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Faculty of Engineering
Higher Education Deanship
Construction Project Management
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
December, 2013
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I
DEDICATION
To all of my family, colleagues and friends for their help and support.
Osama El Agha
II
ACKNOWLEDGEMENT
Many thanks to Dr. Samir Saffi for his support in analyzing the study survey
data.
Finally, I must express my sincere thanks to all those people who made this
thesis possible and an enjoyable experience for me.
III
Abstract
IV
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(. )RII
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V
Table of contents
Dedication ....
II
Acknowledgement ... III
Abstract IV
. V
Table of contents ..... VI
List of abbreviations ... X
List of Tables .... XI
6
2.1 Definitions of procurement method
6
2.2 Background for procurement methods history
9
2.3 Issues for future procurement ..
10
2.4 Types of procurement methods ..
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
VI
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
VII
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
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
VIII
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
5.1 Introduction 91
References . 110
IX
List of Abbreviations
X
List of Tables
Table 4.6: Value of implemented projects during the last five years.. 69
XI
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
XII
List of Figures
XIII
CHAPTER 1
INTRODUCTION
1.1 Introduction
1
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.
2
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.
3
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.
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.
4
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.
5
CHAPTER 2
LITERATURE REVIEW
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.
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
6
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
By the 1950s 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 1960s 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.
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.
7
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 1970s reports reflected
conservatism, as a diminishing number of clients were prepared to commit to
projects in an uncertain economic climate.
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.
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 clients role,
management of the project process, fragmentation of the industry, competitive
tendering, the reputation of the industry and barriers to attracting the best people.
8
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 1980s. There was also an increase in the use of
partnerships and alliances.
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 1950s. 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.
9
objectives for the project, completion of a risk management process, relevance of
timescale, degree of quality expected, and appropriate team structure.
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 clients 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 clients business case for the project.
The risks and how they can potentially affect the clients 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
10
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.
Professional Contractual
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 owners 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 clients design team producing a full construction design. The
contractor will then tender for the construction of this package. Traditional procurement
11
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.
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,
12
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.
13
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).
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
14
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 surveyors profession (RICS, 1984 cited in Davis & Baccarini,
2004).
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
15
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
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).
16
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.
17
perfect solution: the fuller and more accurate the information, the nearer to the
relative safety of the lump sum approach.
18
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 fixedprice 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 organizations 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)
19
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 clients 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 contractors 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 clients 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.
20
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
Design
Consultant
Sub-
Contractor Contractor Sub-
Contractor
(s) Contractor
s)
Pre-Novation Contract Post-Novation Contract
Figure 2.4: Pre and post-novation contracts, source: Davis et al., (2008)
The contractor strives for a complete and self-contained approach where all the
necessary design and construction expertise resides within one organization that has
21
sufficient resources to complete any task that arises. In such organizations, all
aspects of design and construction have the capacity to be highly integrated.
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.
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
22
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.
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
23
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.
24
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 contractors. Any changes in the employers 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 contractors design
obligations are absolute. However, they are usually reduced in standard forms of
contract to those the professionals 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.
25
Benefits can arise from designers and estimators having to work closely
together. The contractors awareness of current market conditions and delivery
times can ensure that a contract runs smoothly, economically and expeditiously.
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.
26
Programme can be accelerated by overlapping design and construction activities;
Single organization is required to take responsibility and risk for design and
construction.
27
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.
28
Competitive tenders for works packages follow later and they will usually, though not
always, will be lump sum contracts with bills of quantities.
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.
Client
Project Manager
(Advisor)
Work Package
Contractors & Suppliers
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';
29
More even development of documentation;
Fewer contract variations;
No need for nominated trade contractors; and
Public accountability.
30
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.
31
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).
32
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.
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
33
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. Clients willingness to be actively involved;
14. Project site location;
15. Clients trust in other parties;
16. Political constraints;
34
17. Project size;
18. Regulatory impact;
19. Market competitiveness;
20. Clients requirement for value for money;
21. Material availability;
22. Clients financial capability.
While the researcher found that principal factors and criteria that influence selection of
procurement systems are
1. Clients 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. Clients trust in other parties;
9. Clients 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
35
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.
