Lump Sum Contract Research Articles

Evolving governance in the space sector: From Legacy Space to New Space models

The space sector is evolving from the “Legacy Space” to the “New Space”. Along with the space sector, space program governance is transitioning to support an environment where legacy and New Space actors co-exist. The aforementioned transitions and the entry of New Space players result in new governance models, as space agencies aim to exploit contributions from non-space sectors, leveraging on collaborative opportunities.Public-private partnerships (PPPs) become a new golden rule, disclosing unprecedented achievements.However, the existing body of knowledge lacks a framing of models of space program governance, covering both Legacy Space programs and New Space ones. It is not clear how the roles and responsibilities of stakeholders change from the Legacy Space to the New Space, alongside the related changes in contract structures and the practices space agencies favour in current space programs and projects. Therefore, our paper aims to investigate how space program governance evolved.We performed a single-case study on NASA-led space exploration programs to investigate the transition of space program governance and its actual state-of-the-art. We co-developed and validated three governance models for space programs through semi-structured interviews with senior experts. Furthermore, we present key drivers and barriers behind the evolution towards New Space governance models.We found and discussed three program governance models corresponding to the evolutionary stages of space exploration programs. In the Legacy Space model, the government owns space infrastructures to demonstrate technological supremacy. In the Transitional model, lumpsum contracts, transitioning between cost-plus and fixed-price, replace the legacy EPC (Engineering, Production, Construction) ones. In the New Space model, collaborative efforts and PPPs enable alignment between public and private expertise. Finally, we examine the factors that promote and impede the evolution of space governance, leading to the emergence of a polycentric governance structure observed in current space programs.The three models enable managers to visualize space programs from a governance perspective, where stakeholders’ roles and responsibilities in PPPs are clearly identified. Moreover, managers can leverage and innovate existing practices for transitioning across different models of governance in space programs and projects.We contribute to research by introducing a transitional governance model that enables the smooth transition between the Legacy Space and the New Space paradigms. We justify the concurrent adoption of multiple governance models within the same space program, as in the current Artemis program.

Comparison between Lump Sum And Unit Price Contracts in Construction of Residential Projects in Kurdistan Region of Iraq - Case Study

Comparison between Lump Sum And Unit Price Contracts in Construction of Residential Projects in Kurdistan Region of Iraq - Case Study

Optimal government and manufacturer incentive contracts for green production with asymmetric information.

Governments commonly utilize subsidy policy to incentivize manufacturers to produce green products, promoting sustainable development. However, in the presence of information asymmetry, some manufacturers may dishonestly misrepresent the green degree of their products to secure higher subsidies. This study examines different incentive contracts between the government and a green product manufacturer who keeps private information of a product's green-degree in a principal-agent model. Lump-sum transfer and fixed- and flexible-proportion benefit-sharing contracts are proposed to investigate screening and improving green-degree issues. To further enhance the flexible-proportion benefit-sharing contract, we construct a non-linear coordinated contract based on the Nash bargaining solution. The revelation principle and Nash bargaining are performed for comparison and analysis of the contracts. We find that the lump-sum contract reveals true green-degree information but fails to impel manufacturers to improve product's green-degree in developing countries where green product development is in initial stages. In contrast, both fixed- and flexible- proportion benefit-sharing contracts are effective in reveling and enhancing green-degree. The non-linear coordination contract optimizes resource allocation and achieves Pareto improvement. An applied case study for inkjet printer operations and numerical experiments corroborate our model findings.

Contract selection and piracy surveillance for video platforms in the age of social media

