A Study of Foreign Contractor Operations Strategy in the Philippines

RenXiaoPeng, ZhangWanying, ZhangMaoQiang

Introduction

The construction industry is characterized by fragmentation, each actor having their

own goals in the value chain (Winch, 2006). The complexity of products delivered is

regarded to be high (Gosling & Naim, 2009). A contractor is generally hired to undertake

some of the work directly and supervise the overall project, but 75-80% of the work is

subcontracted (Bertrand & Muntslag, 1993). Projects are executed by temporary

organizations assembled to deliver a specific artefact to a client, while a contractor is a

permanent organisation designed to organise projects (Winch, 2014). A contractor and

projects have overlapping interests in firm resources.

Foreign Contractor Operation Strategy in the Philippines is one of the in demand need

in the country as we need to adapt a new method, skills and knowledge in the construction

industry as the infrastructure is directly proportional to our economic growth. Foreign

Contractors have demonstrated good safety performance because they have the resources and

leverage to develop and implement robust safety management systems

The business strategy frames what products and on what market (where) they are

offered. Construction contractors can either develop a ‘fast-cycle’ competence in multiple

modes of strategy-making or “throw process to the wind” or concentrate on the content of

business (Junnonen, 1998). An operations strategy is a long-range plan for the operations

function (Anderson et al., 1989). Operations capabilities can even determine a business

strategy, especially in environments that are difficult to forecast (Hayes, 1985). Situations in

construction are often highly changeable and difficult to forecast.

Objectives of the Study

This study aims to determine the following:

1. Provide indications about how they balance engagement in temporary projects versus

sustained survival.

2. Identify the published characteristics of typical operations strategies, in terms of

decision categories, and compare them to apparent decision categories at construction

contractors

3. Aims to determine roles of top management and organizational project

management in the company strategy implementation

4. To elucidate the possible constituents and priorities of operations strategies

Research Problem

1. How operations should be conducted to support a business strategy?

2. Does operations strategy complement or conflict with the business strategy?

3. Does the operations strategy accommodate necessary business timelines?

4. Does operations strategy maintain flexibility while increasing accountability?

Significance of the study

To the employer/client – this can be beneficial to the employer and client in choosing a

contractor that has excellent operation strategies particularly in project implementation.

To the construction industry– this will serve as a foundation for contractors and future

contractors as a basis in developing a “fast cycle” competence in multiple modes of strategy-

making.

To the academe- his study will serve as a foundation for students and future researchers for

further thesis study. This will aid them to formulate new ideas from the study.

Research Method

This study will adapt two main research method. First, a comprehensive literature review will

be carried out to gain a deeper and better understanding about contractor operation strategies

in the Philippines. Second, structured interviews with the top managers of contractor firms in

Philippines will be conducted to identify operations strategies that is particularly appropriate

for contractors. However, due to lack of previous research, this study will use an exploratory

research.

Methodology

An operations strategy is a guide to determine trade-offs between decisions in operations’

(Skinner, 1969). A firm’s operations strategy is often implicit, i.e. it forms a part of the

competence of a firm’s tactical level managers (for example, middle managers responsible

for construction works in a geographical region). These managers are the primary sources of

information about their firms’ operations strategies. As an operations strategy is frequently

implicit (and may deviate in practice from a specified formulation even if it is explicit), the
in-depth interviews focused on the decision categories and their prioritization were

conducted, seeking knowledge about real life events. Since operations strategies and

associated concepts have been addressed in other industries, the same theoretical framework

and terms were applied here to analyze their counterparts within construction contractors.

The results will provide a indication of the prioritization of operational decision categories in

construction contractors and, thus, the overall content of their operations strategies. This

study does not attempt to formulate an operations strategy for the construction industry,

rather the intention is to explain the possible constituents and priorities of operations

strategies by identifying the importance of the decision categories. The limited number of the

interviews rendered the indicative conclusions.

3.1 Data Collection

The empirical data will be collected through the interview with a series of respondents

of each of the three construction contractors in Philippines (Table 1). The unit of analysis are

operations they handle, taken to represent the general practice within their respective firms

(‘how business is done’) from their perspectives. The selection of the respondents was based

on a position within a firm and the long-term experience of enacting a firm’s operations

strategy. The respondents were selected from the three different contractors in the Philippines

to increase the external validity of the results.

