factors affecting the selection of procurement methods...
TRANSCRIPT
The Islamic University – Gaza غزة –اإلسالييت انجايؼت
Faculty of Engineering انهذست كهيت
Higher Education Deanship انؼهيا انذراساث ػادة
Construction Project Management انهذسيت انشاريغ إدارة
FACTORS AFFECTING THE SELECTION OF
PROCUREMENT METHODS IN THE
CONSTRUCTION PROJECTS IN GAZA STRIP
انؼىايم انؤثرة في اختيار طريقت انشراء في يشاريغ اإلشاءاث في قطاع غزة
Partial fulfillment of the requirement for the degree of Master of Science in Civil
Engineering
Prepared by
Osama I. El Agha
Supervised by
Dr. Nabil El Sawalhi
Thesis is submitted in partial fulfillment of the requirement for
Degree of Master of Science in Civil Engineering – Construction Management
The Islamic University of Gaza
December, 2013
I
و ــ انرحيـ انرحىـو انمـبس
زل وأ ت انكتاب ػهيك انه ك وانحك يانى وػه تؼهى تك وكا
فضم ا انه ػهيك ػظي
113اح -سسج انساء
وـصذق اهلل انؼظي
II
DEDICATION
This thesis is dedicated
To my parents for their unlimited support.
To my wife for her continuous encouragement.
To my daughters (Mai and Mayar) who were missing my direct
care during my study.
To all of my family, colleagues and friends for their help and support.
To those who give of themselves so that others may live.
Osama El Agha
III
ACKNOWLEDGEMENT
Iam grateful to my supervisor Dr. Nabil El Sawalhi for his professional
advice, useful guidance, and excellent support through all stages of preparing
this thesis. Dr El Sawalhi careful check and useful response have made a
great contribution to the production of this thesis in its final form.
Appreciation is also expressed to construction management teaching staff
at the Islamic University for their support and encouragement.
Many thanks to Dr. Samir Saffi for his support in analyzing the study survey
data.
Kind gratitude and sincere acknowledgment to Engineering consultancy offices,
NGO‟s, government agencies, international agencies, municipalities in the Gaza
Strip who participated in filling out the questionnaires and provided valuable
information for this study.
Finally, I must express my sincere thanks to all those people who made this
thesis possible and an enjoyable experience for me.
IV
Abstract
The selection of an appropriate procurement method is becoming an increasingly
important issue due to a complex decision-making that has to be made by clients early
in the project lifecycle. The aim of this research is to improve and enhance procurement
system in the Gaza Strip construction industry through identify, evaluate and rank
essential the factors that affect the selection of traditional and the non-traditional
procurement methods from procurement experts and consultants‟ perspectives.
An extensive literature review of various procurement methods and factors which
influence the selection of an appropriate method for construction projects in Gaza Strip
was conducted.
A survey questionnaire was carried out to elicit professionals' views on factors that
influence the selection of procurement method for their planned projects; a total of 68
organizations (i.e. 29 procurement experts and 39 consultants operating in Gaza Strip,
Palestine) responded to the survey. The data was then analyzed using the Statistical
Package for Social Sciences (SPSS) and the factors ranked according to their Relative
Importance Index (RII).
The results indicate that the top six significant factors that have most influence on the
selection of procurement methods in the Gaza Strip in construction projects are: price
competition; degree of project complexity; time constrains of project; project size;
client's financial capability and client's experience in procurement methods. This
research concludes that there is no variety of procurement methods used in the Gaza
Strip construction industry where a traditional procurement method with a measure and
pay method based on bill of quantities is preferred. This is because of the most of
professionals' in Gaza Strip are not familiar and not widely experienced with the other
alternative procurement methods.
One of the main recommendations of this research is to use the proposed conceptual
framework using the multi-attribute utility approach (MAUA) as a decision support
system for the selection of appropriate procurement method for construction projects in
the Gaza Strip.
V
يهخص انبحث
قضح راخ أح تانغح رنك ظشا نظؼتح ػهح انرشذأطثذد ػهح اخراس طشقح انششاء انثه ف يشاسغ
ب ػ ف قد يثكش ي دسج داج انششع، دث أ طغ انقشاس اذخار انقشاس ي طشف انانك أ و
فئ زا انثذث ذف إن ذذس ذؼزز ظاو ن ذأثش كثش ػه جاح انششعتاذخار انطشقح انالئح نهششاء
ذاس طشقح انشرشاخ ف طاػح انرشذ ف قطاع غزج ي خالل ذذذذ ذقى ذشذة انؼايم انر ذؤثش ف ار
. انششاء ي خالل ذقظ أساء االسرشاس خثشاء انشرشاخ
نقذ ذى اسرؼشاع انؼذذ ي انذساساخ انساتقح نطشق انششاء انخرهفح انؼايم انر ذؤثش ف اخراس طشقح انششاء
ألى انؼايم انر ذؤثش ذى اسرخذاو اسرثا كأداج نرضخ أداء انانثه نشاسغ اإلشاءاخ ف قطاع غزج،
ف ػهح اخراس طشقح انششاء ف يشاسغ انرشذ، دث ذى ػم يسخ نؼذد ثاح سر يظح ػايهح ف قطاع
خثش يشرشاخ يثال ػ ػششانذسح، ذسؼح االسرشاسح اسرشاس يثال ػ انكاذة ثالثذسؼح )غزج
ذى قاس ( SPSS)ذى ذذهم انثااخ اإلدظائح نالسرثا تاسرخذاو تشايج قذ( انؤسساخ انانكح نهشاسغ
( . RII)دسجح أح انؼايم انؤثشج ف اخراس طشقح انششاء ذشذثا فقا نؤشش األح انسثح
غزج ف يشاسغ انرشذ ذشش انرائج إن أ أى انؼايم انر نا انرأثش األكثش ف اخراس طشقح انششاء ف قطاع
انافسح ػه انسؼش، دسجح ذؼقذ انششع، يذذداخ قد اراء انششع، دجى انششع، انقذسج انانح :
نهانك، خثشج انانك ف يؼشفح طشق انششاء، ذفش طاقى يؤم ف انشرشاخ، ذجة انخاطش، ع طثؼح
. انسق انذهانششع ، ذفش أظح انششاء انخرهفح ف
تاإلضافح إن رنك خهض زا انثذث نؼذو جد ذع ف طشق أاع انششاء انسرخذيح ف طاػح اإلشاءاخ
رنك " جذل انكاخ"انرشذ ف قطاع غزج، دث فضم األغهة اخراس طشقح انششاء انرقهذح تاسرخذاو طشقح
ػذو ذفش انخثشج انكافح نذى ف قطاع غزج خش نهششاءانطشق األانشرشاخ ػه كف خثشاءخػذو تسثة
.نهرؼايم يغ ز انطشق انثذهح
ذط ز انذساسح إن اسرخذاو إطاس انؼم انقرشح نؼشفح يا إرا كاد طشقح انششاء انر رى اخراسا انخاطح
أضا تجب يؼشفح يذساء انشرشاخ ف تششع يا يجذح أو ال ي انادح انفح، كا ذط ز انذساسح
تم قانؤسساخ انخرهفح االسرشاس ػه طشق انششاء انخرهفح ذشجؼى ػه دساسح فى طشق انششاء انثذهح
. اذخار انقشاس انخاص تطشقح انششاء انسرخذيح ف انشاسغ انذسح
VI
Table of contents
Dedication ……………………………………………………………………....
Acknowledgement ……………………………………………………………...
Abstract …………………………………………………………………………
.……………………………………………………………………… يهخص انبحث
Table of contents ………………………………………………………..……...
List of abbreviations …………………………………………………..……….
List of Tables …..………………………………………………………………..
List of figures ……………………………………………………………..…….
II
III
IV
V
VI
X
XI
XIII
Chapter 1: Introduction …………………………………….…………..……..
1
1.1 Introduction …………………………..…………….………………………………. 1
1.2 Importance of the research …………….………………………………………….... 3
1.3 Research aim ………….…………………...……………………………….............. 3
1.4 Research objectives ………………………..……………………………………….. 3
1.5 Statement of the problem …………………….………….…………………………. 4
1.6 Research limitations …………………………..……………………………………. 4
1.7 Thesis structure …………………………………………………………………….. 5
Chapter 2: Literature review ………………………………………………….
6
2.1 Definitions of procurement method ………………………………………………… 6
2.2 Background for procurement methods history ……………………………………… 6
2.3 Issues for future procurement ……………………………………………………….. 9
2.4 Types of procurement methods …………………………………………………….. 10
2.4.1 Traditional procurement method (Separated) …………………………… 11
2.4.1.1 Lump sum contract method …………………………………… 13
2.4.1.2 Measurement contract method ……………………………….. 14
2.4.1.3 Cost reimbursement contract method ………………………… 15
2.4.1.4 Key points for traditional procurement method …………….... 17
VII
2.4.1.5 Advantages and disadvantages of traditional procurement ……. 18
2.4.1.6 When should traditional procurement method be used …...…... 18
2.4.2 Design and construct procurement method (Integrated) …………..….... 19
2.4.2.1 Key points for design and construct procurement method ..….. 24
2.4.2.2 Advantages and disadvantages of design and construct
procurement method ……………….………………………………….
26
2.4.2.3 When should design and construct procurement be used …..…. 26
2.4.3 Management procurement method (Packaged) …………..……………… 27
2.4.3.1 Management contracting procurement method …..…………... 27
2.4.3.2 Construction management procurement method ………..……. 29
2.4.3.3 Design and manage procurement method…..…………………. 30
2.4.3.4 Key points for management procurement method …………..… 30
2.4.3.5 Advantages and dis. of management procurement method.….... 31
2.4.4 Public private partnership procurement method " PPPP" ……..…………. 32
2.5 Factors affecting the selection of procurement method ………..………………........ 33
2.6 The decision to select procurement method ………………………..……………….. 40
2.7 Local studies …………………………..……………………………………………. 41
2.8 Chapter summary …………………………………………..………………………..
43
CHAPTER 3: Reasearch methodology ………….……..……………………..….…... 47
3.1 Introduction ………….…………………………………………………………….. 48
3.2 Research design ……………………………………………………………..……… 48
3.3 Interview ………………………………..………………………………………….. 49
3.4 Developing the questionnaire ………………….…………………………………... 50
3.5 Statistical analysis tools ………………..…………………………………………... 51
3.6 Methodology for this research ……………..………………………………………. 52
3.6.1 Study and investigate the major practices of variant types of procurement
methods used in Gaza Strip construction industry ………....…………….
52
3.6.2 Identify and rank the factors affecting the selection of procurement
method……………………………..……………..………………………
52
3.6.3 Build a framework for the selection of procurement method in Gaza Strip 55
3.7 Pilot study ………..………..………………………………………………………... 55
3.8 Instrument validity ………………..………………………………………………... 56
3.8.1 Validity test …………………………………………………………….... 57
VIII
3.8.1.1 Criterion-related validity test ………………………….……… 57
3.8.1.2 Structure validity test ………………………….……………… 59
3.9 Instrument (Questionnaire) reliability ……………………..…….………………... 60
3.10 Research sample ……………….………………………………………………….. 62
3.11 Sample size, questionnaire distribution and collecting data …...………..………... 62
3.12 Method of data analysis ……………..……………………………………………..
64
CHAPTER 4: Results and discussion ……………………………….…..…………... 66
4.1 Introduction …………………….…………………………………………………... 66
4.2 Organizational profiles …………………..…………………………………………. 66
4.2.1 Position of respondent ……………………………………….…………... 66
4.2.2 Experience years of the respondents ………………………………..……. 67
4.2.3 Qualification of the respondents ………………..………………………... 67
4.2.4 Type of institution ………………...……………………………………… 68
4.2.5 Type of projects the organizations are dealing with ………………..……. 68
4.2.6 Value of projects executed in the last five years …………...…………….. 69
4.3 Factors affecting the selection of procurement method ………….………..…........... 69
4.3.1 Main factor groups affecting the selection of procurement method ……... 69
4.3.2 The relationship among the selection of procurement method groups..…. 72
4.4 Sub-factors affecting the selection of procurement method ……………..…...……... 73
4.4.1 Group one: Sub-factors related to client ……………..…………………...
7
73
4.4.2 Group two: Sub-factors related to cost ………………..…………………. 74
4.4.3 Group three: Sub-factors related to time ……………………..………….. 75
4.4.4 Group four: Sub-factors related to risk ………..………………………… 76
4.4.5 Group five: Sub-factors related to project characteristics ……………..… 77
4.4.6 Group six: Sub-factors related to external environment ……..…………... 78
4.4.7 Ranking of sub-factors affecting the selection of procurement method in
the Gaza Strip …………...……….……………………………………….
80
4.5 Perspective about procurement methods used in Gaza Strip ………………………. 86
4.5.1 The satisfaction about procurement system of different organizations ..… 86
4.5.2 The most common procurement method selected by organizations ..……. 87
IX
4.5.3The most common type of traditional procurement method selected by
organizations……………………………………………………………...
87
4.5.4 The most procurement methods which are familiar with staff...…………. 88
4.5.5 Types of procurement method would like to see more use in Gaza…...…. 89
4.5.6 A simple model for procurement method selection could be useful and
applied in construction projects in the Gaza Strip in the future ………….
90
CHAPTER 5: Develping a framework ……………………………………………….
91
5.1 Introduction ………………………………………………………………………… 91
5.2 Multi-attribute utility approach (MAUA) …………………………………………. 91
5.3 Data collection procedure ………………………………………………………….. 92
5.4 Data analysis ……………………………………………………………………….. 93
5.5 Multi-attribute utility approach application ………………………………………. 95
5.6 Multi-attribute utility approach verification ………………………………………. 95
5.6.1 Verification cases ………………………………………………………. 95
5.6.1.1 Case 1: Desgin and build of Wadi Gaza wastewater
treatment plant ……………………………………………
96
5.6.1.2 Case 2: Construction of continuous medical education
centre at the Islamic University …………………………..
99
5.7 A framework development …………………………………………………………. 102
CHAPTER 6: Conclusion and Recommendations ………………………...…………
105
6.1 Introduction ………………………..……………………………………………..... 105
6.2 Conclusion ………………………………...………………..……………………… 105
6.3 Recommendations ………………………………..………………………………… 108
6.4 Recommendations for future research ……………………………………..……….
109
References …………………………………….………………………………………
110
Annex (1): Questionnaire (English) …………..…………………………………….. 116
X
List of Abbreviations
BOQ
Bill of Quantity
BOT Build-Operate-Transfer
BPF British Property Federation
CIOB The Chartered Institute of Building
CM Construction Management
CM/GC Construction Manager/General Contractor
CMWU Coastal Municipalities Water Utility
CPARs Country Procurement Assessment Report
DB Design-Build
DBB Design-Bid-Build
ICB International Competitive Bidding
MAUA Multi-Atribute Utility Approach
NCB National Competitive Bidding
NGOs Non-Government Organizations
NS National Shopping
PPP
PPPP
Public Private Partnership
Public Private Partnership Procurement Method
RFP Request for Proposal
RFQ Request for Qualification
RII Relative Importance Index
SPSS Statistical Package for the Social Sciences
UAE United Arab Emirates
UK United Kingdom
WB World Bank
XI
List of Tables
Table 2.1: WB Project cost by procurement method ….…………………………… 42
Table 2.2: Factors influencing the selection of procurement method…….………… 44
Table 3.1: Participants attended interview………………………….………………. 49
Table 3.2: Factors affecting the selection of procurement method…………………. 53
Table 3.3:
Correlation coefficient of each paragraph of factors related to client and
the total of this factor ………………………….………………………...
58
Table 3.4:
Correlation coefficient of each paragraph of factors related to cost and
the total of this factor ………………………………………...………….
58
Table 3.5: Correlation coefficient of each paragraph of factors related to time and
the total of this factor ……………………………...…………………….
58
Table 3.6: Correlation coefficient of each paragraph factors related to risk and the
total of this factor ……………………………………...………………...
58
Table 3.7: Correlation coefficient of each paragraph of factors related to project
characteristics and the total of this factor……………..………………….
59
Table 3.8: Correlation coefficient of each paragraph of factors related to external
environment and the total of this factor…………………………………
59
Table 3.9: Correlation coefficient of each field and the whole of questionnaire…… 60
Table 3.10: Reliability coefficient for the questionnaire…………………..…………. 62
Table 3.11: Percentages of received questionnaires………………………..……….... 63
Table 3.12: Frequency of job title of the respondents…………………………..……. 64
Table 3.13: Ordinal scale used for data measurement…………………..……………. 64
Table 4.1: Frequency and percent of position of the respondents……………..……. 66
Table 4.2: Experience years of respondents……………………..………………….. 67
Table 4.3: Qualification of respondents……………….…………………………..... 67
Table 4.4: Type of institutions……………………..………………………………... 68
Table 4.5: Type of projects the organizations are dealing with……………..……… 68
Table 4.6: Value of implemented projects during the last five years………..……… 69
XII
Table 4.7: RII and rank for the main factors for each type of target group……..…... 70
Table 4.8: RII and rank for the main factors for all responses……………………… 70
Table 4.9: Correlation coefficient among main groups affecting procurement
method……………………………………………………………………
73
Table 4.10: RII and the rank for “Factors related to client”……………………..….... 73
Table 4.11: RII and rank for “Factors related to cost”…………….…………………. 74
Table 4.12: RII and rank for “Factors related to time”……………..………………… 75
Table 4.13: RII and rank for “Factors related to risk”………………………..………. 76
Table 4.14: RII and rank for “Factors related to project characteristics”……..…….. 77
Table 4.15: RII and rank for “Factors related to external environment”………..…… 79
Table 4.16: RII for sub-factors affecting the selection of procurement method…....... 80
Table 4.17: The top ten significant sub-factors affecting the selection of
procurement method……………………………………………………...
82
Table 4.18: The satisfaction percentages of procurement system………..…………... 86
Table 4.19: The percentages of common procurement methods selected by
organizations……………………………………………………………..
87
Table 4.20:
The percentages of common type of traditional procurement method
selected by organizations…………………...…………………………....
87
Table 4.21: The percentages of procurement method familiarity………………..…... 88
Table 4.22: The percentages of procurement method types would like be used more
in Gaza……………………………………………………………………
89
Table 4.23: The degree of agreement on using a model for procurement method
selection…………………………………………………………………..
90
Table 5.1 Rationalized priority rating by respondents 94
Table 5.2 The average benchmark performance values (Case 1) 97
Table 5.3 The weighted sum model results (Case 1) 98
Table 5.4 The average benchmark performance values (Case 2) 100
Table 5.5 The weighted sum model results (Case 2) 101
XIII
List of Figures
Figure 2.1: Procurement method characteristics…………………………………. 11
Figure 2.2: Traditional procurement method……………………………..……… 12
Figure 2.3: Selection Methodology Continuum………………..……….……….. 19
Figure 2.4: Pre and Post-Novation Contracts…………………..….…………….. 21
Figure 2.5: Construction Management Procurement Method……………............ 29
Figure 2.6: Risk apportionment between client and contractor………………….. 40
Figure 3.1: Research methodology flowchart……………………………………. 48
Figure 5.1: Framework for the selection of procurement method ………………. 104
1
CHAPTER 1
INTRODUCTION
1.1 Introduction
Procurement methods for construction industry can be defined as the organizational
structure adopted by client for the management of the design and construction of a
building project (Masterman, 2002). However, procurement methods define the
management, functional and contractual arrangement and relationship amongst project
team. Different procurement methods are used for different construction projects and
the correct choice may help to avoid problems and be the key to the attainment of
project specific goals (Eyitope et al., 2012). The selection of an appropriate
procurement method can reduce construction project costs by an average of 5%. While
an appropriate procurement system may enhance the probability of project success
(Naoum, 1994; Luu et al., 2003). A wrong procurement method often leads to project
failure or client's dissatisfaction (Love et al., 1998). The selection of procurement
system therefore becomes a very important task for clients, as employing an
inappropriate procurement system may leads to project failure (Chua et al., 1999).
Clients have the responsibility to select the most appropriate procurement method for
their construction projects. This has become imperative because the client is faced with
various options to procure his project (Okunlola, 2012). Selecting an appropriate project
procurement method is a complex decision-making process due to risks and
uncertainties. Moreover, it depends largely on the accurate identification of client
requirements. At the time of the decision, the clients and stakeholders often have little
information and the project plans are not detailed enough to make a judgment about the
project with certainty of outcomes (Daniel, 2012).
The decision to select the appropriate procurement method to implement a
construction project is crucial. Though it does not necessary lead to a successful project
but with other factors taken into consideration can influence the success of the project
(Okunlola and Olugbenga, 2010). The use of alternative procurement methods has
increased recently due to many factors including the increase in complexity and size of
projects, increased owner sophistication and requirements, demand for shorter delivery
period and others. However, the decision is not easy as there are many factors that affect
2
the project procurement method decision. These factors are related to time, cost, scope,
quality, owner organization, cash flow, project characteristics, risk and relationships. It
is important that donors, clients and consultants understand these factors as it will assist
them in making the right choice of procurement method for their projects (Sari and El
Sayegh, 2007).
Several previous studies have identified number of factors influencing the selection
of procurement system in construction. The selection criteria for project procurement
will influence which procurement system should be used in a particular project.
Different client has differing needs and requirements whereby construction projects
vary so considerably, in every respect, that no single system of procurement can be
suitable for every project (Luu, et al., 2001). Moreover, there are some criteria to
establish a profile of the client requirement and preferences for the procurement
methods such as: speed (during design and construction), certainty, flexibility in
accommodating design changes, quality, complexity, risk allocation/avoidance,
responsibility, and dispute and arbitration (Love et al., 2005). When project client, or
consultant and decision-makers are selecting a procurement system for a project, their
previous experience plays an influential role. This question sought to determine the
main criteria clients use in selecting procurement systems (Shiyamini, 2006).
As far as Gaza Strip construction industry is concerned, project procurement seems
to be one of the key areas which have to be developed to a great extent. From the
researcher points of view, majority of the public and private construction projects are
procured through traditional procurement system, especially by measure and pay and
the number of different types of procurement systems used in Gaza is less when
compared to other developing countries. Therefore, there is a need to explore new ways
of procuring construction projects. Further, in Gaza Strip, the practice of procurement
selection seems to be rather unstructured and ad hock. There is no logical and consistent
approach is used to select an appropriate procurement system for a particular project.
Therefore, a development and application of such approach for the selection is essential
to aid clients and consultants in selecting the most appropriate procurement system.
3
1.2 Importance of the research
The selection of an appropriate procurement method is playing a pivot role
during all phases of the construction project life span.
This study aiding the client in making more and relevant alternatives of
procurement systems into account when making a decision.
Because previous studies in the Gaza Strip about this topic do not deal with all
aspects of choosing procurement methods in construction industry; this study is
required and very important to be considered.
There is a need to identify the factors influencing the selection of procurement
method in Gaza Strip construction sector to develop a multi criteria decision
support model in a future for the procurement method selection.
