Nexus between contracting and construction professional service businesses: empirical evidence from international market

he construction market around the world has witnessed the growing eminence of construction professional services (CPSs), such as urban planning, architecture, engineering, and consultancy, while the traditional contracting sector remains strong. Nowadays, it is not uncommon to see a design firm taking over the work of a traditional main contractor, or vice versa, of overseeing the delivery of a project. Although the two sectors of contracting and CPS share the same purpose of materializing the built environment, they are as different as they are interrelated. Much has been mentioned about the nexus between the two but little has been done to articulate it using empirical evidence. This study examined the nexus between contracting and CPS businesses by offering and testing lead-lag effects between the two sectors in the international market. A longitudinal panel data composed of 23 top international contractors and CPS firms was adopted. Surprisingly, results of the panel data analyses show that CPS business does not have a significant positive causal effect on contracting as a downstream business, and vice versa. CPS and contracting subsidiaries, although within the same company, do not necessarily form a consortium to undertake the same project; rather, they often collaborate with other CPS or contracting counterparts to undertake projects. This paper provides valuable insights into the sophisticated nexus between contracting and CPS in the international construction market. It will support business executives’ rational decision making for selecting proper contracting or CPS allies, or a proper mergers and acquisitions strategy in the international market. The paper also provides a fresh perspective through which researchers can better investigate the diversification strategies adopted by international contracting and CPS firms.

Auto ID-Bridging the physical and the digital on construction projects

This book looks at how auto-ID has evolved and how it can be used in the construction industry and across projects from the perspective of all the stakeholders, from owners to design consultants, contractors and the supply chain. It could help to improve efficiency, reduce costs, ensure quality, protect the environment, and enhance safety.

Managing the complexity of information flow for construction small and medium-sized enterprises (CSMEs) using system dynamics and collaborative technologies

With the increase in e-commerce and the digitisation of design data and information,the construction sector has become reliant upon IT infrastructure and systems. The design and production process is more complex, more interconnected, and reliant upon greater information mobility, with seamless exchange of data and information in real time. Construction small and medium-sized enterprises (CSMEs), in particular,the speciality contractors, can effectively utilise cost-effective collaboration-enabling technologies, such as cloud computing, to help in the effective transfer of information and data to improve productivity. The system dynamics (SD) approach offers a perspective and tools to enable a better understanding of the dynamics of complex systems. This research focuses upon system dynamics methodology as a modelling and analysis tool in order to understand and identify the key drivers in the absorption of cloud computing for CSMEs. The aim of this paper is to determine how the use of system dynamics (SD) can improve the management of information flow through collaborative technologies leading to improved productivity. The data supporting the use of system dynamics was obtained through a pilot study consisting of questionnaires and interviews from five CSMEs in the UK house-building sector.

Critical operational management in international construction

The construction activities of a contractor may physically take place in the home country or overseas, and the latter, particularly of a large company, has an increasing proportion with the globalisation. Globalisation of the construction industry and its market is a trend in every country, Which increases the opportunities of both international construction, and competition or collaboration with foreign construction companies. International construction project management is undertaken in a complicated circumstance, and requires a synthetic management approach. This research aims to establish a primary framework for the critical operational management in achieving international construction projects in a novel construction market.

A process model to support design and construction

This research is focused on developing a highly detailed understanding of current organisational interactions and information flows leading to a definition of the process model for the environment into which information and communication technology (ICT) applications will be placed. The authors of this paper propose a theoretical process model and the associated detailed information structure which reflects the complexity of information, stakeholder interaction and intellectual property concerns which are currently seen in the construction industry. This is being developed and tested against a field study renovation project. The field study project identifies information flows and interactions between stakeholders such as designers, project managers, clients, contractors, subcontractors and suppliers. The process model which is being established shows very high levels of complexity in dependencies and interdependencies between implicit and explicit information within the project design and construction teams. Without an understanding of these detailed and complex process interactions, proposals for the application of ICT to the construction industry will not reflect the requirements of those for whom they are being developed.

Building a symbiotic relationship between academia and industry: expectations and observations of construction management graduates

Construction management graduates are employed in job functions such as building and civil engineering contracting, construction and project management consulting, client organisations (public and private) and developer organisations. Considering the diversity of employment opportunities for construction management graduates, they increasingly need to have a portfolio of skills to work effectively and efficiently with other professions in the industry. In exploring this, the objective of the research presented in this paper is to determine if construction management graduates are meeting the expectations of their employers. In considering the competitive forces impacting the construction industry, the authors of this paper sought to establish whether construction managers are able to identify those key skills needed for the future success of the industry. In turn, this information is considered critical for the successful formulation of curricula. Therefore, to establish whether construction management graduates are meeting the expectations of contractors, a survey was distributed to managers to establish their expectations and observations of recent graduates. The survey results indicate that managers are generally satisfied with the skill level of graduate students. The survey also highlighted several important skills that were considered to be lacking in graduates. cknowledging that there is always a need to improve the skill level of graduates, the authors propose a number of recommendations that are considered to improve the content construction management curricula.

