Construction Project Procurement Research Articles

Relationship-Quality Judgment Model for Construction Project Procurement: A Conjoint Measurement

AbstractRelationship quality as a measure of working relationships in construction has been associated with four general attributes of trust, commitment, teamwork, and performance satisfaction. These attributes have been previously explored and identified within New Zealand construction sector. However, much ambiguity remains as to what are the values or preference of parties involved in construction project procurement and how the attributes are traded-off in real decision making processes. Basically how do the industry practitioners judge their relationship quality based on the four mentioned attributes. Data is collected from New Zealand industry practitioners through a conjoint full profile questionnaire technique. Via conjoint and cluster analysis a judgment model for relationship quality is extracted. The overall aggregate conjoint analysis suggests that performance satisfaction is the most important attribute in judging relationship quality in construction activities. The other three attributes als...

Repetitive construction processes scheduling using mixed-integer linear programming

Many construction projects contain several identical or similar units, such as floors in multistory buildings, houses in housing developments, sections of pipelines or highways. Repetitive processes arise from the subdivision of a generalized construction process into specific activities associated with particular units. In many cases it is possible to perform individual processes (repeated in each units) in alternative ways (modes). Regardless of the construction project procurement system, duration and cost are the key factors determining project’s economic efficiency and fulfillment of the owner’s needs and requirements. Minimizing project duration and cost are the most important criteria for schedule optimization. Processes that repeat from unit to unit are realized by specialized crews. Uninterrupted resource utilization becomes an extremely important issue for scheduling repetitive processes to minimize employment costs. In this paper, the problem of selecting appropriate modes and minimizing the total project cost and with a constraint on project duration is presented with respect to the continuity of the crews’ work. The paper uses the mixed integer linear programming to model this problem and uses a case study to illustrate it.

Sustainable procurement in the Canadian construction industry: challenges and benefits

Disregard of triple bottom line (TBL) of sustainability is one of the major drawbacks of current construction procurement practices. Sustainable procurement is an emergent concept that can improve procurement practices and enhance the sustainability performance of the construction industry as a whole. Presently, sustainable procurement is still not fully utilized in the Canadian construction industry. A comprehensive literature review showed that the construction industry is still not fully aware about the benefits of using sustainable procurement or ways of implementing the same. This study evaluates challenges encountered in implementing sustainable procurement in the Canadian construction industry. In addition, this study investigates perceptions of construction professionals on the benefits of using sustainable procurement for construction projects. A country wide questionnaire survey and semi-structured interviews were conducted to collect required data. A statistical analysis was performed to rank the challenges and benefits of sustainable procurement. Findings from semi-structured interviews were used to validate the results observed in the statistical analysis. This study revealed that lack of funding is the main challenge for implementing sustainable procurement, while reducing harmful emissions and waste generation was identified as the main benefit. It was concluded that the leadership and commitment of the project owners is the key to fully establish sustainable procurement in the Canadian construction industry.

Procurement-Related Critical Factors for Briefing in Public-Private Partnership Projects: Case of Hong Kong

AbstractPublic private partnerships (PPPs) are widely used for construction project procurement. However, the briefing stage of PPP projects has been largely overlooked, although it has a far-reaching influence throughout the project lifecycle. In response, this is rectified by exploring the critical factors involved. A set of 15 procurement-related factors are first identified from the existing literature. Then the effects of four background variables on the factors are tested with Hong Kong government data by an exploratory factor analysis extracting four major dimensions. The relationships between these dimensions and background variables indicate the need to take the background variables into account when ranking the factors. The ranking of the factors is then obtained by considering their weighted importance. Finally, the final practical value of the results is discussed.