It is noticed that there are a number of problems in the Gaza construction
industry caused by wrong selection of procurement method, and the situation
seems to getting worse. Construction projects are frequently delay, high risky
for the client, over budget and conflict is increasing, resulting in litigation
and arbitration.
Understand the impacting factors that influencing the selection of procurement
method for construction projects will make it possible to handle the
procurement problems much better.
1.3 Research aim
This research aims to improve and enhance procurement system in the Gaza Strip
through support the clients and consultants in the selection process of an appropriate
procurement method for their construction projects.
1.4 Research objectives
The main objectives of this study are summarized as the following:
1. To study and investigate the major practices of variant types of procurement
methods used in Gaza construction industry.
4
2. To identify the most common factors that affecting the selection of procurement
method in construction projects in Gaza Strip.
3. To identify and rank the most important key factors affecting the selection of
procurement method according to the clients and their representative perspectives.
4. To evaluate the degree of agreement/disagreement between procurement
specialists and consultants regarding the ranking of siginificant key factors.
5. To develop a framework for the selection of procurement method in Gaza Strip.
1.5 Statement of the problem
Many clients have been selecting procurement systems in a cursory manner, and
some clients even use a specific procurement system by default without making a
deliberate choice. A recent UK study showed that 89% of respondents were dissatisfied
with the procurement system they had previously employed. Inexperienced clients often
have to rely on expert advice when selecting a procurement approach and this could
result in inappropriate decisions with unforeseeable consequences. Experienced clients
may also suffer if they simply based their selection upon biased past experience and the
conservative decisions of their in-house experts or consultants. The selection of an
appropriate procurement system is one of the most important problem in the
construction sector. The need for selecting and using an appropriate procurement system
for a particular construction project, together with the proliferation of differing
procurement systems, calls for more systematic methods of selection. To do this,
decision criteria and factors pertinent to the selection of procurement approaches and
their properties (i.e. subjectivity) must be carefully identified, evaluated, and examined
their effects on procurement method selection to overcome this problem.
1.6 Research limitations
This thesis is restricted by the following limitations
1. Due to time limitation, this study is concerned with major procurement methods
for construction works only, and will not take into account the other
procurement methods for goods and consultancy services.
5
2. Clients in Gaza Strip usually hire consultants for implementing construction
projects. As those consultants represent the viewpoint of clients, this research
will take into consideration the opinions of two categories, procurement expert
and consultants. Furthermore, this research will not take into account the
opinion of other parties involved in construction projects such as contractors,
suppliers, stakeholders, shareholders, regulators and others.
3. Only consultants who are registered in the Engineering Association will be
involved in this study.
4. The data, to be collected, for this study covers only the last ten years.
1.7 Thesis structure
This research consists of six main chapters as followings
Chapter one: Introduction: this chapter shows the main objectives of
research, statement of the problem and limitations of research;
Chapter two: Literature review: this chapter shows a historical review
from previous studied to identify the main factors influencing the selection
of procurement system in construction projects;
Chapter three: Methodology: this chapter shows the main methodologies
used in previous studies and the methodology used in this research in order to
achieve the required objectives;
Chapter four: Results analysis: this chapter shows analysis, description
and discussion of research results;
Chapter five: Developing a framework: this chapter shows multi- attribute
utility approach, data collection, data analysis, multi- attribute utility approach
application and vertification and framework design.
Chapter six: Conclusion and recommendations.
Appendix.
6
CHAPTER 2
LITERATURE REVIEW
2.1 Definitions of procurement method
Since this research mainly relies on investigating the key factors influencing the
selection of procurement methods, it was necessary to establish the definitions of the
procurement method.
Mathonsi and Thwala (2012) stated that „Procurement method‟ is a contemporary
term, which is known to many practitioners and researchers of the construction
industry by different terms; these include terms such as project approach,
procurement systems, procurement delivery methods or project delivery
systems, etc. Masterman (2002) argues that there is a need to accept that
contemporary procurement methods can now embrace not only design and
construction, but also financing, operating, facilities management etc. The
following definitions best define a procurement method
It is an organizational structure adopted by the client for the implementation and
at times eventual operation of a project,
It is a key means through which the clients create the pre-conditions for the
successful achievement of project-specific objectives,
A procurement method (or sometimes known as procurement system) “is an
organizational system that assigns specific responsibilities and authorities to
people and organizations, and defines the various elements in the construction of
a project”.
2.2 Background for procurement methods history
Larmour (2011) stated that procurement methods remained relatively unchanged for
over hundred years prior to the Second World War, with the main forms being
traditional or conventional methods. Post 1945 many newer forms of procurement
emerged and the use of different procurement methods changed over time. The rise
and fall of the economy during the next fifty years has seen a number of different
7
procurement methods fall in and out of favor depending on trends in the industry and
changes in the project team structure.
Masterman (2002) stated that Pre-World War II (1939-1945) a majority of projects used
traditional (or conventional) procurement. Post 1945 the variety of methods
available increased, partly due to increase of imports, and partly willingness to try
something new due to frustrations of the poor performance of the construction
industry. Larmour (2011) classified evolution of procurement methods into main five
phases which are
Phase 1: 1945 - 1972 – Sustained economic growth
By the 1950‟s negotiated tenders and Design and Build had begun to be used in a very
limited scale by the private sector in developed countries. The Emmerson Report
(Ministry of Works in UK, 1962) criticized the lack of cooperation between
members of the project team and their clients, notably highlighting „in no other
important industry is the responsibility for design so far removed from the
responsibility for production.
This period was still a general failure to adopt alternative methods of tendering. The
early to mid 1960‟s was a time of economic expansion, rapidly developing
technology, changing social attitudes, demand for more complex and sophisticated
buildings, and the increased need from clients for faster completion at minimum
cost. These factors generated considerable activity within the industry, a
consequence of which was that the general standard of performance and
organization improved. (Masterman, 2002).
In summary, this was a time of economic growth, with general use of
conventional procurement methods, and only a small use of non-conventional
procurement methods.
Phase 2: 1973 - 1980 – Recession
This was a period of recession due to the unexpected and large price increases
in crude oil, coupled with high inflation caused by the previous economic boom.
Governments sponsored studies during this period tended to be specific to
individual sectors.
8
In 1976, many reports found that the overall time to implement a large industrial
projects in the development countries, and the final cost considerably higher in all. The
reason attributed to this was „an unnecessarily lengthy and complex design and pricing
process, and the time taken to obtain statutory permits‟.
Masterman (2002) summarizes, the theme of the 1970‟s reports reflected
conservatism, as a diminishing number of clients were prepared to commit to
projects in an uncertain economic climate.
Phase 3: 1981 - 1990 – Post recession recovery
This was a period of post recession adjustment and recovery. Changes such as labour
only sub-contracting emerged due to long term shifts in the structure of the industry. For
example, the British Property Federation (BPF) launched a new procurement
system „System for Building Design and Construction‟ in 1983.
Natasa (2007) stated that prior to the mid-1980s the mainstream of the construction
industry in developed countries has followed traditional methods of procurement. One
consequence of the above has been the global development of new, alternative
procurement methods, which can be categorized, by the way in which the interaction
between the design and construction of the project is managed, to integrated
procurement systems, management-oriented procurement systems and, in more recent
times, partnering.
Phase 4: 1991 - 2000 – Recession and recovery
The early part of this decade saw low economic growth, uncertainty in business and
finance, social pressures and environmental issues emerge. In addition to government
capital spending cuts, there was little enthusiasm for major projects in the private
sector. The results were a major downturn in the construction industry with more than
500,000 construction related jobs lost, and more than 16,000 construction companies
becoming insolvent (Cox, et al., 1998).
In 1997, there were signs of recovery, but annual input was still 20% below
1990 levels. A number of problems to be tackled including the client‟s role,
management of the project process, fragmentation of the industry, competitive
tendering, the reputation of the industry and barriers to attracting the best people.
9
During this period the use of design and build procurement method and
management procurement method fluctuated, but with an overall increase compared to
their use throughout the 1980‟s. There was also an increase in the use of
partnerships and alliances.
Phase 5: Sustained economic growth, followed by recession (2000-2010)
This decade saw continued growth with major projects constructed in the first half of
the decade. The financial crisis towards the latter part of the decade resulted in
recession from June 2008 – Dec 2009, the longest recession since the 1950‟s. During
this decade, the growth period saw an increase in the use of construction management
for large scale projects, and an increase in the use of design and build. This may partly
be due to the requirement to bring new buildings to the market in very short timescales.
Larmour (2011) argues that the impact of the recession in the last few years of
this phase is difficult to determine at present, however it appears to have caused
an increase in use of design and build procurement method, and a more competitive
market for consultant fees. The results of this are likely to be felt over the next few
years in various parts of the construction industry.
Larmour (2011) stated that this decade also saw a shift in the procurement method for
public sector projects. The increased use of private finance to fund public projects, and a
desire to meet the partnering.
2.3 Issues for future procurement
Larmour (2011) stated that one of the impacts of the move away from traditional
contracts is the increasing fragmentation of the industry. It has become more
common for certain packages to be sub-contractor designed, resulting in a loss of
skills within consultant practices. The fragmentation of the industry whilst enabling
the development of specialist teams may preclude the use of some procurement
systems in the future and may be detrimental to some projects.
When choosing a procurement method, many factors must be considered depending on
the type of client, development and mechanisms for funding the project. At the
outset, before a procurement method is chosen, it is important that the client
develops a project strategy. This would include factors such as identifying the
10
objectives for the project, completion of a risk management process, relevance of
timescale, degree of quality expected, and appropriate team structure.
2.4 Types of procurement methods
Davis et al., (2008) stated that a plethora of methods for procuring construction projects
are available to meet the needs of clients. Deciding what method to use for a given
project is a difficult and challenging task as a client‟s objectives and priorities need to
marry with the selected method so as to improve the likelihood of the project being
procured successfully. The decision as to what procurement method to use should be
made as early as possible and underpinned by the client‟s business case for the project.
The risks and how they can potentially affect the client‟s business should also be
considered.
Davis et al., (2008) classified procurement systems as the following two major methods
1. Traditional Procurement Method (Separated);
2. Non-Traditional Procurement Method which include the following three
methods
A. Design and Construct Procurement Method (Integrated);
B. Management Procurement Method (Packaged); and
C. Public Private Partnership Procurement Method
Mathonsi and Thwala, (2012) stated that over the past number of years, the
construction industry has undergone changes in a manner never seen before. The
increased size and complexity of the construction projects, financial challenges,
political and social consideration, and information technology are just some of the
changes that have been taking place. These changes had led to the development of
alternative procurement systems other than the famous traditional one. Although the
development of non-traditional procurement systems seemed to be the favorite to
most clients of the construction industry, It must, however, be emphasized that
there is not yet a specific method used to select the most appropriate procurement
method.
Natasa (2007) stated that many clients today, however, are increasingly dissatisfied
with the traditional approach and its operational characteristics and actively seek
11
alternative methods of procurement, organization and management to meet their
increasingly complex demands.
Masterman (2002) defines a non-traditional procurement system as a diversified
contemporary procurement system(s) that not only considers design and
construction, but also considers financing, operating and facility management.
Increasing integration of design and construction
Contractual Professional
Figure 2.1: Procurement method characteristics, source: Rowlinson et al., (1999)
2.4.1 Traditional procurement method (Separated)
Mathonsi and Thwala, (2012) stated that this method is called „traditional‟ because it
has been in existence for a long time and has been the only choice available for
most clients of the construction industry for many years. Using this method, the
client enters into an agreement with the design consultant (an architect or
engineer) to actually carry out the design work and prepare contract documents.
Following the completion of this phase, the contractor is then appointed based upon
the owner‟s criteria and the owner enters into a contract with the successful
contractor for the assembly of the project elements. In essence, the client is
under two contractual obligations; the design professional and the contractor.
Larmour (2011) argues that this method is used to describe procurement which
involves the client‟s design team producing a full construction design. The
contractor will then tender for the construction of this package. Traditional procurement
Build Operate
Transfer
Design and
Build
Construction
Management
Management
Contracting
Traditional
Design, Manage
and Construct Design and
Manage
Management
Contracting
Construction
Management
12
method usually results in maximum cost certainty for a project with a fully defined
project, but a long programme as design and construction are sequential. It is also
inflexible in terms of design changes, which will can result in excessive cost
and programme implications.
Davis et al., (2008) stated that in the traditional approach, the employer accepts that
design work will generally separate from construction, consultants are appointed for
design and cost control, and the contractor is responsible for carrying out the works.
This responsibility extends to all workmanship and materials, and includes all work by
subcontractors and suppliers. The contractor is usually appointed by competitive
tendering on complete information, but may if necessary be appointed earlier by
negotiation on the basis of partial or notional information.
Figure 2.2: Traditional procurement method, source: Davis et al., (2008)
The Chartered Institute of Building CIOB report, (2010) illustrated that traditional
method, has its weaknesses, as all other methods of procurement do. However, the
construction industry has used the traditional process for so long that it has become the
most understood. Indeed, it is likely that the simplicity involved in understanding
traditional is its greatest strength – the designer is responsible for design and the
contractor for execution, so responsibility for co-ordination of subcontract packages lies
firmly with the contractor. While complications will inevitably arise, as with any
procurement system, the traditional method sees each party knowing where they stand,
and who has responsibility for what. Weaknesses with traditional are, however,
13
apparent. The nature of separating the design and construction processes means disputes
are common, and those delivering the project (i.e. the contractor) do not have much of a
say in the design, cost and allocation of risk. Indeed, some may say that traditional goes
against the requirement for the industry to integrate further.
Davis et al., (2008) argues that the traditional procurement method, using two-stage
tendering or negotiated tendering, is sometimes referred to as the „Accelerated
Traditional Method‟ – this is where the design and construction can run in parallel to a
limited extent. Whilst this allows an early start on site, it also entails less certainty about
cost. There are three types of contract under the traditional procurement method
1. Lump sum contracts: where the contract sum is determined before
construction starts, and the amount is entered in the agreement.
2. Measurement contracts: where the contract sum is accurately known on
completion and after re-measurement to some agreed basis.
3. Cost reimbursement: where the contract sum is arrived at on the basis of the
actual costs of labour, plant and materials, to which is added a fee to cover
overheads and profit.
2.4.1.1 Lump sum contract method
Davis et al., (2008) stated that the contractor undertakes to carry out a defined amount
of work in return for an agreed sum. This can be a fixed amount not subject to
recalculation, in which case there would be no opportunity for the employer to make
variations. The sum is likely to be subject to limited fluctuations, usually to cover tax
etc changes not foreseeable at the time of tendering. The sum may be subject to
fluctuations in the cost of labour, plant and materials – the so called fluctuations
provision. Recovery may be use of a formula, or by checking invoices.
El Wardani (2004) stated that lump sum contracts with quantities are priced on the basis
of drawings and a firm bill of quantities. Items which cannot be accurately quantified
can be recovered by an approximate quantity or a provisional sum, but these should be
kept to a minimum.
Lump sum contracts „without quantities‟ are priced on the basis of drawings and another
document. This may simply be a specification of a descriptive kind, in which case the
lump sum will not be itemized, or one that is detailed to the extent that the contract sum
is the total of the priceable items. The job might be more satisfactory described as a
14
„Schedule of Works‟, where the lump sum is the total of the priced items. In the latter
cases, an itemized breakdown of the lump sum will be a useful basis for valuing
additional work. Where only a lump sum is tendered, then a supporting „Schedule of
Rates‟ or a „Contract Sum Analysis‟ will be needed from the renderer. Tenders can be
prepared on the basis of notional quantities, but they will need to be replaced by firm
quantities if it is intended to enter into a „with quantities‟ lump sum contract.
Odeyinka et al., (2009) in a research conducted on the budgetary reliability of bills of
quantities (BOQ) for procurement of construction projects, opined that the difference
between the budgeted cost and the final cost incurred differed greatly depending on
project type. This is supported by Khumpaisal (2007) who focused on construction
industry and opined that maximum possible risk to the contractor occurs in the lump
sum contract in which the extent of the work is moderately well identified and the cost
of the work is tendered as a non-possible change project.
Young (1993) viewed a lump sum contract as a contract where an agreed price has been
determined for the execution of the work and performance of the obligations by the
parties before the execution of the contract. Taroun et al., (2011) posited that risk
assessment is probably the most difficult component of the risk management process; it
is potentially the most useful. Since the project considered for this research were public
project executed using lump sum contract and the gap noticed was that contractors do
not have a definite way of taking care of inherent risks in their pricing system, they are
only concerned about winning contract (Laryea and Hughes, 2009). This hinders the
performance of not only the contractor but also the project as it is evident by the spate
of abandoned projects and adversarial or acrimonious relationship project stakeholders‟
exhibit (Aje, 2008).
2.4.1.2 Measurement contract method
Davis et al., (2008) argues that measurement contracts are also referred to as „re-
measurement contracts‟. This is where the work which the contractor undertakes to do
cannot for some good reason be accurately measured before tendering. The presumption
is that it has been substantially designed, and that reasonably accurate picture of the
amount and quality of what is required is given to the tenderer. Probably the most
15
effective measurement contracts, involving least risk is to the employer, are those based
on drawings‟ with approximate quantities.
Measurement contract method can also be based on drawings and a „Schedule of Rates‟
or prices prepared by the employer for the tenderer to compete. This type of contract
might be appropriate where there is not enough time to prepare even approximate
quantities or where the quantity of work is very uncertain. Obviously the employer has
to accept the risk involved in starting work with no accurate idea of the total cost, and
generally this type of contract is best confined to small jobs.
Rosli et al., (2006) stated that the function of bill of quantity (BOQ) has not changed
very much ever since it was introduced about hundred years ago. In the traditional
procurement method, BOQ is used mainly for project costing and as part of tender
document for soliciting competitive tenders from contractors. It is a uniform document
for contractors to estimate or price the work on precisely the same basis, thus allowing
for the fairest bidding. (Willis et al., 2002). Later, it was found that BOQ can be
used for other further purposes, at any stage of the project development i.e. during the
pre-contract and post-contract phases of a construction. (Molloy, 2001; Willis et al.,
2002; Turner, 1979). To the quantity surveyors, BOQ are also used for project costing
or estimating, for assessing tenders, price negotiation; valuation of interim payment
and variation orders and for the settlement of final account. It is considered as a multi-
purpose document.
Although measurement and their preparation is very synonymous with quantity
surveyors, are also prepared by contractors such as in Taiwan and Thailand and by
architect and engineers such as in Germany, France, Spain, Russia, Bulgaria, Hungary
and Rumania. In countries like Malaysia, Brunei, Australia, New Zealand and most of
the African and Middle Eastern countries, are prepared mainly by consultant quantity
surveyors. Traditionally, the preparation of BOQ is considered as the „bread and butter‟
of a consultant quantity surveyor‟s profession (RICS, 1984 cited in Davis & Baccarini,
2004).
2.4.1.3 Cost reimbursement contract method
Davis et al., (2008) illustrated that this type of contract sometimes referred to as „Cost
Plus‟ contracts. The contractor undertakes to carry out an indeterminate amount of work
16
on the basis that they are paid the prime or actual cost of labour, plant, and materials. In
addition, the contractor receives an agreed fee to cover management, overheads and
profit. Hybrids of the cost reimbursement contracts include
• Cost-plus percentage fee
The fee charged is directly related to the prime cost. It is usually a flat rate
percentage, but it can also be on a sliding scale. However, the contractor has no
real incentive to work at maximum efficiency, and this variant is only likely to
be considered where the requirements are particularly indeterminate pre-
contract.
• Cost-plus fixed fee
The fee to be charged is tendered by the contractor. This is appropriate provided
that the amount and type of work is largely foreseeable. The contractor has an
incentive to work efficiently so as to remain within the agreed fee.
• Cost-plus fluctuating fee
The fee varies in proportion to the difference between the estimated cost and the
actual prime cost. The assumption is that as the latter cost increases, the
contractor‟s supposed inefficiency will result in a fee which decreases. This
approach depends upon there being a realistic chance of ascertaining the amount
and type of work at tender stage.
Mathonsi and Thwala, (2012) stated that in order for the client to obtain a
constructed facility, tenders from traditional procurement method are invited in
one of the three following methods
• Open tendering
This is a procedure that allows practically any contractor to submit a tender for
the work. This procedure involve either the client or consultant (on behalf
of the client) placing a public advertisement giving a brief description of
the work. Normally the client will require a cash deposit when contract
documents are requested (Pilcher, 1992).
17
• Selective tendering
This consists of the client drawing up a shortlist of contractors that are
known to have the appropriate qualifications to carry out the work
satisfactorily. Those contractors who seek to be listed are then asked for
further details concerning their technical competence, financial standing,
resources at their disposal and relevant experience. Pre-qualifying
contractors who are on the list are invited to tender (Pilcher, 1992).
• Negotiated tendering
This method is applied in several or different contexts, but the essence is
that tenders are obtained by the client inviting a single contractor of his/her
choice to submit a tender for a particular project.
2.4.1.4 Key points for traditional procurement method
• A traditional lump sum contract requires the production of a complete set of
documents before tenders are invited. Adequate time must be allowed for this.
• The traditional procurement method assumes that design will be appointed by
consultants, and it does not generally imply that the contractor has any design
obligations. If this is to be the case, express terms should be included in the
contract.
• As the employer appoints consultants to provide advice on all matters of design
and cost, they thereby retain total control over the design and quality required.
• The contractor depends heavily upon the necessary information and instructions
from the architect being issued on time. There is a risk of claims if they are
delayed.
• The employer decides which specialist firms the contractor is to use, although
the contractor may require certain safeguards relating to performance.
• All matters of valuation and payment are the responsibility of the employer‟s
consultants.
• If it is impossible to define precisely the quantity or nature of some of the work,
it is still possible to adopt a traditional method on the basis of approximate
quantities, provisional sums, or cost reimbursement. However, this is less than a
18
perfect solution: the fuller and more accurate the information, the nearer to the
relative safety of the lump sum approach.
2.4.1.5 Advantages and disadvantages of traditional procurement
The main advantages of using a traditional procurement method are
• Accountability due to a competitive selection;
• Competitive equity as all tendering contractors bid on the same basis;
• Design lead and the client is able to have a direct influence which can facilitate a
high level of functionality and improve the quality in the overall design;
• Price certainty at the award of the contract;
• Variations (changes) to the contract are relatively easy to arrange and manage;
and
• A tried and test method of procurement which the market is very familiar with.
The main disadvantages of using a traditional procurement method are
• Can be a timely process to produce the full contract documentation. Tenders
documents from an incomplete design can be produced but can lead to less cost
and time certainty, and may lead to disputes;
• Overall project duration may be longer than other procurement methods as the
strategy is sequential and construction cannot be commenced prior to the
completion of the design; and
• No input into the design or planning of the project by the contractor as they are
not appointed during the design stage.
2.4.1.6 When should traditional procurement method be used
Turner (1990) stated that traditional procurement method should be used when
• A programme allows sufficient time;
• Consultant design is warranted;
• A client wishes to appoint designers and contractors separately;
• Price certainty is wanted before the start of construction;
• Product quality is required; and
• A balance of risk is to be placed between the client and constructor.
