Investigation of barriers to entry into the design-build market in the People’s Republic of China (PRC)

Although the design-build (DB) system has been demonstrated to be an effective delivery method and has gained popularity worldwide, it has not gained the same popularity in the construction market of China. The objective of this study was, theretofore, to investigate the barriers to entry in the DB market. A total of 22 entry barriers were first identified through an open-ended questionnaire survey with 15 top construction professionals in the construction market of China. A broad questionnaire survey was further conducted to prioritize these entry barriers. Statistical analysis of responses shows that the most dominant barriers to entry into the DB market are, namely, lack of design expertise, lack of interest from owners, lack of suitable organization structure, lack of DB specialists, and lack of credit record system. Analysis of variance indicates that there is no difference of opinions among the respondent groups of academia, government departments, state-owned company, and private company, at the 5% significance level, on most of the barriers to entry. Finally, the underlying dimensions of barriers to entry in the DB market were investigated through factor analysis. The results indicate that there are six major underlying dimensions of entry barriers in DB market, which include, namely, the competence of design-builders, difficulty in project procurement, characteristics of DB projects, lack of support from public sectors, the competence of DB owners, and the immaturity of DB market. These findings are useful for both potential and incumbent design-builders to understand and analyze the DB market in China.

Visualizing the evolution of knowledge management capability in construction firms

A firm, as a dynamic, evolving, and quasi-autonomous system of knowledge production and application, develops knowledge management capability (KMC) through strategic learning in order to sustain competitive advantages in a dynamic environment. Knowledge governance mechanisms and knowledge processes connect and interact with each other forming learning mechanisms, which carry out double loop learning that drives genesis and evolution of KMC to modify operating routines that effect desired performance. This paper reports a study that was carried out within a context of construction contractors, a type of project-based firms, operating within the dynamic Hong Kong construction market. A multiple-case design was used to incorporate evidence from the literature and interviews, with the help of system dynamics modeling, to visualize the evolution of KMC. The study demonstrates the feasibility to visualize how a firm's KMC matches its operating environment over time. The findings imply that knowledge management (KM) applications can be better planned and controlled through evaluation of KM performance over time from a capability perspective.

Improving quality management system implementation in Indonesian construction companies

As the Indonesian construction industry is now promising to become the engine of national economic development, achieving quality and higher performance, not only domestically but also in the international market, are becoming crucial issues. Implementing quality management systems (QMSs) based on ISO 9001 are important in helping Indonesian construction companies become more competitive, for it is acknowledged that quality in construction is a major concern in the global construction industry. However, the possession of ISO 9001 certification does not reflect the presence of a well-operated QMS, which is capable of giving customer and project end-users satisfaction. The review of literature found that there is a significant correlation between a company.s organisational culture and the quality performance of contractors. While research into this area has involved many researchers, there is no critical mass of information specifically related to the Indonesian situation. Studies based on contemporary perspectives of the characteristics of the Indonesian construction organisational culture using Cameron and Quinn.s Organizational Culture Assessment Instrument (OCAI) and its relationship with the contractor.s ISO 9001 practices, have not been previously undertaken. This thesis research, therefore, investigated the culture profiles in Indonesian construction organisations, together with the current implementation of ISO 9001 and their performance during implementing QMSs, as information in these areas has a bearing on the poor performance and low levels of competitiveness of Indonesian construction companies. Questionnaire surveys were distributed to selected representative grade 7 civil engineering contractors located in the two provincial capitals of Makassar and Manado, and the national capital, Jakarta, in order to collect responses designed to examine the effectiveness of their QMSs implementation. The survey also aimed to identify current problems within the systems, and examine the performance of companies while implementing their QMSs. The questionnaire contained questions to assess the organisational culture profiles of Indonesian construction companies, adopting the OCAI. The survey results were then used to analyse the influence of different organisational culture profiles on QMSs implementation among respondent companies. The results from the questionnaire survey supported the development of a Culture-based Quality Management System Improvement Implementation Framework, designed to help Indonesian construction companies identify some typical barriers associated with impacting on effective QMSs implementation; to assist them to develop cultural values that can drive effective QMSs implementation; to undertake effective QMSs practices; and to recognise the potential results and longer-term benefits obtainable from implementing effective QMSs. A Focus Group Discussion was conducted with the assistance of a panel of professional construction practitioners, policy makers and academic experts, which further considered and validated the usefulness and applicability of the framework. Based on the outcome from this discussion and on the results of the earlier data analysis, a final version of the framework was developed to assist Indonesian construction companies in improving their capability of construction project delivery, and thereby contribute to providing or improving the competitive advantage of Indonesian construction companies in the local, national and global construction market.