AbstractPirated video clips, a new form of piracy, have spread rapidly in recent years with the vigorous development of short‐video social media platforms such as TikTok and Douyin. This has led to a huge loss of revenue for the film and TV drama industry where the negative economic impact trickles down from legitimate video platforms to content creators. As video platforms fight back against copyright infringement, they need to decide how much effort to invest in detecting and taking down pirated video clips that emerge on social media platforms. In addition, they need to decide whether a lump sum or unit price contract should be used to secure the playing rights for a video from the content creator. A content creator has no incentive to engage in piracy surveillance together with the video platform after signing a lump sum contract but has an incentive to do so after signing a unit price contract because he/she would receive royalties each time someone watches the copyrighted video. Using an analytical model framework, we find that the video platform should use a unit price contract when production of the video is less costly for the same quality (e.g., music‐based, horror, and romance movies) but a lump sum contract when production is costly (e.g., Sci‐fi, animation, and fantasy genres). We show that in equilibrium, the total surveillance effort between the video platform and the content creator is smaller and the video platform charges customers less to watch the copyrighted video under the lump sum contract compared to the unit price contract. As a result, the lump sum contract not only achieves higher consumer surplus compared to the unit price contract but also leads to a higher percentage of customers legally accessing the video program. Finally, the content creator's revenue is the same under both contracts, but the content creator may prefer the lump sum contract because it attracts more (legal or illegal) viewers and the increased visibility could be beneficial in the long run.

Subcontracting and rework cost sharing in engineering–procurement–construction projects

Infrastructure development projects are overwhelmingly managed through engineering–procurement–construction (EPC) contracts, which allow a project end user to shift all project risks to a contractor. Accordingly, the International Federation of Consulting Engineers recommended a contract template based on a lump-sum contract between the end user and main contractor. However, EPC projects often suffer from quality issues due to moral hazard, which is aggravated by the involvement of subcontractors hired by the main contractor to perform parts of the project. Besides, costly rework is frequently needed to achieve the contractually mandated quality. When the main contractor must share some of the subcontractor’s rework cost, an externality might arise. In this study, we model an EPC contract with three parties: the end user, the main contractor, and a representative subcontractor. We compare the end user’s cost and quality trade-off for the recommended lump-sum contract and the proposed incentive contracts. We find that the lump-sum contract can achieve the first-best trade-off under limited circumstances, whereas the appropriate incentive contract can do so for a wider range of circumstances. Rework cost sharing can cause under- or over-investment in efforts and reduce system welfare compared to the first-best outcome by weakening the incentive contract’s ability to overcome moral hazard. However, for a subcontractor with limited liability, rework cost sharing can improve project outcomes by allowing the main contractor to reduce the subcontractor’s risk exposure.

Price Gap Comparison in Unit Price and Lump Sum Contracts: A Transaction Cost Economic Approach

This study compares two major types of contracts in public procurement, i.e. unit price and lump sum contracts, in terms of the gap between the winner's bid price and owner’s estimated price (OEP) in resulted price gap during the tender process, taking the case of government procurement in Indonesia. Using Indonesian e-tendering data of 2018-2021, this study employs an Ordinary Least Square regression to assess whether there is a difference in the price gap between the two types of contracts. This study finds that the average price gap in unit price contract is significantly higher than that of lump sum contracts. With the help of the transaction cost economics approach, this study discussed that the higher average price gap in unit price contracts is related to a lower information cost and lower risk of having a change order for the contract faced by the bidders. While in a lump sum contract, the winner's bid price is closer to OEP because bidders are faced with design risks that require higher information costs and contract adaptation during the execution phase. The study also found that the use of a unit price contract is significantly related to a longer tendering time due to a longer period in evaluating the bid.

Public–Private Partnership Contract Framework Development for Highway Projects: A Delphi Approach

