Construction Procurement Research Articles

Bidding Strategy in Construction Public Procurement: A Contractor’s Perspective

A contractor’s ability to prepare a competitive bid for a construction tender is crucial for its survival on the market. The bid price estimation strategy should promote the probability of winning a sufficient amount of tenders but, at the same time, ensure the economic stability and development of the company. This paper aims to address this issue in the area of Czech public construction procurement. The opinions, experiences and practices of contractors were collected through a questionnaire survey, and the data were evaluated with the support of statistical methods. This revealed that Czech contractors mostly base their multicriteria bidding strategy on cost-oriented pricing while considering various aspects such as the risks and attractiveness of the tender. The Czech construction market is generally perceived as oriented toward low costs, and with a relatively common occurrence of abnormally low bids. The findings presented in this paper may help contractors improve their current bidding strategies in public construction procurement.

Blockchain: The Next Stage of Digital Procurement in Construction

Blockchain: The Next Stage of Digital Procurement in Construction

Conceptual Framework for Sustainable Procurement of Construction Works

Conceptual Framework for Sustainable Procurement of Construction Works

On the Competitive Effects of Screening in Procurement

Procuring authorities frequently use screening in order to mitigate risky bids. This study estimates the effect of bid screening and litigation on entry and bidding using a unique data set on highway construction procurement auctions in Poland. The market exhibits a screening method that ex post selects eligible offers. We demonstrate with an empirical model that this method disproportionately affects small firms and creates a barrier to entry. Our results suggest that screening increases bids by two channels. First, it directly inates bids as well as decreasing entry. Second, in a competitive market, lower entry also inates bids and prices.

Building information modeling (BIM) and quantity surveying consultancy services in Nigeria

In the growing Sustainable construction business, Building Information Modelling (BIM) represents a new paradigm. This new paradigm shift needs to be embraced by quantity surveyors to remail globally competitive. The construction industry has seen a many advances, including ecosystems, construction software, building information modeling (BIM) and augmented reality among others. As a result of these developments and evolutions, new tools, procedures, and software have been developed to help construction professionals be more productive. For potential integration into the life cycle of construction projects, BIM has advantage, which will enable it to become a reference point for construction projects and, as a result, it will be a vital instrument in project procurement in the future. As a result, major functions of Quantity Surveyors (QS) in BIM-based construction procurement would be significantly different from what they are now. There are concerns that BIM adoption could jeopardize the profession of Quantity Surveying. Understanding the possible expansions of QS positions in BIM-based project delivery is essential. Therefore, this study submits the review of role and responsibility of Quantity Surveyors in the adoption of BIM in Nigeria with a few to outlining the derivate benefits of its adoption.

Managing stakeholders in engineering procurement construction management projects in Africa by Chinese project managers

Africa is growing very fast in term of population and economy currently. To enable the productivity and sustainable economic growth across the African continent, the infrastructure development projects are needed. Recently Africa has become a destination of Chinese Engineering, Procurement, and Construction Management (EPCM) companies. The majority of these large Chinese EPCM companies find it difficult to manage projects in the way that satisfy all stakeholders in Africa due to a number of issues – political, social, historical, personal contexts, and technical. Chinese management approach is regarded as informal by nature generally referred as guanxi management. Literature review and media reports reveal that Chinese model of managing stakeholders in projects is characterized by the informal management approach (guanxi). The informal Chinese management is vital to projects success in China therefore, it is important to explore the informal (guanxi) management approach in EPCM projects in Africa. This paper investigates how Chinese Project Managers manage stakeholders in EPCM in Africa by adopting a mix research method to investigate the Chinese stakeholder management approach in West Africa. The research uses a field observation and survey questionnaires. It is found in practice that the Chinese only use guanxi management approach when certain stakeholders such as project owners and sponsors, in addition, the whole stakeholders’ group in EPCM projects are not all satisfied with the informal (guanxi) management approach of the Chinese PM.

