Critical Success Factors For Construction Projects

Abstract

The literature demonstrates a lack of consensus and consistency to identify critical success factors (CSFs) for different construction operations. Therefore, the objectives of the study are to: (1) identify and categorize CSFs from literature; (2) examine the limitations of the current practices; and (3) recommend future studies. CSFs from the existing literature were categorized according to their emphasis on project outcomes, delivery methods, project types, and partnering processes. Upper management support, commitment, constructability reviews, teamwork, communication, and building trusts emerged as they shared key elements of success in most construction activities. Previous studies’ major limitation lays in the emphasis on experts’ subjective prioritization of CSFs and the limited number of empirical studies. The results of the study also demonstrate that there is a great potential for investigating CSFs for emerging delivery methods, and for exploring the causality relationships between CSFs and project success.

Full text

CRITICAL SUCCESS FACTORS FOR CONSTRUCTION PROJECTS
Esmaeili, Behzad 1; Pellicer, Eugenio 2; Molenaar, Keith R. 3
1 University of Nebraska at Lincoln, 2 Universitat Politècnica de València, 3 University of
Colorado at Boulder
The literature demonstrates a lack of consensus and consistency to identify critical succes
factors (CSFs) for different construction operations. Therefore, the objectives of the study are
to: (1) identify and categorize CSFs from literature; (2) examine the limitations of the current
practices; and (3) recommend future studies. CSFs from the existing literature were
categorized according to their emphasis on project outcomes, delivery methods, project
types, and partnering processes. Upper management support, commitment, constructability
reviews, teamwork, communication, and building trusts emerged as the shared key elements
of success in most construction activities. Previous studies‘ major limitation lays in the
emphasis on experts‘ subjective prioritization of CSFs and the limited number of empirical
studies. The results of the study also demonstrate that there is a great potential for
investigating CSFs for emerging delivery methods, and for exploring the causality
relationships between CSFs and project success.
Keywords: Success Factors; Project Delivery Methods; Partnering
FACTORES CRÍTICOS DE ÉXITO PARA PROYECTOS DE CONSTRUCCIÓN
La literatura existente demuestra que existe una falta de consenso y consistencia para
identificar los factores críticos de éxito (CSFs) de diferentes actividades de la construcción.
Por lo tanto, los objetivos de este estudio son: (1) identificar y categorizar CSFs de la
literatura; (2) examinar las limitaciones de las prácticas existentes; y (3) recomendar futuros
estudios. Se categorizan los CSFs obtenidos de la literatura según los resultados del
proyecto, estrategias de contratación, tipos de proyectos, y procesos de colaboración. El
apoyo del personal directivo, el compromiso, la constructibilidad, el trabajo en equipo, la
comunicación y la generación de confianza emergen como los elementos compartidos de
éxito en la mayoría de las actividades de la construcción. Las mayores limitaciones de los
estudios previos se encuentran en la priorización subjetiva de los CSFs y en el limitado
número de estudios empíricos. Los resultados del estudio también demuestran que hay un
gran potencial para investigar los CSFs relativos a las nuevas estrategias de contratación
colaborativa, así como para explorar las relaciones causales entre CSFs y el éxito del
proyecto.
Palabras clave: Factores Críticos; Métodos de Contratación; Colaboración
Correspondencia: pellicer@upv.es
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1. Introduction
Critical success factors (CSFs) in the context of project management were first defined by
Rockart (1982) as the limited number of factors that should be satisfied to ensure successful
completion of a project. Since then, a considerable amount of research has been focused on
exploring CSFs for construction projects (e.g. Belassi & Tukel, 1996; Li et al., 2005). These
studies gained attention, because identifying CSFs helps practitioners allocate their limited
resources to a manageable number of factors that contribute to project success. Although
researchers often develop metrics for CSFs -such as mutual trust, effective communication,
and adequacy of resource-, there is lack of consensus among researchers regarding the
most critical factors, and there is little consistency in their definition and use of language.
Therefore, exploring the evolution pattern of CSFs in the construction literature and
predicting the future trajectories would be rewarding. To answer this knowledge gap, the
current literature study was conducted to: (1) identify and categorize CSFs according to
different project outcomes, delivery methods, project types, and partnering processes; (2)
examine the limitations of the current practices; and (3) provide suggestions for future
potential studies. To achieve these objectives, a large number of research papers were
reviewed; their salient results are summarized in the following sections. The results of the
study are the first step towards developing universal CSFs for construction projects to help
practitioners create high performance teams.
