Professional Documents
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Aquino, Nicole Marie R.
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CM 652 – CONSTRUCTION CONTRACT ADMINISTRATION
MSCM (OU GRAD)
I. Executive Summary
II. Introduction
The Philippine construction industry expanded by 9.4% in actual terms in 2019, this was
gone before by a normal yearly development of 10.9% during the preceding four years during the
previous four years. Development during the audit time frame (2015-2019) was driven by the
nonstop spending for enormous scope transportation and vitality extends under the Build, Build,
Build (BBB) program. Although the industry plays as an important role in country development,
there are few issues while trying to improve its performance. This is due to the nature of the work,
such as high fragmentation, instability, precariousness, low efficiency, low quality control, and
lack of standards.
Performance is related with a few factors, for example, time, cost, quality, client
satisfaction, productivity and safety. There are other realistic reasons like closures, adjustment of
drawings and changes of the design. Different grounds influencing construction projects
performance are poor management and direction; unfit members; poor relations and
coordination; lack of motivation, inadequate infrastructure, political issues, cultural problems and
economic conditions.
The aim of the case study is to find the factors which affects the performance of the
construction projects in and around the regions of developing countries such as Thailand, India,
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and Palestine, to compare their similarities and differences and to generate suggestions and
recommendations to improve the performance of the local industry using the gathered data.
III. Analysis
The construction industry is complex in its nature because it comprises large numbers of
parties as owners (clients), contractors, consultants, stakeholders, and regulators. In spite of this
complexity, the industry plays a major role in the development and accomplishment of society’s
goals. According to Navon (2005), it is one of the largest industries and contributes to about 10%
of the Gross National Product (GNP) in industrialized countries. In this regard, performance in
construction are examined considering these stakeholders.
Various studies have been led to analyze factors affecting project performance in
developing countries. Faridi and El-Sayegh (2006) reported that shortage of skills of manpower,
poor supervision and poor site management, unsuitable leadership, shortage and breakdown of
equipment among others contribute to construction delays in the United Arab Emirates. Hansonet
al. (2003) examined causes of client dissatisfaction in the South African building industry and
found that conflict, poor workmanship and incompetence of contractors to be among the factors
which would negatively impact on project performance. Mbachu and Nkando (2007) established
that quality and attitude to service is one of the key factors constraining successful project
delivery in South Africa. The performance of contractors in Zambia is evidently beneath
expectation it isn't unprecedented to learn of local projects that that have not been finished or
essentially delayed. This poor performance showing of numerous contractors has gigantic
ramifications regarding their competitiveness (Zulu and Chileshe, 2008). The construction
industry is complex in its nature because it comprises large numbers of parties as owners (clients),
contractors, consultants, stakeholders, and regulators. Despite this complexity, the industry
assumes a significant role in the development and achievement of society’s goals.
However, many local construction projects report poor performance due to many
evidential project-specific causes such as: unavailability of materials; excessive amendments of
design and drawings; poor coordination among participants, ineffective monitoring and feedback,
and lack of project leadership skills (UNRWA 2006). The ever-important macro-level political and
economic factors have also been related to poor projects performance (UNRWA 2006 & 2007).
Project performance can be estimated and assessed using a large number of performance
indicators that could be identified with different dimensions (groups) such as time, cost, quality,
client satisfaction, client changes, business performance, health and safety (Cheung et al. 2004;
DETR 2000). Time, cost and quality are, however, the 3 prevalent performance evaluation
dimensions. Another fascinating method of evaluating project performance is through 2 common
sets of indicators (Pheng and Chuan 2006). The first set is related to the owner, users,
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stakeholders, and the general public; the groups of people, who will look at project performance
from the large-scale perspective. The second set comprises the developer and the contractor; the
groups of people who will look at project performance from the small-scale perspective.
The above items exhibit that there is a plenty of elements with the possibility to influence
the various components of project performance. In this study, factors affecting the performance
of construction projects in the different developing regions such as Thailand, India and Palestine,
will be analyzed. Performance indicators are used to measure performance in construction
projects. Then these indicators will be used for benchmarking purposes, and will be a key element
of any organizations step in achieving best practice so as to conquer the performance problem.