A modified particle swarm optimization for risk assessment and claim management in engineering procurement construction projects

Abstract From project beginning to completion, different kinds of risk factors influence the performance of construction schedule and construction project cost and time. Usually, the integrated risks are allocated via the project management contract assessment. The construction claim involves huge crashes based on project time and cost, which accomplishes successful claim management. In this paper, we proposed a Modified Particle Swarm Optimization (MPSO) algorithm-based claim management system via the Engineering Procurement Construction (EPC) concept. This context considers both project time and cost are the objective functions. The construction process satisfies the minimum requirements of the engineer in order to obtain these objective functions. Next to that, the project managers view the document in case of project time and delay to take the final decision. This article utilizes the MPSO algorithm to achieve an efficient better system quality along with the EPC based claim management system with minimized project cost and time. The case study based on the refinery plant project is analysed. The experimental results demonstrate minimum project time and delay based on the MPSO algorithm and it evaluates better system stability and effectiveness.

Affective, cognitive, behavioural and situational outcomes of social procurement: a case study of social value creation in a major facilities management firm

While there is an emerging body of research on social procurement in construction, there is little empirical research from a facilities management perspective. This is despite the enormous untapped potential of the facilities management sector to create social value in the communities in which they operate. To address this gap in research, this paper presents an in-depth case study of an innovative social procurement initiative developed by a major Australian facilities management organisation. Integrating research in the fields of employment studies, facilities management and social value, it provides new empirical evidence of the significant affective, cognitive, behavioural and situational social value outcomes which can be generated through facilities management. These are best achieved through new hybrid partnerships between business, government, not-for-profit, community and educational organisations which create shared value, underpinned by a common interest in maximising social value for the communities involved. More research is needed into the types of attributes, skills and resources that facilitate such outcomes, the attributes of organisations most likely to be able to collaborate and the types of cross-sector partnerships which work.

Digital Transition and Waste Management in Architecture, Engineering, Construction, and Operations Industry

The research aims at analyzing the integration of Waste Management (WM) strategies and Information management in the construction procurement process. The application of Building information modelling (BIM) methodologies for a Most Economically Advantageous Tender could address the digital transition in order to adopt environmentally sustainable practices. Despite the wide regulation regarding waste minimization, an overview of which is provided, AECO is still one of the most polluting industrialized sector. Drivers and barriers to the method, and a literature review are provided: BIM approaches to enable WM practices have been analyzed from the designer and constructor’s point of view, but few studies investigated the role of the Client, in particular the Public Client. The goal of the study was to evaluate the efficiency of Most Economically Advantageous Tender and a BIM methodology to promote WM strategies during the tender phase. Design Build (DB) and Design Bid Build (DBB) procurement models are tested through three case studies of Italian schools' calls for proposals: the BIM model enabled to verify the bids in terms of WM strategies implementation. Blockchain and Smart contract future applications are also investigated in order to ensure transparency of the whole process. The Public Client could trigger a change in the construction sector regarding the integration of WM practices, as a central and active actor of the construction process, through the application of Green Public Procurement and BIM methodologies.

Penanggulangan Tindak Pidana Korupsi, Kolusi Dan Nepotisme Dalam Pengadaan Barang Dan Jasa Pemerintah Di Provinsi Lampung

