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Value M
anagement in C
onstruction
we have designed
and facilitated
more than 10 value management studies
for various organisations and
Departments of the HKSAR Government
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Value Management in Construction
Co-ordinator
Tel: (852) 2766 5817
Fax: (852) 2764 5131
Members
Name
Prof. Geoffrey Q.P. ShenBEng (Tsinghua), PhD (Salford), VMF
(List A), MIVM, MHKIVM
Dr. Derek S. DrewBSc, PhD, FRICS
Dr. Paul W. FoxHND Bldg., MSc, PhD, MCIOB,
MHKICM
Dr. Christabel M.F. HoBSc (Hon), MSc, AAIQS, MCIOB,
MAIB
Dr. Guiwen Liu
Mr. Jacky Chung
Mr. Timmy Fan
Ms. Barbara LeungMAIB, MCIOB
Mr. Thomas Lin
Ms. Ann Yu
Research interests and area of expertise
Value management, sustainable development, andInformation technology
Bidding and forecasting
Construction industry development, ethics/valuesin construction, construction industry culture,productivity and performance measurement, andeducation and training in construction
Construction management, professional ethics,and quantity surveying practices
Value management and construction management
Value management, group support systems, andinformation technology
Value management and group decision supportsystems
Value management in real estate and propertypricing
Value management and performance measures
Value management and briefing/architecturalprogramming
Research Areas
1. Measuring the processes and outcomes of value management studies in construction.
2. Using group decision support systems in value management studies.
3. Systematic identification and precise representation of clients’ requirements.
4. Successful value management applications in China market economy.
5. The impact of using group decision support systems on value management studies.
6. Development and operation of web-based online programmes.
7. Functional representation of clients’ requirements for building projects.
8. Development of web-based group decision support system for value management
workshops.
9. Benchmarking the best value management practice in China’s construction industry.
10. Development of a framework of indicators for sustainable housing in Hong Kong.
11. A system dynamic model for sustainable land use and development in Hong Kong.
12. A system dynamics model for the supply and demand of housing development in
Hong Kong.
13. Developing a framework of factors that help the construction industry to develop.
14. Developing multi-criteria/multi-stage contract award systems for contractors and
consultants.
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Value M
anagement in C
onstructionConsultancy Services
Design and facilitation of value management workshops and related services
The Value Management Group has designed and facilitated more than 10 value
management studies for various organisations including the Hong Kong Housing Authority,
the Hong Kong Housing Society, Water Supplies Department, and Civil Engineering and
Development Department of the HKSAR Government.
Design and facilitation of partnering workshops and related services
The Value Management Group has been actively involved in the design and facilitation of
more than 20 partnering workshops and provision of related services for a number of
organisations including the Highways Department, Hong Kong Housing Authority, Water
Supplies Department, Drainage Services Department, and Civil Engineering and
Development Department of the HKSAR Government.
Report on the Chinese construction industry relating to labour issues
1999-2001 Consultant, Sectoral Activities Programme, International Labour Office (ILO)
of the United Nations. Preparation of a case study report of China as a contribution to the
report for the ‘tripartite’ meeting of employers, workers and governments in the construction
industry of 23 countries. The title of the meeting was The Construction Industry in the 21st
Century: Its image, employment prospects and skill requirements. The work was performed
jointly by Prof. LU You-Jie (Tsinghua University, Beijing) and Dr. Paul Fox (BRE, HK
PolyU).
44
Levett and Bailey, Chartered Quantity Surveyors, Structured Training for Quantity
Surveyors
This structured training was conducted between 1995 to 1999.
Clients in the industry
1. Housing Authority.
2. Housing Society.
3. Water Supplies Department.
4. Civil Engineering and Development Department.
5. Drainage Services Department.
6. Highways Department.
7. Mass Transit Railway Corporation.
8. Sun Hung Kai Properties Ltd.
Future Development
Development Targets
The Value Management Group will continue its strong collaboration with the industry in
research and high-level consultancy projects in the development process of construction
projects, with a strong focus on the tools and methodologies that can enhance project
values.
Key topics to be completed/developed
1. Using information technology to support value management studies.
2. Measuring the success of value management studies.
3. Improving construction contract award and consultant commission award systems.
4. Construction industry development.
5. Studies of construction industry development through applying theories in practice.
6. Evaluation of the HK Construction Industry Review Committee (CIRC) report.
7. Studies of the construction industry culture and its nature.
8. Improve the ethics management strategy of construction company.
9. Promote and uphold the ethical ethos for the construction industry.
45
Value M
anagement in C
onstruction
The Effect of Using Group Decision Support
Systems on the Processes and Outcomes of
Value Management Studies
Research Team: Geoffrey Q.P. Shen, John Kelly and Shichao Fan
Research project funded by RGC CERG 2002/2003
Background
Interactive Value Management System (IVMS) aims to provide a useful toolbox to support
practitioners in VM studies. It is supposed to overcome or alleviate the problems in traditional
VM studies. IVMS is designed not to replace the traditional VM apporaches but provide
technical features to be a beneficial complement. The system can be integrated with the
traditional face-to-face method to exploit the full merits of both modes of communications.
