An empirical study of researchers' and practitioners' views on compensating major highway project contractors

Int. J. Management and Decision Making, Vol. 12, No. 4, 2013 351

Copyright © 2013 Inderscience Enterprises Ltd.

An empirical study of researchers’ and practitioners’ views on compensating major highway project contractors

Fani Antoniou and Georgios N. Aretoulis* Faculty of Engineering, Department of Construction Equipment and Management, School of Civil Engineering, Aristotle University of Thessaloniki Campus, Egnatia Street, 54124, Thessaloniki, Greece E-mail: [email protected] E-mail: [email protected] *Corresponding author

Dimitrios K. Konstantinidis Department of Civil Infrastructure Engineering, School of Technological Applications, Alexander Technological Educational Institute, 57400, Sindos, Thessaloniki, Greece E-mail: [email protected]

Glykeria P. Kalfakakou Faculty of Engineering, Department of Construction Equipment and Management, School of Civil Engineering, Aristotle University of Thessaloniki Campus, Egnatia Street, 54124, Thessaloniki, Greece E-mail: [email protected]

Abstract: Choosing the most appropriate contract type (CT) for compensating major highway project contractors is a decision that has to be taken by highway procurement authorities within their country’s legal, economic and social framework. The research carried out to date on the use of various CTs for the construction of infrastructure projects in general and for highway projects in particular is highlighted and utilised to determine the most frequently used CTs and the most commonly considered selection criteria (SC). The information obtained was included in a questionnaire survey that assessed the performance of each CT against each SC according to the perceptions of engineers with experience in highway procurement processes both in Greece and abroad. Ultimately, the initial results of the survey in comparison to the expectations resulting from the literature review are discussed.

Keywords: contract type; contractor compensation; infrastructure projects; procurement; Greece; management; decision making; highway projects.

352 F. Antoniou et al.

Reference to this paper should be made as follows: Antoniou, F., Aretoulis, G.N., Konstantinidis, D.K. and Kalfakakou, G.P. (2013) ‘An empirical study of researchers’ and practitioners’ views on compensating major highway project contractors’, Int. J. Management and Decision Making, Vol. 12, No. 4, pp.351–375.

Biographical notes: Fani Antoniou holds a BEng in Civil Engineering and an MSc in Concrete Structures from the Imperial College, London and is a Certified IPMA-Level D: PM Associate. She has been employed at Egnatia Odos S.A., a client organisation responsible for the design, construction, operation and maintenance of the Egnatia Motorway in Northern Greece since 1997, where she has held the position of Project Manager since 2006. She is currently a PhD candidate in the Department of Civil Engineering at the Aristotle University of Thessaloniki and National representative in the Technical Committee ‘Performance of Transport Administrations’ of the World Road Association.

Georgios N. Aretoulis is a faculty member of Civil Engineering Department as a Lecturer of the Aristotle University of Thessaloniki, Greece. He completed his Diploma at the Civil Engineering Department of the Aristotle University of Thessaloniki and on 2004 he was awarded his Master degree in Environmental Protection and Sustainable Development. He completed his PhD dissertation on 2009.

Dimitrios K. Konstantinidis holds a Diploma in Civil Engineering from the Aristotle University of Thessaloniki and an MSc as well as a PhD from the Imperial College, London. He has been a Professor at the Alexander Technological Educational Institute in Greece since 2006 and has recently been elected Dean of the School of Technological Applications. For the last 15 years, he has been involved in the design of bridges. Since 2003, he has held the position of National Representative in the Technical Committee ‘Road Bridges’ of the World Road Association.

Glykeria P. Kalfakakou is a Professor of Investments Appraisal and the Director of the Laboratory of Construction Equipment and Management at the Department of Civil Engineering at the Aristotle University of Thessaloniki in Greece. She is also the Director of the post graduate programme under the title Engineering Project Management.

1 Introduction

The World Road Association (Permanent International Association of Road Congresses’: PIARC) defines procurement as the process whereby an entity purchases works, goods/supplies or services (PIARC, 2003). In the context of this research the Project Procurement System (PPS) is defined as the overall system chosen for the procurement of a major highway project including any contracts required for its design, construction and supervision of construction.

The procurement process of any major infrastructure project includes the design phase, tender phase and construction phase. In the design phase, the owner determines the need for the realisation of the project, carries out a feasibility study and completes the required designs either through an internal design team or through outsourcing. In the

An empirical study of researchers’ and practitioners’ views 353

tender phase, the project budget and tender documents are prepared by the owner based on the definitive design and a construction tender procedure is carried out according to the relevant legislation and the chosen PPS. Finally, the project is constructed according to the contractual documents and supervision is achieved on behalf of the owner in-house or by outsourcing to a Construction Manager (CM). In addition, the owner maintains the project throughout its design life (either with in-house resources or out-sourcing). The major participants in the above procedure are the owner, also known as the client, the design consultant, the contractor and the CM. The PPS chosen defines the number and types of contracts drawn up between the major participants and facilitates coordination between them. Coordination is a problem of efficient allocation of known resources to known ends (Loasby, 2001). The number and type of contractual relationships between the major participants are crucial in terms of time, cost and quality achievement of the resulting project.

The most important contractual relationship in terms of cost, is that between the owner and the contractor. For this reason, the contractor selection method employed and the chosen contract type (CT) which defines the method of payment, play a significant role in ensuring construction costs are within the approved funding limits.

Generally, there is a great necessity for better management techniques (Raja and Prabhu, 2007). The purpose of this paper is to present the definition, advantages and disadvantages of each CT from the point of view of the client, based on theory as published by previous researchers in the field and to compare with the opinions of experts in the field of highway procurement. The methodology employed includes the analysis of the results of a questionnaire survey on the evaluation of the most commonly employed CTs in the construction industry against selection criteria (SC) as defined by researchers. In order to develop the questionnaire, the results of the extensive literature review were utilised. Finally, the results of this survey which was carried out among highway procurement experts in Greece and abroad (Europe, Australia and the USA) and the expected results based on the published opinions of researchers in the field are compared and discussed. Ultimately, this research paper presents initial findings as a first step towards the development of a comprehensive model to be employed by highway agencies in Greece when faced with deciding on the choice of CT.

2 Literature review: choice of CTs and SC

A systematic literature review was carried out in order to determine CTs employed in the construction industry as well as the SC considered by practitioners when choosing between available CTs. The literature review was carried out initially using relevant key words in the SCOPUS Database at the Aristoteleion University of Thessaloniki and then by examining all publications in the following chosen journals which repeatedly were cited in the database search, i.e., ASCE Journal of Construction Engineering and Management, Project Management Journal, Building and Environment, Construction Management and Economics, ASCE Journal of Construction Engineering and Management, Project Management, European Journal of Operational Research and the International Journal of Project Management. The time frame within which the literature was carried is from the late 1980s until 2012. The purpose of this systematic review was to provide as complete as possible a list of all the published studies relating to contracting in the construction industry in order to determine the CTs to be examined for

354 F. Antoniou et al.

implementation in the highway industry and the SC that should be considered when choosing between the available CTs. The synthesis and dissemination of the literature review results are shown in Figure 1.

Figure 1 Summary of objectives of research papers relating to CTs

Author Year Paper Aim

CPF

F

CPP

F

CPI

F (C

+T +P)

ID/T FP

I

LSFP

UPM

Oth

er Research Methodology Project Types Country

1 Herten and Peeters

1986 Introduction of the principle of incentive contracting

√ (C+T+P)

√ √ General review of types of incentives employed in various industries.