Supplier selection process in an integrated construction materials management model

Abstract The procurement and management of construction materials involve challenges related to reducing inventory, speeding delivery, and increasing the control of materials, thus decreasing the overall project cost. The objective of this research was to define and develop an integrated construction materials management (ICMM) model to address these challenges by deploying principles of virtual inventory management, feasible materials management networks, and a supplier selection process. Contributions include the development of the ICMM model and the demonstrated potential of the selection supplier process for improving procurement for construction projects. The use of the supplier selection process has been demonstrated through implementation on an industrial project and using the TOPSIS (Technique for Order Preference by Similarity to Ideal Solution) method. This process optimizes and validates purchasing at each stage of fabrication for each construction package. A variety of project-specific criteria are involved in the supplier selection process, including price, lead-time, cash rebate, and supplier performance.

Survey of digital technologies in procurement of construction projects

Digital technologies are increasingly being used to support the execution of all aspects of the construction procurement process. However, there has been no systematic attempt to identify and catalogue the different digital technologies and tools available for executing construction procurement activities so as to guide those involved in procurement on the options available to support the six basic procurement activities identified in ISO 10845. The method used to identify 36 different digital technologies and tools used in construction procurement was a literature survey involving systematic identification and review of 78 articles published in 52 different sources between 1993 and 2014. The 36 digital technologies and tools identified include ten generic tools used across the procurement process. This is followed by four applications for establishing what is to be procured; four for soliciting tender offers; one for establishment of procurement strategy; two for tender evaluation, two for award of contract and thirteen for contract administration. The research shows that the majority of existing digital technologies are web-based applications that facilitate real-time communication and collaboration across construction supply chains. The effort made to map digital technologies with the ISO 10845 framework presents a useful contribution to current discourse on digital technology use in construction procurement. It seems interesting that despite the progress made in the evolution and use of digital technologies in construction, there is still no single digital technology which integrates all six construction procurement activities into a system that procurers can adopt to manage the entire construction procurement lifecycle. This should be addressed.

Effect of Best Value Model Variables on Contractor Selection Decision

Best-Value contracting is a mechanism that many agencies used to effectively implement projects with multiple objectives. It allows the government to acquire goods and services from the businesses that offer the Best-Value to the government, not simply the low-bid. The Low-bid contracting is false economy as the initial savings from price-based competition are erased by additional long-term costs. This paper discusses the implementation of the Best-Value concept in the procurement of construction projects. The main goal of the model implementation is studyingthe effect of changingBV model variables on the selection decision. Sensitivity analysis isconduct using scenarios of selection decisions. These scenarios are extremely important to the decision makers as it provide them with the reliability level and limitations of the model utilization. The paper provides both the decision makers and researchers with Sensitivity Charts that offer the guidelines for model implementation in real-world projects. Sensitivity Charts shows the effect of past performance data on the resulted Best-Value and the selected contractor as well.

Performance-based procurement for low-disturbance bridge construction projects

Purpose – This paper aims to introduce a method of performance-based procurement, based on the most economically advantageous tender (MEAT), for low-disturbance bridge construction projects in urban environment. Design/methodology/approach – The first part of this paper reviews the key performance indicators (KPIs) of low-disturbance construction and the procurement procedure based on the MEAT principles. The second part reflects on two actual bridge projects (the Rotebro bridge in Sweden and the Arno river bridge in Italy) as observatory case studies to analyse how clients and contractors can implement the KPIs in MEAT. Findings – The research findings demonstrate the possible inclusion of the KPIs of low-disturbance construction into the MEAT criteria. The MEAT principles can then be used in combination with either a traditional or an integrated procurement strategy. Research limitations/implications – The implementation of MEAT to achieve low-disturbance construction projects is considerably new and still requires an empirical validation. A further elaboration of the procurement strategy within the EU regulatory framework is strongly recommended in order to assure the broader impacts of sustainable construction. Practical implications – The findings and recommendations support the practical development and the use of MEAT in construction projects in the EU. Originality/value – This paper presents on-going investigation within the FP7 collaborative research project “PANTURA”, which addresses the actual research agenda of the European Commission on low-disturbance and urban-friendly civil infrastructure projects.