 Contractor Position within a project Department
A Project Manager, Construction Department

Marketing Manager, Marketing Department

Quality Control and Assurance Manager, Quality Assurance Department

Health and Safety Manager, HSE Department

Finance Manager Accounting Department

B Project Manager, Construction Department

Marketing Manager, Marketing Department

Quality Control and Assurance Manager, Quality Assurance Department

Health and Safety Manager, HSE Department

Finance Manager Accounting Department

C Project Manager, Construction Department

Marketing Manager, Marketing Department

Quality Control and Assurance Manager, Quality Assurance Department

Health and Safety Manager, HSE Department

Finance Manager Accounting Department

Table 1. Respondents

The interviews were semi-structured and about one hour long. Respondents A, B and

C were interviewed during the fall of 2020 focusing on the discussion questions reported in

Table 2. The follow-up questions were asked continuously during each interview. All the

respondents were talkative and presented the abundant information about their own tactical

thinking without a need to pose further questions, apparently reflecting a need or a desire to

discuss the issues that influenced the manager’s work.

Table 2. Discussion questions for the interviews

What is your main What is your view of How are you How is your part of
competitive standardization? working with the company
advantage? experience organized?
feedback?

How do you How do you handle How do you handle How are your
measure project variation between additional work resources (own or
progress and projects (e.g. in discovered during subcontracted) used
performance? time, resource and projects? within and between
production method? projects?

What is your view of What is your view of

How do you act to How do you follow a ratio of blue- and relations with clients
move resources up previously made white-collar staff in and subcontractors?
between projects? plans to ensure they projects?
are met?

All interviews will be recorded, fully transcribed and the texts will be used as the

basis for the analysis. The respondents will receive the transcripts of the interviews for

approval.

The researcher are the active professionals in both the academia and the construction

industry. This was advantageous for understanding the language and expressions used for

naming and attributing the objects when interpreting the interviews. An additional advantage

appeared in the interview situation, as the researcher could pose the questions in a way that

was understood and accepted by the respondents. However, a disadvantage with being

socialized in construction was a risk of missing obvious points and discrepancies and/or

regarding an issue as being settled before it was actually fully understood. A risk lied also in

the interpreting statements as they appeared in our own frames of reference, rather than in

those of the respondents. These risks were partly mitigated by the two authors all the time

working in parallel to avoid the interpretations being colored by a single person’s views.
Review of Related Literature

High levels of competition are considered to be a major challenge for contractors. In

order to be a marketplace leader, a contractor is required to be proactive in seeking

opportunities. This study aims to clarify the concept of proactiveness and to explore its

implementation particularly in contracting companies. Following a thorough examination of

the literature on proactiveness and its related issues, semi-structured interviews were carried

out with 19 top managers of contracting companies in Indonesia. The qualitative data

collected during the interviews were analyzed using an inductive thematic analysis method,

through which themes emerged from the data. The literature review resulted in the

clarification of proactiveness and its circumstances, while the qualitative data analysis

resulted in an understanding of the practical implementation of proactiveness by contracting

companies. This study found various proactive actions being carried out in order to obtain

projects including: carrying-out marketing activities; expanding market segment; and looking

ahead to construction industry’s future demands. In addition to these actions, contractors also

need to pursue business diversification in order to survive in their highly competitive

environment. These finding will help contractors to establish the proper strategy to be

proactive in pursuing opportunities in order to survive and to expand their businesses

(Setiawan et al., 2015).

Fig. 1. Methodology of forming of the construction enterprise development strategy considering the

system self-organization

Forming of the strategy implies the choice of alternative ways of development of a

construction enterprise, its potential opportunities, at the same time using prediction,

mathematic apparatus, experience and professional intuition. Taking into consideration

development and system self-organization rules, we have come up with the method of

scholastic prediction of organizational and economic changes taking into account the system

characteristics (Figure 1) in order to form a development strategy of a construction enterprise

(Uvarova et al., 2016).

 Companies are increasingly using organizational project management in their work to

achieve company goals. The purpose of this study is to investigate the effectiveness of the

company strategy implementation in different business organizations. This study aims to

determine roles of top management and organizational project management in

the company strategy implementation. Also, other organizational factors which may

affect the efficiency of the strategy implementation will be considered. In this study, research

method was the case study carried out in business organizations. The results indicate the

importance of clear roles and responsibilities in the organizational project management

governance. Moreover, both top management and organizational project management

emphasized the importance of communication, because nowadays changes in environment

and other focus areas require a fast response (Hyvari 2016).