36
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
37
External factors: consideration should be given to economic, commercial,
technological, political, social and legal factors when selecting a procurement
method
Client characteristics: a clients 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 its a complex project or it needs to be done
38
quickly we may consider construction management. The biggest issue we have is that
often its decided from above because its 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.
39
9. Responsibility division and integration;
10. Risk sharing and allocation.
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 clients 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)
40
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.
41
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)
Procurement Method
Total Financing
Type ICB NCB Other NBF
US $ million
12.60 170.24 50.98 1.17 234.99
Works
0.00 103.31 41.37 0.00 144.68
9.37 2.67 5.59 0.16 17.79
Goods
4.37 1.57 6.96 0.00 12.90
11.52 0.60 9.49 2.53 24.14
Services
10.52 0.60 8.50 0.00 19.62
0.00 2.63 29.34 9.89 41.86
Miscellaneous
0.00 2.63 27.85 0.00 30.48
33.49 176.14 95.40 13.75 318.78
Total
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.
42
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.
43
Table 2.2: Factors that influencing the selection of procurement method
Source
Cameron (2011)
Shiyamini et. al.
Mortledge et al.
Keith M (2012)
M. Shafik & P.
Eyitope et al.
Maizon et al.
Abu Hassan
Rosli et. al.
Abu Baker
S. Thomas
(2006)
(2007)
(2010)
(2011)
(2006)
(2009)
(2002)
(2001)
(2009)
(2006)
(2008)
(2012)
No. Factors
44
Source
Cameron (2011)
Shiyamini et. al.
Mortledge et al.
Keith M (2012)
M. Shafik & P.
Eyitope et al.
Maizon et al.
Abu Hassan
Rosli et. al.
Abu Baker
S. Thomas
(2006)
(2007)
(2010)
(2011)
(2006)
(2009)
(2002)
(2001)
(2009)
(2006)
(2008)
(2012)
No. Factors
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
45
Source
Cameron (2011)
Shiyamini et. al.
Mortledge et al.
Keith M (2012)
M. Shafik & P.
Eyitope et al.
Maizon et al.
Abu Hassan
Rosli et. al.
Abu Baker
S. Thomas
(2006)
(2007)
(2010)
(2011)
(2006)
(2009)
(2002)
(2001)
(2009)
(2006)
(2008)
(2012)
No. Factors
46
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.
47
Research objectives
Questionnaire design
Pilot study
Questionnaire distribution
Results analysis
Developing a framework
48
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.
49
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.
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: respondents 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: respondents rank of the sub-factors affecting the selection of
procurement method. As this section contains sub-factors affecting the selection of
50
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.
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)
RII
W
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
51
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).
3.6.1 Concerning objective one: (To study and investigate the major practices of
variant types of procurement methods used in 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.
52
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
53
No. Main group factors Sub-factors
Degree of project complexity
Project type and nature
Funding method
Project site location
Project size
Project payments modality
5 Project characteristics 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
Procurement policy
Market completion/structure
Market competitiveness
Economic conditions
Political considerations
Social factors
Environment impact
Other parties involvement/role/participation
6 External environment
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
54
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 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,
55
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.
56
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.
57
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
Spearman correlation P-Value
No. Item
coefficient (Sig.)
1. Client's nature and culture (public or
0.405 0.000*
private)
2. Client reputation 0.706 0.000*
3. Client's experience in procurement
0.753 0.000*
methods
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
0.595 0.000*
involvement
9. Availability of qualified personnel
0.789 0.000*
(procurement staff)
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
Spearman correlation P-Value
No. Item
coefficient (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
0.740 0.000*
commencement
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
Spearman correlation P-Value
No. Item
coefficient (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
0.745 0.000*
approval
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
Spearman correlation P-Value
No. Item
coefficient (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*
58
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
Spearman correlation P-Value
No. Item
coefficient (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
Spearman correlation P-Value
No. Item
coefficient (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/
0.379 0.001*
participation
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*
59
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
Spearman correlation P-Value
No. Field
coefficient (Sig.)
