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 if project clients ignore the importance of relationship quality between participants, the impact of any financial incentive will be compromised.

Innovation in construction : a case study of the Australian context

The dominant economic paradigm currently guiding industry policy making in Australia and much of the rest of the world is the neoclassical approach. Although neoclassical theories acknowledge that growth is driven by innovation, such innovation is exogenous to their standard models and hence often not explored. Instead the focus is on the allocation of scarce resources, where innovation is perceived as an external shock to the system. Indeed, analysis of innovation is largely undertaken by other disciplines, such as evolutionary economics and institutional economics. As more has become known about innovation processes, linear models, based on research and development or market demand, have been replaced by more complex interactive models which emphasise the existence of feedback loops between the actors and activities involved in the commercialisation of ideas (Manley 2003). Currently dominant among these approaches is the national or sectoral innovation system model (Breschi and Malerba 2000; Nelson 1993), which is based on the notion of increasingly open innovation systems (Chesbrough, Vanhaverbeke, and West 2008). This chapter reports on the ‘BRITE Survey’ funded by the Cooperative Research Centre for Construction Innovation which investigated the open sectoral innovation system operating in the Australian construction industry. The BRITE Survey was undertaken in 2004 and it is the largest construction innovation survey ever conducted in Australia. The results reported here give an indication of how construction innovation processes operate, as an example that should be of interest to international audiences interested in construction economics. The questionnaire was based on a broad range of indicators recommended in the OECD’s Community Innovation Survey guidelines (OECD/Eurostat 2005). Although the ABS has recently begun to undertake regular innovation surveys that include the construction industry (2006), they employ a very narrow definition of the industry and only collect very basic data compared to that provided by the BRITE Survey, which is presented in this chapter. The term ‘innovation’ is defined here as a new or significantly improved technology or organisational practice, based broadly on OECD definitions (OECD/Eurostat 2005). Innovation may be technological or organisational in nature and it may be new to the world, or just new to the industry or the business concerned. The definition thus includes the simple adoption of existing technological and organisational advancements. The survey collected information about respondents’ perceptions of innovation determinants in the industry, comprising various aspects of business strategy and business environment. It builds on a pilot innovation survey undertaken by PricewaterhouseCoopers (PWC) for the Australian Construction Industry Forum on behalf of the Australian Commonwealth Department of Industry Tourism and Resources, in 2001 (PWC 2002). The survey responds to an identified need within the Australian construction industry to have accurate and timely innovation data upon which to base effective management strategies and public policies (Focus Group 2004).

Sustainability performance of construction : conceptual models of satisfaction levels in construction projects

In general, the performance of construction projects, including their sustainability performance, does not meet optimal expectations. One aspect of this is the performance of the participants who are independent and make a significance impact on overall project outcomes. Of these participants, the client is traditionally the owner of the project, the architect or engineer is engaged as the lead designer and a contractor is selected to construct the facilities. Generally, the performance of the participants is gauged by considering three main factors, namely, time, cost and quality. As the level of satisfaction is a subjective issue, it is rarely used in the performance evaluation of construction work. Recently, various approaches to the measurement of satisfaction have been made in an attempt to determine the performance of construction project outcomes - for instance, client satisfaction, customer satisfaction, contractor satisfaction, occupant satisfaction and home buyer satisfaction. These not only identify the performance of the construction project but are also used to improve and maintain relationships. In addition, these assessments are necessary for the continuous improvement and enhanced cooperation of participants. The measurement of satisfaction levels primarily involves expectations and perceptions. An expectation can be regarded as a comparative standard of different needs, motives and beliefs, while a perception is a subjective interpretation that is influenced by moods, experiences and values. This suggests that the disparity between perceptions and expectations may possibly be used to represent different levels of satisfaction. However, this concept is rather new and in need of further investigation. This chapter examines the methods commonly practised in measuring satisfaction levels today and the advantages of promoting these methods. The results provide a preliminary review of the advantages of satisfaction measurement in the construction industry and recommendations are made concerning the most appropriate methods to use in identifying the performance of project outcomes.