Knowledge management practices in construction : Evidence from Hong Kong

The acquisition and management of knowledge is the dominant source of organisational com-petitive advantage. As innovation processes in the management and procurement of construc-tion activities are becoming increasingly interactive, knowledge management (KM) has been widely recognised by construction organisations as an essential tool to be employed when dealing with growing complexity and cost of projects as well as increasing client demands. KM requires deliberate efforts by an organisation to maximise its performance through the acquisition, dissemination and leveraging of the organisation’s intellectual assets. The Hong Kong (HK) construction market has been described as one of the most open and globally competitive. This paper reports on KM practices within the HK construction industry, and through the analysis of a self-administered questionnaire survey, reveals managers’ opinions of the formal and informal KM practices that could be used to manage the flow of knowledge, and identifies the level of implementation within their organisations. The differences between managers’ perception and the actual state of implementation – as reported by the same man-agers – are statistically examined. The analysis leads to better understanding of how HK con-struction professionals currently manage organisational knowledge, and what areas for poten-tial improvement exist.

Practical framework for measuring performance of international construction firms

The internationalization of construction companies has become of significant interest as the global construction market continues to be integrated into a more competitive and turbulent business environment. However, due to the complicated and multifaceted nature of international business and performance, there is as yet no consensus on how to evaluate the performance of international construction firms (ICFs). The purpose of this paper, therefore, is to develop a practical framework for measuring the performance of ICFs. Based on the balanced scorecard (BSC), a framework with detailed measures is developed, investigated, and tested using a three-step research design. In the first step, 27 measures under six dimensions (financial, market, customer, internal business processes, stakeholders, and learning and growth) are determined by literature review, interviews with academics, and seminar discussions. Subsequently, a questionnaire survey is conducted to investigate weights of these 27 performance measures. The questionnaire survey also supports the importance of measuring intangible aspects of international construction performance from the practitioner’s viewpoint. Additionally, a case study is described to test the framework’s robustness and usefulness. This is achieved by benchmarking the performance of a Chinese ICF with nine other counterparts worldwide. It is found that the framework provides an effective basis for benchmarking ICFs to effectively monitor their performance and support the development of strategies for improved competitiveness in the international arena. This paper is the first attempt to present a balanced and practically tested framework for evaluating the performance of ICFs. It contributes to the practice of performance measurement and related internationalization in the construction industry in general.

A game theoretical approach to construction safety in the Repair, Maintenance, Alteration and Addition (RMAA) sector

Safety has long been a problem in the construction industry. Repair, maintenance, alteration and addition (RMAA) sector has emerged to play an important role in the construction industry. It accounted for 53% of the total construction market in Hong Kong in 2007. Safety performance of the RMAA words has been alarming. Statistics indicate that the percentage of fatal industrial accidents arising from RMAA work in Hong Kong was over 56% in 2006 while the remaining 44% was from new works. Effective safety measures to address the safety problems and improve safety performance of the RMAA sector are urgently needed. Unsafe behaviour has been attributed to one of the major causes of accidents. Traditional cost-benefit analysis of workers' safety behaviour seems to be inadequate. This paper proposes to adopt a game theoretical approach to analyse safety behaviour of RMAA workers. Game theory is concerned with the decision-making process in situations where outcomes depend upon choices made by one or more players. A game theoretical model between contractor and worker has been proffered. Mathematical analysis of this game model has been done and implications of the analysis have been discussed.

Market failure, inequality and redistribution

We consider the following question: does market failure justify redistribution? We argue that the general answer to this question is no, in the sense that policies for correcting market failures do not aim at producing a "desirable" income distribution. This follows from the fact that, by construction, market failure is a deviation from "efficiency" that does not involve any notion of a desirable distribution of welfare (or income). However, there are special cases where a "corrective measure" involving redistribution can offset a market failure, so this can provide a form of efficiency- based justification for redistribution.

UK construction orders and output: A comparison of government and commercially available data 1995-2001

Because of the importance and potential usefulness of construction market statistics to firms and government, consistency between different sources of data is examined with a view to building a predictive model of construction output using construction data alone. However, a comparison of Department of Trade and Industry (DTI) and Office for National Statistics (ONS) series shows that the correlation coefcient (used as a measure of consistency) of the DTI output and DTI orders data and the correlation coefficient of the DTI output and ONS output data are low. It is not possible to derive a predictive model of DTI output based on DTI orders data alone. The question arises whether or not an alternative independent source of data may be used to predict DTI output data. Independent data produced by Emap Glenigan (EG), based on planning applications, potentially offers such a source of information. The EG data records the value of planning applications and their planned start and finish dates. However, as this data is ex ante and is not correlated with DTI output it is not possible to use this data to describe the volume of actual construction output. Nor is it possible to use the EG planning data to predict DTI construc-tion orders data. Further consideration of the issues raised reveal that it is not practically possible to develop a consistent predictive model of construction output using construction statistics gathered at different stages in the development process.