1 Factors related to client 0.632 0.000**
2 Factors related to cost 0.666 0.000**
3 Factors related to time 0.644 0.000**
4 Factors related to risk 0.708 0.000**
5 Factors related to project characteristics 0.833 0.000**
6 Factors related to external environment 0.873 0.000**
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 = 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.
60
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 Chronbachs 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 Cronbachs coefficient alpha value between 0.0 and
+ 1.0, and the higher values reflects a higher degree of internal consistency. The
Cronbachs 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 becomes large.
Also, if the intercorrelation between items is large, the corresponding 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
61
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.
Thereby, it can be said that it is proved that the questionnaire is valid, reliable, and
ready for distribution for the population sample.
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
62
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)
Concerned No. of
Type Percentage
sample size respondents
Procurement specialists 34 29 85 %
Engineers' consulting offices 50 39 78 %
Total 84 68 81 %
63
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.
64
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.
65
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.
66
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
67
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 NGOs, 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 doesnt 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
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.
68
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
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.
69
Table 4.7: RII and rank for the main factors for each type of target group
Procurement Engineer's
specialist consulting office
No. Factor groups
RII RII
Rank 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
RII
No Factor groups Mean 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
70
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
71
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.
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 = 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 environmentgroups because the p-value (Sig.) is less than
0.05. In summary, the result indicates that there is a statistically significant correlation
at = 0.05 among all the main groups.
72
Table 4.9: Correlation coefficient among main groups affecting procurement method selection
Project External
Factors Client Cost Time Risk
characteristics environment
Pearson
Correlation
1
Client
Sig.
Pearson
Correlation
0.593 1
Cost
Sig. 0.000*
Pearson
Time Correlation
0.191 0.399 1
Sig. 0.010 0.000*
Pearson
Correlation
0.427 0.528 0.406 1
Risk
Sig. 0.000* 0.000* 0.000*
Pearson
Project Correlation
0.467 0.448 0.362 0.432 1
characteristics
Sig. 0.000* 0.000* 0.001* 0.000*
Pearson
External Correlation
0.307 0.391 0.584 0.467 0.717 1
environment
Sig. 0.005* 0.000* 0.000* 0.000* 0.000*
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
RII
No. Paragraph Mean P-value Rank
(%)
1. Client's financial capability 4.29 85.88 0.000* 1
Client's experience in procurement
2. 4.25 85.00 0.000* 2
methods
Availability of qualified personnel
3. 4.24 84.71 0.000* 3
(procurement staff)
The degree of desired client
4. 3.72 74.41 0.000* 4
involvement
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
Client's nature and culture (public or
9. 3.24 64.78 0.018* 9
private)
Average 3.82 76.33
73
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.
The relative importance index (RII) and rank of sub-factors related to cost are
summarized in Table 4.11.
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
74
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.
The relative importance index (RII) and rank of sub-factors related to time are
summarized in Table 4.12.
75
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.
The relative importance index (RII) and rank of sub-factors related to risk are
summarized in Table 4.13
76
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.
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
RII
No. Paragraph Mean 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
77
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.
The relative importance index (RII) and rank of sub-factors related to external
environment are summarized in Table 4.15
78
Table 4.15: RII and rank for Factors related to external environment
*The mean is significantly different from 3
RII
No. Paragraph Mean P-value Rank
(%)
Availability of procurement system in the
1. 4.07 81.47 0.000* 1
local market
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
79
conclude that the respondents agreed that this sub-factor is not important factor in
external environment group.