Military, power plants , civil engineering+N2

USA

2 Veld and Peeters 1989 Proposal of methodology for CT selection

√ √ √ (C+T+P)

√ √ √ √ Employs decision trees. Aeronautical, industrial, militay, large development.

Netherlands

3 Ward and Chapman

1994 Comparison of CT's √ √ √ Literature review on the formulation of risk - sharing contracts.

General construction UK

4 Herbsman et. al. 1995 CT performance evaluation √ LR Case studies and interviews Highway projects USA5 Jaraied et. al. 1995 Guideline proposals for use of

ID/T contracts√ Evaluation of ID/T clauses

employed by US DOTs.Highway projects USA

6 Ward and Chapman

1995 Choosing between different forms of fixed price and incentive contracts,

√ √ √ Theoretical statistical analysis including evaluation of expected value, certainty equivalence and stochastic dominance.

7 ITA working group 1996 Guideline proposals for appropriate CT's

√ √ √ √ ITA Working group Tunnels international

8 Jaafari 1996 Methodology for structuring incentive schemes

√ √ Example project Maritime projects Australia

9 Arditi et. al. 1997 Perfomance Evaluation of ID/T contracts and non-ID/T

√ Performance evaluation of case studies

Highway projects USA

10 Howard et. al. 1997 a) Performance Evaluation of CT's and b) Proposals of other CT's

√ √ (C+T+P)

√ PBC Economic theory literature review, interviews and case studies

Wastewater, electric/utility, buildings, industrial

USA

11 Al-Harbi 1998 Methodology for structuring incentive schemes

√ √ √ Literature Review. Implementation of utility theory.

General construction Saudi Arabia

12 Arditi and Yasamis

1998 Perfomance Evaluation of ID/T contracts and non-ID/T

√ (C+T+P)

√ A+B bid Statistical analysis of survey results from 18 Resident engineers (contractor) and 12 Supervising engineers (client) on 21 projects.

Highway projects USA

13 Herbsman and Glagola

1998 Proposal of a new CT √ LR Case studies Highway projects USA / UK

14 Berends 2000 Methodology for structuring incentive schemes

√ √ √ √ Case studies Industrial projects Netherlands

15 Boukendour and Bah

2001 Proposal of combination of CT's √ √ Theoretically based Engineering and Construction Contracts

France

16 Turner and Simister

2001 Perfomance Evaluation of CT's √ √ √ √ Theory, Interviews of PM's on 4 major infrastructure projects 2 using partnering, 7 LSFP(D&B), 19 UPM

Infrastructure, engineeing construction and heavy engineering projects

Netherlands

17 Broome and Perry 2002 How practitiioners set share fractions in target cost contracts

√ √ √ Semi -structured interviews with practitioners on specific projects

Urban infrastructure, pipelines, buildings

UK

18 Bower et. al. 2002 Guideline proposals for use of incentive contracts

√ √ Case studies Industrial construction and maintanence, IT

UK - Europe

19 Bubshait 2003 Study on perceptions about incentive/disincentive CT's

√ √ √ Safety Incentive

Questionaire survey Industial Saudi Arabia

20 Piarc 2003 Overview of CT's in highway construction

√ √ (C+T+P)

√ √ International working group experiences.

Highway projects International

21 Shr and Chen 2003 Provision of a model for bid submission ID/T Contracts.

√ Model based on Florida DOT project data. Validated using completed projects.

Highway Projects USA

22 Shr and Chen 2004 Methodology for structuring incentive schemes

√ Model based on Florida DOT project data. Validated using completed projects.

Highway Projects USA

23 Missbauer and Hauber

2005 Bid calculation method on behalf of the contractor

√ Literature Review. Model Development, Case Studies

Construction Projects Austria

24 Olsen and Osmundsen

2005 Identification and mitigation of risks in Incentive CT's

√ √ Mathematical model and case studies

Norwegian offshore development projects

Norway

25 Paul and Gutierrez 2005 Perfomance Evaluation of CT's √ √ √ √ Uses a parsimonius stochastic model to compare expected price for LSFP, CPFF or CPPF and UPM

Highway projects, Construction projects

USA

26 Boukendour 2007 Proposal of combination of CT's √ √ √ √ √ Switch 3 thoeretical examples Construction Canada

27 Gruneberg et. al. 2007 Proposal of a new CT PBC Telephone survey Buildings UK28 Lambropoulos 2007 Proposal for a combined award

criterion (C+T)√ Bid on

C+TImplementaion of utility theory. An illustrative example is provided.

Highway Projects Greece

29 Tang et al. 2008 Perfomance Evaluation √ (C+T+P)

√ Questioanaire survey. Analysis using SPSS. Case study,

Industrial, buildings and public infrastructure

China

30 Padhi et. al. 2009 Proposal for a combined award criterion (C+T+waranty period+past performance)

Binary goal programming model Public and private construction projects

India

31 Badenfelt 2011 Strategies for dealing with incomplete contracts

√ √ √ (C+T+P)

√ Case Studies. Interviews 3 Buildings and 1 road construction project

Sweeden

32 Chan et. al. 2011b Identification and mitigation of risks in Incentive CT's

√ Questionnaire survey Construction Projects Hong Kong China

33 Chan et. al. 2011a Determination of motives for good contracting behaviour

√ √ Literature review and questionnairesurvey

Construction Projects Hong Kong China

34 ITA working group 3

2011 Discussion of shortcomings of CT's in dealing with the subsurface environment

√ International working group experiences.

Tunnels International

35 Rose and Manley 2011 Determination of motives for good contracting behaviour

√ √ Literature Review.Case Studies Buildings Australia

36 Meng and Gallagher

2012 Perfomance Evaluation of CT's √ √ √ (C+T+P)

√ √ √ PBC Statistical Analysis of results of questionaire survey + 1 Case Study

Civil Engineeing and Building Projects

UK / Ireland

An empirical study of researchers’ and practitioners’ views 355

Following the above described literature review it was determined that the most common CTs that have been employed around the world regarding the method of contractor compensation include cost plus fixed fee (CPFF), cost plus percentage fee (or cost) (CPPF), cost plus incentive fee (CPIF), fixed price incentive (FPI) and the lump sum/fixed price (LSFP) also known as the firm-fixed price. Other CTs that are examined in the literature include incentive/disincentive for time reduction (ID/T) and the unit price method (UPM) as well as performance-based contracting (PBC), option to switch from one CT to another and lane rental.

As can be seen from Figure 1, the most common CT examined is the CPIF followed closely by the ID/T CT. This leads to the conclusion that CTs that provide incentives are considered highly desirable and worthy of investigation. In addition 13 research papers considered the CPFF and the LSFP CTs, while the least commonly investigated CTs are the CPPF and the UPM. It is interesting to note the diversity of projects examined including general civil engineering, electrical engineering, maritime engineering, offshore engineering, building construction, industrial and even IT projects, while only a third is related to the examination of CTs on highway projects. In addition, the research work carried out considered infrastructure projects and practice mostly in Europe (14 papers) and North America (11 papers). Finally, the research methodologies employed by the cited researchers included general overview and discussion, case studies, interviews and surveys, performance evaluation of the application of various CTs and the application of statistical analysis and development of mathematical models (mostly for the calculation of incentive fees) while Veld and Peeters (1989) presented a proposal; of a CT selection model.

In summary, the scope of the papers cited in Figure 1 include:

a evaluation of CT performance in terms of the final cost, duration and/or quality of resulting project

b proposals for new contracting methodologies

c provision of guidelines for the use of various CTs for particular project types

d proposals of methodologies for structuring incentive schemes and identifying and mitigating the associated risks

e investigation of motivations for good contracting behaviour by clients and contractors.

