in 150 - 200 words summarize and rephrase this article and get one sentence the most take away and one-sentence criticis
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in 150 - 200 words summarizeand rephrase this article and getone sentence the most takeaway and one-sentencecriticism from this article
Complexity in the Evaluation of Contract Types Employedfor the Construction of Highway Projects
Abstract The procurement of public works is by definitioncomplex in that its success depends on many varied interrelatedparties (client, designer, licensing authorities, contractors,construction supervisor, users). In addition, the constructionprocess is always technologically complex as it is comprised ofnumerous tasks and objectives. The choice of the most appropriatecontract type (CT) regarding the method of contractor compensationis one of the most essential and complex decisions. This choice isbased on the decision maker’s knowledge, experience and intuition.Following an extensive literature review to determine both theseven CT’s employed in the construction industry and the nineselection criteria (SC) most commonly considered when choosingbetween CT’s, a questionnaire survey was carried out among 79highway construction professionals who were asked to rate each CTagainst each selection criterion. This study presents thefrequencies of the CTs scores against each criterion but the mainaim of the research is to decompose the complex selection patternsrelating to the participants’ choices. A correlation analysiscarried out established associations among the respondents’profiles and their resulting ratings of each CT against each SC.The results indicate that the participants’ origin, currentposition profile, years and type of professional experience andfinally years of direct and indirect experience with each CTinfluence their perception of the appropriateness of each CTagainst each criterion and the respective scores awarded to eachCT.
1. Introduction Vidal et al. (2011) argue that the definition ofproject complexity could be summarized in the following: “projectcomplexity is the property of a project which makes it difficult tounderstand, foresee and keep under control its overall behavior,even when given reasonably complete information about the projectsystem”. According to Baccarini (1996), “Project complexity can bedefined as 'consisting of many varied interrelated parts' and canbe operationalized in terms of differentiation and interdependency.This definition can be applied to any project dimension relevant tothe project management process, such as organization, technology,environment, information, decision making and systems”. Theapplication of complexity theory is to enable the systematic reviewof the inter-connections. Although the complexity of projects andtheir environment obviously influences important decisions,complexity as such is often taken intuitively or from previousexperiences. In addition, complexity issues include but are notlimited to the following: Project complexity influences theselection of project inputs Complexity is frequently used as acriterion in the selection of a project procurement systemComplexity affects the achievement of project objectives of time,cost and quality. The procurement of public works is by definitioncomplex as, from project inception to project realization, it mustgo through a number of phases and its success depends on manyvaried interrelated parties. The major participants in the aboveprocedure are the Owner or Client, the Design Consultant,Contractor and Construction Manager (CM). The number and type ofcontractual relationships between the major participants arecrucial in terms of time, cost and quality achievement of theresulting project. The construction process is considered a complexundertaking as it is comprised of numerous tasks and objectives,the most important of which is obtaining value for money,especially during times of recession. For this reason, the choiceof the most appropriate CT regarding the method of contractorcompensation is essential. In making this choice, decision makersuse their own knowledge, experience and intuition according tospecific selection criteria (SC) they have in mind. This researchfocuses on the procurement authority participants’ thought processand approach to the selection of the appropriate CT for highwayconstruction projects. Each participant is considered a systemwhich processes data and exports a justified opinion, in this casea proposal for a certain CT. The output of the system is thedecision on the CT, which is based upon the assessment of certainSC. Each participant influences the others and shapes the finalcommon decision on the best CT to be employed. Their personalassessment of the available CTs against the predefined SC is basedon a number of factors, interconnections which are not apparent.This paper considers all the above issues and focuses on theselection process of the appropriate CT against a predefined numberof SC for the construction of public highway projects. The finalaim of the current research initiative is to explore the way theprofile of the engineer (experience: years, role, duties, type ofprojects) influence the decisions on the appropriate CT against anumber of predefined SC. 2. Methodology 2.1. Determination ofcontract types and selection criteria Since the late 1980’s early1990’s the importance of choosing the most appropriate CT has beenevident in the construction industry (Veld & Peeters 1989; Ward& Chapman, 1994). The literature review showed that for publicworks CTs and in particular regarding the method of compensation,there are numerous reports relating to: a) the evaluation of theirperformance in terms of the final cost, duration and/or quality ofresulting project (Turner & Simister, 2001; Paul &Gutierrez 2005; Tang et al., 2008;