Critical success factors of project management for Brunei construction projects : improving project performance

The problem of delays in the construction industry is a global phenomenon and the construction industry in Brunei Darussalam is no exception. The goal of all parties involved in construction projects – owners, contractors, engineers and consultants in either the public or private sector is to successfully complete the project on schedule, within planned budget, with the highest quality and in the safest manner. Construction projects are frequently influenced by either success factors that help project parties reach their goal as planned, or delay factors that stifle or postpone project completion. The purpose of this research is to identify success and delay factors which can help project parties reach their intended goals with greater efficiency. This research extracted seven of the most important success factors according to the literature and seven of the most important delay factors identified by project parties, and then examined correlations between them to determine which were the most influential in preventing project delays. This research uses a comprehensive literature review to design and conduct a survey to investigate success and delay factors and then obtain a consensus of expert opinion using the Delphi methodology to rank the most needed critical success factors for Brunei construction projects. A specific survey was distributed to owners, contractors and engineers to examine the most critical delay factors. A general survey was distributed to examine the correlation between the identified delay factors and the seven most important critical success factors selected. A consensus of expert opinion using the Delphi methodology was used to rank the most needed critical success factors for Brunei building construction. Data was collected and evaluated by statistical methods to identify the most significant causes of delay and to measure the strength and direction of the relationship between critical success factors and delay factors in order to examine project parties’ evaluation of projects’ critical success and delay factors, and to evaluate the influence of critical success factors on critical delay factors. A relative importance index has been used to determine the relative importance of the various causes of delays. A one and two-way analysis of variance (ANOVA) has been used to examine how the group or groups evaluated the influence of the critical success factors in avoiding or preventing each of the delay factors, and which success factors were perceived as most influential in avoiding or preventing critical delay factors. Finally the Delphi method, using consensus from an expert panel, was employed to identify the seven most critical success factors used to avoid the delay factors, and thereby improve project performance.

A regional construction R&D evaluation system for China

Expenditure on R&D in the China construction industry has been relatively low in comparison with many developed countries for a number of years – a situation considered to be a major barrier to the industry’s competitiveness in general and unsatisfactory industry development of the 31 regions involved. A major problem with this is the lack of a sufficiently sophisticated method of objectively evaluating R&D activity in what are quite complex circumstances considering the size and regional differences that exist in this part of the world. A regional construction R&D evaluation system (RCRES) is presented aimed at rectifying the situation. This is based on 12 indicators drawn from the Chinese Government’s R&D Inventory of Resources in consultation with a small group of experts in the field, and further factor analysed into three groups. From this, the required evaluation is obtained by a simple formula. Examination of the results provides a ranking list of the R&D performance of each of the 31 regions, indicating a general disproportion between coastal and inland regions and highlighting regions receiving special emphasis or currently lacking in development. The understanding on this is vital for the future of China’s construction industry.

Conceptual models of satisfaction level in construction

It is recognized that, in general, the performance of construction projects does not meet optimal expectations. One aspect of this is the performance of each participant, which is interdependent and makes a significance impact on overall project outcomes. Of these, the client is traditionally the owner of the project, the architect or engineer is engaged as the lead designer and a contractor is selected to construct the facilities. Generally, the performance of the participants is gauged by considering three main factors, namely time, cost and quality. As the level of satisfaction is a subjective measurement, it is rarely used in the performance evaluation of construction work. Recently, various approaches to the measurement of satisfaction have been made in attempting to determine the performance of construction project outcomes – for instance client satisfaction, consultant satisfaction, contractor satisfaction, customer satisfaction and home buyer satisfaction. These not only identify the performance of the construction project, but are also used to improve and maintain relationships. In addition, these assessments are necessary for continuous improvement and enhanced cooperation between participants. The measurement of satisfaction levels primarily involves expectations and perceptions. An expectation can be regarded as a comparison standard of different needs, motives and beliefs, while a perception is a subjective interpretation that is influenced by moods, experiences and values. This suggests that the disparity between perceptions and expectations may be used to represent different levels of satisfaction. However, this concept is rather new and in need of further investigation. This paper examines the current methods commonly practiced in measuring satisfaction level and the advantages of promoting these methods. The results provided are a preliminary review of the advantages of satisfaction measurement in the construction industry and recommendations are made concerning the most appropriate methods for use in identifying the performance of project outcomes.

