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Rethinking construction - the report of the construction task force
... From a supply chain perspective, therefore, the shortcomings of the traditional method primarily hinge on the nonintegrated nature of the supply chain, lack of early collaboration, and adversarial culture (Natasa and Car-Pušić, 2008). Egan (1998) resounded the need to replace traditional procurement, with contracts that seek the best overall value within the supply chain, which are not just based on minimum price. The traditional method of procurement however remains in use to date, despite calls for client-led change from competitive pricing in favour of more collaborative procurement methods rooted in longterm relationships (Egan, 1998). ...
... Egan (1998) resounded the need to replace traditional procurement, with contracts that seek the best overall value within the supply chain, which are not just based on minimum price. The traditional method of procurement however remains in use to date, despite calls for client-led change from competitive pricing in favour of more collaborative procurement methods rooted in longterm relationships (Egan, 1998). This may be attributed to the advantages of the traditional procurement method such as accountability/transparency of the competitive process which lowers the contract price, and the price certainty upon contract award (Noaum, 1994). ...
... It may however pose disadvantages due to the difficulties in comparing alternative design offers, and loss of control over design (Masterman, 2002). Costs may also be higher, as fully competitive bidding is limited compared to the traditional method (Sawalhi and Agha, 2017) [6][7][8][9][10][11][12]. ...
Pre-contract advice on construction projects entails providing strategic expert evaluation at the upstream phase of procurement. It is an essential part of contract management for routine work as well as large projects. This study carries out a procurement assessment as part of the precontract cost advisory services for proposed repair works on a hospitality facility, following damage from a flood disaster event. Using a scenario-based approach, different methods of procurement were evaluated for their pros and cons. Based on the outcome of the evaluation, the management contracting method was chosen as the most suitable method for procuring the repair works. The key considerations in reaching this conclusion were its potential overall advantages in most of the key client criteria, including certainty of finish date, swiftness of response and minimality of employer involvement. Criteria such as cost certainty and price competition were however lower on the scale of client criteria. Further to this, a tender evaluation was carried out as a basis for assessing potential contractors. The tender evaluation was two-pronged-a technical and financial proposal assessment, which were based on set out criteria. The technical criteria was primarily pitched on the experience/qualification of the contractor/team in general and specific to similar works, as well as the quality of the proposed solutions. The overall assessment yielded a recommendation for the preferred contractor on the merits of the highest combined overall score. The recommended tenderer however did not have the lowest financial bid offer. Nonetheless, the tenderer emerged top, via a nexus of both assessment criteria, demonstrating that technical and financial considerations are integral to the selection of contractors for carrying out construction works.
... It has been argued that the construction industry is distinct from other industries and must therefore find solutions that align with its peculiarities. Over the last three decades, several reports, primarily Latham (1994) and Egan (1998) have spotlighted systemic issues underlying the construction industry. The construction industry is highly fragmented evidenced by a high level of subcontracting and a lack of integration within supply chains. ...
... From a supply chain perspective, therefore, the shortcomings of the traditional method primarily hinge on the non-integrated nature of the supply chain, lack of early collaboration, and adversarial culture (Natasa and Car-Pušić, 2008). Egan (1998) resounded the need to replace traditional procurement, with contracts that seek the best overall value within the supply chain, which are not just based on minimum price. The traditional method of procurement however remains in use to date, despite calls for client-led change from competitive pricing in favour of more collaborative procurement methods rooted in long-term relationships (Egan, 1998). ...
... Egan (1998) resounded the need to replace traditional procurement, with contracts that seek the best overall value within the supply chain, which are not just based on minimum price. The traditional method of procurement however remains in use to date, despite calls for client-led change from competitive pricing in favour of more collaborative procurement methods rooted in long-term relationships (Egan, 1998). This may be attributed to the advantages of the traditional procurement method such as accountability/transparency of the competitive process which lowers the contract price, and the price certainty upon contract award (Noaum, 1994). ...
