A theoretical framework for reducing tendering costs in the procurement of infrastructure projects

Purpose of this paper One way in which the tendering process can be further improved is by reviewing and clarifying the high costs that participants face during the course of the tendering phase. The study aims to provide project teams working in construction tender preparation a clear picture of what to expect when tendering for infrastructure projects. Design/methodology/approach Firstly, a review of current literature on tendering in infrastructure projects is conducted to identify the associated costs affecting traditional and PPP procurements as well as the potential measures contributing to tendering cost-reduction. A theoretical framework and its corresponding research hypotheses, which are based on the literature reviewed, are then proposed. An industry-wide questionnaire survey is currently under design to solicit industry practitioners’ views on tendering costs and the associated tendering cost-reduction measures. The data collected in the survey will subject to statistical analysis to test the proposed research hypotheses, which will be reported in a forthcoming paper. Findings and value The direct and indirect costs in public-private procurement have been identified and have been categorised into internal and external costs arising from working on tender submissions. A theoretical framework, mainly composed of five mechanisms of cost reduction, has been proposed and will be tested in a forthcoming industry-wide questionnaire survey. Originality/value of paper The findings are expected to lead to a transparent tendering process in infrastructure procurement, in which there is increased engagement from the private sector as well as an increase in competitive tendering.

Choosing appropriate contract methods for design-build projects

For design-build (DB) projects, owners normally use lump sum and Guaranteed Maximum Price (GMP) as the major contract payment provisions. However, there was a lack of empirical studies to compare the project performance within different contract types and investigate how different project characteristics affect the owners’ selection of contract arrangement. Project information from Design-build Institute of America (DBIA) database was collected to reveal the statistical relationship between different project characteristics and contract types and to compare project performance between lump sum and GMP contract. The results show that lump sum is still the most frequently used contract method for DB projects, especially in the public sector. However, projects using GMP contract are more likely to have less schedule delay and cost overrun as compared to those with lump sum contract. The chi-square tests of cross tabulations reveal that project type, owner type, and procurement method affect the selection of contract types significantly. Civil infrastructure rather than industrial engineering project tends to use lump sum more frequently; and qualification-oriented contractor selection process resorts to GMP more often compared with cost-oriented process. The findings of this research contribute to the current body of knowledge concerning the effect of associated project characteristics on contract type selection. Overall, the results of this study provide empirical evidence from real DB projects that can be used by owners to select appropriate contract types and eventually improve future project performance.

Submission to KPMG review of the Federal Government Initiative to “analyse dementia program and services funded by the Department of Social Services"

The comments I make are based on my nearly twenty years involvement in the dementia cause at both a national and international level. In preparation, I read two papers namely the Ministerial Dementia Forum – Option Paper produced by KPMG Management Consultants (2014) and Analysis of Dementia Programmes and Services Funded by the Department of Social Services: Conversation Starter prepared by KPMG as a preparation document for those attending a workshop in Brisbane on April 22nd 2015. Dementia is a complex “syndrome” and as is often said, “when you meet one person with dementia, you have met one” meaning that no two persons with dementia are the same. Even in dementia care, Australia is a “lucky country” and there is much to be said for the quality and diversity of dementia care available for people living with dementia. Despite this, I agree with the many views expressed in the material I read that there is scope for improvement, especially in the way that services are coordinated. In saying that, I do not purport to have all the solutions nor claim to have the knowledge required to comment on all the programs covered by this review. If I appear to be a “biased” advocate for Alzheimer’s Australia across the States and Territories, it is because I have seen constant evidence of ordinary people doing extraordinary things with inadequate resources. Dementia care is not cheap and if those funding dementia services are primarily only interested in economic outcomes and benefits, the real purpose of this consultation will be defeated. In addition, nowhere in the material I have read is there any recognition that in many instances program funding is a complex mix of government (at all levels) and private funding. This makes reviewing those programs more complex and less able to be coordinated at a Departmental level. It goes without saying therefore that the Federal Government is not” the only player in this game”. Of all those participating in this review, Alzheimer’s Australia is best placed to comment on programs as it is more connected to people living with dementia and has probably the best record of consulting with them. It would appear however that their role has been reduced to that of a “bit player”. Without wanting to be critical, the Forum Report which deals with the comments made at a gathering of 70 individuals and organisations, only three (3) or 4.28% were actual carers of people living with dementia. Even if it is argued that a number of organisations present represented consumers, the percentage goes up only marginally to 8.57% which is hardly an endorsement of the forum being “consumer driven”. The predominance of those present were service providers, each with their own agenda and each seeking advantage for their “business”. The final point I want to make before commenting on more specific, program related issues, is that many programs being reviewed have a much longer history than is reflected in the material I have read. Their growth and development was pioneered by Alzheimer’s Australia organisations across the country often with no government funding. Attempts to bring about better coordination of programs were often at the behest of Alzheimer’s Australia but in the main were ignored. The opportunity to now put this right is long overdue.