Nijkamp et al. (2002) offered an evaluation framework for assessing project alternatives by employing different multicriteria evaluation methods as a tool to reduce conflicts in a decision making process. Their proposed approach is implemented on a case concerning the design of a new road network in the area of the Cilento National Park in Italy. In addition, Badenfelt (2011) investigated strategies for dealing with incomplete CTs and indicated that the most common strategy is to provide incentives while other strategies include long-term relationships, change clauses and contract duration. Moreover, Kirytopoulos et al. (2009) focus on the criteria that should be regarded in project termination considerations, aiming at facilitating project managers’ decisions. Finally, proposals were found for new or combinations of award criteria (Lambropoulos, 2007;

356 F. Antoniou et al.

Padhi and Mohapatra, 2009; Ungern-Sternberg, 1994) or even modifications of the lowest bid criteria (Wang et al., 2006).

The definitions, advantages and disadvantages and the usefulness of each CT from the point of view of the client as appearing in the literature are presented in Tables 1 to 7.

Table 1 Definition, advantages, disadvantages and usefulness of the CPFF CT

CPFF

Veld

and

Pee

ters

(198

9)

War

d an

d C

hapm

an (1

994)

Car

ty (1

995)

ITA

Wor

king

Gro

up (1

996)

Bere

nds (

2000

)

Turn

er a

nd S

imis

ter (

2001

)

Paul

and

Gut

ierr

ez (2

005)

Bade

nfel

t (20

11)

Definition

The client reimburses the contractor for all audited costs and pays a fixed amount for the contractor’s services whatever the final cost

√ √ √ √ √ √ √

Advantages

Total costs are limited to what is actually needed and is the lowest possible

√ √ √

The contractor cannot earn excessive profits √

Adverse effects due to potential contractor’s loss are avoided

√

Disadvantages

Client takes all cost risk √ √ √

Exact cost unknown at start √

Weakened motivation for cost efficient work √

No performance incentive √

Temptation for contractors to pad costs to benefit other work they are undertaking

√

Difficulty in documenting allowable costs and agreed rates

√

High degree of involvement, stringent management and control required on behalf of the client

√ √

Useful for projects

Where there is uncertainty or complexity of scope

√ √ √

With incomplete project specification √ √

Where risks are controllable by the client √

An empirical study of researchers’ and practitioners’ views 357

Table 2 Definition, advantages, disadvantages and usefulness of the CPPF CT

CPPF

Veld

and

Pee

ters

(198

9)

War

d an

d C

hapm

an (1

994)

ITA

Wor

king

Gro

up (1

996)

Turn

er a

nd S

imis

ter (

2001

)

PIAR

C (2

003)

Paul

and

Gut

ierr

ez (2

005)

Bade

nfel

t (20

11)

Definition The client reimburses the contractor for all audited costs but this time pays an additional percentage fee

√ √ √ √

Advantages Avoids the problem of excessive overpayment √ √ √ Adverse effects due to potential contractor’s loss are avoided

√

Disadvantages Client takes cost risk √ Requires stringent management and control on behalf of the client

√

No incentive to contractor to limit costs and even encourages increased costs

√

Useful for projects Where there is uncertainty or complexity of scope √ √ √ √ With incomplete project specification √ √ Where risks are controllable by the client √ Where there is high uncertainty of process √

Table 3 Definition, advantages, disadvantages and usefulness of the CPIF CT

CPIF

Veld

and

Pee

ters

(198

9)

War

d an

d C

hapm

an

(199

4)

How

ard

et. a

l. (1

997)

Bere

nds (

2000

)

Bow

er e

t. al

. (20

02)

PIAR

C (2

003)

Tang

et.

al. (

2008

)

Bade

nfel

t (20

11)

Definition All justified costs are paid and the final fee depends on the actual compared to a target cost, delivery and/or performance achievements

√ √ √ √

Advantages Influences the contractor’s internal process for better performance

√

Reinforces collaboration between client and contractor allowing sharing of risk

√

Makes risk allocation fairer between client and Contractor

√

358 F. Antoniou et al.

Table 3 Definition, advantages, disadvantages and usefulness of the CPIF CT (continued)

CPIF

Veld

and

Pee

ters

(198

9)

War

d an

d C

hapm

an

(199

4)

How

ard

et. a

l. (1

997)

Bere

nds (

2000

)

Bow

er e

t. al

. (20

02)

PIAR

C (2

003)

Tang

et.

al. (

2008

)

Bade

nfel

t (20

11)

Disadvantages Complications in determining appropriate risk sharing rate and target cost

√

Complicates the selection of efficient contractors since the final project cost is uncertain at award phase

√

May lead to poor performance in areas not associated with the incentive

√

Complicate contract to manage as any changes occurring require renegotiation of agreed incentive

√

Useful for projects where The target cost can be realistically defined √ The client has a sound basis on which to estimate contract costs, and there are uncertainties that make a fixed-price contract impractical, but the uncertainties are not so great so as to justify the use of cost plus contracts

√

Table 4 Definition, advantages, disadvantages and usefulness of the ID/T CT

ID/T

Tang

et.

al. (

2008

)

Her

bsm

an e

t al.

(199

5)

ITA

Wor

king

Gro

up (1

996)

Her

bsm

an a

nd G

lago

la

(199

8)

Bow

er e

t. al

. (20

02)

Tang

et.

al. (

2008

)

Definition The contractor is paid in addition to the agreed payment method a bonus (incentive fee) if the project is completed earlier and pays a penalty (disincentive fee) if it is completed after.

√ √ √ √ √

Advantages Reduction in construction time is almost always achieved. √ √ √

Less adversarial relationship with contractor. √

Makes risk allocation fairer between contractor and client. √

Good quality of work as contractor does not risk having to redo work.

√ √

An empirical study of researchers’ and practitioners’ views 359

Table 4 Definition, advantages, disadvantages and usefulness of the ID/T CT (continued)

ID/T

Tang

et.

al. (

2008

)

Her

bsm

an e

t al.

(199

5)

ITA

Wor

king

Gro

up (1

996)

Her

bsm

an a

nd G

lago

la

(199

8)

Bow

er e

t. al

. (20

02)

Tang

et.

al. (

2008

)

Disadvantages Fee’s based on client’s time estimate which is normally based on the average time required. As a result the time savings could probably have been achieved free of charge.

√ √

Leads to increased claims on behalf of the contractor if the time reduction goal is not achieved for reasons that are not the fault of the contractor.

√

Useful for projects where There is a need for the shortest possible completion time. √

There is an agreed firm programme. √

Table 5 Definition, advantages, disadvantages and usefulness of the ID/T CT

FPI

Veld

and

Pee

ters

(198

9)

Car

ty (1

995)

Bere

nds (

2000

) Bo

uken

dour

and

Bah

(2

001)

Bo

uken

dour

(200

7)

Cha

n et

. al.

(201

1a)

Cha

n et

. al.

(201

1b)

Definition The contractor is paid his actual costs in addition to an agreed upon fee while he guarantees that the total cost to the owner will not exceed maximum amount

√ √ √ √

Advantages Protects client against cost escalation and provides possibility of benefitting from cost savings

√

Contractor is more efficient to achieve benefits, i.e., achieves value for money

√ √

Results in better working relationships between the two parties since common goal

√ √

Early settlement of final project account √ √ Capability to tap into contractor’s expertise prior to commencement of construction and consequently enhancing buildability

√ √

360 F. Antoniou et al.

Table 5 Definition, advantages, disadvantages and usefulness of the ID/T CT (continued)

FPI

Veld

and

Pee

ters

(198

9)

Car

ty (1

995)

Bere

nds (

2000

) Bo

uken

dour

and

Bah

(2

001)

Bo

uken

dour

(200

7)

Cha

n et

. al.