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
Procurement Engineers
All respondents
No. Factor specialist consulting office
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
Client's experience in
6 84.80 7 85.20 6 85.00 6
procurement methods
Availability of qualified
7 80.80 9 88.60 2 84.80 7
personnel (procurement staff)
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
Availability of procurement system
10 80.60 10 82.00 10 81.40 10
in the local market
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
Price certainly prior to
14 76.60 20 79.60 14 78.00 14
commencement
Project completion at estimated
15 78.00 16 76.40 17 77.00 15
cost
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
The degree of desired client
20 71.00 30 77.00 16 74.40 20
involvement
21 Accountability 78.00 15 70.80 26 73.80 21
Flexibility for changes and
22 73.20 24 73.20 23 73.20 22
variations
80
Procurement Engineers
All respondents
No. Factor specialist consulting office
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
Project completion at estimated
25 72.40 26 72.20 25 72.20 25
time
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
Other parties
33 64.80 42 68.80 27 67.00 32
involvement/role/participation
Delay in the project completion
34 71.80 28 63.60 36 67.00 34
time
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
Client's nature and culture
37 67.80 36 62.60 37 64.80 37
(public or private)
Expected performance of
38 64.80 41 64.20 35 64.40 38
project
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
Delays in obtaining
52 61.40 49 48.80 53 54.20 52
environmental approval
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
Procurement Engineers All
specialist consulting office respondents
No. Factor
RII RII
Rank RII (%) Rank Rank
(%) (%)
1 Price competition 91.00 1 88.80 1 89.80 1
Degree of project
2 89.60 2 87.60 4 88.60 2
complexity
Time constrains of
3 85.80 6 88.20 3 87.00 3
project
4 Project size 87.60 3 85.40 5 86.20 4
Client's financial
5 86.80 4 85.20 6 85.80 5
capability
Client's experience in
6 84.80 7 85.20 6 85.00 6
procurement methods
Availability of qualified
7 personnel (procurement 80.80 9 88.60 2 84.80 7
staff)
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
Availability of
10 procurement system in 80.60 10 82.00 10 81.40 10
the local market
82
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.
83
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.
84
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 &
85
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
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.
86
4.5.2 What is the most common procurement method selected by your
organization?
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.
87
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.
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.
88
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 %
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.
89
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.
90
CHAPTER 5
DEVELOPING A FRAMEWORK
5.1 Introduction
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
91
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.
92
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)
93
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
94
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.
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.
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
95
experts participated in Coastal municipalities water utility (CMWU) project for case 1
and three external consultants participated in Islamic University project for case 2.
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.
96
Table 5.2: The average benchmark performance values (aijaver.) of procurement methods (Case 1)
Public private
Traditional Design & build Management
partnership
No. Significant factor
aij aij aij aij
aij1 aij2 aij3 aij1 aij2 aij3 aij1 aij2 aij3 aij1 aij2 aij3
aver. aver. aver. aver.
Availability of qualified
7 7 8 9 8.00 8 7 8 7.67 7 9 9 8.33 6 4 5 5.00
personnel
Availability of procurement
10 9 8 10 9.00 8 8 7 7.67 8 7 6 7.00 7 9 7 7.67
system in the local market
97
Table 5.3: The weighted sum model results for the selection appropriate procurement method (Case 1)
Public private
Traditional Design & build Management
partnership
No. Significant factor Cj
aij Result aij Result aij Result aij Result
aver. (Pi) aver. (Pi) aver. (Pi) aver. (Pi)
1 Price competition 0.105 7.67 0.81 8.33 0.87 6.33 0.66 6.33 0.66
2 Project complexity 0.104 8.00 0.83 8.33 0.87 7.00 0.73 10.00 1.04
3 Time constrains 0.102 6.67 0.68 8.67 0.88 6.67 0.68 5.67 0.58
4 Project size 0.101 7.67 0.77 8.67 0.88 8.67 0.88 8.33 0.84
5 Client's financial capability 0.101 7.67 0.77 9.00 0.91 8.67 0.88 8.67 0.88
6 Client's experience 0.100 8.00 0.80 8.33 0.83 8.33 0.83 8.00 0.80
7 Availability of qualified personnel 0.099 8.00 0.79 7.67 0.76 8.33 0.82 5.00 0.50
8 Risk avoidance 0.097 7.33 0.71 9.33 0.91 8.67 0.84 5.67 0.55
9 Project type and nature 0.096 7.67 0.74 7.33 0.70 9.33 0.90 7.00 0.67
Availability of procurement system in
10 0.095 9.00 0.86 7.67 0.73 7.00 0.67 7.67 0.73
the local market
11 Total 1 7.76 8.34 7.88 7.25
12 Rank order 3 1 2 4
98
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.
