Construction management contracts: law and practice

The context of construction management (CM) reveals that this method of procurement is as much a management philosophy as a contract structure. It is important to consider legal and contractual issues in this context. The interplay between management and law is complex and often misunderstood. Before considering specific issues, the use of contractual remedies in business agreements is discussed. In addition, the extent to which standardising a form of contract detracts or contributes to the success of projects is also considered. The dearth of judicial decisions, and the lack of a standard form, render it difficult to be specific about legal issues. Therefore, the main discussion of legal issues is centred around a recently completed research project which involved eliciting the views of a cross-section of experienced construction management clients, consultants and trade contractors. These interviews are used as the basis for highlighting some of the most important legal points to consider when setting up CM projects. The interviews revealed that the advantage of CM is the proximity of the client to the trade contractors and the disadvantage is that it depends on a high degree of professionalism and experience; qualities which are unfortunately difficult to find in the UK construction industry.

Contemporary organizational theory in the management of construction projects

The level of insolvencies in the construction industry is high, when compared to other industry sectors. Given the management expertise and experience that is available to the construction industry, it seems strange that, according to the literature, the major causes of failure are lack of financial control and poor management. This indicates that with a good cash flow management, companies could be kept operating and financially healthy. It is possible to prevent failure. Although there are financial models that can be used to predict failure, they are based on company accounts, which have been shown to be an unreliable source of data. There are models available for cash flow management and forecasting and these could be used as a starting point for managers in rethinking their cash flow management practices. The research reported here has reached the stage of formulating researchable questions for an in-depth study including issues such as how contractors manage their cash flow, how payment practices can be managed without damaging others in the supply chain and the relationships between companies" financial structures and the payment regimes to which they are subjected.

Cash flow management in construction firms

The level of insolvencies in the construction industry is high, when compared to other industry sectors. Given the management expertise and experience that is available to the construction industry, it seems strange that, according to the literature, the major causes of failure are lack of financial control and poor management. This indicates that with a good cash flow management, companies could be kept operating and financially healthy. It is possible to prevent failure. Although there are financial models that can be used to predict failure, they are based on company accounts, which have been shown to be an unreliable source of data. There are models available for cash flow management and forecasting and these could be used as a starting point for managers in rethinking their cash flow management practices. The research reported here has reached the stage of formulating researchable questions for an in-depth study including issues such as how contractors manage their cash flow, how payment practices can be managed without damaging others in the supply chain and the relationships between companies’ financial structures and the payment regimes to which they are subjected.

An analytic knowledge network process for construction entrepreneurship education

Purpose - The purpose of this paper is to provide a quantitative multicriteria decision-making approach to knowledge management in construction entrepreneurship education by means of an analytic knowledge network process (KANP) Design/methodology/approach- The KANP approach in the study integrates a standard industrial classification with the analytic network process (ANP). For the construction entrepreneurship education, a decision-making model named KANP.CEEM is built to apply the KANP method in the evaluation of teaching cases to facilitate the case method, which is widely adopted in entrepreneurship education at business schools. Findings- The study finds that there are eight clusters and 178 nodes in the KANP.CEEM model, and experimental research on the evaluation of teaching cases discloses that the KANP method is effective in conducting knowledge management to the entrepreneurship education. Research limitations/implications- As an experimental research, this paper ignores the concordance between a selected standard classification and others, which perhaps limits the usefulness of KANP.CEEM model elsewhere. Practical implications- As the KANP.CEEM model is built based on the standard classification codes and the embedded ANP, it is thus expected that the model has a wide potential in evaluating knowledge-based teaching materials for any education purpose with a background from the construction industry, and can be used by both faculty and students. Originality/value- This paper fulfils a knowledge management need and offers a practical tool for an academic starting out on the development of knowledge-based teaching cases and other teaching materials or for a student going through the case studies and other learning materials.

Perspectives on experiences of innovation: the development of an assessment methodology appropriate to construction project organizations

The UK construction industry is in the process of trying to adopt a new culture based on the large-scale take up of innovative practices. Through the Demonstration Project process many organizations are implementing changed practices and learning from the experiences of others. This is probably the largest experiment in innovation in any industry in recent times. The long-term success will be measured by the effectiveness of embedding the new practices in the organization. As yet there is no recognized approach to measuring the receptivity of the organization to the innovation process as an indication of the likelihood of long-term development. The development of an appropriate approach is described here. Existing approaches to the measurement of the take up of innovation were reviewed and where appropriate used as the base for the development of a questionnaire. The questionnaire could be applicable to multi-organizational construction project situations such that the output could determine an individual organization's innovative practices via an innovation scorecard, a project team's approach or it could be used to survey a wide cross-section of the industry.