19
2.4.2 Design and construct procurement method (Integrated)
Masterman (2002) define the design and construct procurement method as "An
arrangement where one contracting organization takes sole responsibility, normally on a
lump sum fixed price basis, for the bespoke design and construction of a client's
project".
Mathonsi and Thwala, (2012) stated that this method is a system where one
organization, usually but not exclusively the contractor, takes responsibility for the
design and construction of the project, in theory at least. The client deals only with one
organization.
El Wardani (2004) stated that several definitions have been developed for the various
design and construct teams procurement approaches. Molenaar and Gransberg (2001)
indicated that the fixed–price approach, located at one end of the continuum shown in
Figure 2.3, takes into consideration only the price as the sole criterion for selection.
Accordingly, the lowest bidder is awarded the contract in an approach very similar to
the traditional general contractors‟ procurement. In a one-step procurement procedure,
the design and construct team may be selected based on price only or a best value
combination of financial and technical criteria. A two-step selection approach consists
of a prequalification of the prospective design and construct teams using a Request for
Qualification (RFQ), followed by an evaluation of the price and technical aspects. This
represents the “best value” approach and the weights given to each of the technical and
financial criteria differs from one organization to the other. It is worth noting that
management aspects, an organization‟s financial standing, in addition to previous design
and construct team experience are also considered in a best value procurement approach
(Molenaar and Johnson, 2001).
Figure 2.3: Selection methodology continuum, source: Molenaar and Gransberg (2001)
20
Davis et al., (2008) stated that with design and construct procurement method, a
contractor accepts responsibility for some or all of the design. There should be express
reference to this in the contract, and the extent of design liability should always be set
out as clearly as possible. Unless the contract states otherwise, it seems that the liability
for design is an absolute liability under which the contractor warrants fitness for the
purpose intended.
Some design and construct forms limit the design liability of the contractor to the
normal professional duty to exercise reasonable care and skill. Independent consultants
engaged by the contractor are therefore under a liability no greater than normal. An
indemnity or acceptance of liability is likely to be worthless unless backed by adequate
indemnity insurance, and this is something that should be checked before a contractor is
appointed. If the contractor does not have in-house designers, which is often the case,
and the contractor uses external consultants, their identity should be established before a
tender is accepted.
The client‟s requirements might be stated briefly and simply, perhaps little more than a
site plan and schedule of accommodation. On the other hand, they may be a document
of several hundred pages with precise specifications. The contractor‟s input might be
restricted to taking a scheme design supplied by the client and developing details and
production information. It is however better to specify in terms of the performance
requirement rather than to prescribe in detail, because this leaves the responsibility for
design and selection firmly with the contractor.
Design and construct procurement methods offer certainty on the contract sum and
bring cost benefits. The close integration of design and construction methods and the
relative freedom of the contractor to use their purchasing power and market knowledge
most effectively can provide a client with a competitive price.
With a design and construct procurement method, it is possible ensure a quicker start on
site, and the close integration of design and construction can result in more effective
programming. Time, however, is needed by the client‟s consultants to prepare an
adequate set of requirements, and time is needed to compare and evaluate the schemes
from competing tenderers. Once a contract is signed, any changes by the client can
prove costly.
21
The CIOB report (2010) illustrated that design and construct method is popular with
clients, as the risk primarily lies with the contractor and the process is relatively easy
to understand – the project is specified to be designed (at least in part) and construct by
the same contractor, which, in theory, allows for greater communication. Other parts of
the design phase may be carried out by consultants hired by the client, though the
contractor will be informed of developments during the phase. It is not always as
straightforward as this, and there can be numerous changes to the design in the
construction phase, or a lack of communication between the two teams. Ideally, the
design and construct stage would see both teams working in partnership, with the
contractors giving feasibility input in the design stage, and the architect advising on site
during the construction phase. Both would result in a more integrated ap proach, as set
out in the Latham Report „Constructing the Team‟.
Natasa (2007) stated that the design and construct procurement system is the main
number of the group. The principal variants are novated design and construct,
package deal, develop and construct and turnkey methods of procurement
Figure 2.4: Pre and post-novation contracts, source: Davis et al., (2008)
Rowlinson (1987) suggested that design and construct/build contractors organize
their activities in three different ways as the following
1. Pure design and build
The contractor strives for a complete and self-contained approach where all the
necessary design and construction expertise resides within one organization that has
Pre-Novation Contract Post-Novation Contract
Design
Consultant Client Client
Design
Consultant
Contractor Sub-
Contractor
s)
Contractor Sub-
Contractor
(s)
22
sufficient resources to complete any task that arises. In such organizations, all
aspects of design and construction have the capacity to be highly integrated.
2. Integrated design and build
In this form, a core of designers and project managers exists within the
organization, but this type of contractor is prepared to buy in design expertise
whenever necessary. Although more effort is needed to integrate the internal and
external members of the design and build team, in-house project managers are
employed to co-ordinate these functions.
3. Fragmented design and build
Many contractors, both large and small, and including national builders, operate
a fragmented approach to design and build projects, whereby external design
consultants are appointed and co-ordinated by in-house project managers whose
other main task is to take and refine client briefs. Under this regime, many of the
integration and co-ordination problems of traditional approach are likely to
manifest themselves along with some role ambiguity among the professions as they
come to terms with the builder as leader of the design and construction team.
Larmour (2011) stated that this method is used to describe procurement which
involves contractor design and construction. It is generally associated with good cost
certainty and a minimization of risk to the client. This method is often associated with
programme benefits as design and construction can be overlapped. There are many
variants within this category, such as Direct (when the designer/contractor is
appointed following appraisal, there is no price competition); Competitive (when
the price and design proposal are submitted based on the employers concept
design); Develop and Construct (part design to produce employers requirements,
contractors complete and guarantee the design in competitive tender). Competitive
is prevalent in current procurement, for example the building schools for the
future programme. Develop and construct is the most commonly referred to as „Design
and Build‟ in the private construction sector. Turner (1990) stated that a number of
variations of design and construct exist, which include
23
1. Direct
In this case no competition is obtained in tenders. Some appraisal of the possible
competitors may be made before tendering but only one tender is obtained.
2. Competitive
Tenders are obtained from documents that are prepared to enable several
contractors to offer competition in designs and in prices.
3. Develop and construct
Consultants design the building required to a partial stage, often referred to as
„scope design‟, then competitive tenders are obtained from a select list of
contractors to develop and complete the design and construct the building. The
amount of consultant design can vary depending on the client‟s needs.
4. Package deal / Turnkey
This method is often used where the contractors competing will use a significant
part of their own or another proprietary building system or they will be
constructing variations of a repetitive theme. There is limited scope for
innovation when this method is used. Some contractors may offer to find a site,
to sell, mortgage or lease their product, obtain approvals etc at a risk to
themselves or at a charge to the client.
5. Novation
Sometimes referred to a design, novate and construct. This is where the
contractor takes over from the client a previous contract for the design work,
completes the design and constructs the work.
El Wardani (2004) classified the design & construct procurement method into the
following procurement methods
1. Sole source selection
The sole source procurement method involves the direct selection of the design
and build/construct team without proposals.
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2. Qualifications-based selection
In a qualifications-based selection, the owner selects the most qualified design
and construct team through an RFQ and often negotiates only with that entity to
a “fair and reasonable” price. Selection of the team is primarily based on
qualitative criteria such as past performance, design and build team reputation,
technical competence and financial stability.
3. Fixed budget/best design selection
The fixed budget/best design is a procurement method where the owner specifies
the project budget during the RFP process. The design and build teams
compete by placing as much scope as they can in their submitted proposals. The
design and build teams are selected based on qualitative and technical aspects.
4. Best value selection
The best value procurement method is an approach where the design and build
teams respond to the owner by submitting proposals that are primarily evaluated
based on the technical aspects together with the associated cost of the project.
Negotiations may take place after the proposal submittals phase. The owner
selects the proposal that offers the best value.
5. Low bid selection
The low bid is a procurement method where the owner primarily selects the
design and build team based on the project value and related cost items. Cost
criteria represent more than 90% of the design and build team procurement
selection process.
2.4.2.1 Key points for design and construct procurement method
• In design and construct contracts, in theory, there is usually a single point of
responsibility. The employer therefore has the advantage of only on firm to deal
with – and one firm to blame if things go wrong. In practice, the employer‟s
requirements are detailed to the extent that the contractor‟s design contribution,
and liability, is diminished.
25
• The employer lacks control over the detailed design; however, this might be
acceptable where broad lines of the scheme are satisfactory and the detail
relatively less important.
• Construction work can be started early as a great deal of detailed design can
proceed in parallel. However, it is mainly the contractor who benefits from this
operational flexibility.
• Responsibility for completing on time rests wholly with the contractor. There
should be no risk of claims because of the allegations that information from the
employer is late. This obligation on the contractor to be responsible for the flow
of their necessary information is one of the most attractive features of design and
construct.
• There is greater certainty of cost, even to the extent that, if required,
responsibility for investigating site and subsoil conditions can be made entirely
the contractor‟s. Any changes in the employer‟s requirements can affect the
contract sum, however, and are likely to prove costly.
• It is always advisable to ask for information about who the contractor intends
using as a designer. Adequate professional indemnity insurance should always
be a requirement.
• The employer should be advised to appoint consultants to provide advice on the
preparation of the requirements; it is important that adequate time is allowed for
this to be done adequately.
• The requirements might include specific items or provisional sums, bit generally
it is prudent to prescribe performance criteria, so that a high degree of reliance is
placed on the contractor.
• In the absence of any stipulations to the contrary, the contractor‟s design
obligations are absolute. However, they are usually reduced in standard forms of
contract to those the professional‟s duty of using reasonable skill and care.
• It is difficult to evaluate competitive tenders realistically. Tenderers should be
informed of the criteria to be used, and whether price is likely to be the prime
consideration.
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• Benefits can arise from designers and estimators having to work closely
together. The contractor‟s awareness of current market conditions and delivery
times can ensure that a contract runs smoothly, economically and expeditiously.
2.4.2.2 Advantages and disadvantages of design and construct
procurement method
The main advantages of using a design and construct approach to procurement are
• Client has to deal with one firm and reduces the need to commit resources and
time to contracting designers and contractors separately;
• Price certainty is obtained before construction commences as client‟s
requirements are specified and changes are not introduced;
• Use of a guaranteed maximum price with a savings option split can stimulate
innovation and reduce time and cost;
• Overlap of design and construction activities can reduce project time; and
• Improved constructability due to contractor‟s input into the design.
The main disadvantages of using a design and construct approach to procurement are
• Difficulties can be experienced by clients in preparing an adequate and
sufficiently comprehensive brief;
• Client changes to project scope can be expensive;
• Difficulty in comparing bids since each design will be different, project
programme will vary between bidders, and prices for the project will be
different for each design;
• Client is required to commit to a concept design at an early stage and often
before the detailed designs are complete; and
• Design liability is limited to the standard contracts that are available.
2.4.2.3 When should design and construct procurement be used
Turner (1990) stated that design and construct procurement should be used when a
• Building is functional rather than prestigious;
• Building is simple rather than complex, is not highly serviced and does not
require technical innovation;
• Brief for scope design is likely to change;
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• Programme can be accelerated by overlapping design and construction activities;
• Single organization is required to take responsibility and risk for design and
construction.
2.4.3 Management procurement method (Packaged)
Larmour (2011) stated that this method is used to describe procurement which
involves a contractor providing management services. The two main variants of
this are Management Contracting and Construction Management, which are both
very different approaches. In Management Contracting, the contractor provides
management services to control and coordinate all site activities, sub letting
works to suitable contractors on a competitive basis. In Construction Management
the client enters into separate contracts with the construction manager, designers,
and trade contractors. Construction Management is generally associated with
programme savings, and a higher degree of control for the client in terms of
design quality, but less cost certainty.
Mathonsi and Thwala, (2012) stated that under a management-oriented procurement
system, the management of the project is carried out by an organization working
with the designer and other consultants to produce the designs and manage the
physical operations which are carried out by contractors. When using systems
within this category, the client will need to have a greater involvement with the
project than when employing any of the other methods.
Davis et al., (2008) stated that several variants of management procurement forms exist,
which include; management contracting, construction management and design and
manage. There are some subtle differences between these procurement methods. In the
case of management contracting, the contractor has direct contractual links with all the
works contractors and is responsible for all construction work. In construction
management, a contractor is paid a fee to professionally manage, develop a programme
and coordinate the design and construction activities, and to facilitate collaboration to
improve the project‟s constructability.
2.4.3.1 Management contracting procurement method
The CIOB report (2010) stated that management contracting works by having a
contractor managing a series of „works‟ contractors or subcontractors. Advantages
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include early involvement in the project, and the management contractor can also
appoint trusted subcontractors they have worked with previously rather than risk an
unknown factor. Disadvantages include the lack of a single point of responsibility for
both design and construction phases, which opens the possibility for disputes to arise.
The client appoints an independent professional team, and also a management
contractor. Their involvement at pre-construction stages will be as adviser to the team,
and during construction they will be responsible for executing the works using direct
works contracts. With this type of contract it is possible to make an early start on-site
and achieve early completion. Because of its flexibility, it allows the client to change
the design during construction because drawings and matters of detail can be adjusted
and finalized as the work proceeds.
For a management contract to be successful there must be trust and good teamwork on
the part of the client, the design consultants and contractor. The contractor should
preferably be appointed no later than the outline design stage. The contractor can advise
on the design programme, tender action, delivery of materials and goods, and
construction programmes.
The management contractor is selected after a careful selection process and is paid a
management fee. The basic difference is that works contracts, although arranged and
administered by the management contractor, are direct between the client and works
contractor. Although in a sense this gives the client a greater measure of control, it also
means that the client accepts a considerable amount of risk. The management contractor
is simply an agent, and usually cannot guarantee that the project will be finished to time
and cost.
The management contractor will normally make a written submission which includes a
proposed management fee, and will be appointed after interviews with the client and the
design team. The fee will include for the total management service, expressed as a
percentage of the total project cost, and for a service to cover pre-construction stages
should the project not proceed to site.
The management contractor undertakes the work on the basis of a contract cost plan
prepared by a quantity surveyor, project drawings, and a project specification. The
client accepts most of the risk because there is no certainty about costs and programme.
29
Competitive tenders for works packages follow later and they will usually, though not
always, will be lump sum contracts with bills of quantities.
2.4.3.2 Construction management procurement method
The CIOB report (2010) stated that construction management is not a widely used
procurement method – its main reason for existence is for use on large and/or very
complex construction works. The system works by having a construction manager as a
point of contact, who will typically be head of a design team, who co-ordinates the
project in terms of the various construction operations on site. Construction
management is generally considered to be the least adversarial form of procurement,
and is often used when design needs to run in tandem with construction.
Figure 2.5: Construction management procurement method, source: Davis et al., (2008)
A number of advantages have been identified that can be offered by the CM approach.
These may be summarized as follows (Walker, 1999);
• Reduced confrontation between the design teams and the team responsible for
supervising construction;
• Early involvement of construction management expertise;
• Overlap of design and construction;
• Increased competition for construction work on large projects due to work
packaging and splitting the construction activities into more digestible 'chunks';
Client
Architect Design Consultants
Quantity Surveyor
Construction Manager
Work Package
Contractors & Suppliers
Project Manager (Advisor)
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• More even development of documentation;
• Fewer contract variations;
• No need for nominated trade contractors; and
• Public accountability.
2.4.3.3 Design and manage procurement method
Turner (1990) stated that a design and manage procurement method is similar to
management contracting. Under a design and manage contract, the contractor is paid a
fee and assumes responsibility, not only for works contractors, but also for the design
team. The common variations of design and manage are
• Contractor
A project design and management organization designs and manages the work,
generally for a fee and delivers the project by employing works contractors as its
subcontractors to design/or construct.
• Consultant
A project designer/manager is the client‟s agent, who designs and manages the
work, obtains subcontract tenders from works contractors who then each enter
into a direct contract with the client.
2.4.3.4 Key points for management procurement method
• Management procurement methods are best suited to large, complex, fast
moving projects where early completion is desirable.
• This method of procurement depends upon a high degree of confidence and
trust. There is no firm contract price before the work starts on site, and the
decision to go ahead usually has to be taken on the basis of an estimate.
• The management contractor is the agent of the client, and should therefore put
their interests first throughout the project.
• It is an advantage to appoint the management contractor at early stage, so that
their knowledge and expertise are available to the design team throughout the
pre-construction period.
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• Much of the detailed design work can be left to proceed in parallel with the site
operations for some work packages, thus reducing the time needed before the
project starts on-site.
• The client has a considerable degree of flexibility on design matters. The design
can be adjusted as construction proceeds, without sacrificing cost control. This
would not be possible with traditional methods.
• The management contractor can select specialists and order materials with long
lead-in times for delivery in good time without any of the uncertainties and
complexities which attend traditional nomination procedures.
• The project proceeds on the basis of a contract cost plan, but an independent
quantity surveyor is required for effective cost control.
• A competitive tendering element is retained for all works contracts, which
usually account for most of the overall prime cost. Tenders for works packages
will normally be on a lump sum basis.
2.4.3.5 Advantages and disadvantages of management procurement
method
The main advantages of using a management approach to procurement are
• The client deals with only one firm, which enables improved coordination and
collaboration between designers and constructors;
• Potential for time savings for the overall project as design and construction
activities are overlapped;
• Under a design and manage form, the contractor assumes risk and responsibility
for the integration of the design with construction;
• Works packages can be let competitively at prices that are current;
• Improved constructability through constructor input into the design;
• Roles, risks and responsibilities for all parties are clear; and
• Flexibility for changes in design.
The main disadvantages of using a management approach to procurement are
• Price certainty is not achieved until the final works package has been let
• Informed and proactive client is required.
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• Poor price certainty
• Close time and information control required
• Client must provide a good quality brief to the design team as the design will not
be complete until resources have been committed to the project (Construction
management and management contracting); and
• Client loses direct control of design quality which is influenced by the
constructors (design and manage).
2.4.4 Public private partnership procurement method "PPPP"
Larmour (2011) stated that public private partnership (PPP) procurement method
involves two or more organizations working together to improve performance
through agreeing mutual objectives, devising a way for resolving any disputes,
and committing themselves to continuous improvement, measuring progress and
sharing gains and pains. Examples include framework agreements and joint ventures.
This is a relatively new form of procurement and although discussed in the
Latham report in the 1990‟s, has taken a long time to come into general use. It
is more commonly seen within large civil engineering projects, than individual
building projects.
The CIOB report (2010) believes that this method is the “most efficient way of
undertaking all kinds of construction work including new buildings and infrastructure,
alterations, refurbishment and maintenance”. Long-term (strategic) partnering
commitments showcase the real benefits of the procurement method, although short-
term (project-specific) partnering has also proved highly beneficial on individual
projects.
Under this procurement method, the client lays down a framework for the overall
administration of the project within which he/she has the discretion to use the
most appropriate of all the procurement systems contained within the other three
methods. In PPP procurement method quantity surveyors play an integral role by
providing a wide range of services, which include contractual issues; it also offers
quantity surveyors an opportunity to act as independent advisors within the system
(Cartlidge, 2002).
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The principles of this method include a decision making process, mutual objectives, and
an overall improvement in performance. As more projects are worked on in tandem, a
greater understanding of how to accomplish best practice, reduce costs and attain value
for money is achieved.
Partnership forms are typically used for high complex projects. A detailed description of
their characteristics and the conditions for using such forms of collaborative
arrangement can be found in the Victorian State Government Report (2006) „Project
Alliance Practitioners Guide‟.
2.5 Factors affecting the selection of procurement method
Maizon et al., (2006) presents the various factors influencing the selection of
procurement systems in the Malaysian construction industry. The selection criteria that
are identified as the most common criteria influencing the choice of procurement
method are time, controllable variation, complexity, quality level, price certainty,
competition, responsibility division, risk avoidance, price completion, government
policy and client‟s familiarity in a procurement method.
Shiyamini et al., (2007) focused on the selection criteria in terms of client requirements,
project characteristics, and external environment, thus ensuring that the selection criteria
have been focused at macro level. The results of factor analysis revealed nine significant
factors from client requirements which are risk management, time availability and
predictability, price certainty, price competition, accountability, flexibility for changes,
quality of works, responsibility and parties‟ involvement, and familiarity. Six factors
from the project characteristics which are project cost and funding method, project
complexity, project type, time constrains, degree of flexibility, and payment modality.
Five factors from the external environment which are market completion, economic
conditions and the fiscal policy, technology, socio cultural suitability, and regulatory
environment.
Babatunde et al., (2010) reveals that the variants of traditional method of contract
procurement are the most adopted in project execution in Nigeria and the project
completion at estimated time ranks as the highest factor considered for traditional
method, while quality assurance ranks highest with non-conventional method. The
results of the study further indicate that the choice of variants of the traditional
34
procurement system is made in order of consideration of project completion at estimated
time; project completion at estimated cost; and availability of information at project
inception. The choice of variants of the non-conventional procurement system is made
in order of consideration of quality assurance; and a consideration of either project
completion at estimated time or the consideration of the nature of the project. Project
completion at estimated cost; minimization of construction time; minimization of design
time are also considered as major factors in making choice of the variants of the non-
conventional procurement method, indicating that much more factors are considered in
making choice of the variants of the non conventional procurement method than the
variants of traditional procurement methods in Nigeria.
Odhigu et al., (2011) explains that the procurement strategy is the outcome of a series of
decisions which are made during the early stages of a project and it is one of the most
important decisions facing the project client. No single procurement system can be
applied universally on all construction projects. Each procurement system is chosen for
a particular project based on certain criteria which use in the selecting procurement
systems and those criteria are
1. Time (Speed);
2. Quality level;
3. Risk allocation/avoidance;
4. Flexibility to change design during both design and construction period;
5. Responsibility;
6. Complexity;
7. Price competition;
8. Certainty of cost and time;
9. Disputes and arbitration;
10. Project type;
11. Client's experience;
12. Experienced contractor availability;
13. Client‟s willingness to be actively involved;
14. Project site location;
15. Client‟s trust in other parties;
16. Political constraints;
35
17. Project size;
18. Regulatory impact;
19. Market competitiveness;
20. Client‟s requirement for value for money;
21. Material availability;
22. Client‟s financial capability.
While the researcher found that principal factors and criteria that influence selection of
procurement systems are
1. Client‟s willingness to be actively involved;
2. Flexibility to change design during both design and construction period;
3. Risk allocation/avoidance;
4. Project size;
5. Client's experience;
6. Certainty of cost and time;
7. Experienced contractor availability;
8. Client‟s trust in other parties;
9. Client‟s requirement for value for money;
10. Project type.
Rosli et al., (2006) mentioned that it is very important at the very outset of the project to
carefully consider all factors when selecting the most appropriate procurement approach
for a construction project. This is because each system has its own feature and
peculiarity that will have effect on the cost, time and quality of the project i.e. the
project performance. The author stated that the traditional system with measurement
contract method are also widely used throughout the Middle East except in Iran and
Iraq. Bahrain, Egypt, Jordan, UAE, Qatar, Oman and Saudi Arabia are also using
this method in most of their construction projects as part of the tender and contract
documentation. Measurements are based on the principles of measurement
(International). It was pointed out that their use has not only provided the client with the
benefit of lump sum bid, but also a document for his own financial control.