International construction and Brazilian contractors’ operations

The international construction market is very complex, and requires strong structure and strategy for companies wanting to operate overseas. This article investigates characteristics of international construction. The international operation of Brazilian contractors is explored via results from a qualitative study which was carried out using case studies. The case studies comprised ten big Brazilian contractors, six of which operate abroad. The study identified the patterns of international operation, the competitive advantages of these contractors, as well as the difficulties faced by them in the international construction market. Four of the contractors studied operate only in the domestic market. The study of these cases revealed both obstacles and motivations for future international operations. The study revealed that despite the existing competitive advantages, Brazilian contractors' presence in the international market is limited. The main reason for that is probably their main competitive disadvantage: the lack of financial support from the government.

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 reflexive capability model for sustainable e-business environments in construction supply chains

Despite the increasing significance of e-business worldwide and construction market leaders developing innovative e-business applications, the widespread uptake in the Australian construction industry is lagging. There has been considerable literature related to e-business adoption focusing on drivers and barriers to adoption. However, there has not been an investigation that has applied fundamental supply chain theory concepts. In this paper a reflexive capability model for the individual firm in relation to e-business is developed which relies upon merging economic and social practices through an industrial organization economic theoretical lens and social science theories of communication. The reflexive
capability model proposed within this paper describes a framework for theorization of the different degrees of e-business adoption exhibited by individual firm’s and accounts for social-cultural, organisational-structural, communicative and economic (market and supply
chain) barriers, influences and pressures to adopt e-business.The model is proposed for the construction supply chain to enable awareness, engagement and realization of e-business technology and achieve long term construction e-business sustainability.

Convergence among the sub-markets in Australian regional building and construction sector

Studies on market convergence are well considered in the literature. However, the majority of the previous research focused on housing markets and few studies have concentrated on construction markets. Owing to a simultaneously dramatic increase in the construction prices of the sub-markets in the building construction sector in Australia, this paper aims to identify the convergence among these markets, involving house construction market, other-residential building construction market, and non-residential building construction market. To achieve it the Granger causality test and generalized response function depending on the vector error correction model with the quarterly data of Australia’s eight states from 1998 to 2010 will be applied. Based upon the econometric tests, the price diffusion patterns among these construction markets have been identified. Research on the convergences of construction markets not only helps construction firms perform well in business operations and arbitrage activities, but also provides policy makers with useful information for enacting effective construction policies for national perspectives and approaches to infrastructure planning.

Forecasting construction demand : a vector error correction model with dummy variables

Modelling the level of demand for construction is vital in policy formulation and implementation as the construction industry plays an important role in a country’s economic development process. In construction economics, research efforts on construction demand modelling and forecasting are various, but few researchers have considered the impact of global economy events in construction demand modelling. An advanced multivariate modelling technique, namely the vector error correction (VEC) model with dummy variables, was adopted to predict demand in the Australian construction market. The results of prediction accuracy tests suggest that the general VEC model and the VEC model with dummy variables are both acceptable for forecasting construction economic indicators. However, the VEC model that considers external impacts achieves higher prediction accuracy than the general VEC model. The model estimates indicate that the growth in population, changes in national income, fluctuations in interest rates and changes in householder expenditure all play significant roles when explaining variations in construction demand. The VEC model with disturbances developed can serve as an experimentation using an advanced econometrical method which can be used to analyse the effect of specific events or factors on the construction market growth.

A review of the cost estimation issues in the tender preparation process in construction industry

Cost estimation process is undertaken to predict the total cost of the project. Studies indicate that one of the construction company failures in contracting is because of the uncertain, incorrect, and unrealistic cost estimation. Cost estimation process are heavily influenced by the complexity of the project, scale and scope of construction, market conditions, method of construction, site constraints, client’s financial position, buildability and the location of the project. However, there are other combinations factors that have not been studied thus far. Hence, this paper focuses on the review of other researchers’ findings in relation to cost estimation issues in the construction industry. Among the findings, it has been revealed that the cost estimation issues are related to accuracy, human factors, practical knowledge and insufficient cost data/information. The aim of this paper is to investigate these factors and determining other potential factors that may influence cost estimation process in the construction industry.

Sustainable construction : reliable forecasting for building construction prices

A reliable forecasting for future construction costs or prices would help to ensure the budget of a construction project can be well planned and limited resources can be allocated more appropriately in construction firms. Although many studies have been focused on the construction price modelling and forecasting, few researchers have considered the impacts of the global economic events and seasonality in price modelling and forecasting. In this study, an advanced multivariate modelling technique, namely the vector correction (VEC) model with dummy variables was employed and the impacts of the global economic event and seasonality were factored into the forecasting model for the building construction price in the Australian construction market. Research findings suggest that a long-run equilibrium relationship exists among the price, levels of supply and demand in the construction market. The reliability of forecasting models was examined by mean absolute percentage error (MAPE) and The Theil's inequality coefficient U tests. The results of MAPE and U tests suggest that the conventional VEC model and the VEC model with dummy variable are both acceptable for forecasting building construction prices, while the VEC model that considered external impacts achieves higher prediction accuracy than the conventional VEC model does.