Construction projects can be delivered through various approaches; nevertheless, all practitioners and involved parties have a mutual goal, which is completing the project within the original scope, defined budget, and schedule. Reviewing the literature on public–private partnerships (PPPs) showed that many efforts have been made to cover different research areas, including policies, risks, roles and responsibilities, and finance. The existing literature lacks studies involving the comprehensive process of preparing and implementing PPP contracts associated with highway projects in the US. This research, therefore, fills this noticeable gap in the body of knowledge on the PPP delivery method. The main objective of this research was to develop a framework for PPP contracts focusing on highway projects. To meet this objective, the authors conducted a Delphi study with highway professionals to identify the major issues that they should carefully deal with during contract document preparation, contract procurement, and contract implementation phases to make PPP highway projects successful. The Delphi study consisted of two rounds, with 25 open-ended interview questions over three phases. The study found that highway agencies must fix the scope of a project before a PPP project starts. They should also choose a lump sum contract type and a design-build-finance-operate-maintenance PPP type with a 35 to 40-year concession period for highway projects. Contracts should consist of incentive and disincentive clauses along with availability payments as the mode of compensating concessioners for their work. Before initiating a PPP contract, agencies should make sure that their state legislation allows this type of contract. The study also found that during the contract procurement phase, owners should use the best-value selection method to choose a PPP contractor; the competition should be fair and transparent, and the owner must have expertise in order to successfully procure PPP contracts. The experts recommended setting performance standards for PPP concessioners, performing inspections using independent third parties, and handing over condition data to maintenance personnel at the end of construction. The primary contribution of this research to the body of knowledge was to highlight the fact that each country, with the help of professional expertise and key stakeholders, background, and/or lessons learned, needs to develop a framework that lists the main issues and processes to be considered in implementing PPP highway contracts. This study presents a framework that can work nationwide, something that is missing in previous research studies. This framework can guide professionals in the transportation industry toward effective contract document preparation, procurement, and implementation of PPP highway projects in addition to giving academicians better insights to understand PPP highway projects in the US.

Indonesia Construction Service Law Relating to MRT Development Contracts: A Legal Review with Fidic International Contract

This research was very important because of incomplete regulations related to Late Payment Arrangements and Variation Procedure Arrangements which are regulated in the Construction Services Law because this was very necessary considering the complexity of problems that occur in the construction world in Indonesia. The amendments to the Implementing Regulations also needed to be improved as regulated in Article 51 of Presidential Regulation N0. 54 of 2010 concerning lump sum contracts, there were no price adjustments and additional work, because in fact any construction work for price adjustment and additional work almost always occurred and almost impossible to avoid. So that these regulations could not be applied in the field and could hinder the implementation of construction project work in Indonesia. It was because most of the construction projects in Indonesia required cooperation with foreign investors.

Praxis of knowledge-management and trust-based collaborative relationships in project delivery: mediating role of a project facilitator

PurposeCritical knowledge and lessons learnt from the delivery of infrastructure projects have often remained untapped mainly due to the transient and fragmented nature of construction delivery. The main aim of this paper is to investigate the mediating role of a project facilitator in attenuating disruptions in knowledge flows during the delivery of an infrastructure project.Design/methodology/approachAn inductive case-study method is employed in examining the mediating role of the facilitator in an infrastructure project. Content analysis was undertaken by coding the data derived from eight focus group interactions, 23 semi-structured interviews and 24 documentary sources from workshops using NVivo 12 plus.Findings(1) The project facilitator provided a coherent context to re-invent the narratives (i.e. behaviours and events) by creating a forum for understanding critical problems and stimulating constructive dialogue and intervention. (2) The project facilitator leveraged on both explicit and tacit knowledge within the team, leading to improvement in the proactive management of emergent technical, operational and behavioural challenges, and (3) The project facilitator sustained a valuable intervention in attenuating disruptions in knowledge flows for problem-solving, relationship-management, best-practice strategies, coaching and leadership, as well as reflexive practice.Originality/valueThe novelty of this research is that a facilitator is used as the “knowledge-broker” in a multi-party infrastructure delivery team assembled using a traditional lump-sum contract framework. Facilitators have only previously been used in collaborative contract environments like alliancing and partnering.

Investigating risks of lumpsum contracts in highrise building projects

Risks are inevitable in construction projects, especially complex projects such as high-rise building projects. Risk identification helps stakeholders have better success of project management. The study aims at investigating risks of applying lump sum contracts in high-rise projects. The analysis data collected through the survey based on 49 risks explored for literature. The risk effects are ranked by mean values and grouped by a factor analysis technique. The analysis confirms that 25 risks are grouped into five groups: 1) the group of risks of attitude, cognition, and capacity of project personel, (2) the group of risks of delays in project execution, (3) the group of risks of related contract issues, (4) the group of risks of project complexity, and (5) the group of risks of financial capacity of stakeholders. Contractors may utilize the research results as considering signing the lump sum contracts or paying attention during the project implementation.