(201

1a)

Cha

n et

. al.

(201

1b)

Disadvantages Contractor is likely to use the less productive resources he has if he has other LSFP contracts to use his more productive resources

√

Vulnerable to failure if one or more of the following occur: √

1 change in scope of work

2 insufficient design completion during tender invitation

3 unforeseeable design development risks at tender stage

4 errors and omissions in tender document

5 exchange rate variations

Useful for projects where The project scope is not as definitely defined as required for LSFP (Carty, 1995) but minimal variations are expected

√ √

Table 6 Definition, advantages, disadvantages and usefulness of the LSFP CT

LSFP

Veld

and

Pee

ters

(198

9)

War

d an

d C

hapm

an

(199

4)

Car

ty 1

(995

)

ITA

Wor

king

Gro

up

(199

6)

Bere

nds (

2000

)

Turn

er a

nd S

inis

ter (

2001

)

Bouk

endo

ur a

nd B

ah

)200

1)

Bouk

endo

ur (2

007)

Definition The client pays a fixed price to the contractor irrespective of the actual cost when the LSFP CT is employed.

√ √ √ √ √ √ √ √

Advantages Contractor takes all the cost risk. √ √ √

Implicit incentive to reduce time in order to reduce overheads.

√

An empirical study of researchers’ and practitioners’ views 361

Table 6 Definition, advantages, disadvantages and usefulness of the LSFP CT (continued)

LSFP

Veld

and

Pee

ters

(198

9)

War

d an

d C

hapm

an

(199

4)

Car

ty 1

(995

)

ITA

Wor

king

Gro

up

(199

6)

Bere

nds (

2000

)

Turn

er a

nd S

inis

ter (

2001

)

Bouk

endo

ur a

nd B

ah

)200

1)

Bouk

endo

ur (2

007)

Advantages Contractor is likely to use the most productive resources he has in order to increase his profit margin.

√

Expected price is lowest for risk neutral bidders.

Efficient method for obtaining value for money.

√

Total cost known from the start. √

Less burdensome contract administration. √

Disadvantages Any cost savings are lost to the client. √

No performance incentive to do exceptional work.

√

Supervision required to ensure that contractor is not cutting costs and required quality achieved.

√ √

Increased claims. √

Even a risk-neutral contractor is reluctant to sign without obtaining a higher price. Contractor unwilling to perform duties out of defined scope of work.

In tunnel projects this simplistic contract type has been responsible for a large number of contractual disputes due to unforeseen geotechnical conditions.

Useful for projects where The required outputs are clearly defined, i.e., there is certainty of scope.

√ √ √ √ √

There is high uncertainty of the award and contract management process.

√

Risks are controllable by contractor. √

The duration of the works are clearly defined.

362 F. Antoniou et al.

Table 7 Definition, advantages, disadvantages and usefulness of the UPM CT

UPM

Car

ty (1

995)

ITA

Wor

king

Gro

up

(199

6)

Turn

er a

nd S

inis

ter (

2001

)

Bouk

endo

ur (2

007)

PIAR

C (2

003)

Definition

The contractor commits to fixed prices for pre-specified units of material or work required for the project. Payment is the sum-product of the unit prices and the actual units used.

√ √ √ √

Advantages

Provides a means for managing risks associated with actual conditions encountered.

Disadvantages

Client is at risk as to the quantity of the work finally required. √ √

Contractor is likely to provide high bid for items he expected will exceed the amount assumed at tender and lower bids for those he expects will be less than assumed at tender.

√

Useful for projects where

It is difficult to precisely define the quantities prior to tendering.

√ √ √

There is certainty of the award and contract management process.

√

Tunnel construction is included as the actual ground conditions are likely to be different to the expected at tender conditions based on incomplete designs.

2.1 Other CTs

The literature review determined additional proposals relating to contractual arrangement regarding payment to contractors. These are as follows:

2.1.1 Performance-based contracting

This method of contracting was found in the literature regarding building construction projects where the building is procured, based on its fitness for purpose, not the method of construction or the building components incorporated. Payment is made after the result is assessed or the builder is made liable for financial losses as a result of non-performance. Payments are not made during the construction phase. The client only pays suppliers once buildings are in use and payments are based on meeting performance requirements and providing a service. PBC offers an opportunity to present a new model of contracting that would provide incentives for building and construction improvements

An empirical study of researchers’ and practitioners’ views 363

and innovation, restructuring of the construction market and improvements in productivity (Gruneberg et al., 2007; Gruneberg, 2007).

2.1.2 Option to switch from one contract to another

Boukendour (2007) stated that contractor opportunistic behaviour is a main source of contractual failures and proposed a preventive mechanism consisting of signing two or more contracts with an option given to the client to decide which one to apply once the work is complete. This enables the client to choose the most appropriate contract once the contractor’s behaviour has been observed. In Boukendour (2007), three examples are provided to illustrate how under the CTs Cost+, Lump Sum, Unit Price and a combination of Cost+ and GMP, the contractor always has room for opportunistic behaviour. For each example their proposal for contract switching is described.

2.1.3 Lane rental

In the USA in the early 1990s many state highway agencies (SHAs) experienced a shift from constructing new transportation facilities (roads, highways, and bridges) to restoration, rehabilitation and resurfacing of road facilities. Under conventional contracting methods, contractors mostly focus on their obligations of meeting budget and schedule considerations and did not consider the inconvenience to the public caused by construction work, new contracting methods needed to be developed. The lane rental method combines the cost to the road users for the closing of urban traffic routes with the traditional costs of construction. Under this system, contractors are required to consider, and include, both of these costs in the bidding process (Herbsman and Glagola, 1998).

One of the major conclusions is that because the use of the lane rental method is very intensive, it demands very careful development in the early stages. This development includes preparing and documenting plans for maintenance of traffic under various options and carefully calculating the lane rental fee schedule.

3 Extension to highway projects in Greece

The extensive literature review carried out and presented in this paper indicates that the majority of the cited research work has been carried out on methods of contractor compensation for major infrastructure projects throughout the world. Highway projects are unique as they are always designed for a specific purpose at a specific location. According to Twort and Rees (2004), the completion of any civil engineering project involves five stages of activities which comprise the following:

1 defining the location and nature of the proposed works and the quality and magnitude of the service they are to provide

2 obtaining any licenses and permissions necessary to construct the works

3 designing the works and estimating their probable cost

4 constructing the works

5 testing the works as constructed and putting them into operation.

364 F. Antoniou et al.

It is worth mentioning that the selection of effective construction alternatives is based on technological and economical analysis (Migilinskas and Ustinovichius, 2007). As a result, Twort and Rees (2004) state that there are inherent risks arising in this process because the design, and therefore the estimated cost of the works, is based on assumptions that may later have to be altered. Such inherent risks in highway construction projects include, weather conditions, nature of the ground or groundwater conditions. According to Gholamian et al. (2006) multiobjective management and engineering problems are hard to solve. In these kinds of problems, the objectives often conflict across a high-dimensional problem space. Indeed, the ITA Working Group 3 (2011) suggested that due provisions should be made for dealing with cost consequences of unforeseen circumstances which are common due to the nature of subsurface work by including a mechanism for adjusting contractor compensation according to conditions encountered. Another common unforeseen circumstance in Greece is the risk of archaeological findings. As it takes years to plan, obtain required licenses, design, acquire land and tender highway projects there is always the risk that there will be a need to alter the works design to include the latest technical developments, or meet the latest changes in requirements, so that the client does not get projects that are already out-of-date when completed. All these risks and unforeseen requirements that have to be met can involve additional expenditure; so the problem that arises is – who is to shoulder such additional costs? The choice of CT is central to answering this question.