However, this paper builds upon the vast amount of published studies (E.Soewin, T. Chinda 2017;
M. Alias, R. Dhanyan, G. Ramasamy 2015; and A. Enshassi , S. Abushaban, S. Mohamed 2009) in
order to identify a comprehensive list of factors affecting the performance of construction
projects.
Following this, the paper gives an account of findings of a survey targeting project owners,
consultants and contractors, trying to reveal some insight on how each project party perceives
the relative importance of these factors. At last, the paper formulates various recommendations
in order to overcome issues between the different perceptions thus improving the degree of
project performance in a developing country such as the Philippines.
Generally, performance dimensions may have one or more indicators, and could be
influenced by various project characteristics. For example, Dissanayaka and Kumaraswamy (1999)
found that project time and cost performances get influenced by project characteristics,
procurement system, project team performance, client representation's characteristics,
contractor characteristics, design team characteristics, and external conditions. Similarly, Iyer and
Jha (2005) identified many factors as having influence on project cost performance, these include:
project manager's competence, top management support, project manager's coordinating and
leadership skills, monitoring and feedback by the participants, decision- making,coordination
among project participants, owners' competence, social condition, economic condition, and
climatic condition. Coordination among project participants, however, was identified as the most
significant of all the factors, having maximum influence on cost performance. Interestingly, Love
et al. (2005) examined project time-cost performance relationship, and their results indicate that
cost is a poor predictor of time performance. Elyamany et al. (2007) introduced a performance
evaluation model for construction companies in order to provide a proper tool for the company's
owners, shareholders and funding agencies to evaluate the performance of construction
companies in Egypt.
Traditionally, the industry evaluates its performance using three key indicators; time,
cost, and quality (R. Atkinson, 1999). However, claims that the traditional indicators can no longer
be an effective measurement of project success (S. Cheung et. Al, 2004). In real practice, many
factors apart from those three key factors affecting construction performance, directly and
indirectly. In 2006, H. Bare mentions to include safety and health aspect for better construction
performance, whereas I. Horta et al. (2012) claims the importance of financial aspects for the
profitability and survivability of a construction company. Similarly, P. Erikkson discuss about
environmental aspects for better construction performance, the importance of client/ customer
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satisfaction is pointed out by A. Rahmat in 2010. On the other hand, S. Tabish (2011) argues that
stakeholder management is crucial to improve company performance.
This paper looks at three (3) surveys performed in developing countries namely: Thailand,
India and Palestine. Researchers gave pre-determined factors that the respondents ranked using
their knowledge and experience from construction.
This study was carried out by comparing the questionnaires from the previous studies.
Data from the above-mentioned surveys were screened to increase confidence in the collected
information. For the surveys performed by E. Soewin et al for respondents in Thailand, data
collected from the questionnaire survey are tested with two major data screening analyses;
normality and outlier tests. The results show normal distribution of all 57 items. As for the outlier
test, it was concluded that there is no nonnormality and outliers in the collected data. M. Alias et
al executed reliability test to validate their survey in India. The reliability test shows the
consistency of the data collected. The result showed high reliability. Lastly, A. Enshassi et al survey
in Palestine has been validated by the criterion-related reliability test which measures the
correlation coefficient between the factors affecting the performance of construction projects in
one field and the whole field, and structure validity test (Spearman test).
The following are the description of the gathered surveys used to generate conclusion
and recommendations on how construction industries in similar regions can manage related
factors in optimizing performance in construction:
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There are four sections in each set of questionnaires. The first section includes
five questions related to demographic information of the respondent. The second section
is questions about items affecting the construction performance. The respondents are
asked to rate their agreement on each statement using a 5-point likert scale, ranging from
1=strongly disagree to 5= strongly agree. The third section is to rank the top three most
important factors among nine hypothesized factors. And the last section is the suggestion
part.