The system could provide information support, analysis and evaluation support, and
communication support as well. IVMS is a web-based system which can be used easily. This
system is installed and operated in a web server so that no software installation is required
in individual users’ computers. Users can access to the system at any machines, anytime
and anywhere to obtain the support from the system at all the phases of the VM studies (pre-
workshop, workshop, and post-workshop).
Significance of the project
This systemic investigation will advance our knowledge for the use of Group Decision Support
Systems (GDSS) to support and improve VM studies in construction industry. The role of
culture in the possible differences between VM studies with and without GDSS support will
be unveiled. These outcomes will have a profound impact on the ways VM workshops should
be conducted and the use of GDSS for effectiveness and efficiency. They will also provide
solutions to the difficulties frequently encountered by users during VM studies. These possible
outcomes will be extremely valuable to the construction industry in Hong Kong, where both
the government and the industry have called for wider use of VM, and yet users have
encountered more difficulties than their overseas counterparts due to the large number of
participants and the short duration of VM workshops.
Project objectives
The objectives of this project are to
1. Investigate the extent to which the use of GDSS can improve effectiveness and efficiency
in the processes and outcomes of VM studies in construction projects.
2. Compare and contrast the effect of using GDSS on the processes and outcomes of VM
studies in Hong Kong and the UK, taking due consideration of the cultural differences.
3. Identify critical success factors for the integration of GDSS with activities in VM processes
in order to ensure effective and efficient communication and decision-making in VM studies.
projects
46
Outcome and deliverables
This project will advance our knowledge for the impact of using GDSS on team behaviour,
group dynamics, facilitation, and the overall outcomes of VM studies. It will also generate
quantitative data on the extent to which GDSS can enhance team behaviour and group
facilitation in VM studies. The role of culture in the possible differences between VM
studies with and without GDSS support is likely to be revealed. Moreover, the critical
success factors for using GDSS in VM
workshops will be identified. This project,
focusing on decision-making within the
context of a VM team, is also likely to
discover the underlying principles for the
VM methodology. It should also provide
rich information regarding issues of the
future design of GDSS software in VM
studies.
References
Some publications derived from this
project include:
Fan, S. and Shen, Q. (2004) “A web-
based group decision support
system for value management
studies in construction”, Proceedings
of 2004 International Conference on
Cons t ruc t ion & Rea l Es ta te
Management, 6 to 7 December
2004, Hong Kong, 113-117.
Fan, S. and Shen, Q. (2006) “The effect
of using group decision support
systems on the processes and outcomes of value management studies”, Value
Engineering, in press.
Fan, S., Shen, Q., Li, H. and Kelly, J. (2005) “The effect of using group decision support
systems on the processes and outcomes of VM studies”, Proceedings of 2005
International Conference on Construction & Real Estate Management, 12 to 13
December 2005, Penang, Malaysia, 722-726.
Fan, S., Shen, Q. and Lin, G. (2005) “Using group decision support systems to support
VM studies”, Proceedings of the China Institute of Professional Management in
Construction of the Architectural Society of China Conference, 12 December 2005,
Hong Kong, 96-103.
Shen, Q. and Fan, S. (2005) “A group decision support systems for value management
studies”, The 3rd International Conference on Value Engineering and Technology
Innovation, 2005, NingBo, China.
Flow of GDSS
supported VM
workshop
47
Value M
anagement in C
onstruction
A Best Practice Framework for Systematic
Identification and Precise Representation of
Client’s Requirements in the Briefing Process
Research Team: Geoffrey Q.P. Shen, John Kelly and Ann Yu
Research Project funded by RGC CERG 2003/2004
Background
Briefing is the first and most important step in the design process in which the client’s
requirements for a building project are defined and the major commitment of resource is
made. The briefing process is both critical to the successful delivery of construction projects
and problematic in its effectiveness (O’Reilly 1987, McGeorge and Palmer 2002). Problems
in buildings can often be traced back to the briefing process. The famous Pruitt lgoe project
was demolished in 1976 because it did not respond to the behavioural and social needs of
the users (Duerk 1993). This incident illustrated very well that a systematic identification of
client’s requirements is a prerequisite to project success. Although many initiatives have
been taken to investigate and improve the briefing process, current briefing practice is still
considered “inadequate” and has many limitations. As concluded in the Latham Report (1994):
“more effort is required to understand clients’ needs”. The recent report by the Construction
Industry Review Committee (2001) has also recommended clients to “set out the requirements
of their projects clearly, systematically and comprehensively”.
Significance of the project
This investigation significantly improves our comprehension of the identification and
clarification of client’s requirements and their functional representations to arrive at a precise
and explicit briefing document. This is valuable for both clients and designers in building
industry because a systematic approach to briefing and a precise project brief can effectively
avoid abortive design and rework. It is crucially important for projects to be “on the right
track” from the very beginning to ensure earliest possible completion. The explicit
representation of client’s requirements will also provide essential input to a creative design
process, as it will enable designers to widen the scope of searching for design alternative to
meet client’s requirements.
Aims and objectives
The aim of this project is to investigate whether a best practice framework for the briefing
process, which utilises the value management (VM) approach, can (1) systematically identify
and clarify client’s requirements, and (2) represent these requirements precisely and explicitly
to facilitate the design process. The specific objectives are to:
1. Identify problems and difficulties faced by clients and designers in a briefing process.
48
2. Evaluate current practices in identifying and clarifying client’s requirements for building
projects.