It has been argued that the construction industry is distinct from other industries and must therefore find solutions that align with its peculiarities. Over the last three decades, several reports, primarily Latham (1994) and Egan (1998) have spotlighted systemic issues underlying the construction industry. The construction industry is highly fragmented evidenced by a high level of subcontracting and a lack of integration within supply chains. Poor information management has also been a common thread on most construction projects. The adversarial culture of project stakeholders and low productivity has been repeatedly discussed in the literature. Particularly, in the 1990's discussions on poor information management, loosely coupled supply chains, and lack of collaboration took center stage. Addressing these issues, given the transformational changes in other industries, has resulted in the drive by the construction industry to proffer alternative methods of procurement and supply chain management centered on Building Information Modelling. This report compares the advantages and disadvantages of the different procurement methods available to construction projects , examines the impact of Building Information Modelling on procurement methods, and also outlines the trends in digitalisation within the built environment and its implications for procurement.
... Preceding the blockchain by a decade, the Egan Report "does not consider that technology on its own can provide the answer to the need for greater efficiency and quality in construction" and recommends to "to approach change by first sorting out the culture, then defining and improving processes and finally applying technology as a tool to support these cultural and process improvements." [11] The necessity to collect large scale data on building performance during operation and analyze them digitally was mentioned in reports decades ago [12] , just as the potential of digital models that force teams to anticipate design problems first in the virtual world, rather than on the construction site [11] . Sector reports traditionally look at four big topics: ...
... Preceding the blockchain by a decade, the Egan Report "does not consider that technology on its own can provide the answer to the need for greater efficiency and quality in construction" and recommends to "to approach change by first sorting out the culture, then defining and improving processes and finally applying technology as a tool to support these cultural and process improvements." [11] The necessity to collect large scale data on building performance during operation and analyze them digitally was mentioned in reports decades ago [12] , just as the potential of digital models that force teams to anticipate design problems first in the virtual world, rather than on the construction site [11] . Sector reports traditionally look at four big topics: ...
The trusted exchange of data lies at the heart of many processes in the fourth industrial revolution. Blockchain technology, or Distributed Ledger Technology (DLT), promises to ensure that data is secure, decentralized and immutable. In the financial, insurance and logistic sectors blockchain technology is treated as the next big disruptive force. A restructuring of services, resources and channels of distribution is already visible. This paper explores how the architecture, engineering and construction industry could profit from the application of blockchain technology and in how far the vision drawn for the digitalization of the industry is paving the way for their future applications.
The scope of analysis are policy papers on topics of digitalization from China and leading European nations. The aim is to identify benefits and risks of the digitalization process and highlight drivers and obstacles in the application of new tools, specifically blockchain technology, for facilitating project organization and transparency during architecture design and construction stages that will lead to better performance and quality of buildings and cities.
... A report by the UK construction task force on the state of the construction sector and room for improvement has looked specifically on social housing [10]. The structure of social housing construction with few but large contracts was deemed to lend itself to restructuring for the sake of greater efficiency in terms of cost, time and quality. ...
... Skills related to performance monitoring and error detection will become as important as problem solving skills. Similar to the suggestions of industry reports in the UK or Germany [10,17] large Chinese construction companies seek long-term maintenance contracts with owners and operators of sizable real estate portfolios. This type of co-operation promises high impact and little friction. ...
China's cities are desperate for local jobs and resource efficient strategies for upgrading older neighborhoods. In the construction sector, the high degree of standardization dating from before the time of “reform and opening up” invites economies of scale, mobile capital and the fragmentation of labor to a level that together produce a large amount of unsustainable, and irreparable building components and designs. Maintenance and repair of buildings seem more costly than demolition and reconstruction. This is problematic for several reasons: A meaningful engagement of locals in the construction sector is reduced; the high material turnover (demolition and reconstruction) generates environmental problems, resource shortages and price hikes; demolition destroys social ties when residents are relocated during reconstruction; and replacement contributes to the increasing uniformity of cities where place specific urban morphologies are replaced by generic modern designs. The objective of the paper is to explore in which ways and to which degree maintenance and retrofitting of existing buildings would impact local economies. Investing in local construction skills might solve the dilemma partially. The paper reviews international reports concerned about efficiency and quality delivered by the construction sector and summarizes opinions of insiders to the Chinese construction sector regarding the transferability of strategies to the Chinese context.
... A report by the UK construction task force on the state of the construction sector and room for improvement has looked specifically on social housing [10]. The structure of social housing construction with few but large contracts was deemed to lend itself to restructuring for the sake of greater efficiency in terms of cost, time and quality. ...
