Transaction cost economics deals with costs incurred at the pre-contract phase such as the costs of conducting market research, exploring financial opportunities, conducting a feasibility study, organizing a bidding/negotiation and managing design; and with costs incurred in the post-contract phase such as the costs of administering the contract, administering change orders and claims, resolving disputes and managing incentives. Many researchers have investigated the factors that affect project performance over the years, but neglected to consider transaction-related issues. The effects of transaction-related issues on project performance are investigated in this study. Project performance is measured on the basis of completion within budget and on schedule, compliance with quality standards, and satisfaction of the owner. Transaction-related issues include the magnitude of transaction costs, the uncertainty in the transaction environment, and the owner’s and the contractor’s roles in the transaction. Hypotheses are tested by using a structural equation model using data collected from a survey administered to construction owners. The findings indicate that project performance can be stronger if the uncertainty in the transaction environment is minimized, transaction costs are kept low, and owners and contractors are sensitive to transaction-related issues.
Although line‐of‐balance (LOB) scheduling can be superior to bar charts and networks in repetitive‐unit construction, there are indications that its use is not widespread. In this study, the major limitations of the existing LOB methodology are identified and then eliminated by developing a computer program called repetitive unit scheduling system (RUSS). An effective algorithm that facilitates the implementation of LOB scheduling is developed. A tool that handles logical and strategic limitations caused by the particular characteristics of repetitive activities is provided. A learning model is developed and incorporated into LOB calculations. The program is designed to optimize resource allocation by using multiples of the natural rhythm of activities. An optimum crew size that guarantees maximum productivity in an activity is used throughout the LOB calculations to achieve cost‐optimized schedules. Non‐linear and discrete activities are incorporated into the LOB calculations. RUSS displays the LOB diagram of every individual path in the unit network. It is believed that a system such as RUSS will make the LOB method more appealing to contractors of repetitive projects.
Purpose – Transaction costs arise from economic exchange rather than production activities. However, the term “transaction cost” is not consistently defined in the construction industry because the concept of transaction cost is not universally accepted by all stakeholders in construction projects. As a result, empirical studies are few and conflicting because accessing data on transaction costs is problematic, and the interpretation of the data is difficult. The purpose of this paper is to analyze the transaction costs borne by the owner in a construction project from the perspective of transaction cost economics and construction project characteristics. Design/methodology/approach – A questionnaire survey was administered to construction owners. The factors that impact transaction costs were analyzed in the context of human-related issues (the owner's and the contractor's positions in the transaction), and environment-related issues (the transaction environment, and project management efficiency). Statistical analyses were conducted to compare the transaction costs incurred in the pre- vs post-contract phases of a project relative to the private vs public sector, different project delivery systems, different procurement methods, and different types of contracts. Findings – The owners surveyed believe that transaction costs may be reduced if the owner and the contractor follow some basic guidelines (e.g. experience in similar projects, prompt payment, good relationship with project participants, no irregularities in bidding, and only few material substitutions and claims), if the project is well-run (e.g. technical competency, strong leadership, prompt decision-making, effective communication, and fair/speedy conflict management), and if the transaction environment is favorable (e.g. fair risk allocation, early contractor involvement, and complete design documents). The findings of the survey also indicate that post-contract transaction costs are much higher than pre-contract transaction costs expressed as percent of project value and that transaction costs are affected by the owner (public vs private), the procurement method, the project delivery system, and the type of contract. Originality/value – The primary contribution that this research makes to the body of knowledge is a better understanding of transaction costs incurred by construction owners in the USA. The highest transaction costs are to be expected in the post-contract phase of public projects awarded on a unit price basis, but can be reduced, hence reducing overall project cost.