Labour Recruitment Systems in Global Production Networks: The Ruralisation of Labour Regimes in South India’s Garment and Textile Industries

ABSTRACT This article argues that the labour regime in the garment and textile industries in Tiruppur and Coimbatore, India has transformed from an unorganised feminisation to formalised, ruralised labour, which locates new forms of precarity in the region’s larger factories. Labour brokers’ recruitment of long-distance male migrants has fashioned a national labour market for the recruitment of the region’s garment and textile workers. Feminisation of the workforce now includes the specific recruitment of unmarried women through labour brokers, the use of lump-sum employment contracts and company provision of hostel accommodation. Combining theoretical insights from the literatures on local labour regimes and global production networks, the article argues that labour recruitment strategies play an active role in the construction of regional labour markets and organisation of global production networks.

The Adoption of Total Productive Maintenance (TPM) Concept for Maintenance Procurement of Green Buildings in Malaysia

Green building practices play an important role in achieving sustainability, especially in the construction industry. Green buildings are built to minimise the impact on the environment while reducing the impact of the building on the occupants. Unfortunately, the focus is on building green rather than in its maintenance. Correspondingly, Total Productive Maintenance (TPM) is a tool that has been promoted for its simplicity and the advantages of maintaining a delivery system. It assures the maintenance effectiveness of each industry, such as improving project quality, reducing waste, reducing production costs, increasing hardware accessibility and enhancing organisational support conditions. Meanwhile, procurement is considered to be the key to strengthen the maintenance operation of the construction industry. This study adopts the TPM concept for the maintenance of green buildings in Malaysia and aims to present the TPM concept for the maintenance of green buildings, and to establish the best procurement to adopt TPM for the maintenance of green buildings in Malaysia. This study has employed a qualitative approach where face-to-face and telephone interviews have been adopted. Interviews have been conducted with seven prominent respondents who possess more than 5 years of experience in green building maintenance. Content and thematic analyses have been used to analyse the data that are collected from the interviews; findings show that most of the respondents agreed that TPM could be adopted in the maintenance of green buildings. It has also been identified that for a public project the most appropriate procurement method is the facilities management contract whereas for private project the most popular procurements for green building maintenance are the lump sum contract, out-tasking contract and term contract. The results of this study provide practitioners with a new insight into the impromptu creation of a total productive maintenance concept that could improve the current building maintenance sector.

The list order of construction risk contract for small-scale construction service in surabaya, indonesia using analytical hierarchy process (ahp)

Small-scale construction service providers dominate the construction industry in Indonesia. However, along with Indonesia’s economic growth, small-scale construction service providers owner has a chance to expanse their business. Based on their experience, small-scale construction service providers have limitations. They cannot take a priority, whereas the risky of the contract construction. This study aims to make a list order of the construction risk based on medium-scale construction service providers. With this study, we want to help share the medium-scale experience to small-scale construction service providers in terms of risk contracts in Indonesia to learn and anticipate it. We conduct risk identification by literature and make list order analyzing using Analytical Hierarchy Process (AHP). AHP method can provide a single and easy-to-understand of unstructured problems. This research indicates that mismatch between the volume of work in the Bill of Quantity and field conditions is the most risk in terms of contract construction. However, the lump sum contract also identified the risky contract based on medium-scale construction service providers.

Design alternative on peat soil

Construction on peat soil has its own difficulty and challenge due to its properties of low shear strength, high compressibility, high water content, and flammable material. Indonesia ranked 4th on peat land area around the world after Canada, Russia, and United States. Based on recent mapping, peat land covers 14,9 million hectare in Indonesia. This paper presents the finding from literature studies regarding peat soil, construction on peat soil, case studies for road infrastructure construction on peat soil at West Borneo, Indonesia, and provide analysis and recommendation for the problems faced. Construction on peat soil requires special attention, especially on the design and execution. In the event where construction must be performed on a peatland which thickness is < 3m, the approach recommended is peat removal and replacement. If the peat thickness is 3-10 m, adopt the preloading, construction with vertical and sand drain, lightweight fills, surface mattress, stone column, etc. If the peat thickness is < 10m, use pile as foundation. Unit price contract is preferable over lumpsum contract due to the high uncertainties of peat soil. Environment impact due to construction on peat soil need to be accounted for, also the risk of peat fires need to be considered if dewatering used.