Frequency of conflicts in construction project procurement: A correlation analysis

Conflicts occur on construction projects and may degenerate into unpleasant situations such as claims, lawsuits and project abandonment. This research investigated the frequency and correlates of conflicts in identified conflict centers on projects procured with either the traditional method or integrated methods. Conflicts were measured in terms of their frequencies of occurrence. Five internal conflict centers on construction projects were identified and used. Questionnaires were administered through purposive and snowballing techniques on 274 projects located in twelve states and Abuja in Nigeria. 96 usable responses were obtained. The collected data were subjected to both descriptive and inferential statistical analyses. The most critical area of conflict was around resources for project execution on projects executed with the integrated procurement method, while the most critical area of conflicts on projects executed with the traditional method was conflict arising from administrative procedures. There were significant correlations between overall satisfaction with project procurement and the frequency of conflicts. However, the results of the analyses do not suggest that any significant correlations exist between the method used for the procurement of the projects and the frequency of conflicts on the projects. The study recommends that the central place of the person, the psychological make-up and personality of team members, instead of structure, may be variables to watch out for with respect to frequency of conflicts, handling of conflicts and overall satisfaction with project procurement. It is recommended that similar analyses can be done on the basis of intensity or seriousness of conflicts.

Public construction project delivery process in Singapore, Beijing, Hong Kong and Sydney

PurposeTo perform well in the risky and competitive international construction markets, foreign investors need to fully understand project delivery process in their targeted overseas markets. Singapore, Beijing, Hong Kong and Sydney were selected to be studied in this paper. The aim of this paper is to provide a comparative analysis of the funding source, organization, regulations, approval process, procurement method, and bid evaluation procedure of public projects in four cities. It also investigated the performance outcomes of public projects in these cities.Design/methodology/approachThe research method was a multi‐city structured questionnaire survey conducted in Singapore, Hong Kong, Beijing and Sydney. Data were collected from respondents who have been involved in public construction projects. The data collection methods include email and postal surveys and face‐to‐face interviews.FindingsIt was found that Beijing has the largest market of public construction projects among the four cities, and has the most indistinct and complicated project process. The majority of the public clients in the four cities have on‐going projects, suggesting a good level of construction sophistication. Traditional design‐bid‐build delivery method is the most frequently used in Beijing, Hong Kong and Singapore. Most of the respondents in Hong Kong, Sydney and Singapore were satisfied with the project quality and service quality. About 60 percent of the project samples in the four cities experienced budget overrun and schedule delay.Originality/valueThe study adds to knowledge by providing information on procurement of public construction projects in four cities. The findings may inform foreign enterprises that are planning to enter these markets on the ways to deal with public construction projects there. Foreign enterprises that plan to venture other parts of the world may consider the factors identified in this study to evaluate the projects there.

Payment options in collaborative procurement of major construction projects

There are many options available for procurement of construction work. The main differences between the options include the payment mechanisms and risk allocation between the project participants. Payment options include fixed-price contracts, cost-reimbursable contracts and target-cost contracts. Use of collaborative procurement based on target-cost contracts is increasing in construction worldwide. Other innovative arrangements for procurement include early contractor involvement design and build. The key features and risk allocation inherent in different procurement methods are discussed. The characteristics of early contractor involvement contracts are assessed including evaluation of the payment mechanisms in a major rail project. It is concluded that experience of early contractor involvement design and build contracts is still limited. As a consequence, further theoretical research and empirical data analysis are required to collate information which will guide industry in designing effective incentives in collaborative procurement for infrastructure projects.

Building Information Modeling (BIM) partnering framework for public construction projects

Abstract Organizational and people centered issues pose the greatest challenge for Building Information Modeling (BIM) implementation. Studies showed that BIM implementation is still a challenge for the North American construction industry. The Canadian construction industry, in contrast, is well behind that of the U.S. in its BIM adoption rate. Maturity and adoption of BIM depends mainly on the client or the owner in construction projects. Public sector clients often think that the market is not ready for BIM and are afraid to increase project costs by limiting competition. Moreover, if the contractor is not integrated in the project in the design phase, BIM has limited power. This paper proposes a ‘BIM partnering’ based public procurement framework to ensure ‘best value’ in construction projects. The case study presented in the paper proved the feasibility of proposed BIM based procurement in publicly-funded construction projects. The suggested contractual arrangement for the project resulted in improved productivity, better coordination, and reduced error, and rework.