Height and construction costs of residential buildings in Hong Kong and Shanghai

A widely recognised theme of construction economics suggests that the cost of construction per square metre increases as building height rises. However, after many years, research conducted regarding the height and cost issue have established a classic relationship between those two, well known as a U-shaped curve. This paper describes the study of height-cost relationship of high-rise residential buildings in Shanghai and Hong Kong. Initial findings indicated that the curved relationships of height-cost of residential buildings in Shanghai and Hong Kong exhibit different profiles. The differences suggest that, Hong Kong contractors have more expertise in multi-storey and high-rise construction than contractors in Shanghai. The dissimilarities also imply that different sets of criteria should be applied in the judgement of height affects cost in different locations. Many factors could be contributors, such as the history and experience in constructing residential high-rise buildings, location, linkage and relationships to the neighbourhood provinces, design and construction regulations, and government policy on residential construction.

Investigating relationships of construction prices in Australia using cointegration analysis

Research on construction prices is significant for contractors and traders. A comprehensive understanding of construction prices may influence crucial decisions in business operation and arbitrage activities. This study focuses on the cointegration relationships of regional construction prices in Australia by using a range of econometric techniques including the stationarity test, the Engle-Granger cointegration approach examines the long run equilibrium relationships within the regional markets, and the error correction models explore the short run disequilibrium relationships. Finds of this study reveal that the economic system in which the construction industry participants operate is characterized by a highly competitive, integrated marketplace, Especially in Melbourne and Sydney. But exclude Northern Territory and Queensland. Furthermore, the results of long term relationships estimation suggest that there are 15 pairs of regional construction prices have long term equilibrium relationships. Additionally, the causalities and diffusion among the construction price indices in six states and two territories of Australia are estimated in this study. These outcomes suggest that causal links between regions mainly exist among adjoining states.

An economic analysis of construction industries producer prices in Australia

Research on construction prices is significant for contractors and traders. A comprehensive understanding of construction prices may influence crucial decisions in business operation and arbitrage activities. This study focuses on the cointegration relationships of regional construction prices in Australia by using a range of econometric techniques including the stationarity test, the Engle-Granger cointegration approach and error correction model. The cointegration relationships amongst the regional construction prices are detected in this study. The application of the Engle-Granger cointegration approach examines the long run equilibrium relationships within the regional markets, and the error correction models explore the short run disequilibrium relationships. Results of this study suggest that the economic system in which construction industry participants operate is characterised by a highly competitive integrated marketplace. Furthermore, the causalities and diffusion patterns among the construction price indices in six states and two territories of Australia are drawn by the cointegration analysis. These outcomes reveal a pattern of diffusion paths and network linkages among the six states and two territories, and then expose the regional price linkages.

The impact of client attitudes on the selection of contractors

This research is concerned with identifying prequalification criteria that both clients and contractors believe are good indicators of future construction performance. Criteria used in the past have been developed by clients in a largely idiosyncratic manner with little or no consultation with the contractors affected. The methodology chosen for the research was a survey which probed stakeholder attitudes to commonly used prequalification criteria. This was carried out via a postal questionnaire involving contactors and clients across Australia. The data was analysed using Discriminant Analysis, which is a multivariate statistical approach that determines the differences between groups. The research is structured around 39 criteria that were developed as part of a whole-of–government task force into best practice in procurement. The findings identified the most important criteria from both a client’s perspective, and a contractor’s perspective. The purpose was to discover if those differences reduce the effectiveness of the procurement process. This paper contributes to a more clarified understanding of the impact or contrasting views between the stakeholders involved in the prequalification process. This work is innovative because it is one of a few pieces of research that showed that clients and contractors do actually have divergent opinions on the importance of some criteria currently relied upon in the decision making process. The most important prequalification criteria are identified and possible reasons for these differences are discussed.