3. Analyse existing approaches to representing functional requirements at the briefing
stage.
4. Develop a new approach using Value Management to systematically identify/clarify
client’s requirements and explicitly represent these requirements.
Outcome and deliverables
The main outcome of this project is a best practice framework for systematic identification
and clarification of client’s requirements, and for precise and explicit representation of the
requirements in the briefing process. The deliverables are two practical guidebooks entitled
A Concise Guide for Value Briefing and A How-To Guide for Value Briefing which consist
of a value management framework for the briefing process, an inventory of key issues
frequently referred to by clients, and techniques to be used for identifying client’s needs
and representing client’s requirements.
Theoretical Framework for Construction Briefing
References
Construction Industry Review Committee (2001) Construct for Excellence - Report of the
Construction Industry Review Committee, Printing Department, HKSAR Government.
Duerk, D.P. (1993) Architectural Programming - Information Management for Design,
Van Nostrand Reinhold, USA.
Latham, M. (1994) Constructing the Team - Joint Review of Procurement and Contractual
Arrangements in the United Kingdom Construction Industry, Final Report, HMSO.
McGeorge, D. and Palmer, A. (2002) Construction Management - New Directions,
Blackwell Science, London.
O’Reilly, J.J. (1987) Better Briefing Means Better Buildings, Building Research
Establishment, DoE, UK.
49
Value M
anagement in C
onstruction
Measuring the Processes and Outcomes of
Value Management Studies in Construction
Research Team: Geoffrey Q.P. Shen, John Kelly, Ming Sun and Gongbo Lin
Research project funded by RGC CERG 2004/2005
Background
The performance measurement of Value Management (VM) studies is rarely conducted in
practice due to the lack of appropriate and rigorous measurement models. There are at
least 2 major problems in this area: (1) because of the lack of effective methods for
performance measurement, companies are unable to investigate whether adequate returns
have been made on their investment; (2) it is also difficult to calculate what changes can be
made to improve performance and maximize the benefits of VM studies.
Significance of the project
This project will lead to new knowledge and advanced understanding on the measurements
and ways of improving the performance of VM studies in construction. It is evidently that
organizations who invested in VM studies anticipate impressive performance as well as
remarkable return from their investment. This project will also enrich the knowledge of
implementation of tools to facilitating such measurements to take place. The outcomes from
this project will allow clients to review and compare the performance of VM studies in different
projects so that best practice can be identified and used in future projects. They will be
valuable and timely for the international community at large and Hong Kong in particular.
Project objectives
The objectives of this project are to:
1. Investigate the strengths and weaknesses of the existing performance measurement
models used in VM studies in construction.
2. Develop, validate, and refine a performance measurement framework which is capable
of measuring the processes and outcomes of VM studies in construction in a timely
manner.
3. Implement the framework in a computer-aided toolkit that will be integrated with
collaboration tools for VM studies, so that the measurement and improvement can be
carried out easily and timely.
Outcome and deliverables
The major outcome of this project is likely to be a rigorous and appropriate framework for
measuring the performance of VM workshops. A computer-aided toolkit will be developed to
implement the proposed framework, which will make the measurement easier and quicker.
50
A practical “how to” guide for using the proposed framework as well as the toolkit will be
developed to help both clients and facilitators to make full use of the framework.
The theoretical framework for performance measurement of VM studies
Framework of the computer-aided performance measurement of VM studies
References
Some publications derived from this project include:
Lin, G.B., Shen, Q.P. and Fan, S.C. (2004) “A framework for performance measurement of
value management studies in construction”, Proceedings of 2004 International Conference
on Construction & Real Estate Management, 307-311, Hong Kong.
Shen, Q.P., Lin, G.B., Kelly, J. and Sun, M. (2005) “Measuring the processes and outcomes
of value management studies in construction”, Hong Kong Institute of Value Management
7th International Value Conference, Hong Kong.
Lin, G.B., Shen, Q.P. and Fan, S.C. (2005) “Utilizing information technology to facilitate
performance measurement in VM studies”, Proceedings of 2005 International Conference
on Construction & Real Estate Management, 12 to 13 December 2005, Penang, Malaysia.
Lin, G.B. and Shen, Q.P. (2006) “Measuring the performance of value management studies
in construction: A critical review”, ASCE Journal of Management in Engineering, in press.
51
Value M
anagement in C
onstruction
A Computer-Aided Toolkit for Using the
Functional Performance Specification in the
Briefing Process of Construction Projects
Research team: Geoffrey Q.P. Shen and John Kelly
Research project funded by RGC CERG 2005/2006
Abstract of research
Briefing is the first and most important step in the design
process, where client requirements for a construction project
are defined and major resource commitments are made.