UNIT PRICE CONTRACT IN CONSTRUCTION WORK

According to Presidential Regulation No. 54 of 2010 article 50 paragraph (3) there are 5 (five) contract of procurement goods and services based on payment namely lump sum contract, unit price contract, the combination of lump sum and unit price contract, percentage contract and turnkey contract. Of those five contract types, lump sum and unit price contracts are the most common contract applied in construction work; but other types are also possible to be applied. Government Regulation No. 29 of 2000 article 21 paragraph (2) states “Construction work contract of unit price payment as stated in article 20 paragraph (3) part a number 2 is a contract on services for each completed unit of work within the time given with fixed price for each unit based on volume of work done by service Supplier”. However, there are many service Suppliers in Department of Public Works that do not fully understand about unit price contract in construction work. Thus, the objective of this study is to find out the important considerations in applying unit price contract in work construction.

Comparative Analysis of Lumpsum Contract and Unit Price Contract Risk Using Analytical Hierarchy Process Method

Bekasi Regency Government gives priority in infrastructure development. According to the Central Statistics Agency for West Java Province, the population of Bekasi was 2,344,871 people in 2018. The Bekasi Regency Government will build roads in 28 locations, one of which is to improve the existing infrastructure in Bekasi. In every business, there will always appear two contradictory things which are profit and profit, including in the construction services business. Construction activities can be completed when meeting all the objectives that have been set, following the agreed costs, and meet the quality that has been previously agreed upon. The purpose of this study is to study agreements regarding lump-sum contracts and unit price contracts. This research method uses the Analytical Hierarchy Process Method. The research process starts with creating problems and making hierarchical arrangements. The hierarchical structure consists of three things namely objectives (level I), criteria (level II), and alternatives (level III). Once organized, the hierarchy will be attended by using a questionnaire for 30 respondents. After the data is obtained, the data is tabulated, then the paired frame is searched, move in pairs, and the priority weights. The results of the analysis by the AHP method were obtained in a construction project in Bekasi City, the factor of using Lumpsum contract was more influential compared to the contract Unit price with a ratio of 52.01%: 47.99%.

External Risk Effect in Infrastructure Design Build Projects with Lump Sum Contracts

The increase of fast completion and cost certainty demands of construction projects were encouraging the Provincial Government of DKI Jakarta to use the design-build as a project delivery system. However, the design-build project experienced several constraints. This research aimed to determine the effect of external risks (consist of land acquisition, utility disruption, and third-party risk) on project performance of infrastructure design-build projects with a lump-sum contract system. A mix-method of quantitative and qualitative approaches used in this research, with data collected by using a questionnaire, interview, and documentation study. The questionnaire sent to contractors involved in design-build contracts for the 2015-2018 period, as many as 78 respondents from 39 projects. Fifty responses received within the stipulated time. Quantitative data analysis carried out by using the Structural Equation Model (SEM) based on Partial Least Square (PLS) using SmartPLS and qualitative data used as supporting data. The research findings were as follows. First, land acquisition, utility disruption, and third-party risk had no significant effect on project time performance. Simultaneously, the external risk contributed 11.7% of the time performance variable. Second, the utility disruption and third-party risk requests had a significant negative effect on cost performance, while the land acquisition risk did not have a significant effect on cost performance. Simultaneously, the external risks contributed to 39.3% of the cost performance. Third, time performance has a positive and significant effect on cost performance. Fourth, there was inadequate and inaccurate information related to the existence of the external risk, as well as an inadequate allocation of risk handling costs. Risk identification was vital. Furthermore, working schedules had to synchronize to the risk management schedule in such a way that the effectiveness and efficiency of the work could be maximized by considering all aspects. The response to risk could differ from project to project even between the same types of construction projects. The risk response determined by considering their impact on the project's time and cost performance.