Collaborative learning model of infrastructure construction: A capability perspective

Purpose Performance heterogeneity between collaborative infrastructure projects is typically examined by considering procurement systems and their governance mechanisms at static points in time. The literature neglects to consider the impact of dynamic learning capability, which is thought to reconfigure governance mechanisms over time in response to evolving market conditions. This conceptual paper proposes a new model to show how continuous joint learning of participant organisations improves project performance. Design/methodology/approach There are two stages of conceptual development. In the first stage, the management literature is analysed to explain the Standard Model of dynamic learning capability that emphasises three learning phases for organisations. This Standard Model is extended to derive a novel Circular Model of dynamic learning capability that shows a new feedback loop between performance and learning. In the second stage, the construction management literature is consulted, adding project lifecycle, stakeholder diversity and three organisational levels to the analysis, to arrive at the Collaborative Model of dynamic learning capability. Findings The Collaborative Model should enable construction organisations to successfully adapt and perform under changing market conditions. The complexity of learning cycles results in capabilities that are imperfectly imitable between organisations, explaining performance heterogeneity on projects. Originality/value The Collaborative Model provides a theoretically substantiated description of project performance, driven by the evolution of procurement systems and governance mechanisms. The Model’s empirical value will be tested in future research.

Managing knowledge to promote sustainability in Australian transport infrastructure projects

To deliver tangible sustainability outcomes, the infrastructure sector of the construction industry needs to build capacities for the creation, application and management of ever increasing knowledge. This paper intends to establish the importance and key issues of promoting sustainability through knowledge management (KM). It presents a new conceptual framework for managing sustainability knowledge to raise the awareness and direct future research in the field of transport infrastructure, one of the fast growing sectors in Australia. A holistic KM approach is adopted in this research to consider the potential to “deliver the right information to the right person at the right time” in the context of sustainable development of infrastructure. A questionnaire survey among practitioners across the nation confirmed the necessity and identified priority issues of managing knowledge for sustainability. During infrastructure development, KM can help build much needed industry consensus, develop capacity, communicate decisions, and promote specific measures for the pursuit of sustainability. Six essential elements of the KM approach and their priority issues informed the establishment of a conceptual KM framework. The transport infrastructure sector has come to realise that development must not come at the expense of environmental and social objectives. In practice however, it is facing extensive challenges to deliver what has been promised in the sustainability agenda. This research demonstrates the importance of managing sustainability knowledge, integration of various stakeholders, facilitation of plans and actions and delivery of tangible benefits in real projects, as a positive step towards meeting these challenges.

Evaluating the level of stakeholder involvement during the project planning processes of building projects

The purpose of this study is to examine the current level of stakeholder involvement during the project's planning process. Stakeholders often provide the needed resources and have the ability to control the interaction and resource flows in the network. They also ultimately have strong impact on an organisation's survival, and therefore appropriate management and involvement of key stakeholders should be an important part of any project management plan. A series of literature reviews was conducted to identify and categorise significant phases involved in the planning. For data collection, a questionnaire survey was designed and distributed amongst nearly 200 companies who were involved in the residential building sector in Australia. Results of the analysis demonstrate the engagement levels of the four stakeholder groups involved in the planning process and establish a basis for further stakeholder involvement improvement.

Are green project management practices applicable to traditional projects?