In Greece researchers have been involved in the evaluation of PPSs (traditional, design and build, private public partnerships) and contractor SC and procedures (Antoniou and Kalfakakou, 2009; Antoniou et al., 2012). A methodology proposed by Lambropoulos (2007) which implements utility theory, has been proposed to be included in the new legislation for public works in Greece. This approach defines the requirements of the client in terms of maximum cost and time for completion of the project tendered and compares it with the contractors’ bids which include cost and time discounts. To date there is no proposal for implementation, in the Greek public works scene, of new CT defining any other method of payment apart from, the LSFP, the UPM or the CPPF.

Procurement practice in Greece, on the part of public works clients is defined in the Greek Public Works Law (L.3669/2008), where the content of the contractors’ bids are well defined. More specifically, for the majority of public works projects’ contracts, the detailed project budget according to the design is made up of a schedule of rates against a bill of quantities for each work item defined in detail in the descriptive price list. The bidders are asked to offer a discount against these prices, either per item, per group of items or for the entire project. In each case, the final contractor is compensated the cost resulting from the quantity of each work item carried out multiplied by the offered unit rate, plus an additional percentage equal to 18% of the resulting construction cost to cover overheads and profit. The Greek Public Works law also provides public client’s with the option to request a lump sum offer for the completion of part or the total project. This case is normally associated with the design and builds procurement method. In addition, Greek Public Works’ law provides for the enforcement of a penalty in the case of a delay of completion that is due to the fault of the contractor, while it also allows for the possibility to provide a bonus for early completion. To date, there is no provision in public works law for the submission of bids including time discounts.

An empirical study of researchers’ and practitioners’ views 365

4 Survey methodology

Following the international literature review and taking into account current practice in Greece and the possibilities allowed within the framework of European legislation, it was concluded that the CTs to be investigated are those described in Table 8. Table 8 Contract types

Contract type Short description

Cost plus fixed fee (CPFF)

The client reimburses the contractor for all audited costs and pays a fixed amount for the contractor’s services.

Cost plus percentage fee (CPPF)

The client reimburses the contractor for all audited costs and pays an additional percentage fee.

Cost plus incentive fee (CPIF)

All justified costs are paid but the final fee depends on the actual costs as compared to target cost, delivery and/or performance achievements.

Incentive/disincentive for time reduction (ID/T)

The contractor is paid in addition to the agreed payment method a bonus (incentive fee) if the project is completed earlier and pays a penalty (disincentive fee) if it is completed after.

Fixed price incentive (FPI)

The contractor is paid his actual costs in addition to an agreed upon fee while he guarantees that the total cost to the owner will not exceed maximum amount.

Lump sum/fixed price (LSFP)

The client pays a fixed price to the contractor irrespective of the actual cost.

Unit price method (UPM)

The contractor commits to fixed prices for pre-specified units of material or work required for the project. Payment is the sum-product of the unit prices and the actual units used.

Source: Antoniou et al. (2012)

Table 9 Selection criteria as found in the literature

Selection criteria (freq) Source

Cost uncertainty (7) Veld and Peters (1989), Ward and Chapman (1994), ITA Working Group (1996), Berends (2000), Boukendour and Bah (2001), Bower et al. (2002), and Carty (1995)

Uncertainty of scope (5) Veld and Peters (1989), Ward and Chapman (1994), ITA Working Group (1996), Boukendour and Bah (2001), Turner and Simister (2001), and Carty (1995)

Process uncertainty (2) Veld and Peters (1989), ITA Working Group (1996), and Turner and Simister (2001)

Value for money (2) Ward and Chapman (1994), and ITA Working Group (1996) Criticality of schedule (4) Veld and Peters (1989), Jaraiedi et al. (1995), Herbsman and Glagola

(1998), and Bower et al. (2002)Performance criticality (5) Veld and Peters (1989), Ward and Chapman (1994), Jaraiedi et al.

(1995), Berends (2000), and Bower et al. (2002)Availability of extra resources (4)

Veld and Peters (1989), ITA Working Group (1996), Berends (2000), and Turner and Simister (2001)

Contractual difficulties (3) ITA Working Group (1996), Berends (2000), Turner and Simister (2001)

Claims (3) Jaraiedi et al. (1995), Herbsman and Glagola (1998), and Berends (2000)

Source: Antoniou et al. (2012)

366 F. Antoniou et al.

Each CT was then evaluated according to a series of SC which were also chosen based on the frequency with which they appeared in the literature (Table 9). The SC against which each CT was rated on a Likert scale from 1 to 10, are shown in Table 10 along with an explanation of each rating scale.

The questionnaire survey was conducted during the two last years, 2010–2012. The first part of the structured questionnaire that was developed was devoted to the participants, who responded to a number of personal questions regarding their professional background. The aim of the second part was to rate the degree of achievement of each CT against the nine SC. Table 10 Explanation of rating scale for each CT against each SC

Criteria Each CT was rated as 10 (on a scale of 1 to 10) if

SC1 Cost uncertainty It is appropriate when it is difficult to estimate the final construction cost and the client wishes to avoid the risk of cost escalation

SC2 Uncertainty of scope

It is appropriate when the technical characteristics of the project are not specifically defined

SC3 Process uncertainty It is useful in situations where construction methodologies are unknown at start or are expected to be complex

SC4 Value for money It provides the most efficient method for obtaining value for money

SC5 Criticality of schedule

It is appropriate when the duration of the contract is critical

SC6 Performance criticality

It provides incentive for excellent quality and avoids cutting corners

SC7 Availability of extra resources

It requires adequate staff in numbers and experience to supervise and/or manage the contract

SC8 Contractual difficulties

It is simple to implement and does not require specialised calculations

SC9 Claims It reduces the number of claims expected

Table 11 depicts the personal profiles of the respondents. The survey was addressed to engineers from Greece and abroad. The survey collected 91 answers from engineers only, working in various fields such as with designers, contractors, public authorities, funding managing authorities and academia. The questionnaires were completed through interviews and e-mail. From the total of 91 participants 14 are engineers currently involved in highway design, 24 in Construction Supervision and finally 24 respondents are currently employed in project management or what is known in Greece as the Superior Authority. Participants with public sector experience represent the 78% of the sample while participants with some private sector experience represent 70 % of the pool of respondents. Finally, 75 male and 16 female participants took part in the survey. In addition, the results of the Cronbach’s alpha computation (= 0,916) reveals that the measure has high internal consistency.