The data collection process was conducted from June, 2016 to September, 2016
among the building construction companies in Bangkok and vicinity areas. A total of 720
sets of questionnaire are distributed, with 345 completed responses return, representing
the 47.9% response rate, which is a very good response rate [28]. The respondents
comprise 50 executives (14%), 68 project managers (20%), 133 senior engineers (39%),
and 94 engineers (27%). The data show that more than 70% of the respondents hold the
management titles and around 75% of the respondents have more than 5 years working
experience in the construction industry and in their respective companies. Moreover,
75% of the respondents are working in the medium and large size companies, with more
than 50 workers working in the company or more than 50 million Thai Baht of capital
investment. The demographic information proves the appropriateness of the
respondents in providing information for the analyses.
The outcome of the study presented 10 key factors affecting work performance
in construction. First is the time factor. Litigation is not uncommon in the construction
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industry because of its adversarial nature and the tendency for disputes to arise. Similarly,
B. Jiang (2009) claims that the contract time often arises as an issue when there is too
much time or too little time given in the contract. Second is the cost factor. A closer look
at the survey instrument indicates that the respondents perceived the cost of quality to
be a cost-related attributes, but this item is empirically by the performance related to the
quality performance. Third is client satisfaction factor. The client satisfaction has been
proposed as an important measure in the last decades. A. Chan (2004) also suggests that
their level of satisfaction can also be taken as an indicator of project success. Fourth is the
safety & health factor. R. Haslam (2005) indicated that project safety should always be
considered due to the risky nature of construction activities when evaluating the
performance of construction facilities. It is important for every project organization to
focus on safety during construction because if accidents occur, both contractors and
clients may be subject to legal claims, financial loss and delay in the overall completion of
construction. The fifth and sixth factor is financial performance and information and
innovation technology factors. Although the financial performance factor is closely
associated with the cost factor, the significant different is that the financial factor focuses
in the revenue side, which is the most important for survival of a company, while the cost
factor focuses to reduce the cost (A. Chan, 20004) Therefore, it can be concluded that
financial factor is related more with the company level, and the cost factor is at the project
level (J. Sommerville, 2000). The seventh factor on the other hand is environment factor.
A. Chan (2004) reported that environmental issues in construction have become a global
concern and therefore, should be considered an integral part of construction. All
construction companies should address environmental issues for the purpose of
achieving sustainable development. The eight factor is people factor. The ninth and tenth
are internal stakeholder factor and external stakeholder factor. The last three involves
people affected by the project. It is important that the stakeholders have the
responsibility to minimize disputes amongst themselves and formulate strategies to
govern their relationships during project construction. R. Fellows (2009) and S. Tabish
(2011) have observed that performance measurement should also consider the level of
work related disputes encountered during construction and after.
The questionnaire included questions from cost, time, quality, productivity, client
satisfaction, regular and community satisfaction, people, health and safety, innovation
and learning and environment. The questionnaires were distributed to contractors,
owners and consultants. Mainly the regions covered were Chennai, Kerala and Bangalore.
Respondents were asked to rank the questions from one to five based on their
importance like very low, low, medium high and very high. Based up on the responses
received the questionnaire analysis was done in SPSS software v2.0. Relative importance
index was used to determine the relative significance and ranking of the causes. Below is
the analysis of the factors collated:
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About 53% of respondents were from the consultants firm,34% from the owner
firms and 13% from the contractor firm. With reference to the response obtained 87%
were from firms dealing with building projects. Majority respondents were dealing with
the building projects, that are 87% of the responses and 10% from roads and
transportation sector.
The main factors considered were 7 namely: cost , time, quality, productivity,
client satisfaction, community satisfaction, environment factors, health and safety,
innovation and learning factors.
As for the cost factor, increase in material cost have been ranked one in the
category of cost. For time factors, delay occurring due to material shortage stay as most
important factor in time factor. For the quality factor, there is a need for a proper quality
system in the organization have most importance in quality category. For the productivity
factor, sequencing of work according to schedule leads in productivity. For the client
satisfaction, leadership skills of the concerned persons ranks first in this group. For
community satisfaction, quality of regular documents has very high importance and it
ranks top. And lastly for environment factor, wastes in and around the site affects the
performance of the projects.