The need to explicitly identify and meet client requirements
in the construction industry has led to repeated calls to make
the briefing process more client-oriented, and to deliver
better value for money by renewing its focus on client
requirements. Although many initiatives have been taken
to improve the briefing process, and the use of value
management has led to a major improvement to the process,
the lack of appropriate techniques to clarify and specify client
requirements in a clear, systematic, and comprehensive manner is still a major problem
in the briefing process. The investigators are currently undertaking a CERG project that
aims to develop a best practice value management framework for the formation of project
briefs. The project has identified thirteen key variables as having a major impact on the
briefing process. Of these, the functional performance specification, increasingly used in
manufacturing to specify customer requirements, is the most promising technique for
capturing and representing client requirements in construction.
The research objectives of this proposed investigation are three-fold: (1) to establish a
theoretical foundation that underpins the use of the functional performance specification
in identifying, clarifying, and representing client requirements in the briefing process; (2)
to develop, validate, and verify a practical framework for using the functional performance
specification to identify, clarify, and represent client requirements explicitly in the briefing
process; and (3) to implement the proposed framework in a computer-aided toolkit to
facilitate its use, which will be validated, verified, and refined through real-life construction
projects. These objectives will be achieved by adopting a group of vigorous research
methods such as interviews and focus group meetings to acquire information from the
industry, and action research to validate the findings with real-life projects. It is envisaged
that this research project will lead to an improved understanding of the identification and
representation of client requirements; and contribute to the development of new knowledge
in value-based functional briefs and its implementation in the briefing process. The
51
Value M
anagement in C
onstruction
52
outcomes of this research will benefit all stakeholders in the industry by enabling a good
practice to be identified and used in future projects to ensure the maximum return on
investment from construction projects.
Rationale and purpose of the proposed investigation
Because of the increasingly complicated nature of client organisations and the ever-
changing social, economic, political, and technological environment for construction
projects, defining client requirements and communicating them to other stakeholders are
very complicated undertakings. The lack of an effective technique to identify, clarify,
represent, and communicate these requirements explicitly, is a major problem to the
successful delivery of projects. As revealed from one of the CERG projects undertaken
by the investigators, the functional performance specification is potentially a very useful
technique for such a purpose. The viability and benefits of using this technique in the
briefing process of both building and civil engineering projects need to be investigated
further, and a computer-aided toolkit is deemed essential for its easy and successful
implementation.
Therefore, the research objectives for this proposed investigation are as follows:
1. To establish a theoretical foundation that underpins the use of the functional
performance specification in identifying, clarifying, and representing client requirements
in the briefing process.
2. To develop, validate, and verify a practical framework of using the functional
performance specification to identify, clarify, and represent client requirements explicitly
in the briefing process.
3. To implement the proposed framework in a computer-aided toolkit to facilitate its use,
and to validate, verify, and refine the toolkit by applying it to real-life construction
projects.
Key Issues and problems addressed
The lack of appropriate techniques for specifying client requirements in the briefing process
hinders the effective and efficient creation of briefs in construction. The primary research
question for this project is whether such a technique can be developed and tested
rigorously, so that improvements can be made to the briefing process. Several key issues
will be addressed in depth, including: how client requirements can be identified and clarified
during the briefing process; what strengths and weaknesses the existing techniques
have for such a purpose; what will constitute a practical framework for the effective and
efficient identification and representation of client needs; how such a framework and a
computer-aided toolkit can be used to assist both the clients and design consultants in
the briefing process on a continuous basis; and what benefits the stakeholders would get
from using the proposed framework.
53
Value M
anagement in C
onstruction
Possible outcomes and significance of the research project
The novelty of this proposal lies in the following aspects: (1) it focuses on the use of
functional performance specification and the associated computer-aided toolkit to identify
and represent client requirements using the VM approach; (2) it seeks to integrate with
the VM approach we have proposed in the briefing process, where a team of stakeholders
work in the form of a workshop, so that the briefs can be used on a continuous basis in the
design evaluation phase.
We anticipate that the proposed investigation will lead to new knowledge and an improved
understanding of the creation of value-based functional briefs. The outcomes from this
project will allow clients to identify and communicate their requirements to the design
consultants in the subsequent design and evaluation. These outcomes will be extremely
valuable and timely for the international community at large and for Hong Kong in particular.
As revealed by The Construction Industry Review Committee in Hong Kong, a
comprehensive and clear project brief, which fully reflects the needs and expectations of
the procuring clients at the outset of the project, lays a sound foundation for successful
project implementation. The proposed tools in this project can help clients clarify their
needs for the facility; improve communication among stakeholders; facilitate creative design
solutions; and minimise downstream problems in the development cycle.
54
Managing Multiple Stakeholders in the
Briefing Process of Large Construction
Projects
Research team: Geoffrey Q.P. Shen, John Kelly and Jianping Zhang
Research project funded by RGC CERG 2006/2007
Abstract of research
Briefing is the first and most important step in the development cycle whereby stakeholders’
requirements and expectations for a construction project are defined, conflicts are
addressed and resolved, and major resource commitments are made. One of the major
characteristics of large construction projects is that there are many stakeholders: the
client organisation, the consultants, the enabling and regulatory authorities, and the general
public at large, not to mention the various stakeholders within the client organisation.
Although many initiatives have been taken to improve the briefing process, the lack of
appropriate frameworks to manage multiple stakeholders in a systematic and
comprehensive manner is still a major problem in the briefing process. The investigators
are currently undertaking a CERG project that aims to develop a value management
framework to systematically identify and explicitly represent client requirements in the
formation of project briefs. One of the areas identified for further research is how to
identify and manage multiple stakeholders, assessing and accommodating their conflicting
needs, expectations and requirements, in order to achieve value for money for the project
as whole. This is an area that has a major impact on the briefing process, leading to the
success or failure of a project.
