This paper discusses the decision-making process for microtunneling and the development of the DSS. When the user enters basic information about the potential project such as drive length, installation depth, pipe diameter, and soil condition, the DSS evaluates whether microtunneling will be economically feasible and suggests appropriate types of microtunneling methods. The user can then select microtunneling machines, types of pipes, and types of shaft construction methods. This DSS is most beneficial when used at the preplanning stage by utility contractors.     

Assessing Residual Value of Heavy Construction Equipment Using Predictive Data Mining Model

Construction equipment constitutes a significant portion of investment in fixed assets by large contractors. To make the right decisions on equipment repair, rebuilding, disposal, or equipment fleet optimization to maximize the return of investment, the contractors need to predict the residual value of heavy construction equipment to an acceptable level of accuracy. Current practice of using rule-of-thumb or statistical regression methods cannot satisfactorily capture the dynamic relationship between the residual value of a piece of heavy equipment and its influencing factors, and such rules or models are difficult to integrate into a decision support system. This paper introduces a data mining based approach for estimating the residual value of heavy construction equipment using a predictive data mining model, and its potential benefits on the decision making of construction equipment management. Compared to the current practice of assessing equipment residual values, the proposed approach demonstrates advantages of ease of use, better interpretability, and adequate accuracy.     

Emergency Contracting Strategies for Federal Projects

During the past decade, government agencies have struggled to adequately respond to emergency events that require labor, materials, equipment, and services provided by construction contractors. In fact, the criticism directed at government agencies during their response to, and recovery after, recent events is a testament to the insufficient contracting strategies that were implemented. Countless media headlines highlighted the fragmented approach used to hire contractors expeditiously, and several agencies were criticized for their inconsistent contracting methods. As a result, a study was initiated to investigate the differences between normal federal contracting procedures, as outlined in the Federal Acquisition Regulation (FAR), and emergency acquisition procedures that are permitted by the FAR. The study found six examples of waivers to the usual regulations or expedited contracting techniques permitted by the FAR. Furthermore, the study highlighted five emergency contract strategies that are available to the Navy (as one example of a government agency with contracting authority) and may be available to other governmental contracting authorities as well. Consequently, the purpose of this paper is to identify emergency contract strategies that can be used by government agencies and to outline the criteria that must be met to use each strategy.     

Building Integrated Architecture/Engineering/Construction Systems Using Smart Objects: Methodology and Implementation

Integrated project systems hold the promise for improving the quality while reducing the time and cost of architecture/engineering/construction (AEC) projects. A fundamental requirement of such systems is to support the modeling and management of the design and construction information and to allow the exchange of such information among different project disciplines in an effective and efficient manner. This paper presents a methodology to implement integrated project systems through the use of a model-based approach that involves developing integrated “smart AEC objects.” Smart AEC objects are an evolutionary step that builds upon past research and experience in AEC product modeling, geometric modeling, intelligent CAD systems, and knowledge-based design methods. Smart objects are 3D parametric entities that combine the capability to represent various aspects of project information required to support multidisciplinary views of the objects, and the capability to encapsulate “intelligence” by representing behavioral aspects, design constraints, and life-cycle data management features into the objects. An example implementation of smart objects to support integrated design of falsework systems is presented. The paper also discusses the requirements for extending existing standard data models, specifically the Industry Foundation Classes (IFC), to support the modeling of smart AEC objects.     

Study of Factors Influencing the Efficient Management and Downtime Consequences of Highway Construction Equipment in Thailand

Downtime resulting from machine breakdown invariably has a considerable impact on the performance of construction projects and companies as a whole, especially to contractors with heavy investment in equipment. Attempts to investigate the causes and consequences of downtime are rarely found. The aim of this paper is to characterize and quantify factors that influence downtime consequences (consequential problems resulting from downtime) of highway construction equipment based on the structural equation modeling (SEM) approach. A questionnaire survey was conducted to collect data on equipment management practices and downtime consequences among highway contractors in Thailand. The SEM model proposed is of value for both researchers and practitioners to facilitate a better understanding of the relationships among acquisition condition, operational practice, maintenance quality, disposal practice, and downtime consequence of heavy equipment. The model also helps contractors to manage equipment more efficiently by concentrating on several practices that can convey the greatest benefit in minimizing downtime consequences at each particular stage of a machine’s life cycle, rather than considering all practices simultaneously where the benefits gained are perhaps not proportional to the effort.     

Cost of Risk Transfer: Pricing Agreements in Residential Supply Chains

Theoretical and computational studies of supply chains are confined mainly to buyer-supplier dyads. Evaluation of more tiers in the construction sector specifically is also rare, perhaps in part because short-term partnerships are typical. However, supplier selection in residential construction is often conducted in support of multiple subdivision tracts over a comparatively long time-horizon. This paper describes the lumber supply chain for residential construction, extending from the homebuyer to the lumber company. A particular case for a real builder is examined in which a builder adopted a pricing strategy to control their lumber cost risk. The strategy included minimum time periods of fixed pricing, insulating the builder from price fluctuations during those periods. Consideration of supply-chain lead times allows financial risk modeling for the builder-framer/lumber yard–lumber company portion of the supply chain in order to evaluate the cost-effectiveness of this strategy. Historical records of lumber prices were used to conduct Monte Carlo simulations of three tiers of the supply chain. The pricing strategy is shown to result in a risk premium generally in excess of the true commodity price risk.