The use of supply chain management to reduce delays : Malaysian public sector construction projects

Construction delays are a critical problem for Malaysian public sector projects. These delays have been blamed mainly on inefficient traditional construction practices that continue to dominate the current industry. This paper reports the progress to date of a Ph.D. research project aimed at developing a framework to utilize Supply Chain Management (SCM) tools to improve the time performance of Malaysian Government projects. The potential of SCM has been identified for public sector governance and its use in Malaysia is now being considered within the strategy of the Malaysian Construction Industry Master Plan (2006-2015). Encouraged by success in the UK, there is a cautious optimism concerning the successful application of SCM in Malaysia. This paper considers delay as a problem in Malaysian public sector projects, establishes the need to embrace SCM and then elucidates the need and strategies for the development of a delay reduction framework. A literature review, survey mechanism and structured interview schedule will be undertaken to achieve the research objectives. The final research outcome will be a framework that addresses root delay contributors (“pathogens”) and applies SCM tools for their mitigation.

Evaluating the influences of stakeholder management on construction project quality

The issue of ensuring that construction projects achieve high quality outcomes continues to be an important consideration for key project stakeholders. Although a lot of quality practices have been done within the industry, establishment and achievement of reasonable levels of quality in construction projects continues to be a problem. While some studies into the introduction and development of quality practices and stakeholder management in the construction industry have been undertaken separately, no major studies have so far been completed that examine in depth how quality management practices that specifically address stakeholders’ perspectives of quality can be utilised to contribute to the ultimate constructed quality of projects. This paper encompasses and summarizes a review of the literature related to previous research undertaken on quality within the industry, focuses on the benefits and shortcomings, together with examining the concept of integrating stakeholder perspectives of project quality for improvement of outcomes throughout the project lifecycle. Findings discussed in this paper reveal a pressing need for investigation, development and testing of a framework to facilitate better implementation of quality management practices and thus achievement of better quality outcomes within the construction industry. The framework will incorporate and integrate the views of stakeholders on what constitutes final project quality to be utilised in developing better quality management planning and systems aimed ultimately at achieving better project quality delivery.

Safety leaders' perceptions of safety culture in a large Australian construction organisation

Safety culture in the construction industry is a growing research area. The unique nature of construction industry works – being project-based, varying in size and focus, and relying on a highly transient subcontractor workforce – means that safety culture initiatives cannot be easily translated from other industries. This paper reports on the first study in a three year collaborative industry and university research project focusing on safety culture practices and development in one of Australia’s largest global construction organisations. The first round of a modified Delphi method is reported, and describes the insights gained from 41 safety leaders’ perceptions and understandings of safety culture within the organisation. In-depth, semi-structured interviews were conducted, and will be followed by a quantitative perception survey with the same sample. Participants included Senior Executives, Corporate Managers, Project Managers, Safety Managers and Site Supervisors. Leaders’ definitions and descriptions of safety culture were primarily action-oriented and some confusion was evident due to the sometimes implicit nature of culture in organisations. Leadership was identified as a key factor for positive safety culture in the organisation, and there was an emphasis on leaders demonstrating commitment to safety, and being visible to the project-based workforce. Barriers to safety culture improvement were also identified, with managers raising diverse issues such as the transient subcontractor workforce and the challenge of maintaining safety as a priority in the absence of safety incidents, under high production pressures. This research is unique in that it derived safety culture descriptions from key stakeholders within the organisation, as opposed to imposing traditional conceptualisations of safety culture that are not customised for the organisation or the construction industry more broadly. This study forms the foundation for integrating safety culture theory and practice in the construction industry, and will be extended upon in future studies within the research program.

Community-based protest against construction projects : a case study of movement continuity

Community-based activism against proposed construction projects is growing. Many protests are poorly managed and escalate into long-term and sometimes acrimonious disputes which damage communities, firms and the construction industry as a whole. Using a thematic storytelling approach which draws on ethnographic method, within a single case study framework, new insights into the social forces that shape and sustain community-based protest against construction projects are provided. A conceptual model of protest movement continuity is presented which highlights the factors that sustain protest continuity over time. The model illustrates how social contagion leads to common community perceptions of development risk and opportunity, to a positive internalization of collective values and identity, to a strategic utilization of social capital and an awareness of the need to manage the emotional dynamics of protest through mechanisms such as symbolic artefacts.