The research objectives of this proposed investigation are three-fold: (1) To establish a
theoretical foundation that underpins the management of the value systems of multiple
stakeholders in the briefing process of large construction projects; (2) To develop and
verify a practical framework for identifying and managing stakeholders in the briefing
process, including understanding, assessing, and managing their individual and collective
requirements, their interests and commitment to the project, and their influence on the
direction of the project; and (3) To develop a computer-aided platform underpinned by
Social Network Analysis for mapping and measuring the relationships and flows between
people, groups, and organisations in the briefing process, and validate its usefulness
through real-life construction projects. These objectives will be achieved by adopting a
group of rigorous research methods such as interviews and focus group meetings to
acquire relevant information from the industry, and action research to iteratively develop
and validate the proposed framework with real-life construction projects. It is envisaged
that this research project will lead to an improved understanding of the identification and
55
Value M
anagement in C
onstruction
management of stakeholders; and contribute to the development of new knowledge in
managing stakeholders in the briefing process. The outcomes of this research will benefit
all stakeholders in the industry by enabling a good practice to be identified and used in
future projects to ensure the maximum return on investment from construction projects.
Rationale and purpose of the proposed investigation
Because of the increasingly complicated nature, the changing social, economic, political,
and technological environment, and the involvement of many stakeholders in large
construction projects, managing multiple stakeholders and accommodating their values
are very complicated undertakings in the briefing process. The lack of an effective
framework to identify, clarify, manage, accommodate, and represent these often competing
requirements, is a major problem to the successful delivery of projects. As revealed from
one of the CERG projects undertaken by the investigators, managing multiple stakeholders
in the briefing process is both challenging and critical to the successful delivery of projects.
The viability and benefits of developing a framework for such a purpose in the briefing
process of large construction projects need to be investigated further, and a computer-
aided platform is deemed essential for its easy and successful implementation. The
research objectives for this proposed investigation are as follows:
1. To establish a theoretical foundation that underpins the management of the value
systems of multiple stakeholders in the briefing process of large construction projects;
2. To develop and verify a practical framework for identifying and managing stakeholders
in the briefing process, including understanding, assessing, and managing their
individual and collective requirements, their interests and commitment to the project,
and their influence on the direction of the project; and
3. To develop a computer-aided platform underpinned by Social Network Analysis for
mapping and measuring the relationships and flows among people, groups, and
organisations in the briefing process, and validate its usefulness through real-life
construction projects.
Key Issues and problems addressed
The lack of appropriate frameworks for managing multiple stakeholders in the briefing
process hinders the effective and efficient creation of briefs in construction. The primary
research question for this project is whether such a framework can be developed and
tested rigorously, so that improvements can be made to the briefing process. Several key
issues will be addressed in depth including: how the requirements, needs, and expectations
of a large number of stakeholders can be identified and clarified during the briefing process;
what strengths and weaknesses the existing methodologies have for such a purpose;
what will constitute a practical framework for the effective and efficient management of
the stakeholders; how such a framework and a computer-aided platform can be used to
assist the stakeholders in the briefing process on a continuous basis; and what benefits
the stakeholders would get from using the proposed framework.
56
Possible outcomes and significance of the research project
The novelty of this proposal lies in the following aspects: (1) it focuses on the development
of an innovative and practical framework assisted by a computer-aided platform
underpinned by Social Network Analysis to manage stakeholders systematically; 2) The
proposed framework integrates with the value management approach we have proposed
in previous studies, whereby the multiple stakeholders work collaboratively to define and
prioritise their requirements in a facilitated and participatory workshop environment.
We anticipate that the proposed investigation will lead to new knowledge and an improved
understanding of the management of multiple stakeholders in construction projects. The
findings from this project will enable a better brief to be developed and implemented,
which addresses the diverse views of the stakeholders and encourages ownership,
support, and commitment in the subsequent design and construction phases. The
proposed tools will improve communication among stakeholders, clarify their needs for a
project, facilitate creative solutions, and minimise downstream problems in the
development cycle. These outcomes will be extremely valuable and timely for the
international community at large and for Hong Kong in particular. As revealed by The
Construction Industry Review Committee in Hong Kong, a comprehensive and clear project
brief, which fully reflects the needs and expectations of the procuring clients and other
stakeholders at the outset of the project, lays a sound foundation for successful project
implementation.