As the social environment begins to create more awareness in the area of conserving the natural environment, a new generation of building has emerged. A trend of constructing buildings that minimise impacts on the environment has been established in the construction industry. Therefore, suitable project management practices have been adopted to efficiently manage the construction of these green buildings. This study aims at investigating practices of project management in traditional and accredited green construction projects, with the purpose of discovering if Green Project Management (GPM) practices can be applied to traditional projects to achieve more successful outcomes. The process of GPM contains what applied to traditional projects, could possibly result in benefits in terms of budget control and constructability. Currently the construction industry has been known to suffer difficulties within these areas; therefore GPM practices could possibly hold a solution to these common problems.

An investigation into challenges facing distributed teams: Case of South Australian construction projects

There is increasing momentum within the construction industry to deploy distributed teams on projects, yet the major challenges that companies face for managing teams in distributed arrangements have yet to be explored in the construction context. Driven by such need, this study is intended to present an account of the major challenges encountered throughout the life cycle of offshore outsourcing arrangements within the South Australian construction industry. To this end, the study describes the observations made within the natural contexts of one construction project in terms of the challenges to the success of deploying distributed teams for outsourcing of works. Discussions remain in dialogue with relevant theories and the pertinent literature to explain the interpretations and lessons learned and to underpin the conclusions made. It is contended that this study contributes to the field by providing an illuminating insight into potential challenges facing distributed teams being implemented in outsourcing tasks in construction projects. Discussions also offer practical guidelines for construction project managers and assist them in dealing with potential challenges of offshore outsourcing through the lenses of distributed team working principles.

Evaluation of social externalities of rapid economic development associated with major resource projects in regional communities

This thesis developed a thematic structure for evaluating social externalities of major resource projects using a mixed methods approach and structural equation modelling. The implications offer important insights into the extent quality of life is being influenced by coal seam gas projects in regional communities in Southeast Queensland, Australia. Findings show that unresolved concerns of community residents about environmental and social impacts contribute to lower life-satisfaction, inhibit the community to plan for the future, and lead to a weaker local economy.

Service-learning through multiple client-sponsored projects in an MBA marketing course

This paper outlines an approach for teaching Marketing Principles in an MBA course through service-learning to enable adult learners to connect the lectures’ marketing content to a real-world marketing project. During the course, 40 students in groups of four to five individuals were involved in eight different client-sponsored marketing projects executed simultaneously. The rationale, planning and management of this approach utilised current research on service-learning, living cases and client-sponsored projects in marketing education. The experimental curriculum design is presented in a timeline that mirrors the preparation and management of the group projects and the considerations to be taken into account when initiating and facilitating the projects. Reflections from this iteration of the service-learning design suggest the importance of: detailed project planning, the involvement of students in choosing the projects, the introduction of forms and feedback loops, the role of the instructor in facilitating the students and managing expectations, and the role of the company representative in supporting the groups.

A 4D automatic simulation tool for construction resource planning: A case study

Purpose Traditional construction planning relies upon the critical path method (CPM) and bar charts. Both of these methods suffer from visualization and timing issues that could be addressed by 4D technology specifically geared to meet the needs of the construction industry. This paper proposed a new construction planning approach based on simulation by using a game engine. Design/methodology/approach A 4D automatic simulation tool was developed and a case study was carried out. The proposed tool was used to simulate and optimize the plans for the installation of a temporary platform for piling in a civil construction project in Hong Kong. The tool simulated the result of the construction process with three variables: 1) equipment, 2) site layout and 3) schedule. Through this, the construction team was able to repeatedly simulate a range of options. Findings The results indicate that the proposed approach can provide a user-friendly 4D simulation platform for the construction industry. The simulation can also identify the solution being sought by the construction team. The paper also identifies directions for further development of the 4D technology as an aid in construction planning and decision-making. Research limitations/implications The tests on the tool are limited to a single case study and further research is needed to test the use of game engines for construction planning in different construction projects to verify its effectiveness. Future research could also explore the use of alternative game engines and compare their performance and results. Originality/value The authors proposed the use of game engine to simulate the construction process based on resources, working space and construction schedule. The developed tool can be used by end-users without simulation experience.