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.
99
Table 5.4: The average benchmark performance values (aijaver.) of procurement methods (Case 2)
Public private
Traditional Design & build Management
partnership
No. Significant factor
aij aij aij aij
aij1 aij2 aij3 aij1 aij2 aij3 aij1 aij2 aij3 aij1 aij2 aij3
aver. aver. aver. aver.
Availability of qualified
7 9 9 7 8.33 7 7 8 7.33 8 8 10 8.67 8 7 6 7.00
personnel
Availability of procurement
10 10 8 9 9.00 7 5 6 6.00 8 8 7 7.67 8 7 6 7.00
system in the local market
100
Table 5.5: The weighted sum model results for the selection appropriate procurement method (Case 2)
Public private
Traditional Design & build Management
partnership
No. Significant factor Cj
aij Result aij Result aij Result aij Result
aver. (Pi) aver. (Pi) aver. (Pi) aver. (Pi)
1 Price competition 0.105 6.67 0.70 7.67 0.81 6.33 0.66 7 0.74
2 Project complexity 0.104 7.67 0.80 6.67 0.69 8 0.83 8.67 0.90
3 Time constrains 0.102 6.33 0.65 9.67 0.99 7.67 0.78 6.33 0.65
5 Client's financial capability 0.101 7.33 0.74 7.67 0.77 8 0.81 7.33 0.74
9 Project type and nature 0.096 8.67 0.83 7 0.67 7.33 0.70 7.33 0.70
Availability of procurement
10 0.095 9 0.86 6 0.57 7.67 0.73 7 0.67
system in the local market
11 Total 1 7.88 7.41 7.73 7.34
12 Rank order 1 3 2 4
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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.
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
102
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.
103
Modeling the factors affecting the
Factors related to client selection of procurement method
Identify client's financial capability
Using the wiegted sum model (i.e.
Evaluate client's experience in procurement additive utility)
methods
Formulate for model process
Assign qualification level for personnel
(MAUA)
(procurement staff)
Evaluate the model efficiency
Obtain the model results
Procurement Method
Factors related to cost Selection
Analyze price competition Traditional
Procurement methods assessment Procurement Method
Assessing procurement methods
Factors related to time Decision making process
Set the time constrains for the project
(Strength, advantages,
&tool putDesign and Construct
methodologies, strategies, Procurement Method
effectiveness) Decision Analysis
Set the rate for the suitability for
(DA) Management
Factors related to project characterstics Decide for an Procurement Method
each procurement method
Determine the degree of project complexity appropriate
Involving consultants in
Clarify the project size procurement method Public Private
assessment process
Explain project type and nature Partnership
Procurement Method
Factors related to external environment
Analyze the situation of procurement methods in
Evaluation for procurement
the local market
method
Identify the raising problems
Evaluate client's satisfaction
Factors related to risk Monitoring the project
Locate the risks related to the client performance
Review the decision process Database Output
Database Input
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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
105
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 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.
106
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.
107
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.
The clients 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.
108
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.
109
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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
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
117
Part One: General information: Please add () as appropriate:
1. Position
3. Qualification
4. Institution type
6. Value of executed projects executed in the last five years (in million dollars)
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
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Degree of importance
No. Main factor
Very High Medium Low Very
high = 5 =4 =3 =2 low = 1
A Factors related to client
B Factors related to cost
C Factors related to time
D Factors related to risk
Factors related to project
E
characteristics
Factors related to external
F
environment
Degree of importance
No. Factors
Very High Medium Low Very
high 5 4 3 2 low 1
119
Degree of importance
No. Factors
Very High Medium Low Very
high 5 4 3 2 low 1
120
Degree of importance
No. Factors
Very High Medium Low Very
high 5 4 3 2 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
Availability of procurement system in the local
11
market
12 Number of competitors
13 Technology
14 Stakeholder integration
15 Worker conditions
16 Material availability
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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
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
Researcher
Osama I. El Agha
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