Meng & Gallagher 2012), b) proposals for new CTs (Boukendour& Bah, 2001; Gruneberg et al., 2007), c) proposals for new orcombinations of award criteria (Lambropoulos 2007; Padhi &Mohapatra, 2009) or even modifications of the lowest bid criteria(Wang et al., 2006), d) provision of guidelines for the use ofvarious CT’s for particular project types (Jaraiedi et al., 1995;ITA Working Group, 1997; Bower et al., 2002), e) proposals ofmethods for calculating incentives (Ward & Chapman, 1995;Berends, 2000; Broome & Perry 2002; Shr & Chen, 2003, 2004)and identifying and mitigating the associated risks (Olsen &Osmundsen, 2005; Chan et al., 2011b) and f) motivations for goodcontracting behavior (Rose & Manley, 2011; Chan et al., 2011a).In Greece, researchers have been involved in the evaluation ofproject procurement systems and contractor selection criteria andprocedures (Antoniou & Kalfakakou, 2009; Antoniou et al., 2012;Lambropoulos, 2007). To date there is no proposal forimplementation, in the Greek public works scene, of a CT definingany other method of payment apart from, the Lump sum/fixed price(LSFP), the Unit price method (UPM) or the Cost Plus Percentage Fee(CPPF). It is therefore essential to consider new CTs forimplementation in Greece concerning the procurement of majorhighway projects. Following this review the seven CTs as defined inTable 1 were selected to be investigated. Table 1. Contract TypeDefinitions Cost plus fixed fee (CPFF) The contractor is reimbursedfor all audited costs & paid a fixed amount for the hisservices. Cost plus percentage fee (CPPF) The contractor isreimbursed for all audited costs & paid an additionalpercentage fee. Cost plus incentive fee (CPIF) All justified costsare paid. Final fee depends on actual compared to target cost,delivery and/or performance achievements. Incentive/ Disincentivefor time reduction (ID/T) The contractor is paid in addition to theagreed payment method a bonus (incentive fee) if the project iscompleted earlier and pays a penalty (disincentive fee) if it iscompleted after. Fixed price incentive (FPI) The contractor is paidactual costs and an agreed upon fee but guarantees a maximum totalcost. Lump sum / fixed price (LSFP) The client pays a fixed priceto the contractor irrespective of the actual cost. Unit pricemethod (UPM) The contractor commits to fixed prices forpre-specified units of work items. Payment is the sumproduct of theunit prices and the units used. The choice of SC was based on theresults of an extensive literature review and justification oftheir choice for inclusion in this research work was presented inAntoniou et al., (2012). 2.2. Questionnaire This paper attempts todraw conclusions from a survey between highway procurement expertsof the rating of each examined CT against a series of selectioncriteria. The questionnaire survey was conducted during the twolast years, 2010 - 2012. The first part of the structuredquestionnaire that was developed was devoted to the participants,who responded to a number of personal questions regarding theirprofessional background. The aim of the second part was to rate thedegree of achievement of each CT against the 9 SC. The SC that wereincluded in the survey were rated on a scale of 1 to 10 asexplained in Table 2. Table 3 depicts the personal profiles of therespondents. The survey was addressed to engineers from Greece andabroad. The survey collected 79 answers from engineers, fromcontractors, public authorities, funding managing authorities andacademians. The questionnaires were completed through interviewsand email. From the total of 79 participants 14 are engineerscurrently involved in highway design, 24 in ConstructionSupervision and finally 24 respondents are currently employed inproject management or what is known in Greece as the SuperiorAuthority. Participants with public sector experience representFani Antoniou et al. / Procedia - Social and Behavioral Sciences 74( 2013 ) 448 – 458 451 the 77% of the sample while participantswith some private sector experience represent 70 % of the pool ofrespondents. Finally, 66 male and 13 female participants took partin the survey. In addition, the results of the Cronbach’s Alphacomputation (= 0,916) reveals that the measure has high internalconsistency.
4. Conclusions and Further Research This study, based on anextensive literature review, first identified the dominant CTagainst defined SC and argued that the profile of the participantaffects his/her own perception of the appropriate CTs. The researchindeed produced a ranked list of CTs. The most unique contributionof the current research is the presentation of correlations amongsurvey participants’ profiles and their responses concerning theprioritization of the CTs against selection criteria. Indeed theidea of the ideal CT is shaped in the mind of each decision makeraccording to his / her own perceptions. The next step of theresearch will focus on factor analysis and regression analysis. Theeffort will be partly focused on grouping the CTs. Furthermore,based on the notion that the conception of the CTs is correlated tothe profile of the participant, prediction models will be producedto forcast the desired CT, based on the decision makers’ profile.Apart from creating different research groups by dividing thesample of participants, one other essential fact which will betaken into consideration is the clustering of data. Clustering orgrouping data is the first step towards creating a database.Decisions on data groups affect greatly the analysis resultsbecause the denser the groups of data the greater the number ofcorrelations. Understanding of the perceptions of eachparticipating team member could facilitate the decisions on theselection of the most appropriate contract type. Early recognitionof one’s ideas could help the negotiations for the common decisionson the best contract type hence reducing the complexity of decisionmaker’s intuition.
