Project Procurement Strategies Research Articles

Insights from a project procurement strategy through an action research

Abstract The purpose of this paper is to describe the process of selecting an appropriate procurement method most suitable to the specificities of a building retrofitting project. The relevant literature points to the difficulties in managing design errors and mistakes in the conception phase and their negative impact on the construction phase and, ultimately, on construction project development. The regulatory framework related to these issues exists but the problems persist, alongside the absence of regulation in the project manager’s functions. General contracting is the procurement method mostly used but has its caveats, particularly in risky and complex construction projects. This study adopts a Participatory Action Research methodology to describe all the procedures and decision making during the project development process, including the evaluation of the tenders and the ensuing competitive negotiation process. The results of the study show the importance of a design consultant with skills base and experience in procurement in the process of construction project development. The competitive negotiation process allowed to a final contract price that was lower than the initial best offer. Furthermore, a revised structural project design undertaken under the responsibility of the contractor increased the quality of the project design in comparison with the initial one. The results also show some adjustments in procurement method along the procurement process.

RESPONSIBLE DELIVERY OF THE BUILT PROJECT: WHOSE RESPONSIBILITY IS IT?

Several procurement approaches have evolved over the years to suit the delivery of the ever increasing complexity and size of construction projects, coupled with the increasing pressure to embrace green methodologies as part of any such approach. Many of these available approaches reflect various levels of integration that may be desired to achieve in respect of critical project aspects, including: design, construction, operation, and finance. Decisions as to the most suitable delivery approach are to be made by project owners/developers, while being often assisted by market analysts, project management professionals, and other specialty consultants. While it is established that such a decision-making process does not follow an exact science, this paper tackles the issue of where responsibility truly rests for ensuring that the preferred or adopted project procurement strategy is consciously argued for with the interests of all involved stakeholders in mind. It touches on (1) the roles of the public and development policies and regulations prevailing in the locality of the intended project as well as (2) the capabilities and readiness of concerned project participants in enforcing, or at least, promoting more environmental, social, and economic consciousness into the procurement approach decision-making process.

Analyzing Design Workflow: An Agent-based Modeling Approach

Variability embedded in the architecture, engineering, and construction industry often results from inefficient planning strategies, sub-optimal levels of coordination, and poor flow of information and resources. This inherent variability disrupts workflow in design, results in longer cycle times, increased costs, and rework; thus undermining design, as well as, construction performance. This paper addresses design workflow at the intersection of the social and process aspects of the design phase. These aspects have been studied separately in previous research works, which prevented capturing a comprehensive and realistic understanding of the design process. Accordingly, this study develops a new approach to qualitatively and quantitatively model the exchange of information between design players and pave the way to assessing the impacts of Building Information Modeling and new project procurement strategies on improving design workflow. Agent-based modeling is used to dynamically represent the relationship between social interactions and the diffusion of information between individuals and teams. The study presents a novel design workflow management approach that bridges the gaps in previous studies as it focuses on team structures, interaction dynamics, and information diffusion.

