Albert P.C. Chan, James M.W. Wong and Y.H. Chiang
The construction industry plays a significant role to the economy of Hong Kong not only in terms of output but also the employment. The sector, however, has been severely hit by…
Abstract
The construction industry plays a significant role to the economy of Hong Kong not only in terms of output but also the employment. The sector, however, has been severely hit by the economic downturn in recent years resulting in serious unemployment. Employment planning becomes one of the critical aspects for the recovery of the economy. The main objective of this paper is to establish a labour demand model for the Hong Kong construction industry. The unique characteristics and the current conditions of the construction labour market are reviewed. Regression analysis based on 123 construction projects was used to compute the relationship between expenditure and site workers employed. The best predictor of average labour demand of construction projects in Hong Kong is found to be DL = 463 C 0.934, where DL is the actual labour demand in man‐days, C is the final cost of contract in millions. The labour demand‐cost relationship can be applied as a manpower forecasting model to estimate the total labour required for a given type of project. The developed model enables a more reliable and accurate planning of manpower requirements in the construction industry.
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James M.W. Wong, Albert P.C. Chan and Y.H. Chiangn
Manpower is the most valuable asset in the construction industry. Based on an examination of literature, selected key data sources, and views from 29 key informants, this paper…
Abstract
Manpower is the most valuable asset in the construction industry. Based on an examination of literature, selected key data sources, and views from 29 key informants, this paper addresses the important labour resource context related to the construction industry in the case of Hong Kong. These include the trends of the critical indicators of the labour market in construction and the implications of the changing markets and technology on the future pattern of skill requirements, and the government policies on construction personnel. The findings are of immense importance to anyone involved in the construction industry, particularly training organizations and policy makers in their mission to maintain a skilled, competitive and adequate workforce able to meet the future demands of the industry. The changing labour market trends and skill requirements pose challenges for construction personnel in terms of upgrading their skills. Further research is recommended to construct robust models predicting the occupational trends in labour resources for effective manpower planning and to establish a labour market information system which could lead to capturing periodic labour market signals with a view to assisting the process of policy making on various human resource development aspects of construction workforce in Hong Kong.
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Daniel M Chan, Albert P C Chan, Patrick T I Lam, Edward W M Lam and James M W Wong
Guaranteed maximum price (GMP) and target cost contracting (TCC) with a pain‐share/gain‐share arrangement have been adopted to integrate the construction delivery process and…
Abstract
Guaranteed maximum price (GMP) and target cost contracting (TCC) with a pain‐share/gain‐share arrangement have been adopted to integrate the construction delivery process and motivate service providers to seek continuous improvements in project outcomes. However, there is still a lack of research evidence to evaluate the levels of success and lessons learned from these innovative procurement strategies. Based on the analysis of a series of in‐depth interviews on the perceptions of various relevant experienced industrial practitioners, this paper aims to explore the key attributes of GMP/TCC including the underlying motives, perceived benefits, potential difficulties, critical success factors, key risk factors involved and optimal project conditions for adopting GMP/TCC. The research findings are useful in assisting key project stakeholders in minimising the detriments brought about by potential difficulties in and maximising the benefits derived from implementing GMP/TCC concepts. The study is also significant in contributing to new knowledge and practical information of GMP/TCC applications and implementation, in both a national and international context.
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Albert P.C. Chan, Y.H. Chiang, Stephen W.K. Mak, Lennon H.T. Choy and M.W.W James
Efficient manpower planning has been recognized as a critical aspect for the development of an economy. In 2001, the Works Bureau of the Hong Kong SAR Government (predecessor of…
Abstract
Efficient manpower planning has been recognized as a critical aspect for the development of an economy. In 2001, the Works Bureau of the Hong Kong SAR Government (predecessor of Environment, Transport and Works Bureau) commissioned an HKPolyU consultancy team to develop a computer‐based model to estimate the demand for different categories of construction personnel. This article presents the concept and features of the manpower demand‐forecasting model developed for the construction industry of Hong Kong. The forecasting model is formulated on the basis of the labour multiplier approach by deriving the relationship between the number of workers required and the project expenditure in the given project duration. Multipliers for 61 project types were derived for 38 labour trades using completed project data. The labour demand by occupation for each project can then be estimated by multiplying the corresponding multipliers and the estimated project expenditure. Several unique features of the model have been developed, including “normalization” and “contract cost adjustment factor”. Normalizing the labour multipliers can facilitate the prediction of occupational labour requirements at different stages of a construction project. The adjustment factor is introduced to eliminate the discrepancy between the original estimates and final contract values so as to enhance the estimation accuracy. The model can also be used to predict the number of jobs created for a given level of investment. The government can apply this model to check and compare which project types will generate most jobs before committing public money. This model could be easily adopted and adapted by foreign construction authorities while planning manpower.