Making sense of supply chain management: acomparative study of aerospace and construction

Current recipes for learning across business sectors too often fail to recognize the embedded and contextual nature of management practice. The existing literature gives little emphasis to the symbiotic relationship between supply chain management and the broader dynamics of context. The aerospace and construction sectors are selected for comparison on the basis that they are so different. The UK aerospace sector has undergone extensive consolidation as a result of the imperatives of global competitive pressures. In contrast, the construction industry has experienced decades of fragmentation and remains highly localized. An increasing proportion of output in the aerospace sector occurs within a small number of large, globally orientated firms. In contrast, construction output is dominated by a plethora of small firms with high levels of subcontracting and a widespread reliance on self-employment. These differences have fundamental implications for the way that supply chain management is understood and implemented in the two sectors. Semi-structured interviews with practitioners from both sectors support the contention that supply chain management is more established in aerospace than construction. The introduction of prime contracting and the increasing use of framework agreements within the construction sector potentially provide a much more supportive climate for supply chain management than has traditionally prevailed. However, progress depends upon an improved continuity of workload under such arrangements.

Contextual prerequisites for the application of ILS principles to the building services industry

Purpose – This paper proposes assessing the context within which integrated logistic support (ILS) can be implemented for whole life performance of building services systems. Design/methodology/approach – The use of ILS within a through-life business model (TLBM) is a better framework to achieve a well-designed, constructed and managed product. However, for ILS to be implemented in a TLBM for building services systems, the practices, tools and techniques need certain contextual prerequisites tailored to suit the construction industry. These contextual prerequisites are discussed. Findings – The case studies conducted reinforced the contextual importance of prime contracting, partnering and team collaboration for the application of ILS techniques. The lack of data was a major hindrance to the full realisation of ILS techniques within the case studies. Originality/value – The paper concludes with the recognition of the value of these contextual prerequisites for the use of ILS techniques within the building industry.

Role of knowledge in managing construction change

Purpose-Unplanned changes in construction projects are common and lead to disruptive effects such as project delays, cost overruns and quality deviations. Rework due to unplanned changes can cost 10-15 per cent of contract value. By managing these changes more effectively, these disruptive effects can be minimised. Previous research has approached this problem from an information-processing view. In this knowledge age, the purpose of this paper is to argue that effective change management can be brought about by better understanding the significant role of knowledge during change situations. Design/methodology/approach - Within this knowledge-based context, the question of how construction project teams manage knowledge during unplanned change in the construction phase within collaborative team settings is investigated through a selected case study sample within the UK construction industry. Findings- Case study findings conclude that different forms of knowledge are created and shared between project team members during change events which is very much socially constructed and centred on tacit knowledge and experience of project personnel. Originality/value- Building on the case study findings the paper finally offers a model that represents the role of knowledge during managing project change.

Challenges and opportunities facing contractors in Ghana

The main aim of this study was to ascertain and discuss the current challenges and opportunities facing construction contractors in Ghana. This involved a review of the economic, legal and political environments in which contractors in Ghana operate; a review of published studies on construction in developing countries generally and Ghana specifically; and in-depth interviews and discussions with seven building and civil engineering contractors in Ghana in 2009 and 2010. Six road contractors were also interviewed. The findings indicate significant challenges relating mainly to financing for projects and a harsh business environment. However, most contractors interviewed admitted to significant problems in their own organisations. It is clear that the contracting environment in Ghana is harsh particularly for local contractors who are often not paid on time and without compensation for late payment. However, local construction firms in Ghana who want to breakthrough ought to formulate the right strategic plans, develop innovative business strategies, develop professionalism, and merge with local firms with similar organisational values and characteristics. In short, local or indigenous Ghanaian contractors ought to face up to the reality of competition and the dynamics of modern business in order to survive, grow and become major players in the construction industry in Ghana.