A rationale for alliancing within a public-private partnership

Purpose – This case study was chosen for its rare, if not unique, project procurement strategy. It is, to the authors’ knowledge, the only example of a project alliance (PA) being undertaken within a public-private partnership (PPP) project delivery approach. The purpose of this paper is to explore the case study from a strategic perspective to better understand if it is possible to combine a PA within a less collaborative procurement form, such as PPP or design and construct (D&C), and to determine if there were any specific prerequisite conditions needed for such an arrangement to be successfully adopted. Design/methodology/approach – A single exploratory case study was undertaken through interviewing seven of the most senior project participant executives for approximately an hour that each had a separate and unique perspective to offer relating to the organisational role they represented in the PA. These interviewees were identified as the most knowledgeable key executives participating in the PA from whom both strategic and operational insights could be gained. Findings – It is possible to design a PA approach within a PPP for large and complex infrastructure projects and this can provide a competitive advantage to do so, however, the reasons for doing so should be clear and compelling. Parties to such an arrangement should be prepared to fully engage through adopting full PA principles. In such a case as this, the PPP special purpose vehicle takes on the role of “project owner” that normally the public body part of the PPP would normally adopt. Research limitations/implications – This research reports upon a single case study within a specific project delivery culture that has extensive experience of PAs. Demonstrated positive project outcomes would not be likely to be more generally repeatable across the engineering infrastructure sector unless parties engaged within such a PA had not already experienced and understood outcomes resulting from such a close collaboration. Practical implications – This research has implications for project participants bidding for PPP projects as well as others using a D&C tending approach. It offers a potential competitive advantage because it demonstrates and explains how choices may be expanded beyond a simple single project procurement strategy approach. Social implications – Many PPP and PA infrastructure projects are delivered to provide community benefit. This paper provides a way to improve the project delivery process and thus improving value to the community. Originality/value – The paper makes three contributions. Primarily, it pioneers analysis of a PA within a PPP. Second, it provides important insights into the reasons and emergence of this phenomenon. Finally, it provides an understanding of this how this novel form of early contractor involvement with a PPP special purpose ownership vehicle that combines competition and collaboration may function operationally.

Optimised Selection and use of Project Procurement Strategy in Nigeria: A Case from Practise

Decision based selection process is one of the methods developed to assist procuring clients globally in overcoming the difficulty associated with procurement strategy selection due to competing advantages. While it is increasingly being used in other parts of the world for optimal result, it is not very popular in Nigeria. There is an increasing recourse to the use of one or two procurement strategy based on familiarity for all project circumstances and the outcome is poor performance witnessed in most public and private sector projects. This paper demonstrate the use of decision matrix in appraising a private sector client’s procurement need with a view to select most appropriate procurement strategies to deliver its development needs. It is a report of an action research involving a focus group discussion of key stakeholders in the project selected using convenience sampling. The study was conducted in Akwa Ibom State, south-south Nigeria. Like every other procurement selection exercise, the process adopt in-depth construction industry tested parameters for appraising and advising on the most suitable procurement strategy based on eight project success criteria. The project organisation accepted both the innovation to adopt the process for change and the product of change. The study provides a structured decision based model for improving procurement selection process and eliminating the problems associated with poor project performance in the construction industry in the country.Key words: Decision matrix, Nigeria, procurement strategy, partnering, selection, success criteria

Motivation toward financial incentive goals on construction projects

Construction industry observers tout the use of financial incentives as promoters of motivation and commitment on projects. Yet, little empirical evidence exists concerning their effectiveness. What are the drivers of motivation on construction projects? The reasons that construction project participants are motivated to pursue voluntary incentive goals are examined through four Australian case studies. The results demonstrate the critical role played by project relationships and equitable contract conditions in promoting the effectiveness of financial incentives. In the context of a construction project, this study finds financial incentives to be less important to motivation and performance than relationship enhancement initiatives. This finding is unexpected and has implications for the design of project procurement strategies. These results suggest that if project clients ignore the importance of relationship quality between participants, the impact of any financial incentive will be compromised.

The integration of human relationships in capital development projects

PurposeRecent work on public private partnerships (PPP)/private finance initiatives (PFI) and on the construction industry has emphasised the importance of knowledge transfer, learning and innovation to improve the working processes and procedures of the industry. However, until recently all three have been researched separately. It is on this basis the research presents a theoretical proposition that “the integration of alliance principles through the formation of collaborative network; innovation, knowledge transfer and organisational learning can be enabled where there is coordination, cohesion, commitment, teamwork, clear vision, monitoring and governance structure for control, risks/reward sharing, efficient and effective communication strategy, learning and knowledge transfer strategy”.Design/methodology/approachThe theory of social capital, social networks and inter‐organisational network was applied based on a network perspective to explain and aid specific attributes of PPP and PFI as a collaborative network to achieve the research objective. A case study research methodology was adopted to investigate the theoretical proposition.FindingsThe findings of this research illustrates that collaborative relationship is a crucial factor in contractual arrangements to enable cost savings, time savings and project quality. In addition, the challenges clients and contractors encounter in integrating innovation are as a result of project scope, project duration, affordability and project procurement strategy. Furthermore, the difficulties of knowledge transfer and learning is as a result of the disconnection between the team that closes the PFI deal and the team that implements the contract.Originality/valueThe paper suggests a network perspective to improve work relationships that helps to achieve predetermined common goals and to enhance project performance.