Husam and Sedki (2009) explained the result is fifteen criteria which are (Quality level,
speed, flexibility for changes, technology, complexity, time predictability, certainty of
36
cost, familiarity, responsibility, risk avoidance, accountability, client involvement, price
competition, availability of procurement system in the local market, and legal issues).
Franco et al., (2002) concluded that twelve factors affecting the selection of
procurement method in construction as being applicable in Hong Kong, which they are
Firms‟ background
1. Reputation;
2. Technical competence/qualification;
3. Experience with similar project.
Past performance
4. Cost control;
5. Quality of work;
6. Time control.
Capacity to accomplish the work
7. Present workload;
8. Availability of qualified personnel;
9. Professional qualification/experience.
Project approach
10. Approaches to time schedule;
11. Approaches to quality;
12. Design approach/methodology.
In addition, the consultant fee, being one of the factors thought to be most likely to be
considered by clients in Hong Kong, was added as a further criterion.
Thomas (2001) illustrated that the selection and use of an appropriate procurement
system is crucial to project success. The results indicate that there are nine procurement
selection criteria commonly used by Australian clients: speed, time certainty, price
certainty, complexity, flexibility, responsibility, quality level, risk allocation and price
competition. Only time certainty and price certainty were seen by the respondents as
unambiguous criteria, as the completion date and price can be objectively predicted by
the client beforehand.
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Shafik and Martin (2006) investigates favored procurement methods and the factors
which influence their selection for house building in Scotland. The outcomes and
experience gained highlight the fact that many factors have an impact on the selection
process. Speed and level of quality is the greatest factor followed by client experience,
then the project nature, and finally level of risk and cost.
Mahon (2011) confirmed that the procurement selection parameter of client requirement
for budget/cost requirements was universally rated as the single most influential
parameter on procurement route selection. This was closely followed by client
requirement for on time completion. These two parameters were clearly rated as being
the most influential in terms of procurement selection. The next most influential
parameters were client experience and client requirement for in terms of value for
money.
Abu Bakar et al., (2009) mentioned that among the most important factors in Aceh
rehabilitation and reconstruction in procurement stage are timing, responsibility, and
quality. The local authority, local community and contractors were involved in the
implementation of the procurement method in term of participation, approval,
supervision and implementation. These factors are necessary to guaranty the handover
of the projects to the client in accordance to the contract. In addition, it was stated that
the procurement selection is a very important factor to deliver the project to the user.
Local authorities, contractor, and community as main parties that contribute to the time
overrun should be considered before the start of the procurement stage. Type of project
and approval from local authorities are other factors that contributed to time overrun in
procurement selection. In the procurement implementation, factors, which can cause
possibility in changing the initial design, are location, material, weather, and the worker
from the community. There are many methods of procurements that are available to be
chosen from. However, the traditional method was preferred by the NGOs to procure
the projects due to the ease and familiarity of implementation by the NGOs and local
contractors even if it needs a long completion of time.
Mortledge et al., (2006) summarized that the following factors should be borne in mind
when determining the most appropriate procurement method are
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External factors: consideration should be given to economic, commercial,
technological, political, social and legal factors when selecting a procurement
method
Client characteristics: a client‟s knowledge and experience with procuring
construction projects will influence the procurement method adopted.
Procurement selection is influenced by the culture of the organization and the
degree of desired client involvement
Project characteristics: the size, complexity, location and uniqueness of the
project should be considered as this will influence time, cost and risk.
Ability to make changes: changes in projects are inevitable. The desired level
of flexibility for the client to make changes during the project will influence
the selection of a procurement method
Cost: an assessment for the need for price certainty prior to commencement
of construction by the client should be undertaken. If price certainty is
required, then design must be complete before construction commences and
design changes minimized.
Time: most capital works project are required within a specific time frame. If
early completion is a critical factor then a procurement method that supports
speedy completion may be favored.
Love et al., (2008) illustrated that the selection criteria that the first focus groups
identified as being important criteria to be considered during the procurement selection
process were: project value, project complexity, project type (standard/novelty),
location (regional/local), stakeholder integration, political considerations, client needs,
and industry culture. Surprisingly, political considerations and the prevailing industry
culture were issues that participants wanted to discuss. It was perceived that the
selection of a procurement method was often a fait au complaint for the agency. This is
because of the requirement for cost certainty and the issues associated with probity and
accountability, and thus deemed to be transparent features the traditional procurement
process. It was stated by one participant that
“Factors such as project value, project complexity, and project type are a given. We
know from our own personal experience that traditional lump sum methods always
work and give us cost certainty. When it‟s a complex project or it needs to be done
39
quickly we may consider construction management. The biggest issue we have is that
often it‟s decided from above because it‟s the flavor of the month”.
Tran and Molenaar (2012) observed that the four following critical risk factors appear in
all delivery method selection process (1) unexpected utility encounter; (2) third-party
delays during construction; (3) geotechnical investigation; and (4) delays in reviewing
and obtaining environmental approvals. This similarity indicates that these four critical
risk factors are essential to consider for all delivery methods. However, it should be
noted that the ranking of these factors diverge from one method to other methods. For
instance, unexpected utility encounter is ranked first in design-bid-build (DBB), but is
ranked eighth and tenth in construction manager/general contractor (CM/GC) and
design-build (DB) respectively. Also indicate that the major difference in the delivery
selection process of DBB, CM/GC, and DB could be explained by the identified
following five risk factors: (1) constructability of design; (2) delivery schedule; (3)
railroad agreements; (4) obtaining other agency approvals; and (5) scope definition. The
findings from this study not only encourage decision-makers to perform risk analysis at
the beginning of the project development process but also serve as the input of risk
based frameworks for selecting an appropriate project delivery method in high
construction industries.
Eyitope et al., (2012) finds that a list of thirteen critical criteria was identified. These
can be classified into four major areas of core consideration as follows;
A - Project technicality
1. Type/Complexity of the project;
2. Expected performance quality;
3. Design and product specifications;
4. Completion time.
B - Project business case and financing
5. Availability /Funding structure;
6. Number of competitors;
7. Price certainty and market structure.
C - Project risk management
8. Controllable variation;
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9. Responsibility division and integration;
10. Risk sharing and allocation.
D - Public policy requirement
11. Specific government directive;
12. Trend in client‟s familiarity;
13. Political reasons and interference.
The selection of project procurement strategy should necessitate robust analysis of
project environment, in terms policies, available resources, risk associated, technicality,
and preferred contractual arrangements amongst all parties towards devising a method
of project implementation and to achieving project goals of time, cost and quality.
2.6 The decision to select procurement method
Davis et al., (2008) stated that the decision as to what procurement system to use should
be made as early as possible and underpinned by the client‟s business case for the
project. The risks associated with each procurement system and how they can affect the
client should also be considered. With this in mind, Figure 2.6 provides an overview of
the „speculative risk‟ (i.e. risk that can be apportioned in advance as decided by parties
in a contract) to a client and contractor for specific procurement methods.
Figure 2.6: Risk apportionment between client and contractor, source: Davis et al., (2008)
41
In design and construct forms of procurement, the contractor predominately assumes the
risk for design and construction of the project. Design and construct variations exist
where the level of design risk can be apportioned more evenly, for example, novation.
With traditional lump sum contracts the intention is that there should usually be a fair
and balance of risk between parties. The balance can be adjusted as required, but the
greater the risk to be assumed by the contractor, the higher the tender figure is likely to
be. With management forms of procurement the balance of risk is most onerous for the
client as the contractor is providing only „management expertise‟ to a project. However,
under a design and manage method a high of risk can be placed on the contractor for
design integration.
2.7 Local studies
Enshassi and Modough (2012) stated that a project can be procured using different
procurement methods ranging from single source: direct hiring, negotiation,
restrictive bid, to open competition procurement. An owner may select a contractor
through competitive bidding, such as the lowest-bidder system and the non-lowest-
bidder system. Procurement type is a critical decision because it defines the
method to select the key player in the project, which is the construction firm
that is expected to deliver the project. This decision greatly impacts the performance
because if the construction firm is not qualified to achieve the project goals,
serious problems may arise during and after construction.
Different procurement systems with evaluation criteria have been developed to assist
owners during the contractor selection process. The main advantages of these
methods and evaluation systems is that they provide a systematic and objective
procurement approach that takes into consideration numerous factors other than
the price of the bid.
The finding obtained from three case studies exposed in Gaza Strip is the existence of
a proportional relation between awarding bids to lowest price and the problems
encountered during implementation when used a traditional procurement method. The
three cases of the study were awarded to lowest price contractors; the results
show the existence of the following problems
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Considerable delay in the project handover
Disputes between the project partners
Contractor's claims against the client which lead to disputes issues
Low level of quality in some items
Increase of the final project cost.
Accordingly, there is a need to change the traditional system for contractor selection and
awarding contracts from the “lowest price” to “multi-criteria selection” practices.
This can be implemented by establishing alternative procurement methods to
select contractors based on technical and financial criteria.
The World Bank, Country Procurement Assessment Report (CPARs), West Bank and
Gaza (2004) stated that the most used procurement methods for works and goods are
National Competitive Bidding (NCB) and Shopping (See Table 2.1).
Table 2.1: WB project cost by procurement method, source: WB, CPARs report (2004)
Type
Procurement Method Total Financing
ICB NCB Other NBF
US $ million
Works 12.60 170.24 50.98 1.17 234.99
0.00 103.31 41.37 0.00 144.68
Goods 9.37 2.67 5.59 0.16 17.79
4.37 1.57 6.96 0.00 12.90
Services 11.52 0.60 9.49 2.53 24.14
10.52 0.60 8.50 0.00 19.62
Miscellaneous 0.00 2.63 29.34 9.89 41.86
0.00 2.63 27.85 0.00 30.48
Total 33.49 176.14 95.40 13.75 318.78
14.89 108.11 84.68 0.00 207.68
Moreover, for national shopping (NS), in many cases: (i) municipalities did not use
written invitations in soliciting quotations; (ii) local governments did not prepare
quotation evaluation reports and did not issue purchase orders, relying instead on the
quotations opening minutes and committee decisions; (iii) the value of some contracts
were above the NS thresholds.
43
National competitive bidding (NCB), (i) In most projects and during the intifada period,
the time allowed to bidders to submit bids was much less than the 30 days required
under the Trust Fund Agreement; and (ii) ministry of health component, more than one
bid submission place address and bid opening address were listed in bidding documents.
Sole Source (Direct Contracting) was used although the Trust Fund Agreement does not
stipulate its use and WB no-objections were not sought. Procurement documents were
noted that in many cases, key information was missing in various procurement
documents.
2.8 Chapter summary
This chapter introduced the concept of procurement method definition and history,
issues for future procurement, different types of procurement method, critical success
factors influensing the selection of procurement method and the decision to select an
appropriate procurement method in construction industry.
After studying many previous studies in this chapter, the factors affecting the selection
of procurement method were categorized into six groups: "client group"; "cost group";
"time group"; "risk group"; "project characteristics group"; and " external environment
group".
The selection of an appropriate procurement method in the construction projects in the
Gaza Strip based on factors such as (client reputation, experience, culture, financial
capability, price compitions, time constrains, risk avoidance, project type, size, and
complexity) are presented an applicable tool, in order to determine their impacts on the
selection process of procurement method.
Regarding the practical approaches that could be used in the procurement method
selection process, the previous studies indicate that there are many methods that can be
used as a procurement methods and indicate many approaches to select an appropriate
procurement method, but the effectiveness of these approaches depends on different
factors which directly affect the selection of the best procurement method.
Table 2.2 illustrates the factors that influencing the selection of procurement method
which was collected from the literature review. The factors categorized into six groups.
44
Table 2.2: Factors that influencing the selection of procurement method
No. Factors
Source
Mai
zon
et
al.
(20
06
)
Sh
iyam
ini
et.
al.
(20
07
)
Bab
atu
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e et
. al
.
(20
10
)
Od
hig
u e
t. a
l.
(20
11
)
Ro
sli
et.
al.
(20
06
)
Hu
sam
& S
edk
i
(20
09
)
Fra
nco
et.
al.
(20
02
)
S.
Th
om
as
(20
01
)
M.
Sh
afik
& P
.
Mar
tin
(2
00
6)
Cam
ero
n (
20
11
)
Ab
u H
assa
n
Ab
u B
aker
(20
09
)
Mo
rtle
dg
e et
al.
(20
06
)
Pet
er E
.D e
t al
.
(20
08
)
Dan
iel
Tra
n a
nd
Kei
th M
(2
012
)
Ey
ito
pe
et a
l.
(20
12
)
A Factors related to client
1 Client's nature and culture (public or private) X X
2 Client reputation X
3 Client's experience in procurement methods X X X X X X X X X
4 Client's trust in other parties X
5 Flexiability for changes and variations X X X X X X X
6 Client's financial capability X
7 Accountability X X X
8 The degree of desired client involovement X X
9 Availability of qualified personnel (procurement staff) X
B Factors related to cost
10 Price competition X X X X X
11 Design cost X
12 Consultant fees X
13 Price certainly prior to commencement X X X X X X X X
14 Cost control X X
C Factors related to time
15 Speed X X X
16 Minimize design time X
17 Time constrains X X
45
No. Factors
Source
Mai
zon
et
al.
(20
06
)
Sh
iyam
ini
et.
al.
(20
07
)
Bab
atu
nd
e et
. al
.
(20
10
)
Od
hig
u e
t. a
l.
(20
11
)
Ro
sli
et.
al.
(20
06
)
Hu
sam
& S
edk
i
(20
09
)
Fra
nco
et.
al.
(20
02
)
S.
Th
om
as
(20
01
)
M.
Sh
afik
& P
.
Mar
tin
(2
00
6)
Cam
ero
n (
20
11
)
Ab
u H
assa
n
Ab
u B
aker
(20
09
)
Mo
rtle
dg
e et
al.
(20
06
)
Pet
er E
.D e
t al
.
(20
08
)
Dan
iel
Tra
n a
nd
Kei
th M
(2
012
)
Ey
ito
pe
et a
l.
(20
12
)
18 Time control X X
19 Project time schedule X
20 Completion time X X X
21 Delivery schedule X X
D Factors related to risk
22 Risk avoidance/allocation X X X X X X X
23 Responsibility X X X X X X
24 Disputes & arbitration X
25 Geotechnical investigation X
E Factors related to project characteristics
26 Degree of project complexity X X X X X X X
27 Project type and nature X X X X X
28 Funding method X X
29 Project site location X X
30 Project size X X
31 Project payments modality X
32 Quality level of project X X X X X X X X X
33 Project methodology X
34 Expected performance of project X
35 Available resources of project
36 Constructability of design X
46
No. Factors
Source
Mai
zon
et
al.
(20
06
)
Sh
iyam
ini
et.
al.
(20
07
)
Bab
atu
nd
e et
. al
.
(20
10
)
Od
hig
u e
t. a
l.
(20
11
)
Ro
sli
et.
al.
(20
06
)
Hu
sam
& S
edk
i
(20
09
)
Fra
nco
et.
al.
(20
02
)
S.
Th
om
as
(20
01
)
M.
Sh
afik
& P
.
Mar
tin
(2
00
6)
Cam
ero
n (
20
11
)
Ab
u H
assa
n
Ab
u B
aker
(20
09
)
Mo
rtle
dg
e et
al.
(20
06
)
Pet
er E
.D e
t al
.
(20
08
)
Dan
iel
Tra
n a
nd
Kei
th M
(2
012
)
Ey
ito
pe
et a
l.
(20
12
)
37 Project completion at estimated time X X
38 Project completion at estimated cost X
F Factors related to External environment
39 Procurement policy X X
40 Market completion/structure X X
41 Market cometitiveness X
42 Economic conditions X X
43 Political considerations X X X
44 Social factors X
45 Environment impact X
46 Other parties involvement/role/participation
47 Commercial conditions X
48 Legal issues/factors X X
49 Availability of procurement system in the local market X
50 Number of cometitors
51 Technology X X X
52 Stakeholder integration X
53 Worker conditions
54 Material availability X
47
CHAPTER 3
METHODOLOGY
3.1 Introduction
This chapter includes the methodology used in this research. It provides the information
about the research design, population, sample size, various approaches to data
collection and data analysis. It also identifies the interview, questionnaire design,
pilot study, validity content, and reliability.
This research presents the factors influencing the selection of procurement method
in construction projects in the Gaza Strip. From literature review and past studies, it was
obtained that there were different directions used in order to achieve the required
target, goals and objectives. Previous studies focused on identifying and ranking the
factors affecting the selection of procurement method.
The differentiation of directions and goals of topic as shown previously in chapter
2, required different methodologies. The main methodologies obtained from
literature review were: questionnaire survey, interviewing, case studies and
modeling. The methodology adopted for this research can be summarized in the
following points
Identifying the main and sub factors affecting the selection of procurement
method in construction projects in the Gaza Strip,
Developing a research model,
Conduct several interviews and design a questionnaire,
Instrument validity (validity of the questionnaire),
Research sample and size,
Method of collecting data,
Instrument (questionnaire) reliability,
Method of data analysis,
Establish a framework.
The research methodology flowchart is shown in Figure 3.1.
48
Research objectives
Interview (Local proc. expert) about
factors of proc. method selection
Ranking sub-factorsRanking main factors
Questionnaire design
Developing a framework
Results analysis
Conclusion and Recommendations
Literature review (International) about
factors of proc. method selection
Pilot study
Questionnaires validity Questionnaires reliability
Sample size determination
Questionnaire distribution
Results and discussion
Figure 3.1: Research methodology flowchart
3.2 Research design
The purpose of this research is to identify the factors affecting the selection of
procurement method in construction projects in the Gaza Strip and develop a flowchart
49
to help the clients and their representatives in the selection of an appropriate
procurement method.
To achieve this purpose, a structured questionnaire with personal interviews is used
together in this research. The structured questionnaire is probably the most widely
used data collection technique for conducting surveys and it has been widely used
for descriptive and analytical surveys in order to find out facts, opinions and
views. It enhances confidentially, supports internal and external validity, facilitates
analysis, and saves resources.
Data collected from interviews convinced the researcher by adding some sub-factors
influencing the selection of procurement method which resulted from the interviewee
points of view such as availability of procurement system in the local market and
procurement policy factor in order to help the researcher to build a target structured
questionnaire.
3.3 Interview
The primary data were obtained from the local participants through the application
of the interviews, one of many structural processes that have been designed and
developed.
Before carrying out the interview, the draft questionnaire form was sent to target
interviewee and specific time and date were determined for interview. This provided a
chance for the interviewee to study the questions and factors affecting the selection of
procurement method before conduct an interview. The researcher interviewed seven
client's representatives from procurement expert and engineering consulting offices.
In the beginning of the interview, the researcher introduced himself to the
respondent to create a friendly atmosphere, then thanked the respondent and
affirmed that all the data to be collected would be used only for the research
and would not be transferred to any other party. The duration of each interview is
about fifteen minutes. The interviewee classified as shown in Table 3.1 below.
Table 3.1: Participants attended interview
No. of participants Target No.
4 Procurement experts 1
3 Engineering consulting offices 2
50
During the interviews, participants will be given freedom to discuss issues, listen to
their peers, provide reflective comment and arrive at a shared understanding of
collective experiences regarding procurement method use and selection criteria.
These interviews gave to a far extent, accurate and clear information from interviewee
due to the clarifications which made by the researcher and the interview objective was
to obtain, from the interviewee, a consensus conclusion on the factors affecting the
selection of procurement method in construction projects in the Gaza Strip.
3.4 Developing the questionnaire
A questionnaire survey is designed to obtained further information in order to support
the research study objectives and it is also designed based on identified the main and
sub-factors that will be affect the selection of best procurement method in construction
projects in the Gaza Strip, and to assist in future in formulated a model for the selection
of procurement method. In this study, the questions of the research questionnaire are
constructed based on
Literature review stated in previous chapter (Chapter 2)
Several interviews (Seven interviews) with four local procurement experts and
three client's representative from engineering consulting offices to obtain
different thoughts, which can be useful for creating questions.
The experience of the researcher and some engineers in procurement field
management.
A six page questionnaire was developed as a research tool for this study and it was
built mainly using closed questions. Moreover, the questionnaire was developed in
English version (Annex 1). The questionnaire consists of four sections
Section one: general information (Client's representative profile).
Section two: respondent‟s rank of the main factors affecting the selection of
procurement method. This section aims to make comparison between scores
resulted from ranking the main factors presented in it and scores resulted from
ranking the sub-factors presented in section three. This comparison will check the
priority order of main factors in both ranking.
Section three: respondent‟s rank of the sub-factors affecting the selection of
procurement method. As this section contains sub-factors affecting the selection of
51
procurement method correlated to their main factors, it will be used as a base for all
statistical analysis approaches.
Section four: general questions to obtain perspective and opinion of client's
representatives from procurement experts and engineering consulting offices about
procurement methods used in their organizations.
3.5 Statistical analysis tools
The researcher would use data analysis both qualitative and quantitative data analysis
methods. The data analysis will be made utilizing (SPSS 20). The researcher would
utilize the following statistical tools:
1) Frequency and descriptive analysis
2) Cronbach's Alpha for reliability statistics
3) Spearman Rank correlation for validity
4) Relative Importance Index (RII)
5) Nonparametric Tests (Sign test, Mann-Whitney test, Kruskal-Wallis test)
The relative importance index methods (RII) are used to determine the ranks of all
factors and sub-factors. The relative importance index is computed as (Sambasivan and
Soon, 2007)
WRII
A N
where:
W = the weighting given to each factor by the respondents and ranges from 1 to 5
A = the highest weight (i.e. 5 in this case)
N = the total number of respondents
The RII value had a range from 0 to 1 (0 not inclusive), higher the value of RII, more
agree for the paragraph.
Sign test is used to determine if the mean of a paragraph is significantly different from a
hypothesized value 3 (Middle value of Likert scale). If the P-value (Sig.) is smaller than
or equal to the level of significance, 0.05 , then the mean of a paragraph is
significantly different from a hypothesized value 3. The sign of the test value indicates
whether the mean is significantly greater or smaller than hypothesized value 3. On the
52
other hand, if the P-value (Sig.) is greater than the level of significance, 0.05 , then
the mean a paragraph is insignificantly different from a hypothesized value 3.
Mann-Whitney test is used to examine if there is a statistical significant difference
between two means among the respondents.
Kruskal-Wallis test is used to examine if there is a statistical significant difference
between several means among the respondents due to (Position, Years of experience in
the line of work, Institution type and Value of executed projects executed in the last five
years).
