MISBE 2011

10:30 General Paper Session W65 - Construction bidding and contracting
Chair: Monika Chao-Duivis

10:30 15 mins	SUBCONTRACTOR SELECTION BASED ON DATA ENVELOPMENT ANALYSIS (DEA) Mohammad El-Mashaleh Abstract: In today’s construction market, subcontractors execute significant portions of construction work. Subcontractors lessen resource requirements faced by general contractors and provide specialized expertise to construction projects. The reliance of general contractors on subcontractors to execute major portions of construction work makes the success of construction projects highly susceptible to the performance of these subcontracting organizations. As a result, subcontractors' selection decisions are of crucial importance to general contractors bearing in mind that such decisions are exercised by general contractors multiple times in every single project. This paper contributes a Data Envelopment Analysis (DEA) model to guide general contractors in their subcontractor selection decisions. Key words Subcontractor selection; Decision Support system; Performance measurement; Benchmarking; Data envelopment analysis.
10:45 15 mins	A CRITICAL ANALYSIS OF RISK MITIGATION MEASURES FOR TARGET COST CONTRACTS IN CONSTRUCTION INDUSTRY Daniel Chan, Joseph Chan, Patrick Lam, Albert Chan Abstract: Abstract A scarcity of empirical research has been observed on risk mitigation measures for those construction projects procured by guaranteed maximum price contracts (GMP) and target cost contracts (TCC) worldwide. This paper aims to seek and examine the risk mitigation measures associated with GMP and TCC (GMP/TCC) construction projects through an industry-wide empirical questionnaire survey launched in Hong Kong. Survey respondents were invited to delineate their levels of agreement on 18 individual risk mitigation measures identified from reported literature and in-depth interviews, and the views of client group were compared with those of contractor group. The survey results manifested that both the client group and contractor group are in general consistent in their views towards the risk mitigation measures for GMP/TCC contracts. However, the Mann-Whitney U Test revealed that they held different perceptions on 4 out of the 18 risk mitigation measures, and the findings may stem from different roles involved in the projects. The research findings are useful in providing industrial practitioners with valuable pointers towards effective risk mitigation measures of applying GMP/TCC schemes at an early stage of project delivery. Keywords: Guaranteed maximum price contracts (GMP), Target cost contracts (TCC), Risk mitigation measures, Construction industry, Hong Kong.
11:00 15 mins	MULTI-CRITERIA EVALUATION OF THE BIDS IN PUBLIC CONSTRUCTION Fabio Sciancalepore, Marco Falagario, Nicola Costantino, Roberto Pietroforte Abstract: One of the main tasks of local and national Governments is giving the people the public facilities they need. Carrying out such activity can involve many problems, because of the amount of money required in such projects and the relevant number of involved stakeholders. In particular, a public sponsor needs to find a private firm able to build these infrastructures with the best compromise among the required resources (money, time...) and the quality of the work (in terms of, for instance, service level, technical features...). Consequently, multi-criteria evaluation schemes are often and often used by tendering committees for this kind of public works. Reaching this goal is made more difficult all over the world by attemps of corruption of the public officiers made by some competitors. In most of the States of the world, appropriate laws prescribe transparent procedures in order to avoid such events, which can determine a huge economical detritement to Governments. The European Union Public Procurement Directive 2004/18/EC imposes the use of the Linear Weighting technique (when it is possible) in public tenders to be awarded according to the Most Economically Advantageous Tender criterion. In this case, the committee has to decide the weights of each criterion in advance at the request of tender. Generally these are drawn on the basis of subjective judgments. This makes the method affected by internal consistency and validity problems. Consequently, there isn’t an absolutely optimal choice of weights. Moreover, when this awarding mechanism is used, public officers can give an advantage to a given bidder simply by assigning a high weight to a criterion that only that competitor is expected to fully meet.Consequently, this method is characterized by some subjective choices which makes corrupted behaviours possible. In the last years the literature about this issue presented many models for the evaluations of bids in public tenders. Some of these were proposed specifically for public works of construction, while other ones are more generic but can be successfully implemented also for the evaluation of the bids for the building of a facility. Among these methods, some aim at the optimal choice of the weights for the Linear Weighting. Other ones are based on the qualitative comparison among alternatives. Another group of method is based on the estimation of the utility coming from each bid. Finally, another possible approach aims at determining a sort of social cost coming from the completion time and from the quality of the final work to be summed up to the required bid. The purpose of this paper is to make a classification of different bidding mechanisms for public construction projects proposed by the literature. The strenghtens and the weaknesses of each of them are illustrated. Such an analysis aims at giving Government and public firm advice on what tendering mechanism best meet its requirements, needs and expectations in the evaluation of the bids.
11:15 15 mins	TRACING RISK PATHS IN INTERNATIONAL CONSTRUCTION PROJECTS: A CASE STUDY Irem Dikmen, Talat Birgonul, Matineh Eybpoosh Abstract: International construction projects are mostly known with poor cost performance. Their large sizes, multi-party environments, along with unfamiliarity of foreign firms with host country conditions create high chances of cost overrun and delay which lead to disagreements, claims and failures. In the case of such disagreements, identification of the responsible parties for a sequence of interdependent events that lead to project failure is a tedious task. Factors that result in cost overrun usually occur in the form of a chain of causally dependent events, each of which are either under the responsibility of one party, or shared among different project participants according to the related contract clauses. The diversity of the factors, namely global, country, company and project specific factors, increases the complexity of negotiation process between the project participants when cost overrun and delays occur in international projects. The major idea in this research is that cost overrun depends on causal relations between various risk sources (namely, risk paths) and sources of vulnerability that interfere with these paths. Using the data of 166 international construction projects and utilizing Structural Equation Modeling (SEM), a Risk-Path Model that represents the interactions among different risk and vulnerability paths is identified. A network of interactive risk paths that can be traced from the initiation stage to its final effect on project cost overrun may help allocation of risk and cost overrun to various parties. Such an approach is believed to ease determination of the responsible parties and the configuration of the final risk and cost sharing scheme in a project. Moreover, SEM can be used to predict potential risk paths and estimate the level of cost overrun. In this paper, through a comprehensive case study, the complex risk emergence pattern in a real construction project is demonstrated. Employing the SEM-based Risk-Path Model, the most significant risk paths are identified, cost overrun is estimated and how the model can be used for risk and cost allocation between the parties is discussed.