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Daniel W.M. Chan, Patrick T.I. Lam, Albert P.C. Chan and James M.W. Wong
This paper aims to explore the implementation framework, project performance, underlying motives, perceived benefits, potential difficulties, as well as critical success factors…
Abstract
Purpose
This paper aims to explore the implementation framework, project performance, underlying motives, perceived benefits, potential difficulties, as well as critical success factors, of adopting the target cost contracting (TCC) form of procurement, based on an in‐depth real‐life case study of a challenging underground railway station modification project in Hong Kong.
Design/methodology/approach
The case project was analysed by means of the related project documentation and face‐to‐face interviews with the relevant senior representatives from the client organisation.
Findings
The target cost‐based procurement strategy generates a plethora of benefits throughout the whole delivery process of the project case, including the provision of cost incentives for the contractor to work efficiently, aligning individual goals of various contracting parties with the overall project objectives, achieving better value for money and more satisfactory overall project performance in terms of time, cost and dispute occurrence.
Practical implications
Although the selected TCC case study project is based in Hong Kong, the research findings and hands‐on experience of the relevant industrial practitioners may be cross‐referenced to other similar TCC projects in other parts of the world for international comparisons.
Originality/value
The paper provides some useful insights into assisting key project stakeholders in maximising the benefits, whilst minimising the detriments brought about by potential difficulties in launching the TCC scheme. It seeks more research evidence to evaluate the entire project delivery process, and capture the levels of success and lessons learned from previous TCC construction projects for generating best practice recommendations to achieve better construction performance.
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Daniel W.M. Chan, Albert P.C. Chan, Patrick T.I. Lam and James M.W. Wong
The paper aims to present a succinct review of guaranteed maximum price (GMP) and target cost contracting (TCC) concepts and features in general, and to identify the critical…
Abstract
Purpose
The paper aims to present a succinct review of guaranteed maximum price (GMP) and target cost contracting (TCC) concepts and features in general, and to identify the critical success factors for procuring GMP/TCC contracts from the Hong Kong perspective in particular.
Design/methodology/approach
By means of an empirical questionnaire survey geared towards industrial practitioners with direct hands‐on GMP/TCC experience, the opinions of various contracting parties including clients, consultants and contractors were solicited, analysed and compared in relation to GMP/TCC success factors.
Findings
Experienced practitioners shared the unanimous perception that: reasonable share of cost saving and fair risk allocation; partnering spirit from all contracting parties; right selection of project team; well‐defined scope of work in client's project brief and early involvement of contractor in design development, are the most essential ingredients for the successful implementation of GMP/TCC scheme.
Research limitations/implications
Although the research study is based in Hong Kong with a limited sample size, the survey findings and hands‐on experience of the relevant industrial practitioners may be cross‐referenced to other similar investigations in other parts of the world for international comparisons.
Originality/value
The research study has provided some useful insights into assisting key project stakeholders in determining important successful ingredients when launching GMP/TCC scheme. Such an identification of critical success factors would be valuable in formulating effective practical strategies to improve overall project performance, create win‐win opportunities for contracting parties and mitigate the occurrence of construction disputes/claims. It also attempts to seek more research evidence to capture the levels of success and lessons learned from previous GMP/TCC construction projects for generating best practice recommendations for future implementation.