Risk pricing practices in finance, insurance and construction

A review of current risk pricing practices in the financial, insurance and construction sectors is conducted through a comprehensive literature review. The purpose was to inform a study on risk and price in the tendering processes of contractors: specifically, how contractors take account of risk when they are calculating their bids for construction work. The reference to mainstream literature was in view of construction management research as a field of application rather than a fundamental academic discipline. Analytical models are used for risk pricing in the financial sector. Certain mathematical laws and principles of insurance are used to price risk in the insurance sector. construction contractors and practitioners are described to traditionally price allowances for project risk using mechanisms such as intuition and experience. Project risk analysis models have proliferated in recent years. However, they are rarely used because of problems practitioners face when confronted with them. A discussion of practices across the three sectors shows that the construction industry does not approach risk according to the sophisticated mechanisms of the two other sectors. This is not a poor situation in itself. However, knowledge transfer from finance and insurance can help construction practitioners. But also, formal risk models for contractors should be informed by the commercial exigencies and unique characteristics of the construction sector.

SPICE: a business process diagnostic tool for construction projects

The construction sector is under growing pressure to increase productivity and improve quality, most notably in reports by Latham (1994, Constructing the Team, HMSO, London) and Egan (1998, Rethinking Construction, HMSO, London). A major problem for construction companies is the lack of project predictability. One method of increasing predictability and delivering increased customer value is through the systematic management of construction processes. However, the industry has no methodological mechanism to assess process capability and prioritise process improvements. Standardized Process Improvement for Construction Enterprises (SPICE) is a research project that is attempting to develop a stepwise process improvement framework for the construction industry, utilizing experience from the software industry, and in particular the Capability Maturity Model (CMM), which has resulted in significant productivity improvements in the software industry. This paper introduces SPICE concepts and presents the results from two case studies conducted on design and build projects. These studies have provided further in-sight into the relevance and accuracy of the framework, as well as its value for the construction sector.

Rethinking construction: the Generic Design and Construction Process Protocol

The complexity of construction projects and the fragmentation of the construction industry undertaking those projects has effectively resulted in linear, uncoordinated and highly variable project processes in the UK construction sector. Research undertaken at the University of Salford resulted in the development of an improved project process, the Process Protocol, which considers the whole lifecycle of a construction project whilst integrating its participants under a common framework. The Process Protocol identifies the various phases of a construction project with particular emphasis on what is described in the manufacturing industry as the ‘fuzzy front end’. The participants in the process are described in terms of the activities that need to be undertaken in order to achieve a successful project and process execution. In addition, the decision-making mechanisms, from a client perspective, are illustrated and the foundations for a learning organization/industry are facilitated within a consistent Process Protocol.

IT implementation in the construction organization

Organizational issues are inhibiting the implementation and strategic use of information technologies (IT) in the construction sector. This paper focuses on these issues and explores processes by which emerging technologies can be introduced into construction organizations. The paper is based on a case study, conducted in a major house building company that was implementing a virtual reality (VR) system for internal design review in the regional offices. Interviews were conducted with different members of the organization to explore the introduction process and the use of the system. The case study findings provide insight into the process of change, the constraints that inhibit IT implementation and the relationship between new technology and work patterns within construction organizations. They suggest that (1) user-developer communications are critical for the successful implementation of non-diffused innovations in the construction industry; and (2) successful uptake of IT requires both strategic decision-making by top management and decision-making by technical managers.

Virtual reality as a visualisation tool: benefits and constraints

The benefits and applications of virtual reality (VR) in the construction industry have been investigated for almost a decade. However, the practical implementation of VR in the construction industry has yet to reach maturity owing to technical constraints. The need for effective information management presents challenges: both transfer of building data to, and organisation of building information within, the virtual environment require consideration. This paper reviews the applications and benefits of VR in the built environment field and reports on a collaboration between Loughborough University and South Bank University to overcome constraints on the use of the overall VR model for whole lifecycle visualisation. The work at each research centre is concerned with an aspect of information management within VR applications for the built environment, and both data transfer and internal data organisation have been investigated. In this paper, similarities and differences between computer-aided design (CAD) and VR packages are first discussed. Three different approaches to the creation of VR models during the design stage are identified and described, with a view to providing sharing understanding across the interdiscipliary groups involved. The suitable organisation of building information within the virtual environment is then further investigated. This work focused on the visualisation of the degradation of a building, through its lifespan, with the view to provide a visual aid for developing an effective and economic project maintenance programme. Finally consideration is given to the potential of emerging standards to facilitate an integrated use of VR. The convergence towards similar data structures in VR and other construction packages may enable visualisation to be better utilised in the overall lifecycle model.