... Skills related to performance monitoring and error detection will become as important as problem solving skills. Similar to the suggestions of industry reports in the UK or Germany [10,17] large Chinese construction companies seek long-term maintenance contracts with owners and operators of sizable real estate portfolios. This type of co-operation promises high impact and little friction. ...
China’s cities are desperate for local jobs and resource efficient strategies for upgrading older neighborhoods. In the construction sector, the high degree of standardization dating from before the time of “reform and opening up” invites economies of scale, mobile capital and the fragmentation of labor to a level that together produce a large amount of unsustainable, and irreparable building components and designs. Maintenance and repair of buildings seem more costly than demolition and reconstruction. This is problematic for several reasons: A meaningful engagement of locals in the construction sector is reduced; the high material turnover (demolition and reconstruction) generates environmental problems, resource shortages and price hikes; demolition destroys social ties when residents are relocated during reconstruction; and replacement contributes to the increasing uniformity of cities where place specific urban morphologies are replaced by generic modern designs. The objective of the paper is to explore in which ways and to which degree maintenance and retrofitting of existing buildings would impact local economies. Investing in local construction skills might solve the dilemma partially. The paper reviews international reports concerned about efficiency and quality delivered by the construction sector and summarizes opinions of insiders to the Chinese construction sector regarding the transferability of strategies to the Chinese context.
... There was very little collaborative problem solving between these level (Masterman, 2002;Winch, 2003). Frustration with this transactional approach was highlighted by two major governmental reports in the UK (Latham, 1994;Egan, 1998) and a similar one published in Australia by the National Building and Construction Council (NBCC, 1989). Dissatisfaction with the construction industry's project delivery culture from the 1980s to mid-1990s triggered a move towards a more integrated and relational-based project procurement approach. ...
... Compared to PPPs this assumes a radically different role for the PO/POR, one in which collaboration extends to monitoring, review and adjustment of project specification to cater for refinement and amendment of specifications and standards based on a best-for-project criterion. Other global arrangements that are close to this procurement form are: integrated project delivery adopted in the USA (Cohen, 2010); variations on the Heathrow Terminal 5 integrated supply chain management approach (Brady et al., 2007;Doherty, 2008;Gil et al., 2012); and other hybrid forms that have recently evolved in the UK (HM Treasury and Infrastructure UK, 2013). ...
Purpose
– This case study was chosen for its rare, if not unique, project procurement strategy. It is, to the authors’ knowledge, the only example of a project alliance (PA) being undertaken within a public-private partnership (PPP) project delivery approach. The purpose of this paper is to explore the case study from a strategic perspective to better understand if it is possible to combine a PA within a less collaborative procurement form, such as PPP or design and construct (D&C), and to determine if there were any specific prerequisite conditions needed for such an arrangement to be successfully adopted.
Design/methodology/approach
– A single exploratory case study was undertaken through interviewing seven of the most senior project participant executives for approximately an hour that each had a separate and unique perspective to offer relating to the organisational role they represented in the PA. These interviewees were identified as the most knowledgeable key executives participating in the PA from whom both strategic and operational insights could be gained.
Findings
– It is possible to design a PA approach within a PPP for large and complex infrastructure projects and this can provide a competitive advantage to do so, however, the reasons for doing so should be clear and compelling. Parties to such an arrangement should be prepared to fully engage through adopting full PA principles. In such a case as this, the PPP special purpose vehicle takes on the role of “project owner” that normally the public body part of the PPP would normally adopt.
Research limitations/implications
– This research reports upon a single case study within a specific project delivery culture that has extensive experience of PAs. Demonstrated positive project outcomes would not be likely to be more generally repeatable across the engineering infrastructure sector unless parties engaged within such a PA had not already experienced and understood outcomes resulting from such a close collaboration.
Practical implications
– This research has implications for project participants bidding for PPP projects as well as others using a D&C tending approach. It offers a potential competitive advantage because it demonstrates and explains how choices may be expanded beyond a simple single project procurement strategy approach.
Social implications
– Many PPP and PA infrastructure projects are delivered to provide community benefit. This paper provides a way to improve the project delivery process and thus improving value to the community.