2. CSF for Different Project Outcomes
Each project team member might pursue different or even contradictory objectives in a
project. For example, a contractor may consider construction speed and profitability as the
most important measures of success, while an owner may emphasize on-budget completion
or quality of construction. These conflicting views of success can result in poor overall project
performance if expectations are not communicated. In response to these divergent priorities,
most of the previous literature identified CSFs for shared objectives among different team
members; these factors included cost, time, and quality.
In one of the early studies, Jaselskis and Ashley (1991) investigated different key success
factors that assist project managers to allocate their limited resources in such a way as to
achieve a high level of construction performance. After analyzing data from 75 construction
projects, they found that the following factors improve the likelihood of achieving outstanding
project performance: reducing team turnover, providing a constructability program for
contractor organization, and increasing number of construction control meetings for the
contractor organization. Furthermore, they found that the success factors affected project
outcomes differently. For instance, ―reducing team turnover‖ had more impact on improving
budget performance than emphasizing schedule or overall project performance.
In another study, Chua et al. (1999) identified CSFs for different project objectives, including
budget, schedule, and quality. They identified sixty-seven factors and grouped them into four
main classes: project characteristics, contractual agreements, project participants, and
interactive processes. Chua et al. (1999) then distributed a survey questionnaire among
experienced practitioners to make pairwise comparisons and determine the relative
importance of the various CSFs. They found that regardless of project objective, adequacy of
plans, specifications, and constructability are the most important factors characterizing
successful projects.
In one of the empirical studies, Cooke-Davies (2002) conducted a detailed analysis on 136
projects executed between 1994 and 2000 and identified 12 factors that were critical to
project success. They found that although in some cases schedule delay and cost escalation
correlated in an individual project, only a small amount of the cost escalation was accounted
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for by schedule delay. Their results indicated that the following practices correlate with on-
time performance: adequacy of company-wide education on the concepts of risk
management; maturity of an organization‘s processes for assigning ownership of risks;
adequacy with which a visible risk registers is maintained; adequacy of an up-to-date risk
management plan; adequacy of documentation regarding organizational responsibilities on
the project; and keeping the project (or project stage duration) less than 3 years, with
benefits evident among projects closer to 1 year in length. On the other hand, the following
practices correlate with on-cost performance: only allowing changes to scope through an
established scope-change control process; and maintaining the integrity of the performance
measurement baseline. In addition to the above factors that contributed to project
management success, the existence of an effective benefits delivery and management
process involving the mutual co-operation of project management and line management
functions were critical for overall project success.
3. CSFs for Different Project Delivery Methods
Project delivery systems determine the sequencing of design, procurement, and
construction, and define the roles and responsibilities of the parties involved in a project.
Common delivery methods include design-bid-build (DBB), construction management at risk
(CMR), design-build (DB). However, some governments‘ financial constraints paved the way
for innovative methods of development and the financing of public facilities and services via
the private sector. Two prominent examples of such methods that have been adopted
extensively across the globe are build-operate-transfer (BOT), and public-private-partnership
(PPP). A summary of CSFs for different project delivery methods is provided below.
3.1. Common Delivery Methods (DBB, CMR, and DB)
DBB is the traditional project delivery method in the US characterized by two separate
contracts for design and construction (Bearup et al., 2007). In this method, the owner hires a
designer to provide complete design documents and then selects a contractor based upon a
fixed price bid to build the project according to the completed drawings (Touran et al,. 2009).
One of the disadvantages of this delivery method is that the owner has to contract two
different entities, and the construction cannot be started until the design is complete. To
answer this limitation, CMR evolved from the traditional project delivery system as a method
to obtain significant constructability input during the design phase of the project by
overlapping the design and construction phases (Bearup et al. 2007). While the CMR
approach provides some benefits for overlapping design and construction, the owner still has
to manage two separate contracts. To answer this limitation, DB delivery system was
introduced to help the owner contract a single entity. In fact, any delivery method in which
one party is held responsible for the design and construction services is called DB (Songer,
1992).
Due to its numerous advantageous, DB became a popular delivery method in the past
decades, with several studies conducted to facilitate successful completion of these projects.
For example, Chan et al. (2001) investigated public sectors DB projects to identify a set of
project success factors and to determine their relative importance. They analyzed survey
responses from 53 participants using multiple statistical techniques, such as factor analysis,
stepwise multiple regression, two independent sample t-test, and bivariate correlation. Six
project success factors were extracted, including project team commitment, contractors‘
competencies, risk and reliability assessment, client‘s competencies, end-users‘ needs, and
constraints imposed by end-users. They found that project team commitment, and
contractor‘s and client‘s competencies are the most influential factors for project success.