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120 questionnaires were distributed as follows: 25 to owners; 35 to consultants;
and 60 to contractors. 88 were received (response rate of 73%) as follows: 17 (70%) from
owners; 25 (72%) from consultants; and 46 (77%) from contractors as respondents. The
respondents were asked to indicate, based on their local experience the level of
importance of each one of the identified 63 factors of performance on a five-point Likert
scale as: not important, slightly, moderately, very, and extremely important.
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years in the construction industry). 63 factors believed to affect project performance
were considered in this study and were listed under 10 groups based on the literature
reviewed (Okuwoga 1998; Dissanayaka and Kumaraswamy 1999; Reichelt and Lynies
1999; Karim and Marosszeky 1999; Brown and Adams 2000; DETR 2000; Lehtonen 2001;
Chan 2001; Samson and Lema 2002; Kuprenas 2003; Cheung et al. 2004; Iyer and Jha
2005; Navon 2005; Love et al. 2005; Ugwa and Haupt 2007).
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specification is also vital. The owners usually seek to implement their project
according to required specifications.
Leadership skills for project managers factor is the most important one
for 3 parties because leadership skills for project managers affect the degree of
project performance and client satisfaction. Cheung et al. (2004) observed that
this factor is important for effectiveness of project performance. Number of
reworks factor has the same rank for 3 parties because number of reworks affect
the relationship between them. Number of disputes factor is more important for
owners because disputes between owner and project parties will affect
relationships between them and the degree of client satisfaction will be affected.
All of that affects the performance of project.
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and Jha (2005) are in agreement with our result as this factor is important for
three parties because belonging to works improves productivity and performance
of a project. Employees' motivation has been ranked by the owners’ respondents
in the 2nd position. It has been ranked by the consultants’ respondents in the 3rd
position and by the contractors’ respondents in the 4th position. This factor is less
important for contractors because it is rarely that contractors motivate
employees in the Gaza Strip. Iyer and Jha (2005) remarked that this factor is
moderately important for contractors because of absence of motivation systems
in construction projects. However, other factors are ranked as more important
for one party than others, as shown previously.
The three (3) research papers produced similar results. Based from the conducted
surveys, the factors prevalent among the 3 studies are cost, time, client satisfaction, and
community/stakeholder’s satisfaction. See yellow items on table below. This suggests that the
listed factors greatly impact performance in construction, considering the cross-cultural regional
limitations of the studies. These factors should be given of prime importance and other items
related to them should be given high priority.
The factors common with at least 2 surveys, are quality, productivity, safety and health,
information and innovation, environment, and lastly people. See blue items on table below. These
items are also considered important.
The most important factors which were agreed by the owner contractor and the
consultants were escalation of material prices, availability of resources, average delay due to
closures which leads to material shortage, lack of personnel with high experience and
qualifications and leadership skills for project managers.
Consultants should focus more on design cost by using multi criteria analysis and most
economical criteria should be adopted so as to improve their performance and also to increase
owner’s satisfaction. Contractors should be aware of the business environment risks in their cost
estimation. Enough contingency allowances should be there to guard against the increasing
material prices. Quality trainings and meetings should be done in order to improve cost time and
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quality performance. The contractors should see that minimum amount of waste should be
produced and also the site should be kept clean.They should be more interested in conformance
to specifications to improve time and cost performance and also to overcome disputes in site.
There should be proper coordination and communication among various parties working on the
project in order to improve management, control problems and reduce any avoidable delay.
VI. Conclusion
The observed findings of the study and the ensuing examinations recommend that the
performance of a construction companies does not merely relies upon the customary traditional
iron triangle of time, cost, and quality It additionally relies upon numerous different factors, for
example, safety & health, environment, client satisfaction, financial performance, internal
stakeholder, external stakeholder, and information, technology and innovation.
The study has its own limitations. The data collection process for the survey was
conducted in Thailand, India, and Palestine and hence it is significant need to undergo cross-
cultural validation of the instrument in order to enhance the speculation of items and furthermore
if will be in application inside the Philippine setting.
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VII. References
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