Insights into collaboration at the project level: complexity, social interaction and procurement mechanisms

Drawing upon relevant concepts in organizational social theory (becoming ontology and processual view of complexity), and adopting an interpretative approach to studying organizational phenomena, this paper aims to make a contribution to the understanding of social processes in multi-organizational settings defined as ‘construction projects'. The study takes a critical view on the claimed advantages of non-conventional, innovative project procurement strategies as integration-enhancing mechanisms at the project level. Taking a swimming pool construction project governed by an innovative procurement procedure known as ‘two-stage tender’ as a case in point, the paper evaluates the extent to which better project team integration has been achieved in this context. Two major concerns emerged from the case study analysis: (1) two-stage tendering is an incomplete solution to tensions, adversarial culture and a lack of genuine cooperation over time; and (2) there is a need for facilitating mechanisms of a different nature to support and sustain collective situated learning and shared understanding of longer-term benefits of collaborative work. Based on the theoretical considerations and the interpretation of the empirical accounts, the paper proposes and refines a conceptual framework for understanding the complexity of construction projects as social settings. In the light of this framework, alternative concepts and skills for enhanced collaborative interaction among participating parties in this kind of social setting are suggested.

Statistical analysis of causes for design change in highway construction on Taiwan

Design change exist in construction projects and often cause cost overrun or schedule delay. Change management is a key issue in project management. The first step of change management is change identification. It includes the recognition of potential change event conditions in the project and the clarification of change responsibilities. We conducted multiple-case studies using statistics analysis to identify change in highway project in Taiwan, to clarify the causes of construction change and to analyze the influence. The results show the differences in engineering properties among embankment roads, viaducts, and tunnels create differences in emphasis in investigating and managing geological concerns. The analysis furthermore indicates that, in order to prevent changes of design because of insufficiency of geologic survey, site-survey shall be enhanced in the feasibility analysis and planning design stages for future similar projects. The finding in the paper can be used as a reference for clients in forming their project procurement strategy.

Statistical analysis of causes for change orders in metropolitan public works

The fragmentation of design and construction processes increases the likelihood change orders in conventional project procurement methods. According to the related literature and practical experience, the causes for change orders are greatly varied, thus making the task of change management difficult for most clients. In consequence, cost and time overruns are often the direct outcome of mismanagement of changes. This paper, however, argues that this undesirable situation can be minimized or avoided as long as a mechanism for handling change orders can be understood and built into project management. This paper reviews the recorded change orders in 90 metropolitan public work projects completed before the year 2000 in Taipei, Taiwan. Based on this database, the chains of events are identified and the causes for change orders are categorized. Statistical correlation and variance analysis are used to find the connection among layers of events or causes. This study further provides preliminary recommendations about project management for change orders. The finding of this paper can be used as a reference for clients in developing their project procurement strategy.

Reinforcing Design-Build Contractor Selection: A Hong Kong Perspective

Design-Build contracts are becoming increasingly popular as the construction industry seeks less adversarial and more integrated project procurement strategies. However, contractor selection for integrated Design-Build assignments is more demanding and even more critical than with traditional arrangements. A cross-section of some innovative approaches and good practices that were distilled from a Hong Kong based study is highlighted in this paper both for dissemination and for facilitation of an eventual benchmarking and development of selected best practices. More significantly, the uitimate thrust of the research is aimed at reinforcing Design-Builder selection methodologies in the Hong Kong scenario. A structured Design-Builder selection model and a related Decision Support System framework are also presented to help meet these objectives.