Abstract. A new way to document and visualize the as-built condition of an urban tunnel project with high accuracy is described in this paper, based on recent developments of laser scanning technology. In traditional surveying, the components of a tunnel are organized on the basis of the location of stations and offsets along the project alignment specified in the drawings. It is difficult for people without an engineering background to understand the information involved in surveying reports, drawings, and engineering data. However, in the interest of transparency, public agencies that commission construction projects have to make project information available to government officials and to the general public. This paper discusses the combined use of laser scanning technology and web mapping services to improve the documentation and visualization of an urban metro tunnel. Laser scanning technology is introduced to perform the surveyor's task, document the as-built condition, and geo-reference the construction elements. A set of panoramic pictures is generated by laser scanning that allows for taking measurements and extracting 3D coordinates. An XML file that contains geo-reference information is appended to each panoramic picture. Using application programming interface (API), this information is referenced to a web mapping service. A case study of the CTA Red line Tunnel in Chicago, IL demonstrates this method in a real life project.
Women hold relatively few project management positions in the construction industry. Most studies conclude that women's exclusion from the industry is mostly due to the industry's male-dominated culture, but no study ever attempted to find out whether women are excluded from project management positions in construction because they are deficient in managerial competencies. This study evaluates the managerial competencies of female project managers by administering a competency assessment test and comparing the results with the managerial competencies of male project managers. The management development questionnaire was used, where competency is defined by subjective comparison. All respondents occupied project management positions and were assessed in 20 different competencies. The study concluded that female project managers do not differ much from male project managers in terms of their managerial behaviors but perform better in "sensitivity," "costumer focus," and "authority and presence."
The belief that the design–build (D/B) project delivery system does not lend itself to effective quality assurance and control is quite common in construction circles. Total quality consists of: (1) the corporate quality culture; (2) the quality of the project service; and (3) the quality of the constructed facility. This paper describes a model that was developed to measure the total quality of a D/B firm using quality function deployment (QFD). The first part of this model is described elsewhere and measures the effectiveness of the corporate quality culture and the quality of the service when delivering a project by using QFD. The second part of the model is described in this paper. It makes use of eight building quality factors, three building performance factors, and the relationships between building quality and performance factors (obtained from building users/evaluators) and it measures the quality performance of the constructed facility by using QFD. A total quality performance index is generated by combining the quality performance at the corporate, project, and product levels. The total quality performance measurement model described in this paper can be used by D/B firms to benchmark themselves against their competitors or to monitor their own performance. It can also be used by owners to rank D/B firms relative to their total quality performance.
Subcontractors are very important to the successful completion of most construction projects, yet the many issues involved in subcontracting practice are seldom acknowledged. A literature review indicates that these issues include the timeliness of payments by general contractors, the process of selecting subcontractors, subcontractor bonding, construction insurance, safety issues on the construction site, partnering arrangements with various parties, and productivity issues. A questionnaire survey was administered to subcontractors, general contractors, and construction owners to investigate these issues and to determine the differences in perceptions between the parties. The results confirm the existence of the issues identified in the literature and in addition indicate that (1) the practice of retainage withheld by general contractors seems to be acceptable to many subcontractors unless its magnitude is large relative to the size of the firm; (2) postaward bid shopping by general contractors is sometimes justified, particularly in cases where the scope of subcontract work is modified; and (3) current bonding and insurance practices are adequate unless the additional transferred risks are excessive. Recommendations are made on the basis of the findings to minimize the negative effects of said issues.
While the infrastructure in the United States is in need of large and immediate investment, the funds provided by public agencies are not nearly sufficient to face such a challenge. Build-operate-transfer (BOT) is a delivery/financing system that can be a solution to this problem. In this system, a private sponsor finances the design, construction, maintenance, and operation of a public project for a specified concession period, at the end of which it transfers ownership to the government agency, hopefully after recouping its costs and achieving profits. A questionnaire survey of large municipalities and state departments of transportation was conducted to determine the extent to which they are using BOT in their large projects, to investigate the implementation of BOT, and the reasons why some government agencies avoid using BOT. The findings indicate that very few agencies use BOT. The reasons why most do not use BOT were reported by the respondents to be the availability of proven alternatives and enough funds, the existence of political barriers, and resistance to change both on the part of government agencies and private sponsors. When government agencies and private sponsors explore the use of BOT, they should avoid the pitfalls perceived by the respondents in this study.
