Construction Management & Economics

Skitmore, Martin

doi: 10.1080/01446190802175678pmid: N/A

A great body of knowledge exists on the theory of auctions and competitive bidding that is of potential relevance to construction contract tendering. Most of this, however, contains assumptions—such as perfect information—that are unlikely to be tenable in practice. The aim, therefore, is to examine the effects of relaxing some of the more restrictive of these assumptions to align more closely with the construction tendering situation. In particular, the effects of additive and multiplicative (scalar) mark‐ups in equilibrium are examined for first and second price auctions in situations where bidders have different, uncertain, costs. This is illustrated first by Monte Carlo simulation—by which bids are generated randomly from a normal distribution for six bidders and mark‐ups applied systematically for each bidder in turn until equilibrium is reached. An extensive numerical analysis is then applied to obtain equilibrium results for both mark‐up values and expected profit from the simple symmetric case through to more complex asymmetric cases for the uniform and normal distributions. In general, it is found that first price auction bidders with relatively high cv levels and a larger number of bidders involved bid higher in equilibrium but can expect little profit unless the number of bidders involved is small. Where there are asymmetries, stronger bidders (i.e. those with lower costs and less variability) bid much higher and achieve much higher profits in equilibrium. From the seller's point of view, it is cheaper, in equilibrium, to have a homogeneous group of low variability bidders. The work contributes to the body of knowledge on the economic theory of auctions by closing some of the gap between theory and practice.

Chen, Jieh‐Haur; Yang, Li‐Ren; Chen, W. H.; Chang, C. K.

doi: 10.1080/01446190802014778pmid: N/A

In the highly competitive worldwide construction industry, a slight inaccuracy of estimation can easily cause the loss of a project. Erroneous experience‐based cost estimates or allocations of onsite supervisory manpower often offset the profit gained from the project and may even jeopardize the management processes. To counter these types of problems, we develop a model using mathematical analysis and case‐based reasoning to automate the allocation of onsite supervisory manpower and its costs. The method is founded upon laborious data collection processes and analysis by matching statistical assumptions, and is applicable to construction projects for residential buildings, industrial office buildings, commercial buildings and industrial construction. In the modelling the costs and allocation of onsite supervisory manpower are quantified for both owners and contractors before initiating or bidding on the projects. The findings confirm that the degree of variation of the model predictions has an accuracy rate at 88.47%. Single‐site construction projects with the following characteristics: a non‐crashing schedule, a floor area of less than 35 000 m2, a height of less than 50m, can be accurately predicted and the assignment of supervisory manpower feasibly automated.

Wong, James M. W.; Chiang, Y. H.; Ng, Thomas S.

doi: 10.1080/01446190802189927pmid: N/A

The role of construction in economic development is an important issue facing the construction research community, government and international development agencies. Based on empirical analyses, the complexities of the relationship between construction activity and stage of economic development in Hong Kong were examined. With time series data, Granger causality test results show that the construction output particularly the infrastructure sector drives the economic growth of Hong Kong, and not vice versa. Findings further indicate that the role of the local construction industry changes as the economy matures from newly industrializing country (NIC) to advanced industrialized country (AIC) status, as revealed by the diminishing rate of capacity addition by construction as well as the growing maintenance and repair sector. This complies with Bon's inverted U‐shaped relationship between construction activity and gross domestic product (GDP). However, the proposition of ‘volume follows share’ is not supported since the indigenous construction investments still sustain for the service‐oriented economy which inevitably needs commercial development and logistics infrastructure to provide the services. The results may be significant for policy makers in NICs, in the long run, to formulate corporate and industrial policies to chart out a viable and sustainable course to revive the vigour of the industry.

Bowen, Paul; Dorrington, Rob; Distiller, Greg; Lake, Harry; Besesar, Sarika

doi: 10.1080/01446190802061225pmid: N/A

South Africa has one of the highest HIV/AIDS prevalence rates, with 11% of South Africans currently estimated to be HIV positive. The construction industry has one of the highest prevalence rates of any economic sector. To indicate the nature and extent of HIV/AIDS in the SA construction industry and to establish the degree of association between certain risk factors and the prevalence of HIV/AIDS, the results of HIV tests on 10 243 construction employees drawn from 55 companies nationwide are reported. In addition to the HIV test, a test for tuberculosis (TB) was conducted but proved inconclusive. Permanently employed, semi‐skilled operators and drivers, as well as skilled employees, have the highest prevalence rate of HIV/AIDS; even greater than casual labourers. The group displaying the next highest prevalence is temporarily employed general labourers. With regard to age, middle‐aged employees were shown to be the most at risk. Geographically, KwaZulu‐Natal exhibits the highest HIV prevalence rate, with the Western Cape the lowest. It is recommended that a compulsory, industry‐wide initiative be adopted, funded via levies, involving education, testing and treatment programmes supported via formal certification as part of the completion of work certification process.