The results of the study suggested practitioners focus on team work and partnering to make
a project successful.
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In another study, Ling et al. (2004) collected empirical data from 87 DBB and DB projects to
search for explanatory variables that significantly affect project performance. They
catalogued 59 potential factors affecting project performance (e.g. cost growth) and
conducted multivariate data analysis to investigate their underlying relationship. It was found
that construction speed of DBB projects is determined by gross floor area and the adequacy
of contractor‘s plant and equipment; however, for DB projects, the extent to which contract
period is allowed to vary during bid evaluation is more crucial. In a similar study, Lam et al.
(2008) investigated determinants of successful DB projects to set a benchmark for
comparing project performance. They developed a project success index and distributed a
questionnaire among DB participants in the Hong Kong construction industry to investigate
the casual relationship between the project success index and the key project performance
indicators of time, cost, quality, and functionality. Then, factor analysis and multiple
regressions were used to analyze data; they found that the project‘s nature, the effective
project management action, and the adoption of innovative management approaches are the
most critical success factors for DB projects. It is important to note that the nature of the
project is determined by the extent of contractor‘s input, attractiveness of the project, and the
complexity of the project. On the other hand, project management actions can be described
by up-front planning efforts, effectiveness of communication, control and management
systems, and organizational structure. Furthermore, it was suggested that adopting
innovative management approaches -such as value management and partnering- can
increase the chance of success in a DB project.
3.2. Build-Operate-Transfer (BOT)
In a BOT contract, the private sector is financing the project and furnishing design and build.
More importantly, after completion of project, the private sector manages and operates the
facility for a specified concession period and then transfers the asset to the host government.
While, the BOT model of project development provided tremendous opportunities for both
governments and contractors, winning a BOT contract is not easy and the negotiation
process is complex, time-consuming, and expensive business (Tiong, 1996). Therefore,
several studies conducted to shed light on the road to winning a BOT contract. For example,
Tiong et al. (1992) conducted an in-depth analysis of nine major BOT projects and
interviewed their entrepreneurs, project sponsors, and government officials. They identified
six CSFs in winning BOT contracts: entrepreneurship and leadership, right project
identification, strength of the consortium, technical solution advantage, financial package
differentiation; and differentiation in guarantees. In a follow up study, Tiong (1996) quantified
the relative importance of different factors and found that the strength of consortium and
financial package differentiation are the most important factors in winning a BOT tender.
3.3. Public-Private-Partnership (PPP)
PPP, or P3, is defined as a contractual agreement between the public agency and private
entity that enables the private sector to finance and deliver public projects (Ke et al., 2009).
Some of the perceived benefits of PPP projects for public sector are: enhanced government
capacity; innovation in delivering project services; reduction in time and cost of project
delivery; and transferring the majority of the risk to a private party to secure taxpayers‘ value
(Li et al., 2005). Based on the allocation of resources, risks, and rewards, different types of
PPP projects have emerged (Li et al., 2005). As PPP projects are characterized with a broad
range of risks, uncertainties, and the involvement of multiple participants, it is important to
develop an efficient procurement protocol to improve practices in these projects (Zhang,
2005).
In one of the prominent studies, Li et al. (2005), identified 18 CSFs for PPPs and evaluated
their relative significance in the United Kingdom. By obtaining the ranking of perceived
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importance of different CSFs, the following factors emerged as being the most important
considerations: (1) a strong private consortium; (2) appropriate risk allocation; and (3) the
available financial market. They also conducted factor analysis and grouped CSFs into
effective procurement, project implementability, government guarantee, and favorable
economic conditions. Likewise, Zhang (2005) identified 47 critical success factors for PPPs
and categorized them into five groups: favorable investment environment, economic viability,
reliable concessionaire consortium with strong technical strength, sound financial package,
and appropriate risk allocation via reliable contractual arrangements. He also measured the
relative significance of sub factors by distributing a worldwide questionnaire survey. A
summary of CSFs different project delivery methods is shown in Table 1.
While the growing market of construction projects in China absorbed large number of
international firms, there was no robust method for predicting the outcome of these projects.
To answer this gap in knowledge, Ling et al. (2008) conducted a study to predict project
success in China based upon the project management practices implemented by the
company. They obtained data from 33 projects to identify different project management (PM)
practices as explanatory variables of each project‘s performance. They also used multiple
linear regressions to develop five models to predict the probability of project success. The
results indicated that a firm‘s response to perceived change orders is the most important PM
practice. In addition, they found that the overall project performance was largely affected by
upstream activities, such as managing project scope. The main contribution of the model is
to help project personnel to predict project success potential based upon the project
management practices used. Lu et al. (2008) used a similar approach to identify CSFs for
competitiveness of contractors in China. The relative importance of factors was also obtained
thorough survey and questionnaire. The top three factors proved to be bidding strategy, an
explicit competitive strategy, and relationships with government departments.