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Daniel W.M. Chan, Patrick T.I. Lam, Albert P.C. Chan and James M.W. Wong
This paper aims to investigate the operational mechanism, project performance, motives behind, benefits, difficulties and success factors of adopting the guaranteed maximum price…
Abstract
Purpose
This paper aims to investigate the operational mechanism, project performance, motives behind, benefits, difficulties and success factors of adopting the guaranteed maximum price (GMP) scheme based on a real‐life case study of Chater House, an international Grade A private office project in Hong Kong.
Design/methodology/approach
The case project was analysed by means of the related project documentation and a series of face‐to‐face interviews with the relevant senior project representatives.
Findings
All the interviewed key project stakeholders perceived that the GMP contract helped achieve competitive price, value for money and superior quality of products as well as provided stronger incentives to innovation and cost saving. The case study revealed that the overall success of this GMP project was underpinned by several key attributes.
Originality/value
The paper provides solid groundwork for client bodies and contracting organisations to develop a best practice framework for implementing successful GMP schemes in future construction.
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James M.W. Wong, Albert P.C. Chan and Y.H. Chiang
The purpose of this paper is to examine the performance of the vector error‐correction (VEC) econometric modelling technique in predicting short‐ to medium‐term construction…
Abstract
Purpose
The purpose of this paper is to examine the performance of the vector error‐correction (VEC) econometric modelling technique in predicting short‐ to medium‐term construction manpower demand.
Design/methodology/approach
The VEC modelling technique is evaluated with two conventional forecasting methods: the Box‐Jenkins approach and the multiple regression analysis, based on the forecasting accuracy on construction manpower demand.
Findings
While the forecasting reliability of the VEC modelling technique is slightly inferior to the multiple log‐linear regression analysis in terms of forecasting accuracy, the error correction econometric modelling technique outperformed the Box‐Jenkins approach. The VEC and the multiple linear regression analysis in forecasting can better capture the causal relationship between the construction manpower demand and the associated factors.
Practical implications
Accurate predictions of the level of manpower demand are important for the formulation of successful policy to minimise possible future skill mismatch.
Originality/value
The accuracy of econometric modelling technique has not been evaluated empirically in construction manpower forecasting. This paper unveils the predictability of the prevailing manpower demand forecasting modelling techniques. Additionally, economic indicators that are significantly related to construction manpower demand are identified to facilitate human resource planning, and policy simulation and formulation in construction.
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Olubimbola Oladimeji and Omotayo Olugbenga Aina
This paper aims to appraise a decade (2004-2013) of annual financial statements of 58 locally owned construction firms’ (LOCOFs’) financial statements on turnover, fixed assets…
Abstract
Purpose
This paper aims to appraise a decade (2004-2013) of annual financial statements of 58 locally owned construction firms’ (LOCOFs’) financial statements on turnover, fixed assets, gross profit and after-tax profit to assess their financial performance in the Nigerian construction industry. It serves as a check on firms’ financial performance, analysis and benchmarking of LOCOFs’ financial statement values to assess firms’ financial health and psychosocial environment.
Design/methodology/approach
A purposively sampled frame of 580 LOCOFs’ financial values (turnover, fixed asset and gross profit) from 212 turnover, 207 fixed assets, 184 gross profit and 217 after-tax profit data points was obtained. Firms’ capacities were obtained by categorisation, industrial average median was obtained and a regression analysis was used to describe the relationship and test of significance of the variables. A review of the possible effect of the research findings on LOCOFs’ psychosocial environment was undertaken.
Findings
Most LOCOFs were categorised as micro scale construction contracting business enterprises. LOCOFs’ financial performance was less than the performance of similar construction firm types and profits were not necessarily influenced by the cost of its investments on fixed asset but rather on firms’ turnover.
Research limitations/implications
A limitation of this study is the paucity of financial data because of poor information access and storage.
Practical implications
The paper recommends more funding of infrastructural developmental projects and better patronage of LOCOFs which will positively influence firms’ turnover, profit and the psychosocial well-being of organisation and personnel.
Originality/value
This paper fulfils an identified need to periodically assess LOCOFs’ financial values so as to appraise financial performance and its possible effect on firms’ psychosocial environment.