57
Value M
anagement in C
onstruction
Assessing Price and Quality in Construction
Contract Bidding
Research Team: Derek S. Drew, Li-Yin Shen, H.P. Lo and Ricky W.K. Fu
Background
Many construction clients are dissatisfied with awarding contracts to lowest bid contractors
because their quality expectations often remain unfulfilled. Given that most clients want
the best quality construction work at the lowest possible price, it is perhaps not surprising
to see more construction contracts awarded on a multi-criteria basis in which quality is
considered alongside price. In such cases bidding can be regarded as the mechanism
used for selecting contractors with the best price-quality combination. A variety of alternative
price-quality assessment approaches have been proposed and used, including the one
currently used by the HKSAR Government. Their formulation has a serious shortcoming
in which bid scores vary considerably more than quality scores. It is because contractors
can submit any bid they want yet client quality scores are constrained to a maximum
score of 100 and are often scored to fall within a narrow band. Distinguishing between
different quality levels of contractors is not straightforward since an element of subjectivity
is involved. This is exacerbated by construction bidding being a recurrent process with
contractors’ learning effect from job to job eventually leading to smaller differences between
contractor quality scores. Consequently, the likely outcome is that price scores vary
considerably more than quality scores and therefore price will dominate quality. Low bid
contractors stand a much higher chance of winning the contract, thereby defeating the
object of the price-quality assessment exercise. If clients want higher quality, then they
should be prepared to pay an additional premium on the market price to ensure the
quality standard demanded. The problem, however, is identifying the contractor with the
best price-quality bid submission.
Aims and objectives
The overall aim of this research is to evaluate various price-quality assessment approaches
and in doing so determine the preferred approach to awarding construction contracts to
contractors. Using data collected from the HKSAR Government tender and/or other public
sector tender reports, the specific objectives are to:
1. Determine the extent to which the HKSAR Government competitions for construction
work are price/quality dominant.
2. Consider the effect this has on the type and size of construction work and learning.
3. Compare the HKSAR Government price-quality aggregation approach with other price-
quality assessment approaches.
4. Undertake an opinion survey amongst clients, contractors and consultants as to which
of the price-quality assessment approaches, identified in item 3 above, they are
considered to be the most preferred for construction work.
58
References
Drew, D.S., Lai, P.Y., Li, H. and Lo, H.P. (2002) “Correcting the fee-technical score
variability imbalance in two-envelope fee tendering”, Construction Management and
Economics, 20, 157-166.
Drew, D.S., Tang, S.L.Y. and Lui, C.K. (2004) “Balancing fee and quality in two envelope
fee bidding”, Engineering, Construction and Architectural Management, 11, 159-175.
Project commenced in December 2006
59
Value M
anagement in C
onstruction
A Study of Factors in Developing the
Construction Industry
Research Team: Paul W. Fox, Patrick S.W. Fong, Martyn J. Hills and Martin Skitmore
Research project funded by HK PolyU Central Research Grant
Keywords: Construction industry development, industry culture, Hong Kong
Background
The Hong Kong construction industry is at a significant threshold in terms of the stage of
development, being the subject of two recent studies (HK CIRC 2001; HKHA 2000)
sponsored by government bodies. These both call for improvements in the way the industry
operates, and in particular, to a change in construction industry culture. The growing
awareness of the construction industry as an entity and its characteristics of culture and
image coincides with developments in other countries such as Singapore, the UK and
South Africa (Singapore 1999; South Africa 1999; Latham 1994). The theoretical
foundations of the body of knowledge labelled 'construction industry development' are
not at all established with certainty (Ofori 1993, 1994) and the Principal Investigator (PI)
has recently completed a doctoral study in an attempt to fill this gap (Fox 2003). Through
a two-stage research design addressed to an international construction community, Fox's
study identified six key factors which are important to the development of a generic
construction industry. At least three of these have strong emphasis on human factors and
the industrial culture.
Significance of the project
This study seeks to relate the findings from the generic study to the case of Hong Kong.
This will have the benefit of further validating the generic model, as well as highlighting
the distinctive characteristics of the local construction industry. This study should be helpful
by enabling government policy-makers and industry leaders to focus on the key areas for
attention in developing the Hong Kong construction industry. It would also point the way
for tangible steps in facilitating the industry to change, through a better understanding of
the nature of culture at the level of an industry, and the methods and timescale needed to
effect the changes. Such changes would have a profound influence not only within the
construction industry itself, but also upon the wider community, all of whom depend on it.
Aims and objectives
The recent publication of the report by the Construction Industry Review Committee (CIRC
2001) has focused attention on six specific areas by which the construction industry can
be developed. These are:
1. Fostering a quality culture;
60
2. Achieving value in construction procurement;
3. Nurturing a professional workforce;
4. Developing an efficient, innovative and productive industry;
5. Improving safety and environmental performance; and
6. Devising a new institutional framework to drive the implementation of the change
programme for the industry.
All of these were in support of a “vision for growth and development”, put forward to
develop a new culture for the industry.
The concept of a culture for a construction industry is a relatively novel idea, and supports
for its existence and the need for its development & propagation has been confirmed by
a recently completed doctoral study by the Principal Investigator (Fox 2003). This study
used both qualitative and quantitative data in a methodology to identify the key factors in
developing (improving) the construction industry. Based on data from a range of countries,
six generic factors were found to be important for its future development:
1. Long-term vision and policy for the industry;
2. Basic resources and infrastructure (physical and institutional);
3. Thinking the best and behaving the best (a best practice culture);
4. Financial and human resources;
5. Techniques supporting high production performance; and
6. A learning culture.
These factors were derived from 62 variables and reduced to the six factors using statistical
factor analysis. Based on an international survey, the factors can be regarded as generic
and applicable to construction industries in general. In addition, from the comparison of
the findings of the studies by CIRC (2001) and Fox (2003), it can be seen from the
above-mentioned two sets of factors that the human factors, especially those of culture
of the industry, are highly significant.