4. CSFs for Partnering Process
A construction project typically requires collaboration between multiple parties with diverse
organizational objectives and culture. It is proven that a clash of values and the existence of
complex relationships between team members have an impact on project performance
(Anvuur & Kumaraswamy, 2007). For example, little cooperation, lack of trust, and inefficient
communication can cause adversarial relationships between parties and lead to project
delays, difficulty in resolving claims, cost overruns, litigation, and a win-lose climate (Moore
et al., 1992). One of the widely practiced management strategies that is intended to improve
interorganizational relations is partnering.
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Table 1: Summary of CSFs for different project delivery methods
CATEGORIES
CRITICAL SUCCESS FACTORS
Common Delivery
Methods (DBB, DB
and CMR)
Ling et al. (2004)
 Adequacy of contractor‘s plant and equipment
Chan et al.
(2001)
 Project team commitment
 Contractor‘s competencies
 Risk and reliability assessment
 Client‘s competencies
 End-users‘ needs
 Constraints imposed by end-users
Ling et al. (2004)
 The extent to which contract period is allowed to
varied during bid evaluation
Lam et al. (2008)
 Project nature
 Effective project management action
 Adoption of innovative management approaches
Build-Operate-
Transfer (BOT)
Tiong et al.
(1992), and
Tiong (1996)
 Entrepreneurship and leadership
 Right project identification
 Strength of the consortium
 Technical solution advantage
 Financial package differentiation
 Differentiation in guarantees
Public-Private-
Partnership (PPP)
Li et al. (2005)
 A strong private consortium
 Appropriate risk allocation
 Available financial market
Zhang (2005)
 Favorable investment environment
 Economic viability
 Reliable concessionaire consortium with strong
technical strength
 Sound financial package
 Appropriate risk allocation via contractual
arrangements
Partnering is defined as cooperative strategy that aims to bridge organizational boundaries
and create an environment in which team members can openly interact and perform
(Crowley & Karim, 1995). The fundamental principles of partnering are commitment, trust,
respect, communication, employee involvement, and equality (Construction Industry Institute
[CII], 1991; Cowan et al., 1992; Sanders & Moore, 1992; Uher, 1999). Indeed, the partnering
process is designed in a way to transform the traditional and adversarial approach into a
highly communicated network of construction parties (Cheng & Li, 2002). It provides several
benefits to a project and team members, such as effective framework for conflict resolution,
improved communications, reduced litigation, lower risk of cost overruns and delays, and
increased opportunities for innovation (Abudayyeh, 1994; Harback et al., 1994; De Vilbiss &
Leonard, 2000; Black et al., 2000). Partnering makes all of these possible by re-orientating
project participants toward a ‗‗win-win‘‘ approach and by fostering a teamwork environment.
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Several studies examined the best way of implementing partnering. For example, Cheng et
al. (2000) developed a framework to identify CSFs that contribute to the successful use of
partnering in projects. The authors claimed that to have an effective partnering, there should
be specific management skills and contextual characteristics. While management skills are
necessary to initiate, form, and facilitate interorganizational relationships, one should prepare
a favorable context before starting the partnering process. After reviewing literature, effective
communication and conflict resolution were considered as the critical management skills, and
adequate resources, management support, mutual trust, long term commitment,
coordination, and creativity were classified as critical contextual factors. They also suggested
a list of measures to monitor and control partnering performance by targeting both short- and
long-term objectives. Short-term objectives—such as cost variation and the rejection of
work—were mainly related to an individual project while long-term goals were concerned with
the perceived satisfaction of partners‘ expectations.
Black et al. (2000) analyzed several companies with and without partnering experience to
investigate the importance of CSFs toward partnering success. They obtained the opinion of
clients, consultants, and contractors in the UK regarding the success factors and benefits of
partnering. They found that the following requirements should be met to implement
partnering successfully: trust, communication, commitment, a clear understanding of roles,
and consistency and flexible attitude. The results also indicated that clients and contractors
are more supportive towards the partnering process than consultants.