Pengadaan Barang dan Jasa Pemerintah adalah mekanisme pengeluaran pemerintah yang memainkan peran penting dalam pemanfaatan anggaran negara. Pengadaan Barang dan Jasa Pemerintah melibatkan jumlah uang yang sangat besar, sehingga pemerintah disebut sebagai pembeli terbesar di negara ini. Dalam praktiknya, secara umum pelaksanaan pengadaan barang/jasa konstruksi Pemerintah sering menimbulkan masalah, termasuk pelanggaran baik prosedur pengadaan barang/jasa konstruksi dengan konspirasi yang tidak tepat dan pelanggaran yang merugikan Negara atau terkait dengan tindak pidana korupsi yang dilakukan oleh organisasi pengadaan barang/jasa konstruksi. Hasil penelitian ini pada akhirnya memberikan jawaban bahwa penyebab korupsi, kolusi dan nepotisme dalam pengadaan barang dan jasa pemerintah di Provinsi Lampung adalah 1) Dana yang sangat besar dikeluarkan untuk mengubah proyek menjadi penggoda yang kuat untuk mengundang koruptor, 2) Sejumlah besar data ternyata dilengkapi dengan administrasi rencana proyek pemerintah yang tidak jelas dan tertutup. Sedangkan upaya penanggulangan korupsi, kolusi dan nepotisme dalam pengadaan barang dan jasa pemerintah di Provinsi Lampung meliputi: a) Tindakan pencegahan, dalam bentuk: Pengawasan dan Pengadaan Elektronik (E-Procurenment) dan b) Tindakan represif, yaitu: hukum penegakan hukum dengan penerapan sanksi pidana yang ketat. Saran dari penelitian ini adalah bahwa itu harus dirumuskan dengan jelas tentang pertanggungjawaban pidana dalam pelaksanaan pengadaan barang dan jasa pemerintah dari penyedia barang dan jasa serta pada pejabat yang berwenang dalam pelaksanaan pengadaan barang dan jasa pemerintah.

Overcoming Cost Disadvantages in Procurement Auctions

ABSTRACTAn increasingly studied auction format is the asymmetric procurement auction, which features an advantaged bidder selling a good or service to a buyer. Such asymmetric setups, although generally believed to be more realistic, are also more complex. We investigate one such setting where one bidder has a cost advantage. Our central question is whether bidders who are cost disadvantaged can overcome their inferior cost position. In a design that mirrors real construction procurement auctions, our laboratory experiment tests whether two information asymmetries (more precise cost estimates and knowledge about the cost estimating abilities of a competitor) allow cost‐disadvantaged sellers to better compete. We begin by testing bidder performance in a procurement auction where the only asymmetry is due to a cost. In this setting, analytical benchmarks are known. We find—consistent with other studies—that all bidder types submit aggressive bids well below the Nash equilibrium predictions. Over time, subjects submit less aggressive bids, moving closer to what theory would predict. We then extend our experiments to include our novel, multiple asymmetry setup. We find that endowing cost‐disadvantaged bidders with higher cost estimate precision benefits the bidder, as one might expect. Notably, providing market knowledge about a rival's ability to estimate costs may not provide a benefit; in fact, it seems bidders are not able to use this information effectively and performance suffers. Finally, we show how bidders behave myopically when making these decisions. These implications raise important questions about how asymmetries interact in complex auction settings.

Lessons learnt from green public procurement in the Norwegian construction sector

Introduction. Over the next 5 years, Norway shall construct roads, rail tracks and buildings for up to 300 bNOK. Statens vegvesen (SVV), the Norwegian road authority, has calculated that construction, operation and maintenance of Norwegian roads are responsible for 1.5-2m tCO2eq/yr. SVV also found a correlation between cost and emissions and found that every 1MNOK invested leads to ca. 35tCO2eq. When considering the national transport plan (NTP), this equates to 10% of Norway’s climate budget. In order to reach climate mitigation goals, public developers have initiated environmental measures in public procurement to reduce GHG emissions. Methods. This paper collects, compares and reviews environmental criteria written into Norwegian public procurement to see which measures are being implemented, how they are being implemented, and to discuss how effective these measures are in cutting GHG emissions. Contracts are sampled from major public developers in the Norwegian construction sector. Results. The results show that public procurers use a range of tools to facilitate for emission reductions. Conclusions. This paper reviews environmental measures in public procurement of Norwegian construction. Lessons learnt may be spread to other countries and the private sector. Grant support. None.