Doloi, Hemanta

doi: 10.1080/01446190802244789pmid: N/A

Poor productivity of construction workers is one of the major causes of cost overruns and schedule slippages in construction projects. Anecdotal evidence suggests that workers' attitudes towards higher productivity may not be limited to purely financial rewards, but inherently linked to many other latent factors. Some building construction projects in Melbourne are compared to each other to ascertain the factors that influence productivity. The factors and their relative importance impacting on workers' productivity are investigated by using a structured questionnaire survey approach. The survey was formulated with 72 questions covering three broad categories, namely (1) project planning; (2) incentives/disincentives; and (3) job satisfaction. Perceived best practices that impact on improvement of productivity on site were identified from 19 targeted experts. Analytical hierarchy process shows that the biggest influences on productivity are planning and programming. The outcome of this study should assist management decisions in determining the effect on productivity and suggest possible improvements to establish the appropriate management procedures for most productive use of labour resources in construction projects.

Menches, Cindy L.; Hanna, Awad S.; Nordheim, Erik V.; Russell, Jeffrey S.

doi: 10.1080/01446190802213511pmid: N/A

The mild recession experienced in the early part of this decade forced many US electrical contractors to reduce their profit margins as a way to win jobs and survive economically. However, to make up for lower profit margins, contractors turned to ‘better planning’ as a method for improving their efficiency and increasing their profitability. In general, contractors believe that better planning contributes to better project performance, but the evidence has been mostly anecdotal. A study was conducted recently that transformed anecdotal evidence about the impact of pre‐construction planning on performance into quantitative evidence. The research resulted in the development of a model pre‐construction planning process that was based on outstanding projects that were well planned and performed well. The study quantified the relationship between pre‐construction planning activities, project characteristics and performance, and a separate validation study found that those projects that performed a comprehensive planning process similar to the model planning process were more likely to achieve their estimated work hours, profit, budget and completion goals.

Yip, Brenda; Rowlinson, Steve; Siu, Oi Ling

doi: 10.1080/01446190802213529pmid: N/A

The moderating effect coping strategies have on the relationship between role overload and burnout was investigated in a sample of 222 professional engineers in the construction industry. A four‐factor model of coping strategies, based on the Ways of Coping Questionnaire (WCQ) revised scale, was identified to consist of rational problem solving, resigned distancing, seeking support/ventilation and passive wishful thinking. The results revealed that only rational problem solving significantly moderated the relationship between role overload and all three dimensions of burnout, i.e. emotional exhaustion, cynicism and reduced professional efficacy; whereas the moderating effect of resigned distancing and seeking support/ventilation was significant only on emotional exhaustion and cynicism respectively. Passive wishful thinking failed to demonstrate a significant moderating effect on any of the burnout dimensions at all. The importance and methods of incorporating effective coping strategies as a successful intervention for managing burnout at individual, organizational and institutional levels are discussed.

Abu Dabous, Saleh; Alkass, Sabah

doi: 10.1080/01446190802071190pmid: N/A

Bridge management is the decision‐making process for selecting and prioritizing the actions necessary to maintain a bridge within acceptable limits of safety and serviceability. The current decision‐making approach for bridge management is based on optimizing the life cycle cost of the structure. This is a single criterion decision‐making process which does not include the indirect impact of the maintenance, repair and replacement actions. Sound bridge management decisions should be made through balanced consideration of multiple and conflicting criteria. This requirement motivated the development of a multi‐criteria decision support method for bridge deck management. The method is based on a modified analytic hierarchy process (AHP) to evaluate and rank alternative bridge rehabilitation strategies. The modified AHP provides an effective analytical tool to deal with complex decision making and has the following features: (1) multi‐criteria decision‐making process; (2) accounts for the uncertainty associated with the pairwise comparison values; and (3) provides a sensitive evaluation of consistency in judgements. The proposed decision support method is a rational decision‐making technique for bridge management. The method practicality and validity is demonstrated using a real case study from the industry.