Originality/value
– The paper makes three contributions. Primarily, it pioneers analysis of a PA within a PPP. Second, it provides important insights into the reasons and emergence of this phenomenon. Finally, it provides an understanding of this how this novel form of early contractor involvement with a PPP special purpose ownership vehicle that combines competition and collaboration may function operationally.
... By encouraging better communication intra (inside organization level) and inter Committed leadership, a focus on the customer, integrated processes and teams, a quality driven agenda and commitment to people. This last one also includes decent site conditions, care for the health and safety of the work force, including commitment to training for all participants in the process, involving everyone in sustained improvement and learning [58]. ...
A Mass Customisation model is discussed as a competitive positioning strategy in the marketplace adding value to the customer's end-use. It includes the user as part of the construction process responding to the customer's demands and wishes. To the present day, almost all proposals for Mass Customisation have been focused on the design phase and single family houses. The reality is that the processes carried out in the work execution are so inefficient that the costs of the Mass Customisation models are assumed by the customer and they do not offer solutions that support the change management. Furthermore, this inefficiency often makes Mass Customisation unfeasible in terms of deadlines and site management. Therefore, the present proposal focuses on achieving the paradigm of Mass Customisation in the traditional residential construction complementary to the existing proposals in the design phase. All this through the proposal of a framework for the integral management in the work execution, which will address change management introduced by the users offering an efficient and productive model that reduces costs in the process. This model will focus on the synergy between different strategies, techniques and technologies currently used in the construction management (such as Lean Construction or Six Sigma), together with, other strategies and technologies that have proven to be valid solutions in other fields (such as Business Process Management, Service Oriented Architecture, etc.).
... However, the manner in which these participants are coordinated and managed can affect the efficiency and effectiveness of the material supply chain (SC) process. Recent reviews by Latham (1994) and Egan (1998) suggest that the problems could be overcome by using more "collaborative" and "teamwork" approaches, the intention is to add value to the chain. The major issue facing construction industry is knowing what can be done, by whom, to improve the efficiency and effectiveness of the material supply chain process. ...
There is a need for managing the material supply chain to enhance performance of the entire project. The material supply chain consists of several participants and activities, but their complex interaction and interfacing need special attention. Conventionally, the interaction of these participants and activities has been carried out independently, and these have hindered performance of the whole project. An approach based on agent system approach is presented to address the problems of a material supply chain domain as part of an on-going research. The system views the material supply chain environment as a collaborative system, where supply chain participants are each represented by autonomous agents that can act on their behalf to carry out specific tasks. This system will employ concepts from distributed artificial intelligence (DAI), such as distributed problem solving to manage and co-ordinate the supply chain participants and activities.
The type of procurement method determines how the project would be managed. This is because project uncertainty could be found in the way that projects are awarded and howthe construction project is managed into a system of contract. Procurement methods also influenced the time performance of construction projects. Time would be affected by theflow of project that was driven by different type of procurement method. However, it’s still inconclusive to what extent that different types of procurement systems could affect the performance of refurbishment projects. This study conducted to identify types of procurement methods used in Malaysian refurbishment projects and what are theproblems and difficulties encountered by contractor using different types of procurement systems. On top of that, the study also would examine relationship between challengesencountered by contractors using different types of procurements towards refurbishment projects performance. Triangulation technique was used in the study. 316 sets of closedended questionnaires were obtained from targeted respondents which included site agents, project engineer, contract administrator, contract manager and project manager who were working in various construction companies. From the questionnaire sent out, 268 questionnaires were found to be useful for data analysis, giving a final response percentage of 24.53%. Semi-structured interview has been carried out with 15 contractors to validate the result. The findings shown that 54.3% of the projects were used traditional procurement systems, 39.9% using design and build, 4.3% using management procurement, 1.1% of the refurbishment project using turnkey system and 0.3% using built-operate-transfer (BOT) system. Refurbishment projects using traditional procurement systems were performing well compared to the others. Besides, out of seven contractor challenges variables (independent) which are cash flow and financial, communication with client and consultants, client decision making, frequent change order by client, insufficient or discrepancies of contract documents, material price escalation and skill, expertise and experience tested were significantly correlated with at least one performance variable (dependent). The findings would be useful for future references, especially to those stakeholders who involved in refurbishment projects in Malaysia.Keywords: Malaysia, Procurement system, Performance, Refurbishment
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