Complexity in the Evaluation of Contract Types Employedfor the Construction of Highway Projects
Abstract The procurement of public works is by definitioncomplex in that its success depends on many varied interrelatedparties (client, designer, licensing authorities, contractors,construction supervisor, users). In addition, the constructionprocess is always technologically complex as it is comprised ofnumerous tasks and objectives. The choice of the most appropriatecontract type (CT) regarding the method of contractor compensationis one of the most essential and complex decisions. This choice isbased on the decision maker’s knowledge, experience and intuition.Following an extensive literature review to determine both theseven CT’s employed in the construction industry and the nineselection criteria (SC) most commonly considered when choosingbetween CT’s, a questionnaire survey was carried out among 79highway construction professionals who were asked to rate each CTagainst each selection criterion. This study presents thefrequencies of the CTs scores against each criterion but the mainaim of the research is to decompose the complex selection patternsrelating to the participants’ choices. A correlation analysiscarried out established associations among the respondents’profiles and their resulting ratings of each CT against each SC.The results indicate that the participants’ origin, currentposition profile, years and type of professional experience andfinally years of direct and indirect experience with each CTinfluence their perception of the appropriateness of each CTagainst each criterion and the respective scores awarded to eachCT.
1. Introduction Vidal et al. (2011) argue that the definition ofproject complexity could be summarized in the following: “projectcomplexity is the property of a project which makes it difficult tounderstand, foresee and keep under control its overall behavior,even when given reasonably complete information about the projectsystem”. According to Baccarini (1996), “Project complexity can bedefined as 'consisting of many varied interrelated parts' and canbe operationalized in terms of differentiation and interdependency.This definition can be applied to any project dimension relevant tothe project management process, such as organization, technology,environment, information, decision making and systems”. Theapplication of complexity theory is to enable the systematic reviewof the inter-connections. Although the complexity of projects andtheir environment obviously influences important decisions,complexity as such is often taken intuitively or from previousexperiences. In addition, complexity issues include but are notlimited to the following: Project complexity influences theselection of project inputs Complexity is frequently used as acriterion in the selection of a project procurement systemComplexity affects the achievement of project objectives of time,cost and quality. The procurement of public works is by definitioncomplex as, from project inception to project realization, it mustgo through a number of phases and its success depends on manyvaried interrelated parties. The major participants in the aboveprocedure are the Owner or Client, the Design Consultant,Contractor and Construction Manager (CM). The number and type ofcontractual relationships between the major participants arecrucial in terms of time, cost and quality achievement of theresulting project. The construction process is considered a complexundertaking as it is comprised of numerous tasks and objectives,the most important of which is obtaining value for money,especially during times of recession. For this reason, the choiceof the most appropriate CT regarding the method of contractorcompensation is essential. In making this choice, decision makersuse their own knowledge, experience and intuition according tospecific selection criteria (SC) they have in mind. This researchfocuses on the procurement authority participants’ thought processand approach to the selection of the appropriate CT for highwayconstruction projects. Each participant is considered a systemwhich processes data and exports a justified opinion, in this casea proposal for a certain CT. The output of the system is thedecision on the CT, which is based upon the assessment of certainSC. Each participant influences the others and shapes the finalcommon decision on the best CT to be employed. Their personalassessment of the available CTs against the predefined SC is basedon a number of factors, interconnections which are not apparent.This paper considers all the above issues and focuses on theselection process of the appropriate CT against a predefined numberof SC for the construction of public highway projects. The finalaim of the current research initiative is to explore the way theprofile of the engineer (experience: years, role, duties, type ofprojects) influence the decisions on the appropriate CT against anumber of predefined SC. 2. Methodology 2.1. Determination ofcontract types and selection criteria Since the late 1980’s early1990’s the importance of choosing the most appropriate CT has beenevident in the construction industry (Veld & Peeters 1989; Ward& Chapman, 1994). The literature review showed that for publicworks CTs and in particular regarding the method of compensation,there are numerous reports relating to: a) the evaluation of theirperformance in terms of the final cost, duration and/or quality ofresulting project (Turner & Simister, 2001; Paul &Gutierrez 2005; Tang et al., 2008;