11:30 15 mins	BARRIERS TO IMPLEMENTATION OF ENERGY PERFORMANCE CONTRACTING (EPC) MECHANISM INTO HOTEL BUILDINGS RETROFIT IN CHINA Pengpeng Xu, Edwin Hon-wan Chan Abstract: Building sector contributes a large part of total energy consumption. Building Energy Efficiency Retrofit (BEER) is an effective approach to save energy & reduce emission and improve sustainability of existing buildings. Energy Performance Contracting (EPC), a market oriented mechanism provided by Energy Service Companies (ESCOs), has been widely used to improve energy efficiency in developed countries. EPC mechanism has been introduced in China since 1990s and implemented in different energy efficiency improvement projects. However, EPC mechanism is still unimplemented in some existing building retrofit projects. This research takes hotel buildings as example aims to identify the barriers to implementation of EPC mechanism into hotel buildings retrofit in China. Quality research methodology is employed in this research. In order to identify these barriers, a set of interviews are conducted. After that, a qualitative analysis of feedback information is discussed. Finally, a series of corresponding measures for remove identified barriers are proposed.
11:45 15 mins	FOURTEEN PROCESSES DEFINING COMPETITIVE ADVANTAGE OF BRAZILIAN TRADE CONTRACTORS Ricardo Oviedo Haito, Francisco Cardoso Abstract: Brazilian Trade Contractors, or Subcontractors and Specialty Contractors, are main players in the Brazilian Building Industry competitiveness. They are part of a highly fragmentized and informal chain, with a great diversity in their value propositions, their organizational forms and, as a consequence, in their results. Nonetheless, despite their heterogeneity, most of them are SMEs lacking resources, capabilities, and other assets. This lack of assets and a competition led by the lower bid offering produces the bankruptcy of 50% of them at their fourth year operation, with negative consequences in the competitiveness of the whole Industry. Hence, understanding the causes of that performance is an important issue to improve Trade Contractors management practices and, consequently, their performance. This paper focuses on internal factors, specifically, on the internal processes that allow Trade Contractors to achieve a good performance in their specific competitions. For this purpose, data was gathered from a qualitative research in 24 Trade Contractors with good performance and in 7 other agents that hire them, mainly in Sao Paulo - Brazil. We have two main results: First, we identified fourteen processes conducted by Trade Contractors, namely: Strategic Process, Planning and Management, Commercial, Information Technology, Technical Assistance, Marketing, Financial and Accounting, Procurement, Product Design, Design for Production, Production Planning, Human Resources, Occupational Safety, and Production. Second, those processes are performed in different configurations in accordance with different value propositions and the size of the Trade Contractor.
12:00 15 mins	THE LEVEL OF COMPLIANCE WITH THE PUBLIC PROCUREMENT ACT (ACT 663) IN GHANA Ernest Osei-Tutu, Sarfo Mensah, Collins Ameyaw Abstract: Abstract The Public Procurement Act (Act 663) 2003 was introduced in Ghana to streamline the anomalies in public procurement. The objective of the law is to promote fairness, transparency and ensure that public procurement is non-discriminatory. The implementation of the Public Procurement Act 2003 (PPA) has been quiet challenging coupled with a number of inefficiencies. The aim of this study is to observe and compare the extent to which selected public procurement entities have complied with the processes and requirements of the Law during the year 2008. The entities were chosen from the Ashanti and Brong Ahafo regions of Ghana. Structured questionnaire and face-to-face interviews were used to obtain data for this study. The overall compliance levels in the Ashanti and Brong Ahafo Regions lies at 19.58% and 17.8% respectively. This indicates low compliance levels of public entities. The study confirms that the Public Procurement Act 2003 (Act 663) is observed to proffer solutions but not without challenges. In the pursuit to improve compliance with the Act the study recommends that public entities recruit procurement personnel and organize intensive and regular procurement training for the personnel handling public procurement especially in the area of procurement processes. Keywords: Ghana, Public Entities, Public Procurement, Public Procurement Act, Compliance.
12:15 15 mins	PERFORMANCE BASED HOUSING POLICY IMPLEMENTATION: TOWARDS SUSTAINABLE CONSTRUCTION, INNOVATION AND COMPETITIVENESS Luis Bismarchi, Maria Loschiavo dos Santos Abstract: The building sector is one of the most strategic sectors everywhere in the sustainability context because of it's socioeconomic role as one of the largest employers and also because of it's evironmental role as one of the world's biggest polluter. The adoption of a performance based procurement process to implement the Brazilian public housing policy is, as shown in this paper, a huge step the State might take towards the promotion of sustainable construction, using it's significative purchase power to foster a fruitful environment for innovation, sustainability and competitiveness all along the Brazilian building sector value chain, having a leading role towards the path to a global low-carbon economy – with less greenhouse gas emission, contributing to slow down global warming – and also successfully fulfilling the targets of the national housing policy.