Trade Contractors Research Articles

Construction Management and the Specialty Trade (Prime) Contractors

Nonconventional construction techniques such as construction management and design-build/fast track have developed as methods designed to reduce the total time between the date of decision to build and the date of project completion. Any such time savings predominantly benefits the owner. The sooner the project is completed, the sooner it can serve its intended purpose-a factory can produce goods; an office building can produce rental income; a refinery can produce gasoline products; or a power plant can generate electricity. A time savings can also result in reduced construction and financing costs including lower labor rates, material and fuel costs, and interest expense. Because it is the owner who elects to utilize a nonconventional construction technique, it is the owner who must accept not only the benefits but also the costs of such methods. The purpose of this article is to evaluate the use of construction management and design-build/fast track from the perspective of specialty trade contractors, the group performing the majority of the actual physical construction work. The article will first review the role of specialty contractors under the traditional fixed design and prime contractor-subcontractor system. It will then discuss the expectations of the specialty contractors when nonconventional techniques are to be utilized. Finally, it will evaluate how nonconventional methods have actually worked for specialty trade contractors.

The Trade Contractors' View of Construction Management

Conclusions are reached through the use of questionnaires obtained from contractors who have performed on construction management projects. A tabulation of the results shows the comments about the projects surveyed were favorable from the specialty contractors. Less favorable comments were received about design changes or modifications made after award of the contract. Following a work plan, awarding contracts in an ethical manner and prequalifying contractors is necessary for a successful project.

QUANTITY AND PRICE INDEXES FOR CONSTRUCTION

Construction has traditionally constituted one of the problem areas in the preparation of industry price and quantity statistm with in the system of national accounts of most countries. The difficulty stems from what is considered to be the unique character of construction projects. This has unnecessarily impeded the calculation of output price indexes and has resulted in the use of various input‐based prices as proxies for output prices.One of the objectives of the development of the system of construction price statistics described in this paper is to permit deflation of the outputs of construction industries in order to produce industry output data in constant prices in a manner consistent with measures for the rest of the economy. This is a more promising approach to improving constant price industry and expenditure measures within the SNA framework than attempting such improvements through the collection of a vast array of quantity data.Construction industries sell specified configurations of materials‐in‐place which are, to borrow the jargon of other fields, sub‐assemblies of some total system. As in other areas of industrial pricing, some of these products are simple and some are complex. Trade contractors sell these sub‐assemblies or commodities mainly to an owner‐builder or to a general contractor who, in turn, resells the trade contractors’ commodities along with whatever sub‐assemblies the general contractor has produced. These sub‐assemblies, when combined with, for example, the relevant outputs (or sub‐assemblies) of manufacturers, the design services of service industries and the purchasers’ own contributions, yield the wide variety of plant and structures which constitute the various classes of gross fixed capital formation, which are not typically solely the outputs of the construction industries.The resulting contractors’ selling price indexes will provide deflators for the whole range of outputs of the various construction industries. These will become part of the system of industry selling price indexes from which relevant indexes for the various goods and services can be selected and combined with appropriate weights to yield arrays of deflators for the highly complex capital expenditures of business, institutions and government.Ultimately this integrated system of construction industry statistics will permit the preparation of gross output and value added measures, in both current and constant prices, to be calculated for the construction industries as an integral part of the Canadian System of National Accounts, as well as provide a key element for improving the deflation of fixed capital formation.