An empirical study of researchers’ and practitioners’ views 367

Table 11 Personal profiles of survey respondents

Respondents Respondents Respondents Category

Number % Category

Number % Category

Number %

Current occupational field

Years of private sector

experience

Years of project management

experience Construction supervision (CS)

26 29% None 26 29% None 18 20%

Project management (PM)

31 34% Below 9 years

32 35% Below 9 years

26 29%

Design – research – funding

14 15% 10–19 years 17 19% 10–19 years 28 31%

Construction – freelance

18 20% Over 20 years

15 16% Over 20 years

18 20%

Years of design experience Direct experience per CT Origin

None 39 43% CPFF 26 29% Greece 65 71% Below 9 years 26 29% CPPF 25 27% Abroad 26 29%

10–19 years 17 19% CPIF 11 12% Years of public sector experience

Over 20 years 8 9% ID/T 22 24% None 19 21%

Years of construction supervision experience FPI 8 9% Below 9

years 19 21%

None 24 26% LS/FP 62 68% 10–19 years 29 32% Below 9 years 30 33% UPM 73 80% over 20

years 23 25%

10–19 years 27 30% Over 20 years 9 11%

The ratings as completed by each participant were transformed to a five-point Likert scale in order to allow a more comprehensive analysis of the results. The resulting mean and mode value of the overall responses as well as the frequency of the mode value are presented in Tables 12 and 13.

Table 14 summarises the information from Tables 12 and 13 in comparison to Tables 1 to 7, in order to facilitate conclusions relating to the degree of agreement between the respondent’s perceptions and researchers’ conclusions. In particular, the first column under each CT contains the mean survey respondents’ rating achieved against each SC while the second column denotes whether or not researchers perceived that the given CT meets the specific SC.

368 F. Antoniou et al.

Table 12 Mean, mode and frequency of mode rating of CPFF, CPPF, CPIF and ID/T CTs against each SC

CPFF CPPF CPIF ID/T

Mean Mode Freq (%) Mean Mode Freq

(%) Mean Mode Freq (%) Mean Mode Freq

(%)

SC1 Cost uncertainty

2.93 3 28.3 2.58 2 28.3 2.91 3 43.4 2.96 4 35.1

SC2 Uncertainty of scope

3.37 4 32.2 3.42 4 30.0 3.22 4 37.0 2.82 2 30.4

SC3 Process uncertainty

3.24 4 34.5 3.20 4 35.6 3.36 3/4 37.7 3.25 4 43.6

SC4 Value for money

2.83 3 39.0 2.67 3 30.0 3.13 3 37.0 3.10 3 37.9

SC5 Criticality of schedule

2.58 3 32.2 2.60 3 38.3 3.47 3 43.6 4.29 5 54.2

SC6 Performance criticality

3.10 4 25.0 3.33 4 30.0 3.96 4 44.4 3.31 3 31.0

SC7 Availability of extra resources

3.55 4 48.3 3.54 4 40.7 3.57 3/4 31.5 3.49 4 38.6

SC8 Contractual difficulties

3.88 5 35.0 3.64 3 34.4 2.54 3 27.8 3.00 3 40.4

SC9 Claims 3.71 5 35.6 3.62 3 33.3 3.04 4 31.5 3.05 3 33.3

Table 13 Mean, mode and frequency of mode rating of FPI, LSFP and UPM CTs against each SC

FPI LSFP UPM

Mean Mode Freq (%) Mean Mode Freq

(%) Mean Mode Freq (%)

SC1 Cost uncertainty

4.06 5 47.2 3.97 5 43.4 2.97 3 33.8

SC2 Uncertainty of scope

3.00 4 26.4 2.68 1 33.3 2.88 4 28.6

SC3 Process uncertainty

2.74 1 24.5 3.18 4 31.5 2.70 3 28.9

SC4 Value for money

3.68 4 43.4 3.58 5 28.4 3.34 3 36.4

SC5 Criticality of schedule

3.17 3 40.7 3.11 3 42.7 2.60 3 42.3

SC6 Performance criticality

2.80 2/3 24.1 2.52 3 37.3 3.22 3 39.0

SC7 Availability of extra resources

3.11 3 40.7 3.16 3 44.0 3.63 4 35.4

SC8 Contractual difficulties

3.17 3 53.7 3.77 4 33.3 3.35 3 38.0

SC9 Claims 3.20 4 40.7 3.43 5 29.3 2.86 3 38.5

An empirical study of researchers’ and practitioners’ views 369

Table 14 Comparison between the mean respondents’ ratings and researchers’ opinions

CPF

F C

PPF

CPI

F ID

/T

FPI

LSFP

U

PM

M

ean

Res.

M

ean

Res.

M

ean

Res.

M

ean

Res.

M

ean

Res.

M

ean

Res.

M

ean

Res.

SC1

Cos

t un

certa

inty

2.

93

No

2.

58

No

2.

91

Yes

2.96

4.

06

Yes

3.97

Y

es

2.

97

Yes

SC2

Unc

erta

inty

of

scop

e 3.

37

Yes

3.42

Y

es

3.

22

2.82

3

No

2.

68

No

2.

88

No

SC3

Proc

ess

unce

rtain

ty

3.24

Y

es

3.

2 Y

es

3.

36

3.25

2.

74

No

3.

18

Yes

2.7

SC4

Val

ue fo

r m

oney

2.

83

Yes

2.67

N

o

3.13

3.

1

3.

68

Yes

3.58

Y

es

3.

34

No

SC5

Crit

ical

ity o

f sc

hedu

le

2.58

2.

6

3.

47

4.29

Y

es

3.

17

3.11

Y

es

2.

6

SC6

Perfo

rman

ce

criti

calit

y 3.

1 N

o

3.33

3.

96

Yes

3.31

Y

es

2.

8

2.

52

3.22

SC7

Ava

ilabi

lity

of

extra

re

sour

ces

3.55

Y

es

3.

54

3.57

3.

49

3.11

3.

16

Yes

3.63

SC8

Con

tract

ual

diff

icul

ties

3.88

3.

64

2.54

N

o

3

3.

17

3.77

Y

es

3.

35

SC9

Cla

ims

3.71

3.

62

3.04

3.

05

3.2

Yes

3.43

N

o

2.86

370 F. Antoniou et al.

As a result the following conclusions are drawn:

• The CPFF CT was perceived by the respondents not to be appropriate when it is difficult to estimate the final construction cost and the client wishes to avoid the risk of cost escalation (SC1) and considered that it requires adequate staff in numbers and experience to supervise and/or manage the contract (SC7). At the same time respondent’s considered this CT appropriate in cases where uncertainty of scope (SC2) and process (SC3) exist. In all four of these cases there seemed to be agreement with researchers opinions (Berends, 2000; Paul and Gutierrez, 2005; Ward and Chapman, 1994). On the other hand, the respondents did not seem to agree with researchers views that this CT is expected to limit total costs to what is actually needed and is the lowest possible thus not allowing the contractor to earn excessive profits as they considered this CT lower than average in providing the most efficient method for obtaining value for money (SC4). In addition while researchers do not expect that this CT provides incentive for excellent quality (SC6) respondents rated it slightly higher than average. Finally, it is interesting to note that the respondents considered this CT as simple to implement and does not require specialised calculations (SC8) and that it significantly reduces the number of claims expected (SC9).

• The CPPF CT was perceived by the respondents as not to be appropriate when it is difficult to estimate the final construction cost and the client wishes to avoid the risk of cost escalation (SC1) but appropriate when the technical characteristics of the project are not specifically defined (SC2), useful in situations where construction methodologies are unknown at start or are expected to be complex (SC3) and considered that it does not necessarily provide the most efficient method for obtaining value for money (SC4). In all of these cases there seemed to be agreement with researchers opinions (ITA Working Group, 1996; Paul and Gutierrez, 2005; Veld and Peeters, 1989; Ward and Chapman, 1994).