The objectives of the study are therefore to
1. Carry out a survey of stakeholders in Hong Kong's construction industry using a
similar instrument to that of the international survey in order to both validate the
international study; and to
2. Determine the particular characteristics of the Hong Kong industry by reference to
it;
3. Explore the nature of the concept of culture as it applies to the construction industry;
and to
4. Determine the methods and time-frame by which the desired cultural change can
be reasonably executed.
Outcome and deliverables
Given the strong need for cultural change, the benefits of this study include new insights
and understanding which would enable government policy-makers and industry leaders
61
Value M
anagement in C
onstruction
to focus on the key areas for attention in developing the construction industry. It also
points the way for tangible steps in facilitating the industry to change, through a better
understanding of the nature of culture at the level of an industry, and the methods and
timescale needed to effect the changes. Such changes would have a profound influence
not only within the construction industry itself, but also upon the wider community, all of
whom depend on it. Since construction will never be outsourced to neighbouring Shenzhen,
say, as other industries might be, even small improvements to the overall performance of
the construction industry would have significant impact on the Hong Kong economy and
well being of its people.
Refereed conference papers
Hills, M.J., Fox, P.W., Fong, P.S.W., Hon, C.K.H. and Skitmore, R.M. (2006) “Factors
influencing the development of Hong Kong’s construction industry: A qualitative study”,
Proceedings of Joint International Conference on Construction Culture, Innovation,
and Management (CCIM), The British University in Dubai, UAE, CIB W112 “Culture in
Construction”, Dubai , 26 to 29 November 2006, 875-884.
Other papers
Fox, P.W., Fong, P.S.W., Hills, M.J., Hon, C.K.H. and Skitmore, R.M. “Exploring the
concept of industry culture in the construction industry: The case of Hong Kong”, [in
preparation]
Fox, P.W., Fong, P.S.W., Hills, M.J., Hon, C.K.H. and Skitmore, R.M. “Current strength of
factors facilitating construction industry development: The case of Hong Kong”, [in
preparation]
Fox, P.W., Fong, P.S.W., Hills, M.J., Hon, C.K.H. and Skitmore, R.M. “Factors of future
importance in developing the Hong Kong construction industry”, [in preparation]
References
Fox, P.W. (2003) Construction Industry Development: Analysis and Synthesis of
Contributing Factors, PhD thesis, Queensland University of Technology, Brisbane,
Australia
62
Hong Kong Construction Industry Review Committee (2001) Construct for Excellence:
Report of the Construction Industry Review Committee, Report of the Construction
Industry Review Committee (CIRC) under the Chairmanship of Henry Tang, Hong
Kong, China. Hong Kong SAR Government.
Hong Kong Housing Authority (2000) Quality Housing: Partnering for Change, Consultative
Document.
Latham, M. (1994) Constructing the Team: Final Report, July 1994: Joint Review of
Procurement and Contractual Arrangements in the United Kingdom Construction
Industry, London, HMSO.
Ofori, G. (1993) “Research on construction industry development at the crossroads”,
Construction Management & Economics, 11, 175-185.
Ofori, G. (1994) “Practice of construction industry development at the crossroads”, Habitat
International 18, 41-56
Singapore, Construction 21 Committee (1999) Construction 21: Re-inventing Construction,
Ministry of Manpower and Ministry of National Development.
South Africa, Ministry of Public Works (1999) Creating an Enabling Environment for
Reconstruction, Growth and Development in the Construction Industry, White Paper,
Government Printer, Pretoria.
Project commenced in July 2005
63
Value M
anagement in C
onstruction
An Evaluation of the Impact of the HK CIRC
Report
Research Team: Paul W. Fox and Martin Skitmore
Research project funded by RGC CERG 2006/2007
Keywords: Construction industry development, Hong Kong CIRC
Background
The Government of the Hong Kong SAR sponsored
a report investigating the Hong Kong construction
industry and published the investigating committee's
findings in 2001 (HK CIRC 2001). Since then the
Provisional Construction Industry Coordination
Board (PCICB), also set up by the Government, has
made progress with the necessary reforms.
Significance of the project
Now that four years have passed, it is time for an
independent evaluation of the impact of the CIRC
initiative in order to assist the PCICB and the
Government decision-makers in refining the efforts
to improve the industry's performance. This study
seeks to provide such an evaluation.
Aims and objectives
The aim of this research project is to evaluate the HK CIRC report. There are SIX objectives
arising from this aim.
Objective 1. Examine the perceived state of the Hong Kong Construction Industry (HKCI),
especially its Strengths, Weaknesses, Opportunities and Threats (SWOT),
by its participants in terms of its past, present and expected future if things
carry on as they are.
Objective 2. Explore the views of all key stakeholders in the HKCI about the potential
for improvement to its current state and the barriers that need to be
overcome to allow this.
Objective 3 Examine the level of awareness of the construction industry in Hong Kong
of the main findings and recommendations of the HK CIRC report.
Objective 4. Examine the extent to which different sectors of the construction industry
recognise problems, opportunities, and challenges identified by HK CIRC,
as relevant to their activities.