Meng & Gallagher 2012), b) proposals for new CTs (Boukendour& Bah, 2001; Gruneberg et al., 2007), c) proposals for new orcombinations of award criteria (Lambropoulos 2007; Padhi &Mohapatra, 2009) or even modifications of the lowest bid criteria(Wang et al., 2006), d) provision of guidelines for the use ofvarious CT’s for particular project types (Jaraiedi et al., 1995;ITA Working Group, 1997; Bower et al., 2002), e) proposals ofmethods for calculating incentives (Ward & Chapman, 1995;Berends, 2000; Broome & Perry 2002; Shr & Chen, 2003, 2004)and identifying and mitigating the associated risks (Olsen &Osmundsen, 2005; Chan et al., 2011b) and f) motivations for goodcontracting behavior (Rose & Manley, 2011; Chan et al., 2011a).In Greece, researchers have been involved in the evaluation ofproject procurement systems and contractor selection criteria andprocedures (Antoniou & Kalfakakou, 2009; Antoniou et al., 2012;Lambropoulos, 2007). To date there is no proposal forimplementation, in the Greek public works scene, of a CT definingany other method of payment apart from, the Lump sum/fixed price(LSFP), the Unit price method (UPM) or the Cost Plus Percentage Fee(CPPF). It is therefore essential to consider new CTs forimplementation in Greece concerning the procurement of majorhighway projects. Following this review the seven CTs as defined inTable 1 were selected to be investigated. Table 1. Contract TypeDefinitions Cost plus fixed fee (CPFF) The contractor is reimbursedfor all audited costs & paid a fixed amount for the hisservices. Cost plus percentage fee (CPPF) The contractor isreimbursed for all audited costs & paid an additionalpercentage fee. Cost plus incentive fee (CPIF) All justified costsare paid. Final fee depends on actual compared to target cost,delivery and/or performance achievements. Incentive/ Disincentivefor time reduction (ID/T) The contractor is paid in addition to theagreed payment method a bonus (incentive fee) if the project iscompleted earlier and pays a penalty (disincentive fee) if it iscompleted after. Fixed price incentive (FPI) The contractor is paidactual costs and an agreed upon fee but guarantees a maximum totalcost. Lump sum / fixed price (LSFP) The client pays a fixed priceto the contractor irrespective of the actual cost. Unit pricemethod (UPM) The contractor commits to fixed prices forpre-specified units of work items. Payment is the sumproduct of theunit prices and the units used. The choice of SC was based on theresults of an extensive literature review and justification oftheir choice for inclusion in this research work was presented inAntoniou et al., (2012). 2.2. Questionnaire This paper attempts todraw conclusions from a survey between highway procurement expertsof the rating of each examined CT against a series of selectioncriteria. The questionnaire survey was conducted during the twolast years, 2010 - 2012. The first part of the structuredquestionnaire that was developed was devoted to the participants,who responded to a number of personal questions regarding theirprofessional background. The aim of the second part was to rate thedegree of achievement of each CT against the 9 SC. The SC that wereincluded in the survey were rated on a scale of 1 to 10 asexplained in Table 2. Table 3 depicts the personal profiles of therespondents. The survey was addressed to engineers from Greece andabroad. The survey collected 79 answers from engineers, fromcontractors, public authorities, funding managing authorities andacademians. The questionnaires were completed through interviewsand email. From the total of 79 participants 14 are engineerscurrently involved in highway design, 24 in ConstructionSupervision and finally 24 respondents are currently employed inproject management or what is known in Greece as the SuperiorAuthority. Participants with public sector experience representFani Antoniou et al. / Procedia - Social and Behavioral Sciences 74( 2013 ) 448 – 458 451 the 77% of the sample while participantswith some private sector experience represent 70 % of the pool ofrespondents. Finally, 66 male and 13 female participants took partin the survey. In addition, the results of the Cronbach’s Alphacomputation (= 0,916) reveals that the measure has high internalconsistency.
4. Conclusions and Further Research This study, based on anextensive literature review, first identified the dominant CTagainst defined SC and argued that the profile of the participantaffects his/her own perception of the appropriate CTs. The researchindeed produced a ranked list of CTs. The most unique contributionof the current research is the presentation of correlations amongsurvey participants’ profiles and their responses concerning theprioritization of the CTs against selection criteria. Indeed theidea of the ideal CT is shaped in the mind of each decision makeraccording to his / her own perceptions. The next step of theresearch will focus on factor analysis and regression analysis. Theeffort will be partly focused on grouping the CTs. Furthermore,based on the notion that the conception of the CTs is correlated tothe profile of the participant, prediction models will be producedto forcast the desired CT, based on the decision makers’ profile.Apart from creating different research groups by dividing thesample of participants, one other essential fact which will betaken into consideration is the clustering of data. Clustering orgrouping data is the first step towards creating a database.Decisions on data groups affect greatly the analysis resultsbecause the denser the groups of data the greater the number ofcorrelations. Understanding of the perceptions of eachparticipating team member could facilitate the decisions on theselection of the most appropriate contract type. Early recognitionof one’s ideas could help the negotiations for the common decisionson the best contract type hence reducing the complexity of decisionmaker’s intuition.