Cost and time overruns in commercial construction projects : an Australian study

Cost and schedule are two of most important performance indicators of construction projects. Cost escalation and time overruns are typically associated with poor management practices. Cost overruns and delays have huge impacts on construction projects in relation to the costs of a project, the reputation of the parties involved, and the satisfaction of the final product. Therefore, it is imperative to understand the causes of cost and time overruns so that mitigation measures can be set in place. A group of industry professionals in South Australia were surveyed on their perceptions of the factors contributing towards the cost and time overruns in commercial construction projects. The results showed that timeliness of decision making is ranked as the top factor contributing towards delays whereas problems with design is perceived as most influential to the cost overruns. In addition, the questionnaire survey found that different parties, i.e. clients, contractors and consultants have different perceptions on the impacts of these factors. Similarly, the structural frame stage was considered the most critical stage for controlling the time and cost performance during the construction process. Implications are discussed.

The factors that affect the cost estimation activities in the tender preparation process in the Malaysian construction industry

The possibility of winning the tender is subject to the cost estimation proposed by the contractors compared to the cost estimation prepared by the client’s representative. Studies indicated that one of the construction company failures in the tendering process is due to the uncertain, incorrect, and unrealistic cost estimation. Failure to provide a competitive cost estimation on time is the main reason the contractor is not successful in winning the tender, and will not be considered for the tender evaluation stage. The aim of this paper is to validate the key factors that affect the cost estimation activities in the tender preparation process. This paper describes the results of a pilot study, from a questionnaire survey on the factors that affect the cost estimation activities in the tender preparation process. The study shows the importance of all the factors in the cost estimation activities in the tender preparation process in terms of human factors, working culture, and information technology.

Factors impeding the offsite production of housing construction in China: an investigation of current practice

The promotion of offsite production is a possible future strategic direction for the construction industry as it provides economic, environmental and social benefits. However, in China, the uptake of offsite production, particularly in the housing sector, is relatively low and few studies have identified and examined the reasons behind this trend. This research gap is addressed and factors that inhibit the wider use of offsite production in China’s housing construction industry are investigated. A questionnaire survey was carried out, examining the views of 110 construction professionals in China including developers, designers, contractors, manufacturers and suppliers. Factor analysis of 21 separate variables was undertaken which extracted six principal factors, namely: ‘constructability implementation’, ‘social climate and attitudes’, ‘architectural performance’, ‘costing’, ‘supply chain’ and ‘preparatory stage’. The findings identify both barriers and challenges to increasing the uptake of offsite production in China. This provides a rare insight about the housing construction industry in China with possible implications for other developing countries that are seeking to identify and overcome barriers to the wider uptake of offsite production.

Contemporary service theories integrated into construction project management

Project management plays an important role in successful completion of construction projects. One trend in the construction sector is a growing emphasis on project management. Ineffective integration of project management of project-based enterprises and operational processes of project owners, contractors and consultants prevents synergistic effects and causes resource waste and management inefficiency. Contemporary service theories, specifically service science and service-dominant logic, elucidate the involvement of clients in the creation of value and reinforce the nested relationship between project management service providers and clients. This study expands understanding of service theories by complementing service systems from project management and proposes a new framework for project management service systems, embedding service exchange and value co-creation in the construction processes. Research outcomes represent the importance of project management embedded with service theories in the construction industry and suggestions of research questions for future work.

Assessing the practice of project-based JV between local and international contractors in the UAE

This paper is about assessing the practice of Project-Based Joint Ventures formed between local and international contractors in the UAE construction industry. This common practice nowadays, provides the means for contractors to quickly add resources to enhance project acquisition. Studies indicate that JVs are among the tools that contractors will need to get together in the face of increasing market demands. Specifically, Project-Based JVs are often used in the UAE Construction industry with an exceptional growth in an attempt to diversify from Oil and Gas. The UAE is very business friendly which makes it attractive for such kind of alliance or partnership for local contractors to get the necessary experience and for international contractors to minimize the risks associated with entering new markets. In this context, studies that evaluate this alliance phenomenon in the UAE construction industry are limited. The few industry-related studies have primarily focused on large, international JVs; yet, many JVs are formed on small and medium-sized projects within the UAE. The paper aims to assess the current practices and understand the many factors involved with forming, managing, and controlling JV partnerships. The research methodology adopted a mix of quantitative and qualitative approaches. First, a closed question survey was disseminated to construction professionals in the UAE in light of the literature findings. Second, two case studies were demonstrated and analysed, then triangulated with the literature and survey findings to remove possible bias and improve the confidence in the collected data. The paper concluded that the JV in the UAE construction industry is mostly formed on project-basis rather than continuous collaboration. The management control mostly used in the UAE construction industry is shared management of activities in a venture with the operations shared between parents. The paper addressed major factors that lead to successful JV in the construction projects of the UAE which are namely trust, correct structure, communication, and partner’s commitment. Partners’ common objectives do not affect the JV success or failure. Willingness to adapt eliminates conflicts and enhances the JV success prospect.