Client learning and the performance of collaborative infrastructure projects

Australia is a leading user of collaborative procurement methods, which are used to deliver large and complex infrastructure projects. Project alliances, Early Contractor Involvement (ECI), and partnering are typical examples of collaborative procurement models. In order to increase procurement effectiveness and value for money (VfM), clients have adopted various learning strategies for new contract development. However client learning strategies and behaviours have not been systematically analysed before. Therefore, the current paper undertakes a literature review addressing the research question “How can client learning capabilities be effectively understood?”. From the resource-based and dynamic capability perspectives, this paper proposes that the collaborative learning capability (CLC) of clients drives procurement model evolution. Learning routines underpinning CLC carry out exploratory, transformative and exploitative learning phases associated with collaborative project delivery. This learning improves operating routines, and ultimately performance. The conceptualization of CLC and the three sequential learning phases is used to analyse the evidence in the construction management literature. The main contribution of this study is the presentation of a theoretical foundation for future empirical studies to unveil effective learning strategies, which help clients to improve the performance of collaborative projects in the dynamic infrastructure market.

Developing green procurement framework for construction projects in Malaysia

With the current emerging development pattern in Malaysia, Malaysian government has enthusiastically promoted green procurement approach that will help the construction project being green. Previous studies highlighted that the concept of green procurement is still very new to the Malaysian construction industry, and this increases the needs for further research in this area. This paper addresses the needs of guidelines for stakeholders to procure environmentally-friendly construction. Currently, there is a limited practical guideline for stakeholders to procure green projects. This paper discusses the progress to date of a research project aimed at developing a green procurement framework for construction projects in the Malaysian construction industry. This framework will guide the stakeholders to plan the green procurement implementation to procure a construction projects. Through literature and expert opinion, this paper explores the list of green practices within procurement practices which becomes the basis to develop a survey instrument that will be used in the later part of this study. The paper will shed useful information for construction researchers and practitioners in exploring the green procurement concept for construction industry in Malaysia.

Time and cost performance of design–build projects

The design-build (DB) delivery method has been widely used in the United States due to its reputed superior cost and time performance. However, rigorous studies have produced inconclusive support and only in terms of overall results, with few attempts being made to relate project characteristics with performance levels. This paper provides a larger and more finely grained analysis of a set of 418 DB projects from the online project database of the Design-Build Institute of America (DBIA), in terms of the time-overrun rate (TOR), early start rate (ESR), early completion rate (ECR) and cost overrun rate (COR) associated with project type (e.g., commercial/institutional buildings and civil infrastructure projects), owners (e.g., Department of Defense and private corporations), procurement methods (e.g., ‘best value with discussion’ and qualifications-based selection), contract methods (e.g., lump sum and GMP) and LEED levels (e.g., gold and silver). The results show ‘best value with discussion’ to be the dominant procurement method and lump sum the most frequently used contract method. The DB method provides relatively good time performance, with more than 75% of DB projects completed on time or before schedule. However, with more than 50% of DB projects cost overrunning, the DB advantage of cost saving remains uncertain. ANOVA tests indicate that DB projects within different procurement methods have significantly different time performance and that different owner types and contract methods significantly affect cost performance. In addition to contributing to empirical knowledge concerning the cost and time performance of DB projects with new solid evidence from a large sample size, the findings and practical implications of this study are beneficial to owners in understanding the likely schedule and budget implications involved for their particular project characteristics.

Critical risk factors affecting the implementation of PPP waste-to-energy projects in China

Since 2003, Mainland China has been promoting the public–private partnership (PPP) procurement model in the waste-to-energy incineration sector to reduce the waste burying rate and improve environmental quality. Five critical risk factors (CRFs) that affect the construction and operation of waste-to-energy incineration projects have been identified from real-life risk events of 14 PPP waste-to-energy incineration plants through content analysis. These risk factors are insufficient waste supply, disposal of non-licensed waste, environmental risk, payment risk, and lack of supporting infrastructure. A recently completed PPP waste-to-energy incineration plant, the Shanghai Tianma project, was investigated to learn from the effective management of CRFs. First-hand data about the Shanghai Tianma project was collected, with a focus on project negotiation and concession agreement. Lessons learned about risk management were acquired. This paper presents a detailed study of the contractual structure, risk sharing scheme, risk response measures to CRFs, and project transfer of a PPP project. The study results will provide governments with management implications to prepare equitable concession agreements and benefit private investors by effectively mitigating and managing risks in future PPP waste-to-energy incineration projects.