Cheng and Li (2002) took a different approach by identifying CSFs for different stages of
partnering: formation, application, and reactivation. The factors were prioritized using an
analytical hierarchy process. The results indicated that some of the CSFs influence the whole
partnering process, while there are some CSFs for individual process stages. The common
CSFs for whole partnering process are top management support, open communication,
effective coordination, and mutual trust; CSFs at the stage of partnering formation are team
building, facilitator, and partnering agreement; CSFs of partnering application are joint
problem solving, adequate resources, and partnering goals‘ achievement. Finally, partnering
experience, continuous improvement, learning climate, and long-term commitment are
important in the partnering reactivation phase. The study is creative in developing a
customized CSFs model; however, due to the low number of responses (9 filled-in
questionnaires), it should be considered as an exploratory study.
One of the issues that can affect the partnering process is cultural differences (Cheng & Li,
2002). Therefore, as adopting partnering becomes a common practice across the world,
researchers attempt to identify partnering CSFs based upon local characteristics for a
specific country. For example, to understand the ingredients of successful partnering in the
Hong Kong construction industry, Chan et al. (2004) identified critical success factors for
partnering projects by obtaining the opinions of various parties, such as clients, contractors
and consultants. They used factor analysis and multiple regressions to investigate the
relationship between the perception of partnering success and a set of success factors. The
results showed the following requirements are necessary for successful partnering: the
establishment and communication of a conflict resolution strategy, a willingness to share
resources among project participants, a clear definition of responsibilities, a commitment to a
win-win attitude, and regular monitoring of partnering process.
A summary of CSFs for the partnering process is provided in Table 2. One should note that
only papers that focused on critical factors contributing to successful implementation of
partnering were reviewed. There are several studies that examined the impact of partnering
on projects success (e.g. Larson, 1997) that are out of scope of this study.
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Table 2: Summary of CSFs for partnering process
Studies
Critical Success Factors
Cheng et al.
(2000)
Management skills:
 Effective
communication
 Conflict resolution
Contextual factors:
 Adequate
resources
 Management
support
 Mutual trust
 Long term
commitment
 Coordination
 Creativity
Black et al.
(2000)
 Trust
 Communication
 Commitment, a clear understanding of roles
 Consistency and flexible attitude
Cheng and
Li (2002)
Formation:
 Top management
support
 Mutual trust
 Open communication
 Effective coordination
 Facilitator
 Team building
 Partnering agreement
Application:
 Top management
support
 Mutual trust
 Open
communication
 Effective
coordination
 Joint problem
solving
 Partnering goals‘
achievement
 Adequate resources
 Creativity
 Workshops
Reactivation:
 Top management
support
 Mutual trust
 Open
communication
 Effective
coordination
 Long-term
commitment
 Continuous
improvement
 Learning climate
 Partnering
experience
 Joint problem
solving
 Adequate
resources
 Workshops
Chan et al.
(2004)
 Establishment and communication of a conflict resolution strategy
 A willingness to share resources among project participants
 A clear definition of responsibilities
 A commitment to a win-win attitude
 Regular monitoring of partnering process
5. Conclusions
Success in a construction project is repeatable, and there is a great value in developing a
protocol to improve practices in construction activities. The identification of CSFs can furnish
project participants with an indicator to attain success in delivering a project or implementing
a process. Moreover, CSFs can provide participants with a focus of what they should be
aware of in order to ensure the success of a project. Such an improved understanding can
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be exploited by project managers to select efficient strategies to alleviate the root causes of
poor performance.
To shed light on current practices, this study conducted a comprehensive investigation of
literature on CSFs. The results of this study contribute to the practice by providing a list of
CSFs for various construction operations, and academia can benefit from identifying the
potential topics for future studies. It was found that upper management support, commitment,
constructability reviews, teamwork, communication, and building trust are the key elements
of success in most construction projects. While the contribution of previous studies in the
area of CSFs is significant, there are several limitations related to these studies. First, most
of the previous studies rely on obtaining ratings from experts; providing empirical evidence
based upon completed projects is rare. Since experts‘ judgment is subjected to various
cognitive biases, the results can be misleading (Tversky & Kahneman, 1974). Second, most
of CSFs identified in previous literature (e.g. trust) are subjective, and it is very difficult to
measure them during a real construction operation.
There are several research topics related to CSFs that can be further investigated. For
example, new project delivery systems, such as integrated project delivery (IPD), are gaining
traction in recent years, and determining CSFs for them is rewarding. Kent and Becerik-
Gerber (2010) described the common principals of IPD, including a multiparty agreement,
shared risk and rewards, and early involvement of all parties. Establishing these principles is
not an easy task, and finding a concise number of factors that should be given special and
continued attention to increase the chances of a successful outcome is important.
Furthermore, one may explore the casual relationships between CSFs and project success
based upon empirical evidence.
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