3.6 Methodology for this research
This research discusses the factors affecting the selection of procurement method within
construction projects in the Gaza strip. The basic methodology which is considered to
achieve the objectives of this research is as the following issues:
3.6.1 Concerning objective one: (To study and investigate the major practices of
variant types of procurement methods used in Gaza Strip construction industry)
A structured questionnaire survey approach is considered to study the various types of
procurement methods used in the Gaza Strip construction projects. In addition, the
questionnaire can assist to study the attitude of clients, procurement expert, and
engineering consultants towards the importance of the selection an approprate
procurement method in the Gaza Strip construction industry.
3.6.2 Concerning objectives two & three: (To identify and rank the factors
affecting the selection of procurement method)
Literature review about the selection of procurement method was reviewed by (Maizon
et al., 2006; Shiyamini et al., 2007; Babatunde et al., 2010; Odhigu et al., 2011; Rosli et
al., 2006; Husam and Sedki, 2009; Franco et al., 2002; Thomas, 2001; Shafik and
Martin, 2006; Mahon, 2011; Abu Bakar et al., 2009; Mortledge et al., 2006; love et al.,
2008; Tran et al., 2012; Eyitope et al., 2012) to identify the main and sub-factors
affecting the selection of procurement method in construction projects in Gaza Strip. In
addition, there are other local factors that have been added as recommended by local
procurement experts such as availability of procurement system in the local market and
procurement policy constrains factor.
53
A thorough literature review was conducted to identify factors and sub-factors that
affecting the selection of procurement method as recognized by researchers. Combining
this literature review as discussed in previous chapter (chapter 2) with the results of
the interviews, 54 sub-factors affecting the selection of procurement method in
construction projects are selected and identified. These sub-factors are grouped into six
main groups based on literature review as shown in Table 3.2.
Table 3.2: Factors affecting the selection of procurement method
No. Main group factors Sub-factors
1 Client
Client's nature and culture (public or private)
Client reputation
Client's experience in procurement methods
Client's trust in other parties
Flexibility for changes and variations
Client's financial capability
Accountability
The degree of desired client involvement
Availability of qualified personnel (procurement staff)
2 Cost
Price competition
Design cost
Consultant fees
Price certainly prior to commencement
Cost control
3 Time
Speed
Minimize design time
Time constrains
Time control
Project time schedule
Completion time
Delivery schedule
4 Risk
Risk avoidance/allocation
Responsibility
Disputes & arbitration
Geotechnical investigation
54
No. Main group factors Sub-factors
5 Project characteristics
Degree of project complexity
Project type and nature
Funding method
Project site location
Project size
Project payments modality
Quality level of project
Project methodology
Expected performance of project
Available resources of project
Constructability of design
Project completion at estimated time
Project completion at estimated cost
6 External environment
Procurement policy
Market completion/structure
Market competitiveness
Economic conditions
Political considerations
Social factors
Environment impact
Other parties involvement/role/participation
Commercial conditions
Legal issues/factors
Availability of procurement system in the local market
Number of competitors
Technology
Stakeholder integration
Worker conditions
Material availability
The relative importance index method (RII) is used here to determine clients,
procurement expert and engineering consultants perceptions of the relative importance
55
of the selection an appropriate procurement method in the Gaza Strip construction
projects.
3.6.3 Concerning objective five: (To build a framework for the selection of
procurement method in Gaza Strip)
A framework shall be development in order to assist different organizations in Gaza
Strip in the selection of an appropriate procurement method. This framework will
develop depending on survey results, literature review, and the experience of the
researcher and other procurement experts in construction management in Gaza Strip
in order to establish a model for the selection of procurement method in the future
studies.
3.7 Pilot study
A pilot study provides a trial run for the questionnaire, which involves testing
the wording of questions, identifying ambiguous questions, testing the technique that
used to collect the data. After the preliminary testing, a pilot study was conducted to
evaluate the questionnaire; the researcher distributed the questionnaire to a sample of
nine different local procurement experts and client's representative such as projects
manager and consulting office engineer to fill them. They have a strong practical
experience in procurement and construction management fields. Their sufficient
experiences are a suitable indication for pilot study. The purpose of this step is to
discover if the questions are well understandable or not, also to find out any
problem that may raise in filling the questionnaire. Generally speaking, it
appeared that respondents had no difficulty in understanding the items or the
instructions to complete the questionnaire. The following items are summary of the
main results obtained from pilot study:
1. Private clients and their representatives should be added as a respondent of
questionnaire,
2. Questionnaire should be started with a cover page explained the aim of the
questionnaire,
3. The first part of questionnaire should be general information about the
participants and their organizations,
56
4. Some sub-factors and sentences should be modified in order to give more clear
meaning and understanding,
5. Some sub-factors and sentences should be represented with more specific
details,
6. Some sub-factors were repeated more than one time with the same meaning. So,
it should be to eliminate these repeated factors,
7. Some sub-factors should be added as recommended by local procurement
experts which affect the selection of the procurement method in the Gaza Strip,
8. There are some parts of questionnaire required to be regulated well,
9. Some sub-factors should be rearranged in order to give more suitable and
consistent meaning.
3.8 Instrument validity
The questionnaire was reviewed by a group of experts in the field of the study. They
were requested to identify the internal validity and to what extent it was suitable
to be used as an instrument to realize the goals and aims of this research.
The group of procurement experts and client's representatives have agreed that the
questionnaire is suitable to achieve the studying goals with some amendments.
The researcher has made these amendments in the structure and language of the
questionnaire to be consistent with the local environment.
The validity content of the questionnaire was tested by many procurement experts and
client's representatives. Each of them has full information about the research objectives
and was requested to evaluate validity content for each item based on rating the
index of content validity.
The participants were then requested to rate each item based on relevance on the four
point ratings scale. The point scale developed by Yaghmaie (2003) as "1 = not
relevant; 2 = item need some revision; 3 = relevant but need minor revision; 4 = very
relevant". Based on comments of the experts some minor changes, modifications, and
addition were introduced to the questions.
57
3.8.1 Validity test
This section presents test of validity of questionnaire according to the pilot study.
Validity refers to the degree to which an instrument measures what it is supposed to
measure (Pilot and Hungler, 1985). Validity has a number of different aspects and
assessment approaches. Statistical validity is used to evaluate instrument validity, which
include criterion-related validity and construct validity.
To insure the validity of the questionnaire, two statistical tests should be applied. The
first test is Criterion-related validity test (Spearman test) which measures the correlation
coefficient between each paragraph in one field and the whole field. The second test is
structure validity test (Spearman test) that used to test the validity of the questionnaire
structure by testing the validity of each field and the validity of the whole questionnaire.
It measures the correlation coefficient between one filed and all the fields of the
questionnaire that have the same level of similar scale.
3.8.1.1 Criterion-related validity test
Internal consistency of the questionnaire is measured by a scouting sample, which
consisted of 30 questionnaires through measuring the correlation coefficients between
each paragraph in one factor and the whole factor.
To test criterion-related validity test, the correlation coefficient for each item of the
group factors and the total of the field is achieved. The results of criterion-related
validity test can be obtained with more details and tables as mentioned below.
Tables 3.3 through table 3.8 clarify the correlation coefficient for each paragraph of
each factor and the total of the factor. The p-values (Sig.) are less than 0.05, so the
correlation coefficients of this factor are significant at α = 0.05, so it can be said that the
paragraphs of each factor are consistent and valid to be measure what it was set for.
58
Table 3.3: Correlation coefficient of each paragraph of factors related to client and the total of this factor
* Correlation is significant at the 0.05 level
No. Item Spearman correlation
coefficient
P-Value
(Sig.)
1. Client's nature and culture (public or
private) 0.405 0.000*
2. Client reputation 0.706 0.000*
3. Client's experience in procurement
methods 0.753 0.000*
4. Client's trust in other parties 0.534 0.000*
5. Flexibility for changes and variations 0.585 0.000*
6. Client's financial capability 0.784 0.000*
7. Accountability 0.628 0.000*
8. The degree of desired client
involvement 0.595 0.000*
9. Availability of qualified personnel
(procurement staff) 0.789 0.000*
Table 3.4: Correlation coefficient of each paragraph of factors related to cost and the total of this factor
* Correlation is significant at the 0.05 level
No. Item Spearman correlation
coefficient
P-Value
(Sig.)
1. Price competition 0.666 0.000*
2. Design cost 0.767 0.000*
3. Consultant fees 0.771 0.000*
4. Price certainly prior to
commencement 0.740 0.000*
5. Cost control 0.548 0.000*
Table 3.5: Correlation coefficient of each paragraph of factors related to time and the total of this factor
* Correlation is significant at the 0.05 level
No. Item Spearman correlation
coefficient
P-Value
(Sig.)
1. Speed 0.640 0.000*
2. Minimize design time 0.309 0.005*
3. Time constrains of project 0.256 0.018*
4. Time control 0.703 0.000*
5. Delays in obtaining environmental
approval 0.745 0.000*
6. Delay in the project completion time 0.672 0.000*
7. Delivery time schedule 0.754 0.000*
Table 3.6: Correlation coefficient of each paragraph factors related to risk and the total of this factor
* Correlation is significant at the 0.05 level
No. Item Spearman correlation
coefficient
P-Value
(Sig.)
1. Risk avoidance/allocation 0.653 0.000*
2. Responsibility allocation 0.704 0.000*
3. Disputes & arbitration 0.836 0.000*
4. Geotechnical investigation 0.728 0.000*
59
Table 3.7: Correlation coefficient of each paragraph of factors related to project characteristics and the
total of this factor
* Correlation is significant at the 0.05 level
No. Item Spearman correlation
coefficient
P-Value
(Sig.)
1. Degree of project complexity 0.331 0.003*
2. Project type and nature 0.422 0.000*
3. Funding method 0.564 0.000*
4. Project site location 0.714 0.000*
5. Project size 0.470 0.000*
6. Project payments modality 0.701 0.000*
7. Quality level of project 0.699 0.000*
8. Project methodology 0.637 0.000*
9. Expected performance of project 0.653 0.000*
10. Available resources of project 0.619 0.000*
11. Constructability of design 0.508 0.000*
12. Project completion at estimated time 0.541 0.000*
13. Project completion at estimated cost 0.413 0.000*
Table 3.8: Correlation coefficient of each paragraph of factors related to external environment and the
total of this factor
* Correlation is significant at the 0.05 level
No. Item Spearman correlation
coefficient
P-Value
(Sig.)
1. Procurement policy 0.331 0.003*
2. Market completion/structure 0.661 0.000*
3. Market competitiveness 0.473 0.000*
4. Economic conditions 0.690 0.000*
5. Political considerations 0.528 0.000*
6. Social factors 0.685 0.000*
7. Environment impact 0.741 0.000*
8. Other parties involvement/role/
participation 0.379 0.001*
9. Commercial conditions 0.775 0.000*
10. Legal issues/factors 0.332 0.003*
11. Number of competitors 0.463 0.000*
12. Technology 0.775 0.000*
13. Stakeholder integration 0.816 0.000*
14. Worker conditions 0.744 0.000*
15. Material availability 0.687 0.000*
16. Local authorities approval 0.589 0.000*
3.8.1.2 Structure validity test
Structure validity is the second statistical test that used to test the validity of the
questionnaire structure by testing the validity of each factor and the validity of the
whole questionnaire. It measures the correlation coefficient between one factor and all
60
the factors of the questionnaire that have the same level of liker scale. In another
meaning, it is assessed the fields structure validity by calculating the correlation
coefficients of each field of the questionnaire and the whole of questionnaire.
Table 3.9: Correlation coefficient of each field and the whole of questionnaire
* Correlation is significant at the 0.05 level
P-Value
(Sig.)
Spearman correlation
coefficient Field No.
0.000** 0.632 Factors related to client 1
0.000** 0.666 Factors related to cost 2
0.000** 0.644 Factors related to time 3
0.000** 0.708 Factors related to risk 4
0.000** 0.833 Factors related to project characteristics 5
0.000** 0.873 Factors related to external environment 6
Table 3.9 clarifies the correlation coefficient for each filed and the whole questionnaire.
The p-values (Sig.) are less than 0.05, so the correlation coefficients of all the fields are
significant at α = 0.05, so it can be said that the fields are valid to measure what it was
set for to achieve the main aim of the study.
3.9 Instrument (Questionnaire) reliability
The reliability of an instrument is the degree of consistency which measures the
attribute; it is supposed to be measuring (Polit and Hunger,1985). The less variation an
instrument produces in repeated measurements of an attribute, the higher its reliability.
Reliability can be equated with the stability, consistency, or dependability of a
measuring tool. The test is repeated to the same sample of people on two occasions and
then compares the scores obtained by computing a reliability coefficient (Polit and
Hunger, 1985).
The value of the reliability coefficient theoretically can range between -1.00 and
+1.00. For most purposes, reliability coefficients above 0.7 are considered
satisfactory (Polit and Hungler, 1999). The reliability coefficient was calculated
which indicated a high level of reliability. For more accuracy, reliability coefficient
was calculated for important parts.
61
This section presents test of reliability of questionnaire according to the pilot study.
Reliability of internal consistency was used to test the reliability of the research
questionnaire.
The reliability coefficient of the scale was established by Chronbach‟s alfa using
SPSS package. Chronbach's alpha method is used to measure the reliability of the
questionnaire between each factor and the mean of the whole factors of the
questionnaire. The normal range of Cronbach‟s coefficient alpha value between 0.0 and
+ 1.0, and the higher values reflects a higher degree of internal consistency. The
Cronbach‟s coefficient alpha was calculated for each factor of the questionnaire.
The formula that determines alpha is fairly simple and makes use of the items
(variables), k, in the scale and the average of the inter-item correlations, r
As the number of items (variables) in the scale (k) increases the value α becomes large.
Also, if the intercorrelation between items is large, the corresponding α will also be
large.
Since the alpha value is inflated by a large number of variables then there is no set
interpretation as to what is an acceptable alpha value. A rule of thumb that applies to
must situations is:
The Chronbach's coefficient alpha was calculated for each field of the questionnaire.
The most identical values of alpha indicate that the mean and variances in the original
scales do not differ much, and thus standardization does not make a great difference in
alpha.
Table 3.10 shows the values of Chronbach's Alpha for each factor of the questionnaire
and the entire questionnaire. For the fields, values of Chronbach's Alpha were in the
range from 0.697 and 0.897. This range is considered high; the result ensures the
62
reliability of each field of the questionnaire. Chronbach's Alpha equals 0.929 for the
entire questionnaire which indicates an excellent reliability of the entire questionnaire.
Table 3.10: Reliability coefficient for the questionnaire
Chronbach's Alpha Field No.
0.823 Factors related to client 1
0.760 Factors related to cost 2
0.697 Factors related to time 3
0.728 Factors related to risk 4
0.836 Factors related to project characteristics 5
0.897 Factors related to external environment 6
0.929 All factors
Thereby, it can be said that it is proved that the questionnaire is valid, reliable, and
ready for distribution for the population sample.
3.10 Research sample
The target groups in this study are client's of construction projects and their
representatives. Accordingly, there are two types of population were considered in this
study. The first population is the procurement specialists as client's representative,
who were worked in different organizations in the Gaza Strip in construction field.
The second population is the Engineering Offices, who were assigned by the
clients to manage and supervise of construction projects and these offices registered by
the Engineers' Association in Gaza Strip. According to the Engineers' Association in
Gaza Strip in the beginning of January 2013, the total number of these engineering
offices is 120 offices and they are classified as follows: the first class has 77
offices; and the second class has 43 offices. The researcher targeting only the first
class of engineers' offices because they have a good experience in procurement method
management for a whole large construction projects in the Gaza Strip.
3.11 Sample size, questionnaire distribution and collecting data
For the first population, the number is determined by the researcher as not large as
there are 34 procurement specialists worked in different organizations who owned a
63
large construction projects in Gaza Strip. So it is not required to determine sample size
and it can be selected all of 34 procurement specialists as client's representative and the
whole population was taken as the concerned sample size.
To choose the sample size from the second population which is the first class of
engineers' offices in Gaza Strip (77 offices), the formula of Kish equation (1965) can
be used. The sample size can be calculated as shown below for 94% confidence level
(Assaf et al., 2001; Israel, 2003; Moore et al., 2003)
n= n'/ [1+(n'/N)] (Kish equation)
Where:
N = total number of population
n= sample size from finite population
n' = sample size from infinite population = S²/V²; where S² is the variance of the
population elements and V is a standard error of sampling population. (Usually
S = 0.5 and V = 0.06)
So, for 77 first class of engineers' consulting offices:
n= n'/ [1+(n'/N)]
n'= S²/V² = (0.5)²/(0.06)² = 69.44
N = 77
n= 69.44/ [1+(69.44 / 77)] = 37
This means that the questionnaire should be distributed to 37 first class of engineers'
consulting offices in order to achieve 94% confidence level.
According to previous results of sample sizes, 84 questionnaires were distributed as
follows: 34 to procurement specialists and 50 to engineers' consulting offices. 68
questionnaires were received (81%) as follows: 29 (85%) from procurement specialists
and 39 (78%) from engineers' consulting offices as respondents. These percentages are
shown in Table 3.11.
Table 3.11 : Percentages of received questionnaires
Type Concerned
sample size
No. of
respondents Percentage
Procurement specialists 34 29 85 %
Engineers' consulting offices 50 39 78 %
Total 84 68 81 %
64
These respondents are procurement manager, procurement assistant, projects manager,
construction managers, director or vice director, consultant and others, as they have a
practical experience in procurement and construction industries fields. Their sufficient
experiences are a suitable indication to find out the perceptive of the relative importance
of each factor affecting the selection of procurement method. Their experiences
included many construction fields such as buildings, roads, water and sewage projects.
Table 3.12 shows summary for frequency of job title of the respondents.
Table 3.12: Frequency of job title of the respondents
Position Frequency Percent
Director/Vice director 16 23.5
Procurement manager 19 27.9
Procurement assistant 8 11.8
Consultant 11 16.2
Projects Manager 9 13.2
Other 5 7.4
Total 68 100.0
3.12 Method of data analysis
In order to be able to select the appropriate method of analysis, the level of
measurement must be understood. For each type of measurement, there is/are an
appropriate method/s that can be applied and not others. In this research, ordinal scales
were used. Ordinal scale as shown in Table 3.13 is a ranking or a rating data that
normally uses integers in ascending or descending order. The numbers assigned to the
important (1, 2, 3, 4, 5) do not indicate that the interval between scales are equal, nor do
they indicate absolute quantities. They are merely numerical labels. Likert scale is
shown in Table 3.13 (Cheung et al, 2004; Iyer and Jha, 2005; Ugwu and Haupt, 2007)
Table 3.13: Ordinal scale used for data measurement
Very low
important
Low
important
Medium
important
High
important
Very high
important Item
1 2 3 4 5 Scale
65
After collecting the data from questionnaire which distributed to client representatives,
the data was analyzed and the result documented, the analysis concentrate on two
directions which the first one is to identify and rank of the factors that affecting the
selection of procurement method in construction projects in Gaza Strip, and the second
one is to assistance in future studies to develop strategies to build a model to select the
best procurement method in construction projects in Gaza Strip.
Furthermore, the data was analyzed using SPSS package. As will be discussed in
Chapter 4, descriptive statistics such as frequency and percentage were computed for
each item in the questionnaire. Factor Analysis was performed to allow finding a small
number of underlying dimensions from among a large number of variables.
66
CHAPTER 4
RESULTS AND DISCUSSION
4.1 Introduction
This chapter discusses the results that have been deduced from a field survey of 68
questionnaires, 39 consultant respondents from engineer's consulting offices, and 29
procurement specialist respondents. Part one will present the profiles and all necessary
information about the respondents, part two and three were designed to identify and
rank the most common main factors and sub-factors affecting the selection of
procurement method in construction projects in Gaza Strip, and part four will discuss
the questions of the major practices of procurement methods used in Gaza Strip
construction industry. The results obtained are compared with the relevant literatures
and the researcher comments are added.
4.2 Part one: Organizational profiles
This section mainly designed to provide general information about the respondents in
terms of position, years of experience, qualifications, type of institutions, and the type
of projects.
4.2.1 Position of respondent
Table 4.1 shows the frequency and percent of job title of the respondent that are 23.5 %
were director or vice director, 27.9% of respondents were procurement managers,
11.8% of respondents were procurement assistants, 16.2% of respondents were
consultants, and 13.2% of respondents were projects manager. It can be seen that more
than 69.1% of the respondents have a good procurement experiance which support the
quality of gained information.
Table 4.1: Frequency and percent of position of the respondents
Position Frequency Percent %
Director/Vice director 16 23.5
Procurement manager 19 27.9
Procurement assistant 8 11.8
Consultant 11 16.2
Projects manager 9 13.2
Others 5 7.4
Total 68 100.0
67
4.2.2 Experience years of the respondents
Experience as a general concept comprises knowledge of or skill in or observation of
some thing or some event gained through involvement in or exposure to that thing or
event.
Table 4.2 shows that, 10.3% of the respondents have years of experience between 1 -
less than 5 years, 32.4 % of the respondents have years of experience between 5 - less
than 10 years, and it can be seen that respondents with an experience more than 10 years
have the highest percentage (57.3 %), which is cross checked with the obtained results
in the position of the respondent (more than 69.1% of the respondents have a good
procurement experiance). This gives a good indicator that the respondents have a good
experience in procurement field. Moreover, the variety of experiences between each
group will enrich the research with different knowledge and information.
Table 4.2: Experience years of respondents
Years of experience in the line of work Frequency Percent %
From 1 to less than 5 years 7 10.30
From 5 to less than 10 years 22 32.40
From 10 to less than 15 years 7 10.30
From 15 to 20 years 20 29.40
More than 20 years 12 17.60
Total 68 100.0
4.2.3 Qualification of the respondents
As depicted in Table 4.3 below, it is clear that 38.2% of the respondents have a
master degree while the most of the respondents have a bachelor's degree. This result
also support the quality of gained information from respondents who are almost
qualified and experienced.
Table 4.3: Qualification of respondents
Qualification Frequency Percent %
PhD 0 0.00
Master 26 38.20
B.Sc 42 61.80
Diploma 0 0.00
Total 68 100.0
68
4.2.4 Type of institution
Table 4.4 shows that, 11.8 % of the respondents are governmental, 16.2% of the
respondents are international institution, 7.4 % are NGO‟s, 10.3% are municipalities,
and the most representitive type are engineer's consulting offices which represent 54.4%
from the total sample. Private sector such as investor companies doesn‟t participate in
this questionnaire. It is important to point that most of the constructed projects were
designed, procused, and supervised by engineer's consulting offices. The high
percentage of this category reflects a good indicator to ensure from quality
information beside the other general information.
Table 4.4: Type of institutions
Institution type Frequency Percent %
Governmental 8 11.80
International 11 16.20
Non-governmental (NGO) 5 7.40
Municipality 7 10.30
Private sector 0 0.00
Consultancy office 37 54.40
Total 68 100.0
4.2.5 Type of projects the organizations are dealing with
Table 4.5 shows that (89.4%) of the surveyed organizations are dealing with both
building construction and infrastructure projects (Roads, water, and sewage) as those
two fields are the prevailing construction fields in Gaza Strip.