Uncertainties and risks are always associated with large real-world projects and may

obstacle and threaten projects in some ways. Failure in accurately identifying the project risks

increases the total cost and may cause social and environmental damages as well as casualties

during project execution. The aim of this study is to develop a mathematical programming

model for selecting risk response strategies for construction projects. All risk response

strategies for the analyzed project have been identified and a mathematical model is

presented based on project iron triangle; time, cost and quality to obtain the optimal risk

response strategy for the construction project (Cheraghi et al., 2017)

Through analysis of the evolution of the Japanese, Chinese and South Korean

narratives of the Silk Road, this paper argues that the content and the nature of these Silk

Road strategies changed with time and the international environment. Thus, this paper claims

that, the notion of the Silk Road has changed from a static concept of a historical trade route

into a product of social construction of a number of powerful states – strategies that are

constantly shaped, imagined and re-interpreted. In this sense, the Silk Road is not a foreign
policy doctrine but rather a discursive strategy of engagement that largely exists in the realm

of narration. This narration is also a matter of social construction that is subject to change

depending on the international environment of the country (China, Japan, Korea, etc.) that

produces such narratives, context of a receiving region, the alternative narratives that

compete for wider international acceptance and the country’s vision of “self” and the “other”

in the international context (Dadabaev 2018).

The simultaneous implementations of Sustainable Construction (SC) and Lean

Construction (LC) concepts/practices are feasible in a strategic approach to accomplish

improvement in reducing waste, which resulted in both positive environment and economic

outcomes. Although both concepts/practices are capable of attaining significant

environmental and economic benefits, organizations still experiencing difficulty to integrate

the concepts successfully. The literature indicates that the construction industry in many

countries have encountered poor implementation and integration of both concepts. Therefore,

this paper aims to lay the groundwork for future empirical study by investigating on various

dimensions of SC and LC, where the theoretical and practical findings provided a foundation

for integrating the two initiatives to yield the efficient use of valuable resources (Jamil 2016).

Project management includes several managements, such as time management, cost

man-agreement, and quality management...etc. Project risk management is one of the most

important management, especially in this time, which has many unexpected events. This

management means with classification, analyzing, planning, identification, assessment, and

response and avoidance strategies of risk (Keshk et al, 2018).

The rapid trend of globalization and technological changes have made difficult for

construction organization to survive in the competitive world. Particularly, the actual global

economy crises have the very strong impact on a construction sector, especially in developing
countries such as Croatia. A performance of Croatian construction companies at the

international markets are very low and represent a serious problem for the entire Croatian

economy. So, the importance of international marketing operations increasing rapidly.

International marketing strategies are not the same as the domestic strategies but if Croatian

construction companies develop and establish a good international marketing strategy, their

success at the international markets could be much better. This paper elaborates modes of

international strategies and will try to find out which of them are specific for Croatian

construction companies (Butkovic et al., 2014).

In view of increasing market competition, construction and engineering firms are

forced to seek new business activities in foreign countries since their domestic markets

disable their further growth. Many construction firms have already entered foreign markets in

order to diversify their production, gain access to the new bids and expand the shareholders’

value. The application of the right strategic approach on the company’s way to

internationalization plays a crucial role. The export know-how is possessed by a limited

number of construction firms successfully competing on international markets, whereas other

companies fail in their attempts. Recent academic literature is inconsistent in several aspects

of company••s strategic behavior in international construction in relation to formation of joint

ventures and export financing. This research attempts to address these issues. On the basis of

perceived business needs, six research statements were outlined. These statements were

analyzed and evaluated through quantitative survey. Research findings were derived from

empirical evaluation collected through structured questionnaires. Respondents were

represented by corporate executives, project managers and trade finance specialists. The

outcomes of this research provide resolution and deeper understanding of analyzed aspects.

The research findings may serve as a valuable input for the composition of the corporate

strategy and building competitive advantage in international environment (Picha et al., 2017).
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Chinese/English Name: RenXiaoPeng/Ren

Address: Taguig City, Metro Manila

Contact Number: 09178730461

Job Occupation: Civil Engineer

Chinese/English Name: ZhangWanying / Vivian

Address: Mandaluyong City, Metro Manila

Contact Number: 09157222258

Job Occupation: HR Manger

Chinese/English Name: ZhangMaoQiang/ Richard

Address: Mandaluyong City, Metro Manila

Contact Number: 09777810980

Job Occupation: r&d manages