• The CPIF CT was perceived by the respondents to provide incentive for excellent quality (SC6) as expected from the literature review (Howard et al., 1997) and that it is not simple to implement (SC8) in agreement with researchers (Bower et al., 2002). On the other hand, the respondents did not seem to agree with researchers views that this CT is appropriate when it is difficult to estimate the final construction cost and the client wishes to avoid the risk of cost escalation (SC1).

• The ID/T CT was perceived by the respondents to be appropriate when the duration of the contract is critical (SC5), as well as to provide incentive for excellent quality and avoids cutting corners (SC6) as expected from the literature review (Herbsman et al., 1995; Tang et al., 2008).

• In agreement with researcher’s opinion (Boukendour and Bah, 2001; Chan et al., 2011a, 2011b; Veld and Peeters, 1989), the FPI CT was perceived by the respondents to be especially appropriate when it is difficult to estimate the final construction cost and the client wishes to avoid the risk of cost escalation (SC1) and to provide the most efficient method for obtaining value for money (SC4), while it was considered as highly inappropriate in situations where construction methodologies are unknown at start or are expected to be complex (SC3). On the other hand, while Chan et al. (2011b) consider that this CT is not appropriate when

An empirical study of researchers’ and practitioners’ views 371

the technical characteristics of the project are not specifically defined (SC2), respondents’ seemed to disagree.

• The LSFP CT was perceived by the respondents to be highly appropriate when it is difficult to estimate the final construction cost and the client wishes to avoid the risk of cost escalation (SC1) and in providing the most efficient method for obtaining value for money (SC4) but considered it as highly inappropriate when the technical characteristics of the project are not specifically defined (SC2), in all cases fully corroborating with researchers opinions (see Table 6). In addition they agreed once again with researchers that this CT is useful in situations where construction methodologies are unknown at start or are expected to be complex (SC3) and that it is simple to implement and does not require specialised calculations (SC8). Finally, it is interesting to note that the respondents considered that this CT reduces the number of claims expected (SC9) which does not agree with the position of Ward and Chapman (1994) on this issue.

• The UPM CT was perceived by the respondents not to be appropriate when the technical characteristics of the project are not specifically defined (SC2) as expected from the literature review in agreement with Carty (1995), Turner and Sinister (2001) and PIARC (2003). On the other hand, the respondents did not seem to agree with researchers’ views that this CT is appropriate in avoiding cost escalation (SC1) nor did they agree that with the opinion that this CT will not provide an efficient method for obtaining value for money (SC4).

5 Statistical analysis of literature review

The literature review data have undergone a series of statistical analyses. Descriptive statistics were calculated using SPSS 20. Figure 1, was used as input to the SPSS database. The initial data were transformed into categorical data. The produced database included 36 cases (each case represents a journal paper) and 14 variables. The variables used include: year of paper publication, one variable for each CT (seven variables in total), one variable representing the project type and five variables representing the research methodology applied in each paper. The transformation into categorical data took place according to Table 15: Table 15 Data codification for literature review analysis

Variable Year Use of specific CT Project type

Use of specific research

methodology

Value Until 2000

After 2000

Yes No

Highway Other

Yes No

1 2 1 2 1 2 1 2

The CTs under examination include: CPFF, CPPF, CPIF, IDT, FPI, LSFP, UPM. The Research Methodology approaches include: literature review, surveys, interviews, case studies/example projects, other.

372 F. Antoniou et al.

5.1 Descriptive statistics – frequencies

Table 16 presents the frequency of appearance of each CT in the literature: Table 16 Frequency of occurrence of various CTs across literature

CT Frequency Percentage

CPIF 18 50.0 IDT 17 47.2 CPFF 13 36.1 FPI 13 36.1 LSFP 10 27.8 UPM 9 25.0 CPPF 8 22.2

The most frequently appearing CT is the CPIF while the least frequently appearing CT is the CPPF. It is worth mentioning that CPFF and FPI CTs have identical frequencies.

6 Conclusions

Relevant research work that has been carried out in the field on CT selection in the past decades was systematically collected and studied. The results were used to develop, circulate and collect the responses of a questionnaire survey where the most common CT’s employed in the construction industry were evaluated against the most frequently considered SC. This evaluation was based on the perceptions of professional civil engineers on the use of each CT in the highway construction industry. As noted previously, only three papers have been found that discuss the use of various CTs for highway construction projects outside the USA and since Veld and Peeters (1989) no other paper was found proposing a CT selection model for any type of construction project let alone highways. Following the survey collection phase and based on these preliminary results, it was found that national and international experts in the field of highway procurement are in general agreement with the opinions of researchers regarding the expected achievement of each CT against each SC for use in construction projects in general. Differences that were determined can be considered to be a result of the different construction industries that these CTs have been applied and researched. By utilising the research review carried out on best – practice abroad and the initial results of the questionnaire survey, further work will be carried out, in the short run, to develop a CT selection methodology that can be employed by Greek highway authorities for implementation in the highway construction industry. This endeavour will be carried out by taking into due consideration the legal, environmental and political situation in Greece and Europe, as a whole, in an effort to provide insight on how to choose early on in the design and development phase, the most efficient contractor compensation method in order to obtain the best value for European tax payers money when constructing major highways.

An empirical study of researchers’ and practitioners’ views 373

References Al-Subhi Al-Harbi, K.M. (1998) ‘Sharing fractions in cost-plus incentive-fee contracts’,

International Journal of Project Management, Vol. 16, No. 2, pp.73–80. Antoniou, F. and Kalfakakou, G. (2009) ‘Selection criteria for the choice of procurement system

for major highway construction projects’, CITC-V: Proceedings of 5th International CITC-V Conference ‘Collaboration and Integration in Engineering, Management and Technolog’, Istanbul, Turkey, pp.473–480.

Antoniou, F., Aretoulis, G., Konstantinidis, D. and Kalfakakou, G. (2012) ‘Selection criteria used for the choice of contract type for major highway construction projects’, Procedia – Social and Behavioral Sciences, Vol. 48, pp.3508–3517.

Arditi, D. and Yasamis, F. (1998) ‘Incentive/disincentive contracts: perceptions of owners and contractors’, ASCE Journal of Construction Engineering and Management, Vol. 124, No. 5, pp.361–373.

Arditi, D., Khisty, J. and Yasamis, F. (1997) ‘Incentive/disincentive provisions in highway contracts’, ASCE Journal of Construction Engineering and Management, Vol. 123, No. 3, pp.302–307.

Badenfelt, U. (2011) ‘Fixing the contract after the contract is fixed: a study of incomplete contracts in IT and construction projects’, International Journal of Project Management, Vol. 29, No. 5, pp.568–576.

Berends, T.C. (2000) ‘Cost plus incentive fee contracting – experiences and structuring’, International Journal of Project Management, Vol. 18, No. 3, pp.165–171.

Boukendour, S. (2007) ‘Preventing post-contractual opportunism by an option to switch from one contract to another’, Construction Management and Economics, Vol. 25, No. 7, pp.723–727.

Boukendour, S. and Bah, R. (2001) ‘The guaranteed maximum price contract as call option’, Construction Management and Economics, Vol. 19, No. 6, pp.563–567.

Bower, D., Ashby, G., Gerald, K. and Smyk, W. (2002) ‘Incentive mechanisms for project success’, ASCE Journal of Management in Engineering, Vol. 18, No. 1, pp.37–43.

Broome, J. and Perry, J. (2002) ‘How practitioners set share fractions in target cost contracts’, International Journal of Project Management, Vol. 20, No. 1, pp.59–66.

Bubshait, A.A. (2003) ‘Incentive/disincentive contracts and its effects on industrial projects’, International Journal of Project Management, Vol. 21, No. 1, pp.63–70.