The Best Value Approach in the Netherlands: A Reflection on Past, Present and Future

More than 15 years ago Dean Kashiwagi created a process called BVP/PIPS (Best Value Procurement/Performance Information Procurement System) at Arizona State University. PIPS is a procurement method that aims to select the most suitable vendor for the job, to spur this vendor on to highest performance, and to reduce the client’s management and control tasks (Kashiwagi, 2009b). Kashiwagi developed the method for several years with the objective of improving the procurement and management of construction projects by reducing risk in selecting the top performer. The method (herein BV approach) has a number of steps, each built around a specific "filter”, which focuses on a different element to separate high and low performers. The early phase of the adoption of the process in the Netherlands has been described by Van de Rijt and Witteveen (2011) in the special issue of the Journal for the Advancement of Performance Information and Value. In this paper an update is given and future developments are described. The paper covers the BV approach, a brief history of PIPS in the Netherlands, technology adoption theory, adoption and adaptation of the technology and future developments.

Construction Sector Transparency Initiative: making construction more accountable

The international Construction Sector Transparency Initiative brings government, the private sector and civil society together with the aim of promoting transparency and accountability in the global construction sector. The UK was one of seven pilot countries along with Ethiopia, Malawi, the Philippines, Tanzania, Vietnam and Zambia, later joined by Guatemala. This paper explains why the initiative is of importance to not only the public, who fund the procurement of public sector construction projects through rates and taxes, but also to construction professionals and the organisations they work for worldwide. It explains the concepts of the multi-stakeholder approach and disclosure, and highlights the findings and lessons from the pilots.

Review of Selected Macroeconomic Factors Impacting Building Material Prices in Developing Countries – A Case Of Nigeria

High prices of building materials had form a crucial constraint to improving construction procurement in Nigeria. The influence of the macro-economic indicators on this problem cannot be ruled out. This study therefore investigates the impact of macro-economic indicators on the prices of building materials with a view to enhancing construction project procurement and delivery. Questionnaires were administered to respondents which included the Architects, Quantity Surveyors, Builders, Engineers, Bankers/Economist. The study established that inflation, exchange rate, import, interest rate, money supply and demand for money have a significant effect on the prices of building materials. Demand for import, inflation rate, government economic policies, level of foreign currency demand and level of foreign currency supplied were identified as causing a change in exchange rate while factors affecting inflation rate were variation in the value of the naira, demand for goods, changes in real in comes lending interest and import tariffs. On the other hand, factors causing a change in interest rate were government economic policies, demand for money, inflation rate, deregulation of interest rate. It was found that a high relationship existed between exchange rate, inflation rate and interest rate and the prices of building materials. The study recommended reduction in import duties, bringing exchange rate to the barest minimum, reduction in interest rate on banks loans while  government should maintain stable inflationary trend.Keywords: Macro-Economic factors, Construction projects, Procurement, prices, Building Materials, Delivery

The impact of contractors' prequalification on construction project delivery in Nigeria

PurposePrequalification of contractors is a very important step in construction project procurement under the contract “Due Process” policy in Nigeria. The purpose of this study, therefore, is to investigate the impact of contractors' prequalification on cost, time and quality performance of construction projects.Design/methodology/approachData were collected with the aid of a questionnaire addressed to construction practitioners selected from clients, consultants and contractors' organizations. Also archival data on 77 completed building projects relating to prequalification assessment of contractors and project delivery variables were sourced from consultant quantity surveyors. The data were analysed with the aid of mean score and one‐way analysis of variance (ANOVA).FindingsThe results show that contractors' prequalification has significant impact on time and quality performance of construction projects as evidenced by p‐values of 0.039 and 0.030, respectively.Practical implicationsThe findings should provide a valuable reference for clients and consultants during contractors' prequalification and contract award.Originality/valueThe outcome of this paper will assist clients and consultants in the construction industry to carry out objective assessment of contractors' potential performance in relation to project goals prior to contract award.