China’s Investment in African Ports: Spatial Distribution, Entry Modes and Investor Profile

Over the past decades, China's direct investment in Africa expanded significantly and became more diversified. The increased involvement of Chinese interests in Africa has intensified the debate on the benefits, modes and risks linked to these investments. Chinese state-owned companies have directed large amounts of expertise and resources to African ports, not only to deliver benefits to the investing parties, but also to contribute to a more effective and efficient African port industry. This paper presents an analysis of Chinese investments in and operation of African port infrastructure. Next to offering a comprehensive view on the spatial distribution of Chinese investments in African ports, this study elaborates on the specialization of major Chinese state-owned companies in terms of investment modes, and on the reasons behind the observed/expected geographical distribution of specific entry modes across Africa. The EPC + F + I mode (Engineering Procurement Construction + Finance + Investment) is the most common arrangement adopted by Chinese enterprises in view of port investment in Africa while also PPP type of arrangements are frequently used. China's enterprises are challenged to choose suitable modes when investing in African ports by taking into account their own attributes, the development status of the host countries and the port characteristics.

A concept to evaluate procurement principles implementation of public construction project in Surabaya

Public construction procurement is a Government program to meet infrastructure needs. As a government program that uses the public budget as a source of funding, public procurement tends to be vulnerable to various problems and criticisms, especially related to public trust as users. Therefore, the government must prove that the implementation of procurement including the procurement of construction can be relied upon, so it must be carried out professionally and ethically. To guarantee that, construction procurement must adhere to the principles set out in the regulation. Presidential Regulation of the Republic of Indonesia Number 16/2018 regulates Public Procurement of Goods and/or Services and establishes 7 principles of procurement implementation, including: efficient, effective, transparent, open, competitive, fair, and accountable. This paper is an initial stage of research to evaluate the implementation of the principles of construction public procurement. The purpose of this study is to identify the indicators that must be met by the government in the implementation of these principles. These principles will become the research variables, while the indicators are obtained from related literature studies. The data in this study were obtained by distributing questionnaires and interviews with several parties concerned with the public procurement in Surabaya. According to the experts’ opinion, there are found that 48 indicators of the principles which could be used to evaluate the principles of the implementation of public construction project procurement in Surabaya.

Critical factors that influence the success of construction projects procurement in Surabaya

Construction procurement for public infrastructure projects is important with regard to the national development to fulfil infrastructure needs. As public construction works uses the public budget, its procurement process should be conducted appropriately. Proper procurement process will result the best contractors and consultants. This paper aims to analyze the factors that influence the procurement success of the public construction project in Surabaya. The right procurement process will produce good service providers. There has been a lot of research related to procurement, but only a few have focused on the determinants of construction procurement. Therefore, research is needed related to the critical success factors of construction procurement by reviewing presidential regulation number 16 of 2018. This study attempts to identify factors determining the success of construction procurement based on a literature review and applicable presidential regulations. The preliminary survey was carried out by involving several experts who assessed the variables obtained from the results of related literature studies.

An interdisciplinary perspective of conflict and relationships in construction procurement and logistics

Due to the construction industry’s eagerness tolifting adversarial trends and realising the benefits of good relationships, the current research intends to investigate the construct of relationship quality in construction projects; especially in the eventof a conflict. An interdisciplinary construct is derived using a three step methodology and wide range of theories from a comprehensive literature review. These theories range from relational marketing to relational contracting and construction project management. A conflict process model is used to outline the association of conflict and relationship quality in construction projects. Concepts such as psychological meaningfulness, psychological availability, resource availability, aligned-commitment, teamwork, performance satisfaction and trust are attributed to relationship quality. An interdisciplinary construct with antecedents, core attributes and outcomes are achieved. Conflict is demonstrated as a potential antecedent of relationship quality. Finally, moderating factors such as actions and strategies, some of which could be used in conflict management are identified as moderators of relationship quality. By identifying and mapping all the possible components in relationship quality, its different constructs and potential interactions can be recognised. This is extremely important in future investigations of relationship quality in relation to construction project issues and trainingproject teams. The choices of components for the construct are extracted from existing literature; however other components may be of effect which are not included and explored in the future. The model can be used to achieve project integration goals and joint problem solving strategies.