Construction projects are one-time endeavors with three strong constraints i.e., time, cost and quality. Construction management pursues success through the balanced accomplishment of the target levels of these. Since construction management has been and is still being performed to some extent by architects, AIA’s guidance has a strong influence on the profession. Thus, AIA’s “A201-2007 General Conditions of the Contract for Construction” is widely preferred among owners and contractors in the U.S. In Turkey, on the other hand, the government is the owner of a large number of public building projects with a total contract value that accounts for a sizeable portion of the national construction activity. Thus, the “General Conditions for Construction” that is issued by the Ministry of Environment and Urbanization is widely used in the industry. Delays have an important effect on both the owner and the contractor; while the owner experiences cost overruns as a direct result of delays, contractors suffer from excessive overhead. A201-2007 addresses the issue in “Article 8-Time”; the Turkish General Conditions addresses it in “Clause 30-Job Duration and Time Extension”. A literature review is performed in this paper to understand the importance of the deviations from the project duration specified in the contract. The objective of this study is to determine the similarities/differences in the management of delays, as mandated by the general conditions commonly used in the U.S. and Turkey. Recommendations are made in the light of the findings to improve delay management.
The reasons precast concrete systems are not used extensively in the United States were explored through four mail surveys that were sent to 100 contractors, 100 design firms, 100 precast concrete manufacturers, and 100 local labor unions. The findings indicate that most of the prerequisite conditions for the extensive use of industrialized building systems already exist. The findings also indicate, however, that there is a major shortage of expert personnel capable of designing and organizing projects involving precast concrete systems and that almost half the contractors surveyed did not observe significant cost savings when they used precast concrete systems. Architects' and engineers' awareness of precast concrete systems and the number of competent precast concrete designers and erectors can be increased by providing adequate exposure of engineering and architecture students to these systems and by providing frequent and numerous continuous education programs for the benefit of active professionals.
The objective of the study presented in this paper is to provide owners with a decision-making mechanism that will free them from automatically taking the typical "transfer the risk to a surety" option and will allow them to make intelligent and economical decisions that include retaining or avoiding the risk of contractor default. The methodology involves using artificial neural network (ANN) and a genetic algorithm (GA) training strategies to predict the risk of contractor default. Prediction rates of 75 and 88% were obtained with the ANN and GA training strategies, respectively. The model is of relevance to owners because once the likelihood of contractor default is predicted and the owner's risk behavior is established, the owner can make a decision to retain, transfer, or avoid the risk of contractor default. It is of relevance to surety companies too as it may speed up the process of bonding and of reaching more reliable and objective bond/not bond decisions. The comparative use of the ANN and GA training strategies is of particular relevance to researchers.
Alliances between construction companies have become popular because of their importance as an alternative in global competition. Construction companies complement skills, experience, and resources with their partners to successfully complete a construction project through the formation of alliances. Alliances provide several advantages for the participants, but are subject to several risks too. The quality of inter-company relations determines how well an alliance performs. In this study, the effect of the similarity/difference between the organisational cultures of partnering companies on the quality of inter-company relations is examined through a questionnaire survey. The results of the study suggest that similarities in the organisational culture of the partners have a significant and direct impact on the quality of inter-company relations. It also has a significant and direct impact on the organisational structure of an alliance, which in turn affects inter-company relations. The findings reveal that allied companies maintain better relations when the organisational structure of the alliance is properly designed.
Purpose – This study aims at capturing the perspectives of construction professionals into a classified taxonomy of the various characteristics of smart buildings and at developing an index able to define their level of smartness. Design/methodology/approach – A questionnaire survey has been administrated to construction professionals in the service of designers, constructors and owners. Results have been analyzed with the Kruskal–Wallis test and they have been used to develop a smartness index. Findings – Designers and owners are more focused on the energy issue than constructors. The energy captures the attention of practitioners with less years of experience, confirming that the awareness of the energy topic is rather recent. Originality/value – The main characteristics of smart buildings have been structured in domains and subdomains. Their importance has been rated by construction professional and a smartness index for smart building has been developed to provide with a convenient tool for evaluation and benchmarking.