Application of Lean Production/Construction to Reduce Waste in Pipe Gas Construction (Case Study of Semare-Tie in KM 19 Pipa Porong Grati Gas Development Project PT Pertamina Gas)

The lean approach, which was initially used in manufacturing industry, now is widely adopted by the construction industry called lean construction, in order to reduce waste and to optimize the value. This study was conducted to see the suitability of the lean construction approach on the EPC project of gas pipeline installation. This study is viewed from the Company side as the owner particularly in engineering aspect which is carried out by the company itself. Engineering work is deemed as a key to the next activity which is effective and efficient procurement and construction phase. Almost all similar projects show the same symptoms such as: low quality of engineering work (amendment value above 10%), target and realization lagging of its progress, re-work, weak coordination and residual materials. Therefore, the urgency to make improvements occur with the Lean Construction approach described in Big Picture Mapping, Value Stream Analysis Tool, Pareto Diagram, Fishbone Diagram at each stage of the engineering work EPC gas pipeline. Value Added (VA) activities were obtained at 39.35% and Non-Added Value (NVA) activities at 60.65%, engineering work quality classified as poor (amendment value 12.81%). The application of a lean construction approach is suitable to be applied in Company for gas pipe installation projects but with some notes. Then a comprehensive evaluation is required to evaluate man power, load, and skills needed and eventually to be standardized in an acknowledged company standard in order to make every project to be done punctually. The dominant root cause of the problem is the engineering contract form (a lump-sum engineering contract) and company policy as the reference to identify the contract form itself

A Grading System-based Model for Detecting Unbalanced Bids during the Tendering Process

Unbalanced bidding is a common practice used in both unit price and lump sum contracts. Contractors may unbalance their bids in different forms for various reasons. The studies in the literature either focus on developing optimization models that assist contractors in winning contracts and maximizing profits of their bids through unbalancing or developing models that assist owners in detecting and/or preventing unbalanced bids during the bid evaluation stage. Unbalanced bidding is one of the most controversial subjects in the construction management literature and practice. Although there is no consensus on whether it is unethical or not, this practice is not usually for the benefit of owners. Therefore, owners have the right to reject the unbalanced bids and create a fair competition environment if they have a mechanism to detect it during the bid evaluation process. The main objective of this study is to propose a model, which consists of five different grading systems and helps owners in detecting unbalanced bids during the tendering process. In the proposed model, owners may either calculate the individual grades of each bidder or calculate the final score of each bidder by assigning different weights to these grading systems according to the project characteristics or their own needs. The final scores and bid prices of the contractors can be simultaneously evaluated. In order to demonstrate the applicability of the proposed model, an illustrative example is presented. It can be concluded that the proposed model can be effectively and easily used by owners for detecting unbalanced bids. This paper is the revised version of the paper that has been published in the proceedings of the Creative Construction Conference 2018 (Polat et al., 2018).

Fuzziness over Randomness in Unforeseen Works of Construction Projects

A new approach to distinguish construction management models by uncertain and fuzzy states has been presented and laid out in the paper. Supplementing well recognised practical models of project and construction management, based on probabilistic and fuzzy events may make possible to transfer the weight of the change and extra orders assessment from the qualitative form to a quantitative one. This assessment, however, is naturally burdened with an immeasurable, subjective aspect. Elaboration of probability of occurrence in a construction project unforeseen building works requires application (in addition to the non - measurable, qualitative criteria) of measurable (quantitative) criteria which still appear during construction project implementation. In reimbursable engineering contracts, a random event described as an extra, supplementary building work has a random character and occurs with a specific likelihood. In lump sum contracts, on the other hand, such a random event has a fuzzy character and its occurrence is defined in a linear manner by the function of affiliation to the set of fuzzy events being identical with unforeseen events. The strive for quantitative presentation of criteria regarded by nature as qualitative and the intention to determine relations between them led to the application of the fuzzy sets theory to this issue. Their properties enable description of the unforeseen works of construction projects in an unambiguous, quantitative way. In 19 considered construction projects the lump sum from of engineering contracts are in majority, therefore, it is so crucial to apply fuzzy sets models with their fuzzy tools which makes possible to quantify of construction projects unforeseen works as indicated in research presented in the paper. The random event for fixed fee contracts as an unforeseen building work has a fuzzy character and its occurrence is defined by a linear function of affiliation in the set of fuzzy events identical with the unforeseen events. Such fuzzy relations between faults of construction projects with impacted unforeseen works have been precisely determined in the presented research findings.