Carty, G.J. (1995) ‘Construction’, ASCE Journal of Construction Engineering and Management, Vol. 121, No. 3, pp.319–328.

Chan, D.W.M., Chan, A.P.C., Lam, P.T.I. and Wong, J.M.W. (2011a) ‘An empirical survey of the motives and benefits of adopting guaranteed maximum price and target cost contracts in construction’, International Journal of Project Management, Vol. 29, No. 4, pp.577–590.

Chan, D.W.M., Chan, A.P.C., Lam, P.T.I., Yeung, J.F.Y. and Chan, J.H.L. (2011b) ‘Risk ranking and analysis in target cost contracts: empirical evidence from the construction industry’, International Journal of Project Management, Vol. 29, No. 4, pp.751–763.

Gholamian, M.R., Ghomi, S.M.T.F. and Ghazanfari, M. (2006) ‘A hybrid computational intelligent system for multiobjective supplier selection problem’, International Journal of Management and Decision Making, Vol. 7, Nos. 2–3, pp.216–233.

Gruneberg, S. (2007) ‘Letter to editor: performance-based contracting: an alternative approach to transacting in construction’, Construction Management and Economics, Vol. 25, No. 2, pp.111–112.

Gruneberg, S., Hughes, W. and Ancell, D. (2007) ‘Risk under performance-based contracting in the UK construction sector’, Construction Management and Economics, Vol. 25, No. 7, pp.691–699.

Herbsman, Z.J. and Glagola, C.R. (1998) ‘Lane rental – innovative way to reduce road construction time’, ASCE Journal of Construction Engineering and Management, Vol. 124, No. 5, pp.411–417.

374 F. Antoniou et al.

Herbsman, Z.J., Chen, W.T. and Epstein, W.C. (1995) ‘Time is money: innovative contracting methods in highway construction’, ASCE Journal of Construction Engineering and Management, Vol. 121, No. 3, pp.273–281.

Howard, W.E., Bell, L.C. and McCormick, R.E. (1997) ‘Economic principles of contractor compensation’, ASCE Journal of Management in Engineering, Vol. 13, No. 5, pp.81–89.

ITA Working Group (1996) ‘ITA position paper on types of contract’, Tunnelling and Underground Space Technology, Vol. 11, No. 4, pp.411–429.

ITA Working Group 3 (2011) Contractual Practices, International Tunnelling and Underground Space Association, ITA Report [online] http://www.ita-aites.org/fileadmin/filemounts/ general/pdf/ItaAssociation/ProductAndPublication/WorkingGroupsPublication/WG3/ITA_Report_N6_WG3_P.pdf (accessed 24 March 2013).

Jaafari, A. (1996) ‘Twinning time and cost in incentive-based contracts’, ASCE Journal of Management in Engineering, Vol. 12, No. 4, pp.62–72.

Jaraiedi, M., Plummer, R.W. and Aber, M.S. (1995) ‘Incentive/disincentive guidelines for highway construction contracts’, ASCE Journal of Construction Engineering and Management, Vol. 121, No. 1, pp.112–120.

Kirytopoulos, K., Voulgaridou, D., Panopoulos, D. and Leopoulos, V. (2009) ‘Project termination analysis in SMEs: making the right call’, International Journal of Management and Decision Making, Vol. 10, Nos. 1–2, pp.69–90.

Lambropoulos, S. (2007) ‘The use of time and cost utility for construction award under European Union legislation’, Building and the Environment, Vol. 42, No. 1, pp.452–463.

Loasby, B.J. (2001) ‘Cognition, capabilities and cooperation’, International Journal of Management and Decision Making, Vol. 2, No. 1, pp.35–47.

Meng, X. and Gallagher, B. (2012) ‘The impact of incentive mechanisms on project performance’, International Journal of Project Management, Vol. 30, No. 3, pp.352–362.

Migilinskas, D. and Ustinovichius, L. (2007) ‘Normalisation in the selection of construction alternatives’, International Journal of Management and Decision Making, Vol. 8, Nos. 5–6, pp.623–639.

Missbauer, H. and Hauber, W. (2005) ‘Bid calculation for construction projects: regulations and incentive effects of unit price contracts’, European Journal of Operational Research, Vol. 171, No. 3, pp.1005–1019.

Nijkamp, P., Torrieri, F. and Vreeker, R. (2002) ‘A decision support system for assessing alternative projects for the design of a new road network: methodology and application of a case study’, International Journal of Management and Decision Making, Vol. 3, No. 2, pp.114–138.

Olsen, T.E. and Osmundsen, P. (2005) ‘Sharing of endogenous risk in construction’, Journal of Economic Behavior and Organization, Vol. 58, No. 4, pp.511–526.

Padhi, S.S. and Mohapatra, P.K.J. (2009) ‘Centralized bid evaluation for awarding of construction projects – a case of India Government’, International Journal of Project Management, Vol. 28 No. 3, pp.275–284.

Paul, A. and Gutierrez, G. (2005) ‘Simple probability models for project contracting’, European Journal of Operational Research, Vol. 165, No. 2, pp.329–338.

Permanent International Association of Road Congresses’ (PIARC) (2003) Procurement of Works: Goods and Services by Road Administrations, PIARC Technical Committee, C15 Report.

Raja, J.K. and Prabhu, V. (2007) ‘An integrated software system for enterprise performance management’, International Journal of Management and Decision Making, Vol. 8, No. 1, pp.89–113.

Rose, T. and Manley, K. (2011) ‘Motivation toward financial incentive goals on construction projects’, Journal of Business Research, Vol. 64, No. 7, pp.765–773.

Shr, J.F. and Chen, W.T. (2003) ‘A method to determine minimum contract bids for incentive highway projects’, International Journal of Project Management, Vol. 21, No. 8, pp.601–615.

An empirical study of researchers’ and practitioners’ views 375

Shr, J.F. and Chen, W.T. (2004) ‘Setting maximum incentive for incentive/disincentive contracts for highway projects’, ASCE Journal of Construction Engineering and Management, Vol. 130, No. 1, pp.84–93.

Tang, W., Qiang, M., Duffield, C.F., Young, D.M. and Lu, Y. (2008) ‘Incentives in the Chinese construction industry’, ASCE Journal of Construction Engineering and Management, Vol. 134, No. 7, pp.457–467.

Turner, J.R. and Simister, S.J. (2001) ‘Project contract management and a theory of organization’, International Journal of Project Management, Vol. 19, No. 8, pp.457–464.

Twort, A.C. and Rees, J.G. (2004) Civil Engineering Project Management, 4th ed., Elsevier Butterworth-Heinemann, New York.

Ungern-Sternberg, T. (1994) ‘Quality incentives in auctions for construction contracts’, International Journal of Industrial Organization, Vol. 12, No. 1, pp.89–104.

Veld, J. and Peeters, W.A. (1989) ‘Keeping large projects under control: the importance of contract type selection’, International Journal of Project Management, Vol. 7, No. 3, pp.155–162.

Wang, W.C., Wang, H.H., Lai, Y.T. and Li, J.C.C. (2006) ‘Unit-price-based model for evaluating competitive bids’, International Journal of Project Management, Vol. 24, No. 2, pp.155–166.

Ward, S. and Chapman, C. (1994) ‘Choosing contractor payment terms’, International Journal of Project Management, Vol. 12, No. 4, pp.216–221.

Ward, S. and Chapman, C. (1995) ‘Evaluating fixed price incentive contracts’, International Journal of Management Science, Vol. 23, No. 1, pp.49–62.