Objective 5. Identify the perceived barriers to the adoption by the construction industry
of the HK CIRC recommendations.
64
Objective 6. Examine stakeholder respondents' expectation of future developments and
changes to their working operations and the environment in which those
occur, whether these be business operations, regulatory, educational, or
of other nature.
References
Fox, P.W. and Skitmore, R.M. (2005) Developing the Hong Kong Construction Industry,
Construction Industry Institute – Hong Kong.
Fox, P.W. and Skitmore, R.M.(2007) “Factors facilitating construction industry
development”, Building Research & Information [accepted for publication].
Hong Kong Construction Industry Review Committee (2001) Construct for Excellence:
Report of the Construction Industry Review Committee, Report of the Construction
Industry Review Committee (CIRC) under the Chairmanship of Henry Tang, Hong
Kong, China. Hong Kong SAR Government.
Hong Kong Housing Authority (2000) Quality Housing: Partnering for Change, Consultative
Document.
Project commenced in December 2006
65
Value M
anagement in C
onstruction
Ethics Management Practices of
Construction Corporation in Hong Kong
Research Team: Christabel M.F. Ho and Derek S. Drew
Background
In the face of economic globalisation and worldwide competition, construction organisations
in many countries including Hong Kong have to deal with a difficult economic climate.
Driven by the pressure to report high corporate profits, corporate management is torn
between business profits and social interests. Indeed, immoral practices and ethical
misconduct are enduring problems in the Hong Kong construction industry.
Aims and objectives
The objective of this research is to offer new knowledge to corporate ethics management
and to provide fresh evidence on the usefulness of codes of ethics in the construction
industry in Hong Kong using social network analysis. It outlines findings and outcomes to
determine whether codes of ethics merit revised use as a strategy for managing corporate
ethics.
Outcome and deliverables
A conference paper, which presents the findings of the research, was prepared at the
end of this project. A refereed paper was also prepared for publication in an international
journal.
References
Fan, L. and Ho, M.F. (2001) “Effect of professional socialisation on quantity surveyors’
ethical perceptions in Hong Kong”, Engineering Construction and Architect
Management, 8, 304-312.
Fan, L., Ho, M.F. and Ng, V. (2001) “A study of surveyors’ ethical behaviour”, Construction
Management and Economic, 19, 9-36.
Ho, M.F., Drew, D., McGeorge, D. and Loosemore, M. (2004) “Implementing corporate
ethics management and its comparison with other management system: A case study
in Hong Kong”, Construction Management and Economic, 22, 595-606.
Ho, M.F. and Ng, C.W. (2003) “Quantity surveyors’ background and training, and their
ethical concepts, conceptions and interests considerations”, Construction Management
and Economic, 21, 43-68.
66
Ethics Management in the Hong Kong
Construction Organisation
Research Team: Christabel M.F. Ho
Background
The spate of ethical scandals in the Hong Kong construction industry has highlighted the
importance of fostering an ethical ethos in the industry as a means of reducing corruption
and dishonest acts. Business ethics have become a serious concern for the construction
business community and the HKSAR Government (Hong Kong Housing Authority, HKHA,
2000, Construction Industry Review Committee, CIRC, 2001). In response to the ethical
challenges facing the industry, a special task force - the Hong Kong CIRC - was formed
in 2001 to review the practices of the whole industry. Several ethics advisory centres
were established, including the Hong Kong Ethics Development Centre (HKEDC). The
HKEDC was established in 1995 under the auspices of the Community Relations
Department of the Independent Commission Against Corruption (ICAC). Establishing
the Centre was the HKSAR Government’s response to an increasing interest amongst
corporations and the general public alike in promoting
improved business/corporate ethics. The HKEDC works with
corporations to develop organisational codes and ethics
training with the aim of raising the standards of business
ethics.
The development of business ethics management in the
Hong Kong construction industry is still in the embryonic
stage. The CIRC is the first HKSAR Government-related
entity that has recognised the importance of business ethics
management in the construction industry (CIRC 2001: 97).
The study of business ethics in construction organisations
of Hong Kong has become an important precursor of
determining effective practices in the management of
corporate ethics.
Project objectives
The objective of this research is to offer new knowledge to
corporate ethics management and to provide fresh evidence
on the usefulness of codes of ethics in the construction
industry in Hong Kong using social network analysis. It
outlines findings and outcomes to determine whether codes
of ethics merit revised use as a strategy for managing
corporate ethics.
67
Value M
anagement in C
onstruction
Outcome and deliverables
Conference and journal papers, which presented the findings of this project, were prepared
at the end of the research.
References
Ho, M.F., Drew, D., McGeorge, D. and Loosemore, M. (2004) “Implementing corporate
ethics management and its comparison with other management system: a case study
in Hong Kong”, Construction Management and Economic, 22, 595-606.
Ho, M.F. and Ng, C.W. (2003) “Quantity surveyors’ background and training, and their
ethical concepts, conceptions and interests considerations”, Construction Management
and Economic, 21, 43-68.
Hong Kong Housing Authority (HKHA) (2000) Quality Housing: Partnering for Change,
Hong Kong Housing Authority, HKSAR Government Printer, Hong Kong.