A Second Look: Stakeholders’ Perceptions of Some Issues in Design-Bid-Build Procurement Practice in Nigeria

The construction product is an outcome of many procurement possibilities, among which the most dominant has been the design-bid-build (otherwise called the traditional) method. The procurement method’s real or perceived drawbacks have warranted or even been rationalized for the emergence of alternative methods. Yet there is a continued use of the method in both private and public sector projects in Nigeria. This study thus sought to investigate stakeholders’ perception on the use of the traditional method. 241 questionnaires were administered purposively on construction industry client, consulting and contracting organizations. 100 were received and analyzed through the use of descriptive and inferential statistical tools. Respondents were requested to express their agreement or otherwise with twenty issues raised from literature and practice on the traditional project procurement. The aggregated rankings for the stakeholder organizations show that ‘where sought at all, inputs of contractors are at best advisory’ ranked first among issues being assessed on traditional project procurement practice. ‘Relationships among participants breed mistrust’ ranked least among the twenty issues. The results of the analysis further indicate that there are no significant differences between the three stakeholder groups on some selected issues in traditional project procurement practice and documentation. It is recommended that the homogeneity of perceptions about the traditional method can be a springboard and form a baseline for further intervention efforts at improving construction project procurement in Nigeria.

Exploring infrastructure procurement by Australian state governments

PurposeThe purpose of this paper is to report on a research thesis that explores how Australian state government agencies procure infrastructure projects and the extent to which they view the procurement process as an opportunity to deliver more than just a physical facility. The primary purpose of this study was to understand the practice of construction project procurement by project managers on behalf of Australian state government agencies and to explore the creation of public value through procurement.Design/methodology/approachThis thesis presents results drawn from ten case studies of state government organisations that procure infrastructure; either roads or buildings. A total of 37 highly experienced project managers operationally responsible for the procurement of infrastructure within these organisations were interviewed.FindingsThe findings show that there is considerable scope for improving infrastructure procurement by Australian state governments and that broader public value creation approaches in the form of policy by‐products are either not considered or inconsistently pursued.Practical implicationsThe broader policy implications flowing from the research findings provide valuable commentary that inform the practice of infrastructure procurement and point to areas to which improvement efforts may be directed. These areas include the challenge of developing the next generation of infrastructure procurement managers, applying non‐price criteria in a rigorous way, using prequalification registers to engage in supplier development and delivering policy by‐products as part of standard procurement approaches.Originality/valueThis thesis presents qualitative data focused on the perspective of procurement professionals, a group who have, hitherto, been somewhat underrepresented in the literature.

Subscription of shares

The paper studies share subscription schemes and claims that these schemes are useful when it is desirable to let an item be held or a project be undertaken by a group of bidders. Examples of such instances include the privatization of state-owned enterprises, the introduction of strategic investors, the procurement of large government construction projects, the issuance of treasury bills, and the resolution of the banks' toxic assets. I show that these share subscription schemes result in sale prices that do approach the fundamental value as the number of bidders increases. This is in contrast to share auctions in Wilson (1979) in which the Nash-equilibrium sale price can yield a significantly lower sale price than a unit-auction.

Procuring complex performance in construction: London Heathrow Terminal 5 and a Private Finance Initiative hospital

This paper takes as its starting point the fact that complex projects, interpreted as multiple dependent interactions between many stakeholders over time, challenge traditional procurement practices based on the serial purchase of discrete components. The paper examines how the procurement management of such projects – procuring complex performance – can be conducted. The paper utilises two contrasting case study examples of high-profile UK construction project procurement. The findings suggest that the choice of mechanisms or interfaces for the governance of upstream supply relationships critically relates to subsequent performance. The theoretical contribution is a fusion of procurement literature with the influential CoPS literature.