Furthermore, Table 4.5 demonstrates that (36.20%) from respondents are involved,
in a way or another, in building works, (21.30%) are involved in roads works,
(31.90%) are involved in water and sewerage works, and only (10.60%) are involved
in electro mechanics works.
Table 4.5: Type of projects the organizations are dealing with
Type of projects your organization dealing with Frequency Percent %
Buildings 51 36.20
Roads 30 21.30
Water & Sewage 45 31.90
Electro mechanics 15 10.60
Total 141 100.0
69
4.2.6 Value of projects executed in the last five years
From Table 4.6, it is noticed that only (30.9%) of the organizations have executed a
volume of work with a value more than or equal 10 million dollars which means
that most of executed projects are mainly small size compared to wide world
construction projects. This is mainly because of the unfavorable political and
economical situation in Gaza Strip last 5 years.
In addition, the Table shows that (17.6%) of organizations executed projects with a
value of less than 2 million dollars, during the last five years. (30.9%) of
organizations executed projects with a value between 2 and less than 5 million
dollars, and (20.6%) of organizations executed projects with a value between 5
and less than 10 million dollars.
Table 4.6: Value of implemented projects during the last five years
Value of implemented projects during the last five years Frequency Percent %
1 – less than 2M 12 17.60
2 – less than 5M 21 30.90
5 – less than 10 M 14 20.60
More than or equal 10 M 21 30.90
Total 68 100.0
4.3 Part two: Factors affecting the selection of procurement method
4.3.1 Main factor groups affecting the selection of procurement method
This part consists of results and discussion of main factors that affecting the selection of
procurement method in Gaza Strip. These factors were grouped into six groups. The
first group is related to client factors. The second group is related to cost factors. The
third group is related to time factors. The fourth group is related to risk factors. The fifth
group is related to project characteristics factors. The last group is related to the external
environment factors.
The results of this part of study provide an indication of the relative importance index
and rank of the major groups affecting the seletion of procurement method in Gaza
Strip. Table 4.7 shows summary of major groups ranking according to each type of
target group and Table 4.8 shows summary of ranking according to all respondents.
70
Table 4.7: RII and rank for the main factors for each type of target group
No. Factor groups
Procurement
specialist
Engineer's
consulting office
RII
(%) Rank
RII
(%) Rank
1. Factors related to client 75.60 1 76.83 1
2. Factors related to cost 74.42 3 73.43 2
3. Factors related to time 73.40 4 64.41 5
4. Factors related to risk 73.24 5 71.78 4
5. Factors related to project characteristics 75.08 2 72.00 3
6. Factors related to external environment 67.41 6 62.42 6
All factors 72.42 69.06
Table 4.8: RII and rank for the main factors for all responses
No Factor groups Mean RII
(%) P-value Rank
1. Factors related to client 3.82 76.33 0.000 1
2. Factors related to cost 3.69 73.82 0.000 2
3. Factors related to project characteristics 3.66 73.30 0.000 3
4. Factors related to risk 3.62 72.44 0.000 4
5. Factors related to time 3.41 68.21 0.000 5
6. Factors related to external environment 3.23 64.51 0.025 6
Mean Value 3.52 70.49 0.000
From Tables 4.7 & 4.8 mentioned above, it is noticed that factors related to client group
has been ranked by the all respondents in the first position with RII equal 76.33%. At
the same time, it has been also ranked by the procurement specialist respondents and
engineer's consulting offices respondents in the first position with RII equal 75.60%
and 76.83% respectively. This group is the most important one for all
respondents and it is obtained that this factor group has a similar importance for
each target group because procurement specialists and consultants are usually
interested with client requirements. This is mainly due to financing issues and
client interference which are considered very important by consultants and this is
related to client satisfaction. In addition, all respondents remarked that factors related
to client characteristics is an important indicator affecting strongly the selection of an
appropriate procurement method. Shiyamini and Rameezdeen (2007) are in agreement
with this result as client requirements group ranked in the first position and it affects
strongly the selection of procurement method. The researcher illustrated that this group
71
can be one of the most important group at macro level in the procurement selection
process. Mahon (2011) are agree to a certain extent with this result as he ranked client
factors group in the third position and he stated that this group was an important
parameter in terms of client experience and client requirement for value for money.
Factors related to cost group has been ranked by the all respondents in the second
position with RII equal 73.82%. It has been ranked by the procurement specialist
respondents in the third position with RII equal 74.42% and has been ranked by
the engineer's consulting offices respondents in the second position with RII equal
73.43%. This group is more important for consulting offices than for others because
liquidity of organization, design cost, and consultant fees affect the project cost and
this is related to client satisfaction. Mahon (2011) are in line with this result as
factors related to cost group affects strongly the selection of procurement method
and the researcher confirmed that the procurement selection parameter of budget/cost
requirements was universally rated as the single most influential parameter and was
considered as most important criteria for judgment on procurement route selection. This
was closely followed by time factors. These two parameters were clearly rated as being
the most influential in terms of procurement selection.
Factors related to project characteristics group has been ranked by the all respondents in
the third position with RII equal 73.30%. It has been ranked by the procurement
specialist respondents in the second position with RII equal 75.08%. While it has
been ranked by the engineer's consulting offices respondents in the third position with
RII equal 72.00%. It is not surprising to observe that this group is the most important
one for procurement specialists than for consulting offices because the procurement
specialist is concerned more with project properties such as project funding method,
degree of project complexity, and project payments modality when the selectin of an
approperate procurement method while consultants considered the client and technical
factors to be more important than project characteristics ones. Shiyamini et al., (2007)
are agree to a certain extent with this result as he ranked project characteristics group in
the second position and he stated that this group was also an important parameter in
terms of project type and complexity. Eyitope et al. (2012) remarked that the project
characteristics factor as type and complexity of the project affects the selection of
procurement method. Mortledge et al., (2006) summarized that the project
72
chasacteristics group as the project size, complexity, location and uniqueness should be
considered as influence other factors as time, cost and risk factors. Love et al. (2008)
finds that the project characteristics factor is the first important selection criteria and
this result is differ slightly from the result of this study and this is because of the
difference in degree of projects nature, type, complexity, and location between Gaza
Strip and other countries.
Factors related to external environment group is has been ranked by the all respondents
in the sixth and last position with RII equal 64.51%. Also, it has been ranked by the
procurement specialist respondents and the engineer's consulting offices respondents in
the sixth and last position with RII equal 67.41% and 62.42% respectively. It is
obtained that this group is not important for all respondents and it rarely considered
for clients and their representitives when the selection of procurement method because
of unspect and unstable political and ecomomical situations in the Gaza Strip.
Shiyamini and Rameezdeen (2007) are disagree with this result as he ranked external
environment group in the third position and he stated that this group was also an
important parameter and it is one of set of procurement selection indicators. This
differencation in findings is related to stable fund, political and ecomomical situations
in western countries when compared to Gaza Strip situation.
4.3.2 The relationship among the selection of procurement method groups
This part discusses the significant correlation among the main groups affecting the
selection of procurement method in the Gaza Strip.
Table 4.9 shows that the correlation coefficient is statistically significant at α = 0.05
among these groups: “factors related to client”, “factors related to cost”, “factors related
to time”, “factors related to risk”, “factors related to project characteristics”, and
“factors related to external environment”groups because the p-value (Sig.) is less than
0.05. In summary, the result indicates that there is a statistically significant correlation
at α = 0.05 among all the main groups.
73
Table 4.9: Correlation coefficient among main groups affecting procurement method selection
Factors Client Cost Time Risk Project
characteristics
External
environment
Client
Pearson
Correlation 1
Sig.
Cost
Pearson
Correlation 0.593 1
Sig. 0.000*
Time
Pearson
Correlation 0.191 0.399 1
Sig. 0.010 0.000*
Risk
Pearson
Correlation 0.427 0.528 0.406 1
Sig. 0.000* 0.000* 0.000*
Project
characteristics
Pearson
Correlation 0.467 0.448 0.362 0.432 1
Sig. 0.000* 0.000* 0.001* 0.000*
External
environment
Pearson
Correlation 0.307 0.391 0.584 0.467 0.717 1
Sig. 0.005* 0.000* 0.000* 0.000* 0.000*
4.4 Part three: sub-factors affecting the selection of procurement method
4.4.1 Group one: sub-factors related to client
The relative importance index (RII) and rank of sub-factors related to client are
summarized in Table 4.10
Table 4.10: RII and the rank for “Factors related to client”
*The mean is significantly different from 3
No. Paragraph Mean RII
(%) P-value Rank
1. Client's financial capability 4.29 85.88 0.000* 1
2. Client's experience in procurement
methods 4.25 85.00 0.000* 2
3. Availability of qualified personnel
(procurement staff) 4.24 84.71 0.000* 3
4. The degree of desired client
involvement 3.72 74.41 0.000* 4
5. Accountability 3.69 73.82 0.000* 5
6. Flexibility for changes and variations 3.66 73.13 0.000* 6
7. Client reputation 3.63 72.65 0.000* 7
8. Client's trust in other parties 3.62 72.35 0.000* 8
9. Client's nature and culture (public or
private) 3.24 64.78 0.018* 9
Average 3.82 76.33
74
From Table 4.10, client's financial capability sub-factor has been ranked by the all
respondents in the first position with RII equals 85.88%, Mean = 4.29, and P-value =
0.000 which is smaller than the level of significance 0.05 . The sign of the test is
positive, so the mean of this sub-factor is significantly greater than the hypothesized
value 3. We conclude that the respondents agreed that this sub-factor is the most
important one in factors related to client group.
Client's experience in procurement methods sub-factor has been ranked by the all
respondents in the second position with RII equals 85.00%, Mean = 4.25, and P-value =
0.000 which is smaller than the level of significance 0.05 . The sign of the test is
positive, so the mean of this sub-factor is significantly greater than the hypothesized
value 3. We conclude that the respondents agreed that this sub-factor is very important
factor in client group.
Client's nature and culture (public or private) sub-factor has been ranked by the all
respondents in the ninth position (The last position) with RII equals 64.78%, Mean =
3.24, and P-value = 0.018 which is smaller than the level of significance 0.05 . The
sign of the test is positive, so the mean of this paragraph is significantly greater than the
hypothesized value 3.
4.4.2 Group two: sub-factors related to cost
The relative importance index (RII) and rank of sub-factors related to cost are
summarized in Table 4.11.
Table 4.11: RII and rank for “Factors related to cost”
*The mean is significantly different from 3
No. Paragraph Mean RII
(%) P-value Rank
1. Price competition 4.49 89.80 0.000* 1
2. Price certainly prior to commencement 3.90 77.94 0.000* 2
3. Design cost 3.59 71.76 0.000* 3
4. Cost control 3.40 67.94 0.000* 4
5. Consultant fees 3.10 62.06 0.141 5
Average 3.69 73.82
From Table 4.11, price competition sub-factor has been ranked by the all respondents in
the first position with RII equals 89.80%, Mean = 4.49, and P-value = 0.000 which is
75
smaller than the level of significance 0.05 . The sign of the test is positive, so the
mean of this sub-factor is significantly greater than the hypothesized value 3. We
conclude that the respondents agreed that this sub-factor is the most important one in
factors related to cost group.
Price certainly prior to commencement sub-factor has been ranked by the all
respondents in the second position with RII equals 77.94%, Mean = 3.90, and P-value =
0.000 which is smaller than the level of significance 0.05 . The sign of the test is
positive, so the mean of this sub-factor is significantly greater than the hypothesized
value 3. We conclude that the respondents agreed that this sub-factor is very important
factor in cost group.
Consultant fees sub-factor has been ranked by the all respondents in the fifth position
(The last position) with RII equals 62.06%, Mean = 3.10, and P-value = 0.141 which is
greater than the level of significance 0.05 . Then the mean of this sub-factor is
insignificantly different from the hypothesized value 3. We conclude that the
respondents agreed that this sub-factor is not important factor in cost group.
4.4.3 Group three: sub-factors related to time
The relative importance index (RII) and rank of sub-factors related to time are
summarized in Table 4.12.
Table 4.12: RII and rank for “Factors related to time”
*The mean is significantly different from 3
No. Paragraph Mean RII
(%) P-value Rank
1. Time constrains of project 4.35 87.00 0.000* 1
2. Minimize design time 3.72 74.41 0.000* 2
3. Speed 3.56 71.18 0.000* 3
4. Time control 3.35 67.06 0.002* 4
5. Delay in the project completion time 3.35 67.06 0.009* 5
6. Delivery time schedule 2.81 56.18 0.097 6
7. Delays in obtaining environmental
approval 2.71 54.12 0.013* 7
Average 3.41 68.21
From Table 4.12, time constrains of project sub-factor has been ranked by the all
respondents in the first position with RII equals 87.00%, Mean = 4.35, and P-value =
76
0.000 which is smaller than the level of significance 0.05 . The sign of the test is
positive, so the mean of this sub-factor is significantly greater than the hypothesized
value 3. We conclude that the respondents agreed that this sub-factor is the most
important one in factors related to time group.
Minimize design time sub-factor has been ranked by the all respondents in the second
position with RII equals 74.41%, Mean = 3.72, and P-value = 0.000 which is smaller
than the level of significance 0.05 . The sign of the test is positive, so the mean of
this sub-factor is significantly greater than the hypothesized value 3. We conclude that
the respondents agreed that this sub-factor is very important factor in time group.
Delays in obtaining environmental approval sub-factor has been ranked by the all
respondents in the seventh position (The last position) with RII equals 54.12%, Mean =
2.71, and P-value = 0.013 which is smaller than the level of significance 0.05 . The
sign of the test is negative, so the mean of this sub-factor is significantly smaller than
the hypothesized value 3. We conclude that the respondents agreed that this sub-factor
is not important factor in time group.
4.4.4 Group four: sub-factors related to risk
The relative importance index (RII) and rank of sub-factors related to risk are
summarized in Table 4.13
Table 4.13: RII and rank for “Factors related to risk”
*The mean is significantly different from 3
No. Paragraph Mean RII
(%) P-value Rank
1. Risk avoidance/allocation 4.16 83.28 0.000* 1
2. Responsibility allocation 4.03 80.60 0.000* 2
3. Disputes & arbitration 3.53 70.61 0.000* 3
4. Geotechnical investigation 2.75 54.93 0.021 4
Average 3.62 72.44
From Table 4.13, risk avoidance/allocation sub-factor has been ranked by the all
respondents in the first position with RII equals 83.28%, Mean = 4.16, and P-value =
0.000 which is smaller than the level of significance 0.05 . The sign of the test is
positive, so the mean of this sub-factor is significantly greater than the hypothesized
77
value 3. We conclude that the respondents agreed that this sub-factor is the most
important one in factors related to risk group.
Responsibility allocation sub-factor has been ranked by the all respondents in the
second position with RII equals 80.60%, Mean = 4.03, and P-value = 0.000 which is
smaller than the level of significance 0.05 . The sign of the test is positive, so the
mean of this sub-factor is significantly greater than the hypothesized value 3. We
conclude that the respondents agreed that this sub-factor is very important factor in risk
group.
Geotechnical investigation sub-factor has been ranked by the all respondents in the
fourth position (The last position) with RII equals 54.93%, Mean = 2.75, and P-value =
0.021 which is smaller than the level of significance 0.05 . The sign of the test is
negative, so the mean of this sub-factor is significantly smaller than the hypothesized
value 3. We conclude that the respondents agreed that this sub-factor is not important
factor in risk group.
4.4.5 Group five: sub-factors related to project characteristics
The relative importance index (RII) and rank of sub-factors related to project
characteristics are summarized in Table 4.14.
Table 4.14: RII and rank for “Factors related to project characteristics”
*The mean is significantly different from 3
No. Paragraph Mean RII
(%) P-value Rank
1. Degree of project complexity 4.43 88.53 0.000* 1
2. Project size 4.31 86.18 0.000* 2
3. Project type and nature 4.10 82.00 0.000* 3
4. Project completion at estimated cost 3.85 77.01 0.000* 4
5. Constructability of design 3.84 76.76 0.000* 5
6. Quality level of project 3.78 75.52 0.000* 6
7. Project completion at estimated time 3.61 72.24 0.000* 7
8. Funding method 3.57 71.47 0.000* 8
9. Available resources of project 3.50 70.00 0.000* 9
10. Project payments modality 3.31 66.18 0.007* 10
11. Expected performance of project 3.22 64.41 0.009* 11
12. Project site location 3.04 60.88 0.261 12
13. Project methodology 2.97 59.39 0.371 13
Average 3.66 73.30
78
From Table 4.14, degree of project complexity sub-factor has been ranked by the all
respondents in the first position with RII equals 88.53%, Mean = 4.43, and P-value =
0.000 which is smaller than the level of significance 0.05 . The sign of the test is
positive, so the mean of this sub-factor is significantly greater than the hypothesized
value 3. We conclude that the respondents agreed that this sub-factor is the most
important one in factors related to project charactristics group.
Project size sub-factor has been ranked by the all respondents in the second position
with RII equals 86.18%, Mean = 4.31, and P-value = 0.000 which is smaller than the
level of significance 0.05 . The sign of the test is positive, so the mean of this sub-
factor is significantly greater than the hypothesized value 3. We conclude that the
respondents agreed that this sub-factor is very important factor in project charactristics
group.
Project methodology sub-factor has been ranked by the all respondents in the thirteenth
position (The last position) with RII equals 59.39%, Mean = 2.97, and P-value = 0.371
which is greater than the level of significance 0.05 . Then the mean of this sub-factor
is insignificantly different from the hypothesized value 3. We conclude that the
respondents agreed that this sub-factor is not important factor in project charactristics
group.
4.4.6 Group six: sub-factors related to external environment
The relative importance index (RII) and rank of sub-factors related to external
environment are summarized in Table 4.15
79
Table 4.15: RII and rank for “Factors related to external environment”
*The mean is significantly different from 3
No. Paragraph Mean RII
(%) P-value Rank
1. Availability of procurement system in the
local market 4.07 81.47 0.000* 1
2. Procurement policy 4.00 80.00 0.000* 2
3. Legal issues/factors 3.99 79.71 0.000* 3
4. Market competitiveness 3.78 75.59 0.000* 4
5. Other parties involvement/role/participation 3.35 67.06 0.000* 5
6. Political considerations 3.31 66.18 0.005* 6
7. Market completion/structure 3.15 62.94 0.196 7
8. Economic conditions 3.12 62.35 0.162 8
9. Number of competitors 3.10 62.06 0.437 9
10. Commercial conditions 3.03 60.59 0.350 10
11. Worker conditions 3.00 60.00 0.280 11
12. Technology 2.90 57.94 0.313 12
13. Material availability 2.81 56.18 0.072 13
14. Stakeholder integration 2.74 54.71 0.028* 14
15. Environment impact 2.66 53.24 0.001* 15
16. Social factors 2.57 51.47 0.001* 16
Average 3.23 64.51
From Table 4.15, availability of procurement system in the local market sub-factor has
been ranked by the all respondents in the first position with RII equals 81.47%, Mean =
4.07, and P-value = 0.000 which is smaller than the level of significance 0.05 . The
sign of the test is positive, so the mean of this sub-factor is significantly greater than the
hypothesized value 3. We conclude that the respondents agreed that this sub-factor is
the most important one in factors related to external environment group.
Procurement policy sub-factor has been ranked by the all respondents in the second
position with RII equals 80.00%, Mean = 4.00, and P-value = 0.000 which is smaller
than the level of significance 0.05 . The sign of the test is positive, so the mean of
this sub-factor is significantly greater than the hypothesized value 3. We conclude that
the respondents agreed that this sub-factor is very important factor in external
environment group.
Social factors sub-factor has been ranked by the all respondents in the sixteenth position
(The last position) with RII equals 51.47%, Mean = 2.57, and P-value = 0.001 which is
smaller than the level of significance 0.05 . The sign of the test is negative, so the
mean of this sub-factor is significantly smaller than the hypothesized value 3. We
80
conclude that the respondents agreed that this sub-factor is not important factor in
external environment group.
4.4.7 Ranking of sub-factors affecting the selection of procurement
method in the Gaza Strip
The relative importance index (RII) and rank of each of the sub-factors affecting the
selection of procurement method in construction projects in the Gaza Strip are
presented in Table 4.16 according to all respondents and each type of target group
Table 4.16: RII for sub-factors affecting the selection of procurement method
No. Factor Procurement
specialist
Engineers
consulting office All respondents
RII (%) Rank RII (%) Rank RII (%) Rank
1 Price competition 91.00 1 88.80 1 89.80 1
2 Degree of project complexity 89.60 2 87.60 4 88.60 2
3 Time constrains of project 85.80 6 88.20 3 87.00 3
4 Project size 87.60 3 85.40 5 86.20 4
5 Client's financial capability 86.80 4 85.20 6 85.80 5
6 Client's experience in
procurement methods 84.80 7 85.20 6 85.00 6
7 Availability of qualified
personnel (procurement staff) 80.80 9 88.60 2 84.80 7
8 Risk avoidance/allocation 84.20 8 82.60 9 83.20 8
9 Project type and nature 86.00 5 80.60 11 82.00 9
10 Availability of procurement system
in the local market 80.60 10 82.00 10 81.40 10
11 Responsibility allocation 77.20 18 83.00 8 80.60 11
12 Procurement policy 80.40 11 79.40 15 80.00 12
13 Legal issues/factors 79.40 13 80.00 13 79.80 13
14 Price certainly prior to
commencement 76.60 20 79.60 14 78.00 14
15 Project completion at estimated
cost 78.00 16 76.40 17 77.00 15
16 Constructability of design 72.40 25 80.00 12 76.80 16
17 Market competitiveness 77.20 17 74.40 22 75.60 17
18 Quality level of project 77.20 18 74.40 20 75.60 18
19 Minimize design time 74.40 22 74.40 20 74.40 19
20 The degree of desired client
involvement 71.00 30 77.00 16 74.40 20
21 Accountability 78.00 15 70.80 26 73.80 21
22 Flexibility for changes and
variations 73.20 24 73.20 23 73.20 22
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No. Factor Procurement
specialist
Engineers
consulting office All respondents
RII (%) Rank RII (%) Rank RII (%) Rank
23 Client reputation 69.60 33 74.80 18 72.60 23
24 Client's trust in other parties 69.00 34 74.80 19 72.40 24
25 Project completion at estimated
time 72.40 26 72.20 25 72.20 25
26 Design cost 71.00 29 72.40 24 71.80 26
27 Funding method 78.60 14 66.20 30 71.40 27
28 Speed 79.40 12 65.20 33 71.20 28
29 Disputes & arbitration 73.60 23 68.40 28 70.60 29
30 Available resources of project 72.40 27 68.20 29 70.00 30
31 Cost control 70.40 32 66.20 32 68.00 31
32 Time control 75.20 21 61.00 38 67.00 32
33 Other parties
involvement/role/participation 64.80 42 68.80 27 67.00 32
34 Delay in the project completion
time 71.80 28 63.60 36 67.00 34
35 Project payments modality 68.20 35 64.60 34 66.20 35
36 Political considerations 66.20 37 66.20 31 66.20 35
37 Client's nature and culture
(public or private) 67.80 36 62.60 37 64.80 37
38 Expected performance of
project 64.80 41 64.20 35 64.40 38
39 Market completion/structure 70.40 31 57.40 44 63.00 39
40 Economic conditions 65.60 39 60.00 40 62.40 40
41 Consultant fees 63.40 45 61.00 39 62.00 41
42 Number of competitors 65.60 38 59.40 41 62.00 42
43 Project site location 63.40 44 59.00 42 60.80 43
44 Commercial conditions 63.40 45 58.40 43 60.60 44
45 Worker conditions 64.80 42 56.40 45 60.00 45
46 Project methodology 63.40 47 56.20 46 59.40 46
47 Technology 62.80 48 54.40 47 58.00 47
48 Delivery time schedule 65.60 39 49.20 51 56.20 48
49 Material availability 61.40 49 52.40 49 56.20 48
50 Geotechnical investigation 57.80 53 52.80 48 55.00 50
51 Stakeholder integration 58.60 51 51.80 50 54.80 51
52 Delays in obtaining
environmental approval 61.40 49 48.80 53 54.20 52
53 Environment impact 58.60 52 49.20 52 53.20 53
54 Social factors 55.80 54 48.20 54 51.40 54
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From Table 4.16, the most important factors agreed by the procurement specialists,
engineer's consultant offices, and all respondents as the sub-factors affecting the
selection of procurement method in the Gaza Strip were: price competition; degree
of project complexity; time constrains of project; project size; client's financial
capability; client's experience in procurement methods; availability of qualified
personnel (procurement staff); risk avoidance/allocation; project type and nature; and
availability of procurement system in the local market. This can be summarized and
shown by Table 4.17.