An integrated framework to assess financial reward systems in construction projects

Motivation is a major driver of project performance. Despite team member ability to deliver successful project outcomes if they are not positively motivated to pursue joint project goals, then performance will be constrained. One approach to improving the motivation of project organizations is by offering a financial reward for the achievement of set performance standards above a minimum required level. However, little investigation has been undertaken into the features of successful incentive systems as a part of an overall delivery strategy. With input from organizational management literature, and drawing on the literature covering psychological and economic theories of motivation, this paper presents an integrated framework that can be used by project organizations to assess the impact of financial reward systems on motivation in construction projects. The integrated framework offers four motivation indicators which reflect key theoretical concepts across both psychological and economic disciplines. The indicators are: (1) Goal Commitment, (2) Distributive Justice, (3) Procedural Justice, and (4) Reciprocity. The paper also interprets the integrated framework against the results of a successful Australian social infrastructure project case study and identifies key learning’s for project organizations to consider when designing financial reward systems. Case study results suggest that motivation directed towards the achievement of incentive goals is influenced not only by the value placed on the financial reward for commercial benefit, but also driven by the strength of the project initiatives that encourage just and fair dealings, supporting the establishment of trust and positive reciprocal behavior across a project team. The strength of the project relationships was found to be influenced by how attractive the achievement of the goal is to the incentive recipient and how likely they were to push for the achievement of the goal. Interestingly, findings also suggested that contractor motivation is also influenced by the fairness of the performance measurement process and their perception of the trustworthiness and transparency of their client. These findings provide the basis for future research on the impact of financial reward systems on motivation in construction projects. It is anticipated that such research will shed new light on this complex topic and further define how reward systems should be designed to promote project team motivation. Due to the unique nature of construction projects with high levels of task complexity and interdependence, results are expected to vary in comparison to previous studies based on individuals or single-entity organizations.

Modern construction economics [Book Review]

The editor, Gerard de Valence, points out in the preface, this book is neither a textbook nor a guide to what is done by construction managers and construction economists – read quantity surveyors and the like. Rather, de Valence notes it comprises a collection of chapters each of which focus on matters at the industry level and, in doing so, illustrates that a substantially improved understanding of the building and construction industry can be gained beyond the economics of delivering projects. Before giving some thought to how far each of the chapters achieve this, it’s worth reflecting on the virtues of developing construction economics as its own discipline or sub-discipline in general economics and the bold manner by which de Valence is proposing we do this. That is, de Valence proposes partitioning industry and project economics - as explained in the preface and in Chapter 1. de Valence’s view that “the time seems right” for these developments is also worthy of some consideration.

Safety culture research in the construction sector : interlocked projects in safety competency and safety effectiveness indicators

Safety culture is a concept that has long been accepted in high risk industries such as aviation, nuclear industries and mining, however, considerable research is now being undertaken within the construction sector, with varying levels of success. The current paper discusses three recent interlocked projects that have had some success in the Australian construction industry. The first project examined the development and implementation of a safety competency framework targeted at safety critical positions across first tier construction organisations. Combining qualitative and quantitative methods, the project: developed a matrix of safety critical positions (n=11) and safety managements tasks (SMTs; n=39); mapped the process steps for their acquisition and ongoing development; detailed the knowledge, skills and behaviours required for all SMTs; and outlined organisational cultural outcomes that could be anticipated in a successful implementation of the framework. The second project extended research on safety competency and leadership to develop behavioural guidelines for leaders to drive safety culture change down to second tier companies. This was designed to assist smaller construction companies to customise their own competency framework and develop implementation guidelines that match their aspirations and resources. The third interlocked project explored the use of safety effectiveness indicators (SEIs) as an industry-relevant assessment tool for reducing risk on construction sites. With direct linkages to safety competencies and safety management tasks, the SEIs are the next step towards an integrated safety cultural approach to safety and extend the concept of positive performance indicators (PPIs) by providing a valid, reliable, and user friendly measurement platform. Taken together, the results of the interlocked projects suggest that safety culture research has many potential benefits for the construction industry, particularly when research is conducted in partnership with industry stakeholders. Suggestions are made for future research, including further application and testing of the safety competency framework and aligning SEIs across construction projects of varying size, location and design.