Six Sigma Project Procurement application in public procurement

PurposeProject management tools and techniques have been widely adopted in the construction industry; however, its combination with Six Sigma and application in construction procurement has not been widely researched. This paper explores the use of Six Sigma Project Procurement (SSPP) and its potential applications in public sector construction procurement.Design/methodology/approachThe role of Six Sigma and project management in construction is critically evaluated using three case studies to demonstrate their application in public procurement.FindingsThe use of SSPP by public sector organisations creates efficient and effective construction procurement processes by addressing delays. The proposed timelines for competitive tendering in the Ghanaian Public Procurement Manual are not realistic.Research limitations/implicationsThis paper contributes to and broadens the limited body of evidence and knowledge of applying SSPP to public procurement processes and identifies areas for further research.Practical implicationsProject management will continue to expand in the global construction industry. However, what will eventually determine if SSPP is embraced by public sector construction depends on the leadership and success of its execution. The application of SSPP to public construction procurement will address delays and lead to significant time reduction of the process. This will eliminate the major issue (delay) accounting for deficiencies in the process.Originality/valueThe paper yields immense value to construction project management researchers and practitioners, especially in the public sector. It recommends the inclusion of Six Sigma to promote focus on actual instead of perceived problems and advocates for decisions-making based on facts which will ensure continuous improvement.

Implementation of Design and Build Contract in Government Building Construction Project Practice

The Development of government infrastructure projects, which has grown rapidly in recent years, require the Indonesian Government, through the Ministry of Public Work and Housing, to socialize the breakthrough of the national construction procurement system with design and build contract. This breakthrough on construction projects is expected to accelerate the achievement of government infrastructure targets, thus supporting national economic growth. The purpose of this research is to identify DB characteristics, implementation, the advantages and disadvantages in Indonesian construction projects, and to analyze the obstacles, conflicts and problems emerging on the construction project implementation. In the construction project implementation, all participants involved hopes that the project can be completed within the objectives. The expected objectives are that the project is completed in time, does not exceed the budget and meets the quality requirements.

To Thine Own Self Be True: Asymmetric Information in Procurement Auctions

As procurement auctions increasingly move to digital platforms, more data and information is available (or can be made available) to bidders. Despite this trend, relatively little is known about the impact of information asymmetries in these settings. We investigate two such differences in first‐price sealed‐bid reverse auctions with a common value. In a design that mirrors real construction procurement auctions, our laboratory experiment tests the impact of the precision of a bidder's cost estimate and the degree to which bidders know the inherent cost estimate precisions in the auction. We find that more understanding of estimate precision decreases bidder profit, counter to our expectation; however, we also find evidence of strategic behavior from those bidders that ratchets up pressure on competitors and pushes competitors toward bankruptcy. Most notably, understanding just one's own precision can help avoid the winner's curse in some settings. The same result does not apply if bidders also know their competitor's precision; more information does not help. The implication from our realistic setting—that reduced uncertainty may not help the bidder—raises important questions about the degree of transparency that is optimal in procurement auctions.

Challenges and Drivers of Green Procurement among Construction Practitioners in Malaysia

Construction is one of the sectors that contributes to a significant impact on the natural environment. There are many initiatives introduced to ensure that problems related to environmental degradation can be minimized. The introduction of green procurement is one of the strategies that helps in tackling issues related to the environment in the execution of construction projects in the Malaysian construction industry. However, knowledge of green procurement among construction stakeholders in Malaysia is still indicated as very low. Thus, the aim of this paper is to identify the driving factors in encouraging the inclusion of green practices in construction procurement. The findings of this paper provide the success factors identified from the literature review and focus group discussion. The outcome provides insights for construction practitioners to ensure green procurement in the delivery of construction projects.