Table 4.17: The top ten significant sub-factors affecting the selection of procurement method
No. Factor
Procurement
specialist
Engineers
consulting office
All
respondents
RII
(%) Rank RII (%) Rank
RII
(%) Rank
1 Price competition 91.00 1 88.80 1 89.80 1
2 Degree of project
complexity 89.60 2 87.60 4 88.60 2
3 Time constrains of
project 85.80 6 88.20 3 87.00 3
4 Project size 87.60 3 85.40 5 86.20 4
5 Client's financial
capability 86.80 4 85.20 6 85.80 5
6 Client's experience in
procurement methods 84.80 7 85.20 6 85.00 6
7 Availability of qualified
personnel (procurement
staff) 80.80 9 88.60 2 84.80 7
8 Risk avoidance/allocation 84.20 8 82.60 9 83.20 8
9 Project type and nature 86.00 5 80.60 11 82.00 9
10 Availability of
procurement system in
the local market 80.60 10 82.00 10 81.40 10
According to procurement specialists, engineer's consulting offices, and all respondents;
it was obtained from Table 4.17 that the price competition was the most important
sub-factor as it has the first rank among all sub-factors with relative important
index (RII) equal 91.00% for procurement specialists, 88.80% for engineer's
consultants, and 89.80% for all respondents and it has a similar rank for all parties as
it affects directly on the selection of procurement method in the Gaza Strip. This
agreement between all target groups is traced to the difficult economical situation and
fund limitations which Gaza Strip suffers. These problems can be affect strongly on the
83
price competition in construction projects in Gaza Strip and all clients and consultants
feel with such this sensitive problem in their projects. Shiyamini et al., (2007) are
agree with this result as he ranked price competition sub-factor in the first position and
he stated that this factor was a high important parameter. This factor was considered as
critical factor by Thomas (2001) who illustrated that this factor should be taking into
consideration for Australian clients when they selecting procurement method. On the
other hand, Maizon et al., (2006) are relatively far with this result as he ranked the price
competition factor in the sixth position factor in the Malaysian construction industry
while Husam and Sedki (2009) ranked this factor in the thirteenth position.
Degree of project complexity has been ranked by all respondents in the second position
with RII equal 88.60%. It has been ranked by the procurement specialists in the second
position with RII equal 89.60% and has been ranked by the engineer's consulting offices
in the fourth position with RII equal 87.60%. This factor can be considered as an
important for both parties. This result is compatible with Shiyamini et al., (2007) and
Eyitope et al., (2012) who agree to a certain extent with this result as they ranked the
degree of project complexity factor in the first position from the project characteristics
group. The result of Maizon et al., (2006) and Husam & Sedki (2009) are also very
close to this result as they ranked the project complexity factor in the third position and
fifth position respectively in the Malaysian construction industry. Also, as previous
price competition sub-factor, Thomas (2001) and love et al., (2008) illustrated that this
sub-factor should be taking into consideration for clients when they selecting
procurement method. Mortledge et al., (2006) summarized that the project size and
complexity should be considered as influence other main factors as time, cost and risk
factors.
Time constrains of project sub-factor has been ranked by engineer's consulting offices
and all respondents in the third position with RII equal 88.20% and 87.00%
respectively. It has been ranked by the procurement specialist respondents in the sixth
position with RII equal 85.80%. This result is in line with Shiyamini et al., (2007) as
time constrains factor affects strongly on the selection of procurement method.
Mortledge et al., (2006) summarized that early completion because of time constrains is
a critical sub-factor and a procurement method that supports speedly completion may be
favored.
84
Project size sub-factor has been ranked by the procurement specialist respondents in
the third position with RII equal 87.60%. It has been ranked by the engineer's
consulting offices respondents in the fifth position with RII equal 85.40% and has
been ranked by the all respondents in the fourth position with RII equal 86.20%.
This factor is considered as more important for the procurement specialist
respondents than for consultants. This result is the same with Odhigu et al., (2011)
result.
Client's financial capability sub-factor has been ranked by the procurement specialist
respondents in the fourth position with RII equal 86.80%. It has been ranked by
the engineer's consulting offices respondents in the sixth position with RII equal
85.20% and has been ranked by the all respondents in the fifth position with RII
equal 85.80%. Odhigu et al., (2011) explains that each procurement system is chosen
for a particular project based on certain criteria which use in the selecting procurement
systems and one of the most important those criteria is client's financial capability.
Client's experience in procurement methods sub-factor has been ranked by engineer's
consulting offices and all respondents in the sixth position with RII equal 85.20% and
85.00% respectively and it has been ranked by the procurement specialists in the
seventh position with RII equal 84.80% and it is obtained that this sub-factor has to a
certain extent similarity rank for all parties as it affects directly on the selection of
procurement method in the Gaza Strip. Shiyamini et al., (2007), Maizon et al., (2006),
Mortledge et al., (2006), and Franco et al., (2002) illustrated that this sub-factor is one
of the most important factors influencing the selection of procurement methods. In
addition, the result of this study for this sub-factor is compatable with Odhigu et al.,
(2011) and Husam & Sedki (2009) results as they ranked client's experiance factor in
the fifth and eighth position respectively. On the other hand, Shafik & Martin (2006)
and Mahon (2011) investigates that client's experience sub-factor is in the second and
third rank position respectively which they are a little differ than the result of this study.
Availability of qualified personnel (procurement staff) sub-factor has been ranked by
all respondents in the seventh position with RII equal 84.80%. It has been ranked by
the procurement specialists in the ninth position with RII equal 80.80% and has been
ranked by the engineer's consulting offices in the second position with RII equal 88.60.
85
Availability of personals as procurement staff with high experience and qualification
lead to better descion making for procurement method selection which lead to
improve the performance of quality, time, cost, productivity and minimize the risk
of projects for clients. In the Gaza Strip, some of the procurement employee may lack
experience, qualification and contract management skills which affect negatively on the
selection of an approprate procurement method. Franco et al., (2002) are in agreement
with the result of this study as availability of qualified personnel sub-factor is a very
important factor affecting the selection of procurement method in Hong kong
construction industry because it affects strongly on the performance criteria of
construction projects.
Risk avoidance sub-factor has been ranked by all respondents in the eighth position with
RII equal 83.20%. It has been also ranked by the procurement specialists in the eighth
position with RII equal 84.20% and has been ranked by the engineer's consulting offices
in the ninth position with RII equal 82.60% and it is obtained that this sub-factor has to
a certain extent similarity rank for all parties as it affects directly on the selection of
procurement method in the Gaza Strip. Maizon et al., (2006) are in the exact agreement
with this result as he ranked risk avoidance factor in the eighth position factor in the
Malaysian construction industry while Husam & Sedki (2009) are very close with this
result as they ranked the risk avoidance factor in the tenth position in the Malaysian
construction industry. In opposite, Odhigu et al., (2011) and Eyitope et al., (2012) are
relatively far from this result as they ranked this sub-factor in the third rank position.
Project type and nature sub-factor has been ranked by all respondents in the ninth
position with RII equal 82.00%. It has been ranked by the procurement specialists in the
fifth position with RII equal 86.00% and has been ranked by the engineer's consulting
offices in the eleventh position with RII equal 80.60%. This difference in rank between
targeting groups is related to the procurement specialists are concerned more with
project characteristics more than the client and technical factors. This result is in line
and compatible with Shiyamini et al., (2007), love et al., (2008), and Abu Baker et al.,
(2009) results as they finds that the project type sub-factor is the most important
selection criteria for choosing procurement method and is very close with Odhigu et al.,
(2011) result as he ranked this factor in the tenth position. On the other hand, Shafik &
86
Martin (2012) investigates that project nature sub-factor is in the third rank position in
Scotland house building which is relativily far from the result of this study.
It was obtained that availability of procurement system in the local market sub-factor
was the tenth most important sub-factor as it has the tenth rank among all sub-
factors with relative important index (RII) equal 80.60% for procurement specialists,
82.00% for engineer's consultants, and 81.40% for all respondents and it has a similar
rank for all parties. This result is very close with the result of Husam & Sedki (2009) as
he ranked this sub-factor in the fourteenth position in the Malaysian construction
industry.
Finally, according to Table 4.17 above, both procurement experts and consulting
offices have at almost the same attitude towards ranking of the procurement selection
factors. This may be attributed to the fact that they work under the same
conditions and they are passing almost the same experience through purchasing and
implementing the several stages of the construction projects.
4.5 Part four: perspective about procurement methods used in Gaza Strip
4.5.1 Are you satisfied about procurement system of your organization?
Table 4.18: The satisfaction percentages of procurement system
Result Frequency Percent %
Yes 43 63.2
No 25 36.8
Total 68 100.0
From Table 4.18 above, it is noticed that only around one third of the respondants
dissaified with procurement system in their organizations while around two third of
them are satisfied. This is mainly because of the good governance of procurement
principles such as transperancy and accountability in their organizations.
87
4.5.2 What is the most common procurement method selected by your
organization?
Table 4.19: The percentages of common procurement methods selected by organizations
Procurement method Frequency Percent %
Traditional procurement method (Separated) 47 69.10
Design and build procurement Method (Integrated) 5 7.40
Management procurement method (Packaged) 14 20.60
Public private partnership procurement method (PPPP) as
Build-Operate-Transfer method (BOT Method) 2 2.90
Table 4.19 shows that, the most common procurement method that selected by the
respondants in construction projects in the Gaza Strip is a traditional procurement
method (Separated method) which represent around two third (69.10%) from the total
sample and the high percentage of this result reflects a bad indicator to ensure that
there is no a variety of procurement methods selected and used in costruction projects in
Gaza. The second most common procurement method is a management procurement
method (Packaged method) which represent 20.60% from the total sample. It is
important to point that other common procurement methods are very rarely selected in
construction projects in the Gaza Strip.
The result of this study are in the agreement with Babatunde et al., (2010) study. Abu Bakar
et al., (2009) mentioned that the traditional method was preferred by the organizations
to procure the projects.
4.5.3 What is the most common type of traditional procurement method
selected by your organization?
Table 4.20: The percentages of common type of traditional procurement method selected by
organizations
Traditional procurement method types Frequency Percent %
Lump sum method 15 22.00
Measurement method (Based on bill of quantities) 52 76.50
Cost reimbursement as cost plus method 1 1.50
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Table 4.20 shows that, the most common type of traditional procurement method that
selected by the respondants in construction projects in the Gaza Strip is a measurement
method based on bill of quantities which represent 76.50% from the total sample and
the high percentage of this result reflects a bad indicator to ensure that there is no a
variety types of traditional procurement method selected in costruction projects in Gaza.
The second most common type of traditional procurement method is a lump sum
method which represent 22.00% from the total sample. It is important to point that cost
plus method is very rarely selected in construction projects in the Gaza Strip.
The result of this study are in the agreement with Rosli et al., (2006) result. Davis et. al.,
(2008) stated that with traditional lump sum contracts the intention is that there should
usually be a fair and balance of risk between parties. The balance can be adjusted as
required, but the greater the risk to be assumed by the contractor. So, this method is
widely selected in construction projects but is used less than a measurement method.
4.5.4 What procurement methods are you familiar with?
Table 4.21: The percentages of procurement method familiarity
Procurement method Frequency Percent %
Traditional procurement method (Separated) 51 75.00
Design and build procurement method (Integrated) 6 8.80
Management procurement method (Packaged) 8 11.80
Public private partnership procurement method (PPPP)
as Build-Operate-Transfer method (BOT Method) 3 4.40
Table 4.21 shows that 75% of the respondents are familiar with traditional
procurement method as this method is widely experienced, known, and spread in
different organizations in the Gaza Strip while only 25% of the respondents are
familiar with other procurement methods as shown in Table 4.21.
89
4.5.5 What types of procurement method would you like to see more use
in the Gaza Strip?
Table 4.22: The percentages of procurement method types would like be used more in Gaza
Procurement method Frequency Percent %
Traditional procurement method (Separated) 9 13.20
Design and build procurement method (Integrated) 38 55.90
Management procurement method (Packaged) 4 5.90
Public private partnership procurement method (PPPP)
as Build-Operate-Transfer method (BOT Method) 17 25.00
Total 68 100.00
As depicted in Table 4.22 above, it is clear that more than a half (55.90%) of the
respondents would like to see a design and build procurement method is used more in
the Gaza Strip while only 13.20% of the respondents would like to see a traditional
procurement method used more in the Gaza Strip. This result support that the
repondants would like to deal with a non traditional procurement methods and applied a
new procurement methods rather than a traditional method in the future in construction
projects in Gaza.
Enshasi and Modough (2012) finding that from three case studies exposed in Gaza Strip
is the existence of a proportional relation between awarding bids to lowest price
and the problems encountered during implementation when used a traditional
procurement method.
Accordingly, there is a need to change the traditional system for contractor selection and
awarding contracts from the “lowest price” to “multi-criteria selection” practices.
This can be implemented by establishing alternative procurement methods such as
design and built method to select contractors based on technical and financial
criteria.
90
4.5.6 Do you think that a simple model for the selection of procurement
method could be useful and applied in construction projects in the Gaza
Strip?
Table 4.23: The degree of agreement on using a model for procurement method selection
Result Frequency Percent %
Yes 53 77.90
No 15 22.10
Total 68 100.0
From Table 4.23 above, it is noticed that 77.90% of the respondants think that the use of
a simple model for the selection of an appropriate procurement method could be useful
while 22.10% of the respondants think it is unuseful. This is mainly because of there is
no an identified methodology found before in Gaza for the selection of procurement
method.
91
CHAPTER 5
DEVELOPING A FRAMEWORK
5.1 Introduction
The decision to select the appropriate procurement method to implement a construction
project is crucial. Though it does not necessary lead to a successful project but with
other factors taken into consideration can influence the success of the project. From the
researcher points of view, clients and consultants in the Gaza Strip do not have a
specific procedure in selecting their procurement method to implement their
construction projects but base it on familiarity with a particular method. Hence clients
use procurement methods compatible with their corporate environments. So, most of
clients in the Gaza Strip use the traditional procurement method as mentioned in the
result in Chapter 4 because they do not have the relevant experience and familiarity for
other non-traditional methods. This is as a result of the fact that there, is no theoretical
framework on which to derive either an ideal or an optimum approach to select the
appropriate procurement method.
One of the objectives of this research was aimed to developing a framework using the
multi-attribute utility approach (MAUA) as a decision support system for the selection
of appropriate procurement method for construction projects in the Gaza Strip. The
conceptional framework of the multi-attribute utility approach (MAUA) was suggested
in this chapter to match clients„ prioritized factors with the benchmarked performance
of the procurement methods in achieving a selection criterion (utility coefficient), to
select appropriate procurement method for construction projects in Gaza Strip.
5.2 Multi-attribute utility approach (MAUA)
Fellows et al., (1983) stated that a multi-attribute utility approach is a methodology which
can be used as a tool to measure objectivity in an otherwise subjective area of
management. As a procurement system is the overall managerial approach by which a
client commissions and obtains a project, the multi-attribute utility approach was
considered to be the foremost technique appropriate for examining the criteria of clients
and the preferences of procurement experts and consultants weights for each method in the
92
most objective way. By indicating the relative utility of each client requirement and
procurement method against a numerical scale, it is possible to obtain a set of utility
factors.
The multi-attribute utility approach (MAUA) is used mostly to solve complex problems
that involve the consideration of several criteria in relation to different outcomes. The
decision makers assess the value of possible outcomes based on utility i.e. relative
desirability of each possible outcome.
Okunlola and Olugbenga (2010) illustrated that the multi-attribute utility approach
(MAUA) involves four steps which are
1. Client weights the relative importance of each significant factor that affecting
the selection of procurement method;
2. Rationalised priority ratings are calculated (by dividing each of the priority
ratings by the sum of all the ratings) and then entered into the decision chart.
The sum of the rationalised priority ratings should always be equal to 1.
3. Each rationalised priority rating is taken in turn and multiplied by each of the
utility factors; the results will then be entered into the appropriate columns.
4. The totals of each of the results columns, under each procurement method, are
calculated and ranked in descending order. The most appropriate procurement
method will have the highest total result.
5.3 Data collection procedure
A survey instrument in the form of questionnaire was used to capture the necessary data
for this approach. Procurement specialists and consultants who are involved in the
decision of selecting a procurement method were asked to prioritize the factors
influencing the selection of procurement method based on Likert scale and tested using
Cronbach α of the SPSS package at 5% significant level. The factors with Important
Index exceeding or equal to 81% were recognized as important significant factors based
on the consensus of the respondents to be used in factor analysis.
From the questionnaire result analysis as mentioned in Chapter 4, ten factors were
identified as significant important factors affecting the selection of procurement method
in construction projects in the Gaza Strip which are
93
1. Price competition (RII = 89.80%),
2. Degree of project complexity (RII = 88.60%),
3. Time constrains of project (RII = 87%),
4. Project size (RII = 86.20%),
5. Client's financial capability (RII = 85.80%),
6. Client's experience in procurement methods (RII = 85%),
7. Availability of qualified personnel (procurement staff) (RII = 84.80%),
8. Risk avoidance/allocation (RII = 83.20%),
9. Project type and nature (RII = 82%),
10. Availability of procurement system in the local market (RII = 81.40%),
Table 4.19 mentioned in previous chapter (Chapter 4) shows that, the most common
procurement methods that selected by the respondents in construction projects in the
Gaza Strip are
Traditional procurement method (Separated)
Design and build procurement Method (Integrated)
Management procurement method (Packaged)
Public private partnership procurement method (PPPP) as (BOT Method)
5.4 Data analysis
Considering a decision-making problem with M alternatives procurement methods and
N significant factors whereby the alternatives procurement methods is denoted as: ai
(for i = 1, 2, 3, M) significant factors as Cj (for j = 1, 2, 3 …N). Trianbtapyllou et al.,
(1997) assumed that the decision maker knows the performance values aij (for i = 1, 2,
3, M and j = 1, 2, 3, N) of each of procurement method in terms of each of the
significant decision factor. Also that for each significant decision factor, the decision
maker has determined its relative importance denoted as Cj (for j = 1, 2, 3, N). Lastly
that the relative importance of the N factors satisfies the following normalization
constraint
This is termed the rationalized priority rating and is calculated as
94
Where RIp - is the relative importance index (RII)
It is used to calculate the performance of the alternatives procurement methods by an
additive utility (the weighted sum model) of the following form
For i = 1, 2, 3, …………. M where Pi is the preference value of procurement method
aij (i = 1, 2, 3, M) when all the significant important factors are considered
simultaneously. For maximization case in this research, the best alternative is the one
which has the largest preference value.
Table 5.1 below, published the rationalized priority rating (Cj) by the respondents in
this research
Table 5.1: Rationalized priority rating by respondents (Cj), source: questionnaire field survey
(2013)
No. Factor
Respondents
RII (%) Rationalized priority
rating (Cj)
1 Price competition 89.80 0.105
2 Degree of project complexity 88.60 0.104
3 Time constrains of project 87.00 0.102
4 Project size 86.20 0.101
5 Client's financial capability 85.80 0.101
6 Client's experience in procurement methods 85.00 0.100
7 Availability of qualified personnel
(procurement staff) 84.80 0.099
8 Risk avoidance/allocation 83.20 0.097
9 Project type and nature 82.00 0.096
10 Availability of procurement system in the
local market 81.40 0.095
Total 853.80 1
95
In a further research, respondents (procurement specialists and consultants) were asked
to rate the suitability of procurement methods in achieving a selection factor based on
main factor groups using a Likert scale of 1 to 10. A rating of 1 means, low suitability in
achieving a selection factor and 10 means, very high suitability in achieving a selection
factor. The procurement methods considered were those in use in Gaza Strip such as
traditional procurement method, design and build procurement method, management
procurement method and public private partnership procurement method such as BOT
method. The benchmark performance values (aij) of these procurement methods will be
calculated and after that, the totals of each of the results columns, under each procurement
method, are calculated and ranked in descending order. The most appropriate procurement
method will have the highest total result.
5.5 Multi-attribute utility approach application
Two forms will be used to apply the multi-attribute utility approach (MAUA). In the
first form, procurement experts are asked to rate the suitability of procurement methods
in achieving each significant factor based on a Likert scale. The second form was
developed from consultants to calculate the benchmark performance values (aij) of
different procurement methods in order to identify the most appropriate procurement
method in construction project.
5.6 Multi-attribute utility approach verification
MAUA verification and validation are essential parts of the conceptional framework
development process if MAUA to be accepted and used to decision support system.
Validation ensures that the approach meets its intended requirements in terms of the
methods employed and the results obtained.
5.6.1Verification Cases
Two cases were taken to evaluate the MAUA verifications and to measure its accuracy
and strength in selection of appropriate procurement method. Three procurement
96
experts participated in Coastal municipalities‟ water utility (CMWU) project for case 1
and three external consultants participated in Islamic University project for case 2.
5.6.1.1 Case1: Design and build of Wadi Gaza wastewater treatment
plant
The following case shows the results of MAUA verification. Three procurement experts
participated in Coastal municipalities‟ water utility (CMWU) project. Design and build
procurement method was selected for this project. The contract value for this project
was $ 1,304,000.00 with project duration of 365 calendar days. The project was
completed on 2013. The three experts were asked to rate the suitability of procurement
methods in achieving each significant factor based on a Likert scale, the results
introduced in Table 5.2 below and Table 5.3 shows the weighted sum model results for
the selection appropriate procurement method.