Interlocked projects in safety competency and safety effectiveness indicators in the construction sector

Safety culture is a concept that has long been accepted in high risk industries such as aviation, nuclear industries and mining, however, considerable research is now also being undertaken within the construction sector. This paper discusses three recent interlocked projects undertaken in the Australian construction industry. The first project examined the development and implementation of a safety competency framework targeted at safety critical positions (SCP's) across first tier construction organisations. Combining qualitative and quantitative methods, the project: developed a matrix of SCP's (n=11) and safety management tasks (SMTs; n=39); mapped the process steps for their acquisition and development; detailed the knowledge, skills and behaviours required for all SMTs; and outlined potential organisational cultural outcomes from a successful implementation of the framework. The second project extended this research to develop behavioural guidelines for leaders to drive safety culture change down to second tier companies and to assist them to customise their own competency framework and implementation guidelines to match their aspirations and resources. The third interlocked project explored the use of safety effectiveness indicators (SEIs) as an industry-relevant assessment tool for reducing risk on construction sites. With direct linkages to safety competencies and SMT's, the SEIs are the next step towards an integrated safety cultural approach to safety and extend the concept of positive performance indicators (PPIs) by providing a valid, reliable, and user friendly measurement platform. Taken together, the results of the interlocked projects suggest that industry engaged collaborative safety culture research has many potential benefits for the construction industry.

Economic fluctuations and productivity in the Malaysian construction sector

Growth in productivity is the key determinant of the long-term health and prosperity of an economy. The construction industry being one of major strategic importance, its productivity performance has a significant effect on national economic growth. The relationship between construction output and economy has received intensive studies, but there is lack of empirical study on the relationship between construction productivity and economic fluctuations. Fluctuations in construction output are endemic in the industry. In part they are caused by the boom and slump of the economy as a whole and in part by the nature of the construction product. This research aims to uncover how the productivity of construction sector is influenced in the course of economic fluctuations in Malaysia. Malaysia has adopted three economic policies – New Economic Policy (1971-1990), National Development Policy (1991-2000) and the National Vision Policy (2001-2010) since gaining independence in 1959. The Privatisation Master Plan was introduced in 1991. Operating within this historical context, the Malaysian construction sector has experienced four business cycles since 1960. A mixed-method design approach is adopted in this study. Quantitative analysis was conducted on the published official statistics of the construction industry and the overall economy in Malaysia between 1970 and 2009. Qualitative study involved interviews with a purposive sample of 21 industrial participants. This study identified a 32-year long building cycle appears in 1975-2006. It is superimposed with three shorter construction business cycles in 1975-1987, 1987-1999 and 1999-2006. The correlations of Construction labour productivity (CLP) and GDP per capita are statistically significant for the 1975-2006 building cycle, 1987-1999 and 1999-2006 construction business cycles. It was not significant in 1975-1987 construction business cycles. The Construction Industry Surveys/Census over the period from 1996 to 2007 show that the average growth rate of total output per employee expanded but the added value per employee contracted which imply high cost of bought-in materials and services and inefficient usage of purchases. The construction labour productivity is peaked at 2004 although there is contraction of construction sector in 2004. The residential subsector performed relatively better than the other sub-sectors in most of the productivity indicators. Improvements are found in output per employee, value added per employee, labour competitiveness and capital investment but declines are recorded in value added content and capital productivity. The civil engineering construction is most productive in the labour productivity nevertheless relatively poorer in the capital productivity. The labour cost is more competitive in the larger size establishment. The added value per labour cost is higher in larger sized establishment attributed to efficient in utilization of capital. The interview with the industrial participant reveals that the productivity of the construction sector is influenced by the economic environment, the construction methods, contract arrangement, payment chain and regulatory policies. The fluctuations of construction demand have caused companies switched to defensive strategy during the economic downturn and to ensure short-term survival than to make a profit for the long-term survival and growth. It leads the company to take drastic measures to curb expenses, downsizing, employ contract employment, diversification and venture overseas market. There is no empirical evidence supports downsizing as a necessary step in a process of reviving productivity. The productivity does not correlate with size of firm. A relatively smaller and focused firm is more productive than the larger and diversified organisation. However diversified company experienced less fluctuation in both labour and capital productivity. In order to improve the productivity of the construction sector, it is necessary to remove the negatives and flaws from past practices. The recommended measures include long-term strategic planning and coordinated approaches of government agencies in planning of infrastructure development and to provide regulatory environments which encourage competition and facilitate productivity improvement.