97
Table 5.2: The average benchmark performance values (aijaver.) of procurement methods (Case 1)
Public private
partnership Management Design & build Traditional
Significant factor No. aij
aver. aij3 aij2 aij1
aij
aver. aij3 aij2 aij1
aij
aver. aij3 aij2 aij1
aij
aver. aij3 aij2 aij1
6.33 7 7 5 6.33 6 7 6 8.33 8 8 9 7.67 9 6 8 Price competition 1
10.00 10 10 10 7.00 6 7 8 8.33 8 8 9 8.00 8 9 7 Project complexity 2
5.67 7 6 4 6.67 5 8 7 8.67 9 9 8 6.67 7 7 6 Time constrains 3
8.33 8 10 7 8.67 9 8 9 8.67 9 9 8 7.67 7 7 9 Project size 4
8.67 8 9 9 8.67 8 9 9 9.00 8 10 9 7.67 7 8 8 Client's financial capability 5
8.00 7 9 8 8.33 7 8 10 8.33 9 7 9 8.00 8 9 7 Client's experience 6
5.00 5 4 6 8.33 9 9 7 7.67 8 7 8 8.00 9 8 7 Availability of qualified
personnel 7
5.67 7 6 4 8.67 8 10 8 9.33 10 9 9 7.33 8 7 7 Risk avoidance 8
7.00 7 6 8 9.33 10 9 9 7.33 6 9 7 7.67 9 6 8 Project type and nature 9
7.67 7 9 7 7.00 6 7 8 7.67 7 8 8 9.00 10 8 9 Availability of procurement
system in the local market 10
98
Table 5.3: The weighted sum model results for the selection appropriate procurement method (Case 1)
Public private
partnership Management Design & build Traditional
Cj Significant factor No. Result
(Pi)
aij
aver.
Result
(Pi)
aij
aver.
Result
(Pi)
aij
aver.
Result
(Pi)
aij
aver.
0.66 6.33 0.66 6.33 0.87 8.33 0.81 7.67 0.105 Price competition 1
1.04 10.00 0.73 7.00 0.87 8.33 0.83 8.00 0.104 Project complexity 2
0.58 5.67 0.68 6.67 0.88 8.67 0.68 6.67 0.102 Time constrains 3
0.84 8.33 0.88 8.67 0.88 8.67 0.77 7.67 0.101 Project size 4
0.88 8.67 0.88 8.67 0.91 9.00 0.77 7.67 0.101 Client's financial capability 5
0.80 8.00 0.83 8.33 0.83 8.33 0.80 8.00 0.100 Client's experience 6
0.50 5.00 0.82 8.33 0.76 7.67 0.79 8.00 0.099 Availability of qualified personnel 7
0.55 5.67 0.84 8.67 0.91 9.33 0.71 7.33 0.097 Risk avoidance 8
0.67 7.00 0.90 9.33 0.70 7.33 0.74 7.67 0.096 Project type and nature 9
0.73 7.67 0.67 7.00 0.73 7.67 0.86 9.00 0.095 Availability of procurement system in
the local market 10
7.25
7.88
8.34
7.76
1 Total 11
4
2
1
3
Rank order 12
99
From the results obtained in Table 5.2 and Table 5.3, it was concluded that the weighted
sum model results by procurement experts revealed that, design and build procurement
method was the most appropriate procurement method option with preference value Pi
equal 8.34. Management procurement method was ranked second most appropriate
procurement method with preference value Pi equal 7.88. It means that if a client has a
construction manager, then he can consider the management procurement method
option. Traditional system was ranked the third appropriate procurement method for this
project with preference value Pi equal 7.76 while public private partnership
procurement method was ranked the least appropriate procurement method with
preference value Pi equal 7.25.
After this result, the researcher of this study asked the procurement manager for this
project about the performance of the project concerning on procurement issues, the
procurement manger confirmed that this method is the most appropriate option for the
project. This conclusion proves that the verification of MAUA approach.
5.6.1.2 Case 2: Construction of continuous medical education centre at
the Islamic University
The second case that was used to verify the MAUA was to construct a continuous
medical education centre at the Islamic University in Gaza. This project was completed
in 2010 and constructed under the Engineering office supervision. MAUA verification
was done by targeting external three consultants for this project. Traditional
procurement with measure and pay method was selected for this project. The contract
value for this project was $ 309,000.00 with project duration of 120 calendar days. The
three external consultants were asked to rate the suitability of procurement methods in
achieving each significant factor based on a Likert scale, the results introduced in Table
5.4 and Table 5.5 shows the weighted sum model results for the selection appropriate
procurement method.
100
Table 5.4: The average benchmark performance values (aijaver.) of procurement methods (Case 2)
Public private
partnership Management Design & build Traditional
Significant factor No. aij
aver. aij3 aij2 aij1
aij
aver. aij3 aij2 aij1
aij
aver. aij3 aij2 aij1
aij
aver. aij3 aij2 aij1
7.00 7 8 6 6.33 6 6 7 7.67 8 7 8 6.67 8 6 6 Price competition 1
8.67 8 9 9 8.00 8 7 9 6.67 7 7 6 7.67 8 7 8 Project complexity 2
6.33 6 7 6 7.67 8 7 8 9.67 10 10 9 6.33 5 8 6 Time constrains 3
7.00 8 6 7 8.00 8 7 9 7.00 7 8 6 8.33 8 8 9 Project size 4
7.33 8 8 6 8.00 7 9 8 7.67 8 6 9 7.33 7 8 7 Client's financial capability 5
8.00 8 9 7 8.00 8 9 7 6.67 7 8 5 9.00 9 10 8 Client's experience 6
7.00 6 7 8 8.67 10 8 8 7.33 8 7 7 8.33 7 9 9 Availability of qualified
personnel 7
7.67 8 7 8 7.67 8 7 8 8.33 8 8 9 7.67 8 8 7 Risk avoidance 8
7.33 8 7 7 7.33 7 6 9 7.00 6 7 8 8.67 8 9 9 Project type and nature 9
7.00 6 7 8 7.67 7 8 8 6.00 6 5 7 9.00 9 8 10 Availability of procurement
system in the local market 10
101
Table 5.5: The weighted sum model results for the selection appropriate procurement method (Case 2)
Public private
partnership Management Design & build Traditional
Cj Significant factor No. Result
(Pi)
aij
aver.
Result
(Pi)
aij
aver.
Result
(Pi)
aij
aver.
Result
(Pi)
aij
aver.
0.74 7 0.66 6.33 0.81 7.67 0.70 6.67 0.105 Price competition 1
0.90 8.67 0.83 8 0.69 6.67 0.80 7.67 0.104 Project complexity 2
0.65 6.33 0.78 7.67 0.99 9.67 0.65 6.33 0.102 Time constrains 3
0.71 7 0.81 8 0.71 7 0.84 8.33 0.101 Project size 4
0.74 7.33 0.81 8 0.77 7.67 0.74 7.33 0.101 Client's financial capability 5
0.80 8 0.80 8 0.67 6.67 0.90 9 0.100 Client's experience 6
0.69 7 0.86 8.67 0.73 7.33 0.82 8.33 0.099 Availability of qualified
personnel 7
0.74 7.67 0.74 7.67 0.81 8.33 0.74 7.67 0.097 Risk avoidance 8
0.70 7.33 0.70 7.33 0.67 7 0.83 8.67 0.096 Project type and nature 9
0.67 7 0.73 7.67 0.57 6 0.86 9 0.095 Availability of procurement
system in the local market 10
7.34
7.73
7.41
7.88
1 Total 11
4
2
3
1
Rank order 12
102
From the results obtained in Table 5.4 and Table 5.5, it was concluded that the weighted
sum model results by consultants revealed that, traditional procurement method was the
“best in class” i.e. the most appropriate procurement method option to implement this
project with preference value Pi equal 7.88. Management procurement method was
ranked second most appropriate procurement method with preference value Pi equal
7.73 while design and build method was ranked the third appropriate procurement
method for this project with preference value Pi equal 7.41. Again, public private
partnership procurement method was ranked the least appropriate procurement method
with preference value Pi equal 7.34 and this result confirmed that the verification of
MAUA approach.
5.7 A framework development
The main objective of designing a conceptional framework is to assist a decision maker
for construction procurement method selection. Additionally, the framework facilitates
the following:
Assists clients and their representatives in the initial decision on making an
appropriate procurement selection for any kind of construction project;
Ensures systematic and consistent approach for procurement selection through
the application of relevant research methods;
Provides better understanding on selection criteria which affect the procurement
selection and various types of alternative construction procurement systems in
practice;
Provides report on ranked list of procurement systems.
A framework was designed for construction clients and/or their consultants particularly
those who use an unrealistic method to select the appropriate procurement system and
are responsible for the selection process. Primarily, this framework guides how to select
a most appropriate procurement system for a particular type of construction project.
This framework not only considers the requirements of clients and project's profile but
also the impact of external environment on procurement selection. In this way, it will be
possible to ensure that the project is procured in an efficient and effective way that adds
value for the client. Development of the framework consists of three main phases which
103
are database input phase, process and modeling the factors phase and data base output
phase. Figure 5.1 shows a conceptional framework for the selection of an appropriate
procurement method.
104
put
Database Output
Process and Modeling the factors
Database Input
Figure 5.1: Framework for the selection of an appropriate procurement method
Factors related to client
Identify client's financial capability
Evaluate client's experience in procurement
methods
Assign qualification level for personnel
(procurement staff)
Factors related to cost Analyze price competition
Factors related to time Set the time constrains for the project
Factors related to project characterstics Determine the degree of project complexity
Clarify the project size
Explain project type and nature
Factors related to external environment Analyze the situation of procurement methods in
the local market
Procurement methods assessment Assessing procurement methods
(Strength, advantages,
methodologies, strategies,
effectiveness)
Set the rate for the suitability for
each procurement method
Involving consultants in
assessment process
Decision making process
&tool Decision Analysis
(DA)
Decide for an
appropriate
procurement method
Procurement Method
Selection Traditional
Procurement Method
Design and Construct
Procurement Method
Management
Procurement Method
Public Private
Partnership
Procurement Method
Modeling the factors affecting the
selection of procurement method
Using the wiegted sum model (i.e.
additive utility) Formulate for model process
(MAUA)
Evaluate the model efficiency
Obtain the model results
Evaluation for procurement
method Identify the raising problems
Evaluate client's satisfaction
Monitoring the project
performance
Review the decision process
Factors related to risk Locate the risks related to the client
105
CHAPTER 6
CONCLUSION AND RECOMMENDATIONS
6.1 Introduction
There are several procurement methods that clients can select to implement their
construction projects and achieve their objectives. The selection of an appropriate
procurement method is crucial to project success. To assist the clients and consultants
in choosing the appropriate procurement method, a number of factors should be
considered. An exploratory study of factors affecting the selection of procurement
method was conducted in this research to determine the level of importance and
influence for each factor. The researcher relied on literature review, field survey to
achieve the goals of this research.
In the process of conducting this research, some conclusions are emerged. General
recommendations and recommendations for future research are included in this chapter.
6.2 Conclusion
Based on the results obtained from this research, the following research conclusion are
drawn:
A total of 54 factors affecting the selection of procurement method were
synthesized in the main six groups in the survey, which were shown to be
reliable. Data were collected from a representative sample of professional
procurement staff and consultants in the Gaza Strip. The findings from the
empirical survey of this study show that there are twelve most influential
factors/criteria affecting the selection of procurement method in construction
projects in Gaza Strip which are
1. Price competition (RII = 89.80%),
2. Degree of project complexity (RII = 88.60%),
3. Time constrains of project (RII = 87%),
4. Project size (RII = 86.20%),
5. Client's financial capability (RII = 85.80%),
6. Client's experience in procurement methods (RII = 85%),
106
7. Availability of qualified personnel (procurement staff) (RII = 84.80%),
8. Risk avoidance/allocation (RII = 83.20%),
9. Project type and nature (RII = 82%),
10. Availability of procurement system in the local market (RII = 81.40%),
11. Responsibility allocation (RII = 80.60%),
12. Procurement policy (RII = 80%).
Clients can truly benefit from realizing the importance of above several factors
into the selection of procurement method.
The six least influential factors, as evaluated by procurement specialists and
consultants, are: material availability, geotechnical investigation, stakeholder
integration, delays in obtaining environmental approval, environment impact,
and social factors.
It was concluded that, both procurement specialists and consultants generally
agree on the ranking order of the factors affecting the selection of procurement
method. This agreement confirms the influential effect of those factors on the
selection of procurement system which provide a level of validation for this
research. According to the results of this study, it was concluded that, there
is no difference of the opinions between procurement specialists and
consultants in the factors affecting the selection of procurement method at
the significance level of 0.05.
The results give a general indication that both the conventional (traditional) and
non conventional procurement methods are currently embraced in Gaza Strip.
This study reveals approximately two-thirds (69.10%) of construction projects
are executed using variants of traditional procurement method; 20.60% are
through variants of management procurement method; 7.40% are executed
through design and build method; and 2.90% are executed through public private
partnership (PPP) method in Gaza.
The procurement methods in use are still much of variants of traditional
methods. Gaza Strip construction remains in the phase of almost exclusively
using traditional methods. This may be presumably due to procurement staff and
107
consultants are well familiar with traditional methods and this familiarity was
found regarding to a long age existence of the traditional procurement systems in
the Gaza Strip construction industry. It could be noted that the percentages of the
use of design and build and PPPP methods are still significantly very low,
indicating that the clients and their representatives are still not well familiar
with this variant of non-conventional procurement system, or are yet to
appreciate their advantages. The results of the study indicate that only 8.80% are
familiar with design and build method while 4.40% are familiar with PPP
procurement method.
The majority of respondents have indicated that current procurement methods
(most prominently traditional) have directly contributed to projects overrunning
in terms of cost and time, suggesting that this method is unsuitable for a
modern, progressive construction industry in Gaza. It is clear that more than a
half (55.90%) of the respondents would like to see a design and build
procurement method used more in Gaza Strip. Only 13.20% of the respondents
would like to see a traditional procurement method used more in Gaza Strip.
This result support that the respondents would like to deal with a non traditional
procurement methods and apply a new procurement methods rather than a
traditional method in the future in construction projects in Gaza.
Among the variant types of traditional procurement method, measurement
method based on bill of quantities (Measure and pay method) had the highest
selection share. The popularity of this method is mainly due to the government
influence on the construction industry of Gaza Strip. Government as a major
client and the regulator neglected the development of alternative procurement
methods. Bureaucratic red tape of the Government created a barrier for the
growth of other alternative procurement methods to have high accountable and
transperant system.
It was concluded that the combination of national culture and organizational
culture of construction in Gaza has created an environment that did not favor
the use of new procurement methods. The organizational culture of construction
in Gaza is characterized by the separation of design and construction from the
108
colonial days. The construction professionals are found to be collectivists and
feminine. Therefore, this mixed culture does not challenge the status quo. Thus,
there is no room for new procurement methods to be experimented in the Gaza
Strip construction industry. As a result, the measurement method became
institutionalized procurement method.
6.3 Recommendations The following recommendations are the most important ones that can be deduced by
this research
All clients and consultants of the construction industry in Gaza, whether from
the public or the private sector, should familiarize themselves with various
procurement methods as this will assist them in making well-informed
procurement method.
Clients and consultants should monitor the quality and performance of
procurement methods which used in their organizations in terms of hire a
qualified procurement staff in order to obtain the true decision related to the
selection of procurement method.
It is recommended to use the proposed framework as a guideline (Figure 5.1)
which detailed in previous chapter to assist procurement managers and
consultants in the selection of an appropriate procurement method in the
construction project effectively in the Gaza Strip. Procurement managers and
consultants can use this framework to assess the quality level of a planning
of construction project in terms of procurement method selection.
It is also recommended that training courses, seminars, and workshops in
procurement should be conducted. These activities would improve the local
practice in the selection process and increase the capabilities of procurement
staff in using mathematical models for the selection of an appropriate
procurement system.
The client‟s actual needs, requirements, objectives and project goals must be
interested and accurately conveyed to the project team in order to enable the
project team to develop a sound procurement strategy and system.
109
The procurement managers should be encouraged to study the alternative
procurement methods before deciding which approach to be selected.
A clear type of procurement system should be established at a very early
(planning) stage of the project which will determine broadly what has to
be done, how it must be done, by whom it must be done, where it must be
done and when it must be done. Construction planners, managers and all
other procurement specialists involved in procurement decision-making
should formulate a systematic selection approach, as this will assist in
eliminating unnecessary project demands.
It is also recommended to establishment of a legislation and laws that encourage
the using of alternatives procurement methods such as PPPP and BOT methods.
6.4 Recommendations for future research
The research results have identified several areas that require further research efforts.
The following points discuss suggestions for expanding upon the current this research
A follow-up advance study on the non-traditional procurement methods such as
design and built procurement methods.
Future research should focus on developing models for the selection of an
appropriate procurement method. These models could include detail project-
specific factors such as the project type, the degree of project complexity, and
time constrains of project, and others.
The factors affecting the selection of procurement method studied from
procurement specialists and engineer consultants respective only. So it is
important to repeat this study and take and add contractors, investors and donor
respective.
A follow-up study that further researches the impact of the type of procurement
methods on the project performance would be beneficial. The future researches
could be examine in-depth the performance of several construction projects
together with the procurement methods selected and implemented.
It is necessary to repeat this research every 5 years to observe the new trends of
procurement staff and consultants.
110
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Annex (1): Questionnaire (English)
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ISLAMIC UNIVERSITY - GAZA
ENGINEERING FACULTY
CIVIL ENGINEERING DEPARTMENT
MASTER PROGRAM IN CONSTRUCTION MANAGEMENT
(Questionnaire)
In fulfillment of MSc thesis requirement
FACTORS AFFECTING THE SELECTION OF PROCUREMENT
METHOD IN CONSTRUCTION PROJECTS IN GAZA STRIP
The aim of this questionnaire is to study the factors affecting the selection of
procurement method in construction projects in Gaza Strip. This questionnaire is
required to be filled with relevant facts as much as possible. All data included in this
questionnaire will be used only for academic research and will be strictly
confidential. After all questionnaires are collected and analyzed, interested participants
of this study will be given feedback on the overall research results.
Researcher
Osama I. El Agha
Supervised by
Dr. Nabil I. El Sawalhi
June, 2013
118
Part One: General information: Please add (√) as appropriate:
1. Position
Director/Vice director Procurement manager Procurement assistant
Consultant Projects Manager Other
2. Years of experience in the line of work
From 1 to less than 5 years From 5 to less than 10 years
From 10 to less than 15 years From 15 to 20 years
More than 20 years
3. Qualification
Master B.Sc. Diploma
4. Institution type
Governmental International Non-governmental (NGO)
Municipality Private Sector Consultancy office
5. Type of projects your organization dealing with
Buildings Roads Water & Sewage Electro mechanics
6. Value of executed projects executed in the last five years (in million dollars)
1 – less than 2M 2 – less than 5M
5 – less than 10 M More than or equal 10 M
Part Two: Main Factors affecting the selection of procurement method in your
organization
Please identify (carefully) the degree of importance of the main factors affected the
selection of procurement method in your organization
Very High Important = 5 High Important = 4 Medium important = 3
Low important = 2 Very low important = 1
119
No. Main factor
Degree of importance
Very
high = 5
High
= 4
Medium
= 3
Low
= 2
Very
low = 1
A Factors related to client
B Factors related to cost
C Factors related to time
D Factors related to risk
E Factors related to project
characteristics
F Factors related to external
environment
Part Three: Sub-factors affecting the selection of procurement method in your
organization
From your experience, please express your opinion on the importance of the
following sub-factors affecting the selection of procurement method in construction
projects in the Gaza Strip. (Please tick the appropriate box).
Very High Important = 5 High Important = 4 Medium important = 3
Low important = 2 Very low important = 1
No. Factors
Degree of importance
Very
high 5
High
4
Medium
3
Low
2
Very
low 1
A Factors related to client
1 Client's nature and culture (public or private)
2 Client reputation
3 Client's experience in procurement methods
4 Client's trust in other parties
5 Flexibility for changes and variations
6 Client's financial capability
7 Accountability
8 The degree of desired client involvement
9 Availability of qualified personnel (procurement
staff)
120
No. Factors
Degree of importance
Very
high 5
High
4
Medium
3
Low
2
Very
low 1
B Factors related to cost
1 Price competition
2 Design cost
3 Consultant fees
4 Price certainly prior to commencement
5 Cost control
C Factors related to time
1 Speed
2 Minimize design time
3 Time constrains of project
4 Time control
5 Delays in obtaining environmental approval
6 Delay in the project completion time
7 Delivery time schedule
D Factors related to risk
1 Risk avoidance/allocation
2 Responsibility allocation
3 Disputes & arbitration
4 Geotechnical investigation
E Factors related to project characteristics
1 Degree of project complexity
2 Project type and nature
3 Funding method
4 Project site location
5 Project size
6 Project payments modality
7 Quality level of project
8 Project methodology
9 Expected performance of project
10 Available resources of project
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No. Factors
Degree of importance
Very
high 5
High
4
Medium
3
Low
2
Very
low 1
11 Constructability of design
12 Project completion at estimated time
13 Project completion at estimated cost
F Factors related to external environment
1 Procurement policy
2 Market completion/structure
3 Market competitiveness
4 Economic conditions
5 Political considerations
6 Social factors
7 Environment impact
8 Other parties involvement/role/participation
9 Commercial conditions
10 Legal issues/factors
11 Availability of procurement system in the local
market
12 Number of competitors
13 Technology
14 Stakeholder integration
15 Worker conditions
16 Material availability
Part Four: General Questions
1. Are you satisfied about procurement system of your organization?
Yes No
2. What is the most common procurement method selected by your organization?
Traditional Procurement Method (Separated)
Design and Construct Procurement Method (Integrated)
Management Procurement Method (Packaged)
Public Private Partnership Procurement Method (PPPP) as Build-Operate-
Transfer method (BOT Method)
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3. What is the most common type of traditional procurement method selected by
your organization?
Lump Sum Method
Measurement Method (Based on Bill of Quantities)
Cost Reimbursement as Cost Plus Method
4. What procurement methods are you familiar with?
Traditional Procurement Method (Separated)
Design and Construct Procurement Method (Integrated)
Management Procurement Method (Packaged)
Public Private Partnership Procurement Method (PPPP) as Build-Operate-
Transfer method (BOT Method)
5. What forms of procurement method would you like to see more use of in Gaza
Strip?
Traditional Procurement Method (Separated)
Design and Construct Procurement Method (Integrated)
Management Procurement Method (Packaged)
Public Private Partnership Procurement Method (PPPP Method)
6. Finally, do you think that a simple model for the selection of procurement
method could be useful and applied in construction projects in the Gaza Strip?
Yes No
Thanks for your cooperation…
Researcher
Osama I. El Agha
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